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A Comprehensive Guide to RAG Ratings in Project Management Reports

Introduction

In the complex world of project management, understanding a project's status is crucial. A great way to do that visually is with the RAG system: Red, Amber, and Green.


Effectively, you use colour coding of project status for items in your project management reports to bring attention to certain points.


In your report, you might have a summary of deliverables, such as the following;


An example of a RAG report

The RAG status reporting is pivotal in communicating the overall project status, identifying areas that need attention, and determining corrective action.


This article is a comprehensive guide to RAG status, which delves into the critical aspects of RAG ratings, from the basic rag status definitions to their application in project reports.


A free download of the Project Status / Highlight Report Template



What is a RAG Rating?

RAG stands for Red, Amber, Green—the traffic light system used to indicate the health of various elements within a project. RAG status indicators offer a quick, subjective assessment of a project's health based on clearly defined criteria. A RAG status reporting system is thus an invaluable tool for project managers, senior management, and project sponsors.


Red Status

Red status signifies that serious issues are jeopardizing the project delivery.

If a project is in the red status, it's a red flag for project managers to alert senior management. These issues might relate to project budget overruns, poor project performance, or significant slippages in the project schedule.

A picture of a meeting.


It's really important that project managers define clearly what 'Red' means because it's such a controversial thing to flag on a report. It's highly visible (by design) and is making a bold statement.


So, I recommend that you define each status on your reports and with your major stakeholders so that you all have a common understanding.


For example, a while back, I put a status item on the report as red, meaning it was behind schedule and holding things up. I wrote alongside the commentary that we expected to resolve the issue in the next week and catch up. The CEO, however (and quite rightly) said, "I only want to see red on the report if the executive team need to intervene to ensure the project's success". I've run with that over the years, and it has served me well.


Amber Status

An amber status is a cautionary sign. The project isn't failing, but it's not running smoothly either.


Project managers should pay particular attention to amber projects, as they can quickly devolve into red projects if the underlying problems are not addressed.


It's a cardinal sin in some organisations to progress from Green to Red without going via Amber on status reports. Amber allows you to do something about a situation. It's a way of highlighting that things aren't going to plan but that you can take action to correct it.

In short, I always explain amber as "We have an issue, but the project team can control it".


Green Status

A green status indicates that the project is on track. All elements, from the project budget to the project schedule, proceed as planned.


A green project requires less immediate management attention but should still be monitored to maintain its positive trajectory.


Green is good.


Why Should Project Managers Use RAG Status?

Project managers employ RAG status reporting for several compelling reasons.

First, the colour coding in RAG status reports provides a visual representation of project health, making it easier for the project team and senior managers to understand the project status at a glance.


RAG status reports also play a crucial role in project report submissions, helping the project board and organizational leadership make informed decisions.


Finally, using RAG status in your project status reports aids in catching issues before they become insurmountable, thus increasing the business benefits of the project.


RAG status reporting is a tool that is used in project management tools everywhere now. Look at the screenshot below from Monday.com. It's a great example of a project management tool that does great visual rag status reports, too.

An example of a Monday.com RAG chart
Monday.com


How to Implement RAG Status Reporting

To use RAG status effectively, a project manager should consider the following steps:


Define Criteria

Before starting with RAG reporting, you must clearly define the red, amber, or green status criteria. APM and PMI bodies offer guidelines that can be adapted to fit your project's unique needs.


There are two different methods for this. My preference is for the first because it is the simplest (and simple = good) but here they are;


The RAG Scale

This approach simply gives each status and what it means. Sometimes, some status review is needed to align stakeholders, but you agree at a high level.


An example of a RAG Scale
An example of a RAG Scale


RAG Rating Validation Sheet

The other, slightly more complex approach is to break down the RAG status by tolerances for each area. So, a tolerance is where you have a +/- percentage that the project manager can manage within. When a value deviates from the agreed limits, it changes the RAG status.



An example of a RAG Rating Validation Sheet
An Example of a RAG Rating Validation Sheet


You might think this is overkill, and in most circumstances, it is, but it is explicit and is useful for some projects to define the tolerances that are acceptable to the project sponsor(s) and gives the project manager a much clearer path to manage within.


Incorporate into Project Status Reports

Integrate RAG status into your project status report, and progress reports. This ensures that the RAG status reporting system is systematically followed across the project's lifecycle.


Status reports can take many forms. Above, I've given two examples of reports (Monday.com and a Template from www.iseoblue.com/products). But there are others out there. Here's another good example from Asana.



An example of an Asana RAG status report
Asana

Senior Management and Steering Committee Involvement

The importance of involving senior management and the project's steering committee in RAG status reports cannot be overstated.


Their experience often provides insights into how to turn a red or amber project back on track.


If an item is red, or the project's rag status will likely turn red, then I strongly suggest that any project managers get out there and speak to their key stakeholders (sponsors, execs) and let them know personally that bad news is on the horizon.


Nothing upsets a manager like being told news after the event, especially if they could have in some way potentially affected the outcome with action.


Also, always, always, always make sure that the status is agreed with any person who is responsible for that part of the delivery or risk before putting it out there. If they follow up your report with an email saying, "Hey! I didn't know we were red on this. I disagree..." then the project manager will end up red-faced.


Regular Updates

RAG statuses should be updated regularly.


One project manager might opt for weekly updates, while another might find that a bi-weekly update better suits the project’s pace. Whatever the right cadence is for you, ensure it's right for the stakeholders for whom the report is generated.


Also, ensure that as a project manager, you are rag status reporting when you said you would, like clockwork.


Challenges and Pitfalls of RAG Status Reporting

RAG status reporting is widely accepted and employed across project management landscapes. However, this "traffic light" system has its pitfalls and challenges.

Understanding these can enable project managers to utilise the system more effectively.


Subjectivity

One of the most significant challenges is the subjective assessment that often goes into assigning a Red, Amber, or Green status. Project managers may have different interpretations of what each colour signifies, leading to inconsistencies.


As discussed, consider using a Validation Sheet with clearly defined criteria to make the RAG statuses as objective as possible. This ensures that everyone has the same understanding of what each colour means in the context of the whole project itself.


Over-Simplification

RAG statuses can sometimes oversimplify complex issues. A 'Green' status may give the impression that everything is fine, when in reality, there might be underlying problems that are not adequately captured.


Complement RAG statuses with detailed progress reports or status reports that delve into the specifics.


Ensure senior management and the project board are aware that Green does not necessarily mean "no action needed."


Optimism Bias

There's a natural tendency for project managers to want to report good news, potentially leading to an Amber or even Red status being reported as Green. This could mask poor project performance and delay crucial intervention.


Create a culture of transparency and accountability. Make it clear that it's more beneficial to have an accurate Red or Amber status early on than a false Green that leads to bigger issues later.


Inadequate Senior Management Attention

Often, senior managers might only pay attention to the 'Red' projects, ignoring the 'Amber' and 'Green' ones. This can lead to missed opportunities for corrective action before an Amber turns into a serious Red project.


Regular project status reporting meetings should be in place, where even 'Green' and 'Amber' projects are given due management attention. This allows for proactive measures to be taken.


Ignoring Trends

If a project stays at 'Amber' for an extended period, that's a trend that needs attention. It's not just the current RAG status but the history that’s important.


Use historical RAG data to spot trends over time. An 'Amber' that’s been stable for a while could indicate a more significant issue that needs to be addressed.


Lack of Action

Assigning a RAG status is only beneficial if it leads to action. A Red status that isn't followed by corrective action is just a colour.


Each RAG status should be linked with a recovery plan via a set of pre-defined corrective actions. Senior management and the project team should be aware of these and act accordingly.


Comprehensive Guide to RAG Ratings Conclusion

RAG ratings are indispensable in modern project management. They offer a simple yet effective way to monitor project status, keep stakeholders informed, and enable corrective action.


Understanding RAG status definitions and their proper implementation can make a significant difference in the successful delivery of a project.


Whether you're a project manager, part of a project team, or a member of senior management, the RAG system offers invaluable insights into the state of your project.


Give yourself a green light to give it a go.

A green light


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About the author

Hi, I'm Alan, and have been working within the IT sector for over 30 years.

For the last 15 years, I've focused on IT Governance, Information Security, Projects and Service Management across various styles of organisations and markets.

I hold a degree in Information Systems, ITIL Expert certificate, PRINCE2 Practitioner and CISMP (Information Security Management).

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