Application of performance measurement as an early warning system : A case study in the oil and gas industry

Purpose – The purpose of this paper is to present an overview of the concept of early warning signs in projects and explain how a performance measurement system can be utilized as a source of data for an early warning approach signaling that a project is about to experience problems at some stage in the future. Design/methodology/approach – Combination of action research and semi‐structured interviews and document analysis supplemented by a post‐mortem analysis after project close‐out. Findings – Detection of early warning signals in projects can be better enabled through the application of a performance measurement system with properly defined key performance indicators. Utilization of this tool can positively affect the overall success of the project. Research limitations/implications – The case study involved only one project from the oil and gas industry. Practical implications – The empirical case study was developed to illustrate the usefulness of exploiting a performance measurement system in a project. A procedure was demonstrated for developing and implementing an early warning system based on performance measurement, and specific performance indicators have been described for other projects to copy. Originality/value – This paper highlights the gap in the literature concerning the link between early warning and project management and the link between early warning and performance measurement. It offers a new idea on how performance measurement can be used as an effective early warning system and is intended to be primarily of use to project management practitioners and practically‐oriented academics who are interested in developing fresh insights into new approaches for better management of projects.