What is the Baseline?

What is the Baseline?

A baseline refers to a fixed point of reference for a particular project, budget, or any product used for comparison. It is considered as a starting point for any project or product based on which its success or failure will be judged.

Generally, the teams agree upon certain criteria for the baseline based on existing data, then use this as a reference point to determine the costs, sales, revenue, etc. over a period of time.

Baselining can be a very valuable tool for any business to assess the performance of any product or service. It also serves as a tool to identify the scope creep for projects meant for the long term.

Advantages of the Baseline

Here are some advantages of using the Baseline for a large-scale project

• A baseline provides the ability to measure the cost or schedule against it and thus, provides an accurate estimate of whether the project has more or less than what was expected of it.
• All the stakeholders, even the non-technical ones, are able to understand the end objectives and expected schedule of the project.
• It provides teams the chance to analyze and explain delays, design changes, and the dreaded scope creep.

Evaluating business performance with a baseline

A baseline is typically used for only one function, i.e., to serve as a reference for comparison, but various businesses may choose to interpret it the best way they deem fit.

The most suited for the use of baseline are the sales projections. Companies can use the previous year’s performance as a benchmark by which the current year’s performance can be judged. In this manner, they always have a readily available dataset that can be used to compare their performance for the ongoing year.

Companies may also evaluate the financial requirements of a coming year using the financial baselining tool. Generally, the companies tend to use the financial performance for Q1 as a baseline for the rest of the quarters of the year.

Requirement baselines are used by companies to establish feasible goals for the development process. All the requirements are decided and agreed upon by all the stakeholders and the product owner, following which the baseline is used to judge the progress as the development process is underway.

What are the baseline components in product management?

In product management, setting a baseline outright enables the whole team to get focused on the goal from the start of the project. The team members tend to make decisions wisely regarding the costs, schedule, or any other thing if they have a clear number to refer to.

In product management, the baseline can be broken down into three types.

1. Cost – refers to how the budget of a project is determined.
2. Schedule – determines the timeline for how long certain items on the roadmap will take to complete.
3. Scope –  determines the objectives of the development and establishes the expected outcomes of the project.