A project stoplight report is a simple, visual way to show the status of projects. Green shows the project is good, yellow shows it is in danger, and red shows it as in trouble. Unfortunately, that doesn't help much beyond giving a summary. Managers often ask for these reports as a simple way to understand the status of portfolios of projects, and focus on the red and yellow areas.
Project leaders, though, understand that a yellow or red indicator could be taken as showing weakness in their own project leadership skills. In this case, the project leader is inclined to show a troubled project as green and hope they can fix any problems before they are noticed. There is also a dynamic that red and yellow projects require more work from the project manager to explain what is going wrong and to do extra tasks to fix the problems. When the project is already in trouble, this extra work is the last thing the project leader needs. This is another reason to shade projects toward green.
Instead of this, managers could set the meaning of green, yellow and red differently, such that they get more value from the stoplight report. I suggest that green can mean, "The project is going well, we don't need help from management." Yellow can mean, "We are starting to worry about some aspects of the project and want some advice from management about how do proceed." For yellow projects, the project leader should give options to the management team for a decision rather than just present the problems. Then red can mean, "This project is in trouble and needs action from management to fix it." In most cases, red projects should have been escalated to management as soon as they turned red, so if they are still red at the project review, that should mean that the project leader has yet to receive the support they needed from the managers on the project. Red becomes a reminder to the management team that the project needs their help.
With a better use of the project stoplight report, management reviews can become a useful working session rather than a tedious meeting of blame passing.