The Problem with Red, Yellow, Green Project Status

Many years ago I worked in a Project Management Office at a large financial institution. Once a week I prepared a project status report for executive management and the PMO director. I would calculate how we were tracking to budget, list any major issues or risks, and summarize overall status.

I was also told to mark the project as red, yellow, or green – using the following definitions:
Red: Serious issues and the project will probably be delayed or have significant budget overrun.
Yellow: Potential issues with schedule or budget, but both can probably be saved with corrective actions.
Green: On schedule, on budget, all good.

The red/yellow/green approach seems simple and logical. You only worry stakeholders if something goes wrong, so green projects do not need much review or attention.

However, in my experience the color approach has many shortcomings and potential repercussions. Let’s look at few.

Expectations
What happens when a green project turns yellow or red? In my experience there is an emotional conversation with stakeholders. Here are some of comments I frequently hear when a project goes from green to yellow:

“What went wrong?”, “Why didn’t you manage this project better?, “How can we avoid this happening again?”, “Why didn’t you see this coming?”.

As a project manager I often feel great guilt with these conversations and I too question my competency. But if we spend a moment and work our way through the guilt and emotion, we can see this issue from a more analytical perspective.

Not in line with normal project uncertainty
You may be familiar with the cone of uncertainty. The cone of uncertainty tells us that you cannot completely understand all of the tasks and potential issues within a project, at the beginning of a project. As the project progresses we learn more and there are less risks, but we can never anticipate everything that could go wrong until the project is 100% complete.
When we label a project as green we are telling the sponsor everything is OK, today.
Sponsors interpret green as everything is OK today and it should be for the entire project. It is human nature to assume the project is under control and should stay under control.

A Different Approach
But since any experienced project manager knows that green does not necessarily mean green forever, we need to speak in verbiage that stakeholders can relate to. To address this issue I have changed my color scheme when working with sponsors and removed green from my status options.

My options are now:
Yellow: The project does not have any known issues but there is still high risk that something could go wrong (as demonstrated by the cone of uncertainty). As with any project in flight, we are managing it cautiously and we are doing our best to deliver successfully.
Orange: An issue has surfaced and the project goals are in jeopardy. We are triaging the issue(s) and at this time we believe we can still be successful
Red: An issue has surfaced and we do not believe 100% project success can be obtained due to the discovery. More than likely we will either miss the desired date, or exceed budget, or not be able to deliver the desired scope by the target date.

Conclusion
What do you think of my approach? I welcome your thoughts. I know many stakeholders will “freak-out” at seeing no greens, but I believe all projects are yellow until they are delivered.  We need to teach stakeholders that this a reality of doing business.

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24 Responses to The Problem with Red, Yellow, Green Project Status

  1. Joel says:

    Green: It is all wrapped up and ready for delivery.

  2. SouthernGent says:

    I tend to think this way myself as I have yet to win the lottery and thus have no real forward-seeing skills. All projects to me are yellow until the customer has signed off.

  3. Nandun says:

    not to be critical or anything. but i think sponsors will lose confidence in you if you keep saying everything you do has a risk of failing.. i would still stick to Green yellow & red.

    • Greg Smith says:

      Hi Nandun,

      You could be be right. In my experience, though, confidence comes from how consistently my team delivers, not necessarily how we report project status.

      • Tony Wilson says:

        True, but without Green, you strip away the thin layer of comfort that all stakeholders carry from reporting-period to reporting-period. Everyone realistically knows that nothing can stay Green forever, but sponsors and functional managers use Green in the same way that children use warm milk—–it helps them sleep at night………

    • meera says:

      I agree! If you dont show confidence in being able to turn the project around and delivering.. they will lose faith in you … and not be as committed to making it happen. I’d rather go with the attitude of we have some challenges but believe we can overcome them.

      • SouthernGent says:

        “I’d rather go with the attitude of we have some challenges but believe we can overcome them.”

        Isn’t that the intent? To be more realistic and less pollyanna?

  4. Joanne says:

    Yellow should be the default color, I concur. In my current position we missed milestones an delivery date in jeopardy.. Turned rad and got hauled over the coals. Red is not bad, but good real to me, not to the sponsor…

  5. Betty says:

    I like the three colors, it is simple. My concern: if the project is always green….just not realistic. If Sponsors and Stakeholders think otherwise, then they are not creating an environment to truly support projects. When there is trouble, it is usually time to ask for help and management should be prepared to step up.

  6. Constance says:

    In my experience, the green-yellow-red scheme is an appropriate, effective tool for interdepartmental project reporting/planning. This scheme is best used when addressing internal resources needed for the projects – i.e. who can be pulled off of green projects to assist with yellow projects – and when do we need ‘all hands on deck’ for red projects. Past the interdepartmental reporting/planning, my experience says to drop color schemes all together. When it comes to stakeholders/executive reporting, I find it most effective to report the facts – Project A is on track & on budget, Project B is on track with projected contengency spending of $X, Project C will not meet deadline X and to stay on budget we need to adopt contengency option A, B, or C. This way, you are bringing solutions to the table with your reporting as opposed to merely throwing a colored, emotional flag for stakeholders.

    • Paul says:

      As PMO of a Division, I am currently preparing a project metrics report for the Group CEO with my Division counterparts. I completely agree with you Constance. Enough said…

  7. I prefer the green, yellow, a red which directly related and calculated from the project performance indicators. check this http://www.youtube.com/watch?v=przuiHWROlk.
    I believe status meeting within a week is fair enough to manage any diversion in your indicators and you will find the stakeholders in your side if these issue are communicated back with them.
    if the project duration is less than two month you might thing of having status update twice a week.

  8. Marcos Orozco says:

    I use five color scheme.
    Green – the project is under control, as the plan predict (risk still exist)
    Yellow – we identify some risk or potential problem to put attention to prevent.
    Blue – the project have issues to review or risk/problems to resolve
    Red – the project have problems and don’t be delivered as planed in time, cost, quality or scope.
    Black – the project definitely don’t be finish as planed and need to terminate (even not finish) in the best way as possible.
    The action for this scheme would be
    Green, still working….
    Yellow, put attention on issues
    Blue, resolve the issues
    Red, special teem, meetings, even strategic solution, and re-planning and possible re-negotiation.
    Black, try terminate the Proyect in the best way or even finish accepting the problem. (sponsor decision).
    Regards.

  9. William says:

    The issue really isnt red yellow green – the issue issue what is getting measured. Instead of applying ryg model to project/task line item, try ryg accross specific project dimensions – ie scope, schedule, budget, quality, resources, customer, etc. This way you are tracking meaningful aspects against which you can put corrective actions in place if needed.

  10. Dayton Chan says:

    To me, the primary reason why the colors, green, yellow and red were chosen is because it is a metaphor that is understood. If we introduce a new color, “orange,” we have to explain what that color means repeatedly, and they still will prefer the color green instead. Sometimes, the meaning of these colors are universally understood, especially by executives, and trying to change the color metaphors tend to cause more frustration and confusion than improved understanding.

    I agree with you though, that all “green” projects are really “orange.”

  11. jdarbroudi says:

    I like your attemp to break out of the old school. I have a few thoughts to share with you though:
    1- A standalone status report on schedule and budget is not a strong and transparent reporting tool but a good enough way for keeping the lights green for the project!
    2- I think what you are trying to do here is using another perspective to the projects and that being risk management. Risk management has its own way of reporting by probability, impact and recommended mitigation. In that case green is a project that has all the identified risks properly mitigated. You can see that here it gets harder to get a green status.
    3- normally the culture and the level of transparency in an organization dominate the project governance process. Meaning those who seek green get green!
    4- most of projects fail or succeed by luck only because of lack of risk management and guess why? Because the management is scared of the term RISK. As with risk nothing is easily green and that is not a comfortable feeling.
    5- last and not least, if you add estimate to completion (ETC) to your status report, a so far green project can manage the expectations and prepare the executives for an upcoming non-green project.

    • Paul says:

      I use color indicators in precisely this way….to communicate if any of the Risks have been triggered. (I tell all my PMs and contractors that I don’t believe in ‘green’ projects as it means their PM either doesn’t know what is going on, or is lying!)

  12. Cora Systems says:

    I believe that green within tasks is important as much for morale as a good management, however your points around yellow make sense as no project is completed until all lights are green. So maybe it should be green, yellow, orange and red which if I am correct the original transport traffic lights were colored.

  13. Willy says:

    If you use only 1 metric and 1 color coding … that too simple. You need to put up a weighted value and the 3 colors assist grouping them a addressing first the red, then yellow and if you have time the green.
    You are playing with colors and keeping 3 and this will not result a different view by management.

  14. Riccardo says:

    I think that the problem is not the colours, but if we are able to plan and control the project. Anyway the use of colours should make confident stakeholders about the management of the project, instead of rising fear and confusion.
    Regards

  15. Rajasekhar Ramalingam says:

    In my Project Management experience, I always see a need of using Green, Yellow and Red colors to depict the right project status. There is an element of confidence on the delivery when the status is Green, which also means that the executive management need not spend time discussing about its progress and spend good time on projects with Yellow and Red. When a different color (in this case Orange) is used, you are allowing team to spend time to discuss about a future situation that is uncertain even for management. As rightly said that any Project execution cannot be 100% sure till the end, we should be worried about what is the status as of day we present to management.

  16. iharrington@stubhub.com says:

    I think this is just a matter of semantics; the key is to make sure that whatever status colors you are using have a definition that is agreed upon and socialized among stakeholders and project teams.
    I still think green is valuable to let stakeholders know that whatever risks might exists, they are under control and no action is needed on their end. Every project has risks, it’s the nature of it, the point is use status colors that mean something to audience and can be interpreted/translated in necessary actions if needed.

  17. Mansur says:

    I agree, there should be no green color until the project is closed. Green – means the project has been successfully closed. If there is at least anything to be completed in the project there should always be some feeling of urgency and attentions from stakeholder is required.

  18. Jeff says:

    As with everything you report, the key is knowing what you’re trying to accomplish with the report – in particular are you asking for help from the people you’re reporting to, are you resetting expectations, or are you just mechanically rolling up on-track results. We use our status to indicate what level of attention we want from senior execs, so we defined our status colors as Green (project proceeding within the bounds of the risks as understood); Yellow (some additional risks emerged & are being managed, just putting this on your radar); Red (significant risks require intervention, want discussion with the reportees re: how to get it non-Red); Black (critically blocked, require intervention for there to be any chance of success).

    So for us the status colors are all about what actions we’re asking for from the people seeing it. These aren’t mechanically generated, they’re the opinion of the Program managers involved.

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