Project RAG status meanings and best practice (2022)

Blog 27-05-2022

Welcome to our guide to project RAG status meanings and best practice.

Here you will find how RAGs play a crucial role in both project reporting and organizational leadership.

Understanding RAG in project management is essential if you want to make sure that all projects and programmes are being managed and controlled properly.

To help you achieve RAG mastery, we’ve created the following 4 chapters:

1: How many RAGs should you use?
2: Why a permanently green RAG status should scream ‘you’ve got a big problem on your hands’!?
3: When a Red RAG Status can be a good thing
4: Why RAGS are useless without a road to green

Let’s get started.

1: How Many RAGS should you use?

Most project and programme highlight reports include one or more Red, Amber, Green (RAGS) ratings.

These can signify the health of the project and also report on key aspects of the project, e.g. How committed are the stakeholders, or is the team motivated and performing?

These ‘sub-RAGS’ are a good way of ensuring that key aspects of the project are being managed and controlled.

Whether you use one overall RAG or, as we do, a set of sub-RAGS, the principle is that stakeholders can view a RAG and instantly know the state of the project.

Side Note: In our PPM tool, PM3, we objectively define what we mean by each RAG, an example is shown below.

So, in this example, if you see a RED RAG on costs, we know that the project budget is in excess of 20% over budget.

The reason why RAGS are so powerful is that they are a simple indicator on how the project is going.

We all know that when the traffic light is RED, stop the car, Amber is a warning that the lights are about to turn RED and Green signifies that it is safe to keep going.

So, in project parlance Red is a warning that cannot be ignored (the project has serious issues) Amber is a warning (the project has some issues), Green (the project is on track with no serious issues).

Many organisations have different definitions to these but broadly the traffic symbols are clear to all people at least those who drive or walk on roads.

It is baffling therefore when some organisations say they use 4 or 5 RAGS!

A client once wanted 4 RAGS, RED, Amber, Orange and Green. Another one wanted 5 RAGS.

But this is a very retrograde step in project status reporting.

Introducing one or even two intermediary RAGS just causes confusion to both those setting the project RAG status and to those stakeholders who are now reading a report with Red, Orange, Amber and Green.

The ‘keep it simple’ principle is one that should be applied to project reporting.

Are we really saying that we cannot say whether the project is Amber or Red so let’s go for Orange?

It is also another way for some project managers to over-complicate project management which is not good for anyone.

Orange may be used in some organisations where a red RAG status is unacceptable due to culture.

Stakeholders must be educated that a red RAG can be a good thing when used.

It signifies that urgent attention is needed to bring this project on track or maybe terminate it.

Hiding the truth in an Orange RAG status could mean that urgent remedial action is not taken to a project that needs it.

In this case, the longer the problem project is not addressed typically the more it costs to fix or cancel at a later stage.

The RAG status is a very useful communication aide for the project manager and the stakeholders.

Please keep it uncomplicated and stick to three RAGS.

It keeps things simple and also helps bring failing projects back on track at the earliest opportunity as long, of course, the true RAG is being reported.

2: Why a permanently green RAG status should scream ‘you’ve got a big problem on your hands’!?

We are often asked to review projects and programmes.

We have a structured approach that reviews artefacts: project plans, risk registers, progress reports, etc, and interviews team members and various stakeholders.

Sometimes we come across a project that is green on all RAG indicators and has always been green.

In these situations, we are sceptical about the veracity of the governance reports and the true state of the project.

In our experience, a permanent green RAG status is the exception and not the norm; it can also be a symptom of a serious problem.

We recommend that all projects have not just one overall RAG indicator but a number of RAG statuses (sub-RAGS) for a project, including:

  • Are Stakeholders Committed?
  • Are Risks being managed?
  • Is progress on track?
  • Is the scope being managed?
  • Are costs within acceptable thresholds?

Side Note: Our PPM tool, PM3 has up to 10 of these RAG indicators and each one can be objectively defined rather than subjectively assessed by a project manager.

If over a reasonable period of time a project is showing green on all indicators, it could be one of three reasons:

  • Project is straightforward and is being well managed by the project manager. Nothing unforeseen has occurred;
  • Culture of the organisation is not to accept any RAG status except green;
  • Project manager is being less than honest and is covering up any areas of concern for the project

Projects are by their very nature uncertain endeavors, and it is natural for unforeseen problems to be encountered that put the project at risk.

It is a good thing for a project manager to be honest and escalate to management that there are issues or concerns with a project.

This honesty allows management to support the project manager and develop a ‘route to green’ plan to bring the project back on track.

This ‘lack’ of honesty may, of course, be down to point 2 above, i.e., the culture of the organisation.

Our experience of conducting many project and programme reviews makes us want to do a deep dive on projects that are always green because they are often hiding problems.

And the longer project issues or problems are covered up, the greater the cost to the organisation in bringing the project back on track.

3: When is a Red RAG Status a good thing?

Using RAGS is a really useful and visual away of informing stakeholders on the state of their initiatives.

Some organisations use one overall RAG status, but this can be too macro a level to be useful.

For example, if you have a project RAG status of red, you have no understanding of why it is red unless you look at a commentary against the RAG.

We use a number of RAG traffic lights as well as an overall RAG indicator.

This advantage of this approach is that stakeholders can scan down the set of RAGs and quickly see the underlying cause of a red status.

Side note: In PM3, our PPM tool, you can have up to 10 status indicators for a project or a programme.

The standard ones are:

  • Cost
  • Progress
  • Risks
  • Issues
  • Stakeholders
  • Team
  • Quality
  • Scope
  • Value

So you may have an overall red status for the project and a red status for team indicating that the overall red traffic light is because the team is underperforming.

Whilst having a set of RAG indicators is an improvement over having just an overall one, there are two problems with this type of reporting.

First, some people have different interpretations of what red, amber or green actually mean.

Some people are more conservative and would mark their project red whereas others are more optimistic and would assess the same project as green.

There is therefore a lot of subjectivity in the use of RAG traffic lights.

What is needed is a more objective assessment of each RAG indicator. For example, in PM3 if the default tolerances are used, and the costs of a project exceeds the original budget by 10% then it should be assessed as red. If it exceeds the budget by between 3 and 9% then it should be amber and if it is within 3% then it is green.

If you define criteria for each RAG traffic light, then this will help to ensure that you drive consistency of reporting across an organisation.

Side Note: PM3 allows you to assess each project in this way giving you greater reporting consistency across your organisation.

The second problem with RAG traffic light reporting is that some project managers are loathe to assess their project as red.

This can be down to many factors, but it is often due to a project manager being worried that he or she may get fired if their project is assessed as red.

Red traffic lights can be a very good way of getting attention from the stakeholders or sponsor.

Action can then be taken to address the root cause of the Red status.

The earlier you highlight problems with a project, it is typically less costly to rectify. Hiding a red project by assessing it as amber or green is likely to cost you time and money as the corrective action happens later than it should.

A red traffic light status should not be considered as unacceptable.

On the contrary, an objectively defined red traffic light should be considered as a positive statement by the project manager who may require help and support to put the project back on track.

Conversely, a project manager who hides a red traffic light status is probably going to cost the organisation more in time and resources to rectify the underlying problems as they are often highlighted at the last possible moment when a red traffic light can no longer be hidden.

4: Why RAGS are useless without a road to green

Your project/programme highlight reports may include Red, Amber, Green (RAG) ratings. But without a RAGS road to green they won’t deliver the business benefits you seek.

Most project and programme highlight reports include one or more Red, Amber, Green (RAG) ratings.

These can signify the health of the project and also report on key aspects of the project, e.g. How committed are the stakeholders, or is the team motivated and performing?

Here is an example of rags used to assess risks:

PM3 Risk Matrix grid
PM3 Risk Matrix grid

These ‘sub-RAGS’ are a good way of ensuring that key aspects of the project are being managed and controlled.

The Road to Green

When reviewing projects and programmes we often see that there are RAG reports at the overall project level and sometimes at a more detailed level.

There are, of course, those organisations where a red RAG is unacceptable, so red RAGS are rarely reported.

This completely negates the use of a RAG.

Remember: The whole purpose of a RAG is to give an honest and objective assessment of your project and programme!

If it is red by your objective assessment, then this needs to be reported honestly and a plan of action put in place to bring the project or programme back on track.

RAG reporting is a very useful tool in giving stakeholders an assessment of the value of a project or programme.

However, the real value is when you report an honest RAG rating and then, if it is amber or red, you accompany this rating with a ‘Road to Green’.

This is the real benefit of RAG reporting.

It is relatively easy to report using RAGs but it can be more difficult to accompany this with a ‘Road to Green’ plan.

The Road to Green is the actions that need to be taken to bring the project back on track, assuming that it is recoverable.

Also, when the project board or steering committee receive a RED RAG rating on a project or programme, they can question the Road to Green plan and, at the next project board or steering group, they can check on the Road to Green progress.

So next time you use RAG reporting, which is a simple and very effective governance tool, ensure that you accompany any non-green RAGS with the Road to Green plan which will not only reassure your stakeholders that you have a plan but also help ensure you deliver your project outcomes.

We hope you found this guide to project RAG Status best practice useful. Please feel free to share it with colleagues and on your social channels!

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