5 Top Project Metrics You Need to Use Today

February 3, 2021

Project management metrics play a vital role in the success of any project. Project managers define these parameters as per the guideline of the organization during the initiation phase. It gets tracked regularly and validated during each milestone to ensure that the project progresses as per plan. To track time, cost and direct the team towards the goals, performance metrics act as a guiding light.

What gets measured, gets done.” — Peter Drucker

Regular checks help the managers assess the project’s health and ensure that the project is not getting derailed.

An efficient project manager needs to understand and analyze the various deciding checkpoints. He/She must stay informed on the project’s status, whether it is leading or lagging, thereby avoiding future bottlenecks.

In this article, let us understand ways to measure performance with various project management metrics to fuel the project’s success.

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What is Project Management Metrics?

Project metrics are key indicators that help to track a project’s performance. To be a successful project manager, one must monitor the team’s progress and lead the efforts to the project’s goals. Metrics also help to implement corrective measures in case the numbers don’t align with the expectations.

So,

Why is Project Management Metrics needed?

Project managers need a definite system to assess every project attribute and prepare an action plan accordingly. Many successful organizations have created well-defined guidelines to develop these metrics. The size and complexity of the project, technology/domain area, can influence this decision. Integrating these metrics into the system is necessary to assess and maintain the project’s lifecycle.

In a nutshell, a project management metric allows you :

  • To analyze the overall health of the project.
  • To determine the critical factors that need attention.
  • To evaluate the current status and make informed decisions.
  • To evolve, adapt and forecast better during uncertainties.

Metrics act as a warning system and, hence, are the backbone of any project.

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How to engineer project metrics?

It is essential to understand that each project is unique, and the way organizations evaluate their performance can vastly differ. Therefore, project managers need to engineer key project metrics to suit their organizational needs and align with the strategic goals.

The first step towards engineering project metrics involves setting suitable targets to reach the optimum performance level. The idea here is to formulate your targets, keeping the end objective in mind.

Let’s begin with the first step of setting the right goals.

Many project managers follow the “SMART” framework, one of the best practices to ensure that the goals are attainable. SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-bound. When this is implemented appropriately, one can measure real-time performance.

Here is a brief description of each one of these:

    • Specific– The goal must be specific to your project. It should answer

I. what needs to be accomplished
II. by who,
III. when, and the process (How) to be implemented to carry out the tasks.

    • Measurable– The progress of the project should be quantifiable. So, set parameters to calculate your project development right from its start.

 

    • Achievable– Setting unrealistic goals is as good as having no targets at all. To make them possible, break down the bigger goals into smaller tasks and set realistic deadlines.

 

    • Relevant– The project’s goal must be in-line with your organization’s overall mission. So, the project goal must be consistent with other business goals that align with your current and long-term plans.

 

    • Time-bound– Timeline is one of the most crucial indicators of a project’s success. Creating a timeline in terms of deadlines or the last date to achieve the set task is, therefore, of utmost importance

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Let’s take a step further and create SMARTER goals to enhance organizational efficiency.

    • Setting SMARTER goals to achieve project success:

To stay resilient and adaptive in the current volatile market, one may have to go beyond the usual SMART goals. SMARTER goals include the aspects of Evolving and Reviewing the overall process to ensure continual assessment and improvement.

It addresses two major questions:

I. Do you EVOLVE based on your project needs?
II. Are you REVIEWING the shortfalls in due time and fixing them?

Subdividing the goals and categorizing them will help you set specific and measurable metrics. It will further enable you to control the project attributes more efficiently.

Based on the SMARTER goals, the KPIs are further divided into five major categories. Here is a detailed description of each one of them:

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5 Fundamental factors that decide your project success:

1. Stick to Timelines

When it comes to projects, time and cost are directly proportional. Improper utilization of time will increase the project costs and eventually lead to billing loss. Thus, time-based metric is vital to deliver the projects on or before the deadline and within budget.

Use the following KPIs to stay on course with the project:

    • Cycle time: Cycle time is the actual time needed to complete one task in the project. It is best suited to track recurring functions within a project. Measuring the cycle time enhances the accuracy of your future predictions and helps you draw out a precise project plan.

 

    • Billable Resource utilization is the way to measure the time spent by resources on particular tasks against their availability or capacity. The utilization level reflects overall on the productivity of the workforce. You can track resource utilization to check if they are sticking to the timeline allocated for every project task.

 

    • On-time completion: This flags the fulfillment of deadlines, acts as a performance indicator for both clients and the project manager. Respecting and adhering to completion dates is very seriously observed in project management.

 

  • Forecast vs. actual time: It is the difference in the time planned for activity compared to the actual time spent. If the resources exceed the forecasted time, managers can implement corrective measures to keep the project going.

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The next critical metric is the project cost. Let us see various KPIs associated with it:

2. Stay within Budget

A project budget lays out a financial plan based on the resource requirements and other factors. It is the total projected cost required to complete a project. To maximize revenue, the costs need to remain within the stipulated budget. Monitoring the budgeting techniques and setting alerts on budget creeps in the project management dashboard can help prevent budget overruns. Dashboards enable you to manage your team better.

Project management metrics based on Budget include:

    • Budget Variance: It is the difference between forecast and actual budget. A Forecast vs. actual report can be handy for tracking budget variance. Managers can track this from time to time and keep a check on budget overruns.

 

    • Line Items: It is a group of individual financial items divided into sub-categories to track and sort the project expenses. Line items in budget work as a tool for future comparisons and budgeting. If one thing exceeds the projected cost, managers can implement remedial measures to avoid the domino effect on the overall revenue.

 

    • CPI: Cost performance Index Similar to forecast vs. actual cost, CPI analyzes the work’s budgeted cost with the actual amount spent. It helps you calculate the efficiency of resources and overall project planning and budgeting.

 

Pivoting your project budget plan is best done after assessing the financial details of your project.

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3. Maintain the quality of delivery

A project manager’s key responsibility area is to maintain the quality of delivery. Also, it is crucial to understand and meet the client’s expectations from the very start. As a project manager, you need to assess and spearhead the team’s performance towards the desired project goals.

Some of the KPIs in this area are:

    • Customer retention/loyalty

Customer retention speaks and reflects on the quality of work and client satisfaction. Study has shown that poor customer service costs businesses a great deal of money. Faster and better service that creates a memorable customer experience can substantially improve your client satisfaction.

    • Net Promoter Score or NPS

It measures customer experience and predicts business growth. Similar to customer retention/loyalty, NPS checks on user satisfaction. A short questionnaire can be used here to measure customer experience and brand loyalty.

    • Calculation of errors

Most projects have very thin margins for errors. Project Errors or blunders that form bottlenecks lead to rework and have an irreversible impact on the project performance. An error log can form a basis for future analysis and provides enough leeway for future improvement.

Earned Value :

Earned value provides strategic guidance and suggests the value earned from the money spent until the date on a project. Earned Value gives an accurate measurement of the work accomplished in terms of profit earned by the client. You can calculate earned value by

EV = Work Completed/budget approved *100

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4. Deliver Effectively

To deliver effectively, a project manager has to break down processes into actionable parts that can be easily implemented over time. A systematic increment in the project progress makes way for qualitative delivery. Various components contributing to the effectiveness are:

    • Clearly define project requirements: All essential aspects of the project like objectives, scope, requirements etc must be clearly stated, documented and communicated with the stakeholder involved.

 

    • Communicate effectively and regularly: Establish clear and transparent communication with involved stakeholders. It helps rule out assumptions and provides clarity into customer’s expectations.

 

    • Defining task dependencies: Setting task dependencies clearly is an essential factor that determines project delivery effectiveness. It ensures that the tasks are completed in the right sequence for timely delivery.

 

    • Match suitable resources to projects: By matching the right skill set to the right task at the right time is the best-case scenario for any project manager. Optimized project delivery can be achieved with competent resource allocation.

 

    • Number of Project Milestones completion: Effective completion of project milestones approved by the client is a key performance indicator. Rework or revisions slows the rate of project completion.

 

  • Equip a contingency plan: Inevitable changes in project scope, costs, client requirements, resource availability can put projects at great risk. Project managers must identify and evaluate risks in advance and create a contingency plan for mitigation.

Getting project lifecycle right

5. Analyze Project Closure

The key aspect of any successful project manager is to analyze the lessons learned from a completed project. A project closure analysis provides insightful improvements for all future projects and hence must not be missed.

    • Who does it? Project Closure typically is a set of meetings by the project manager and the heads of each activity.

 

    • What to do? Each head collates all the data from the beginning of the project up until the end. They cover all bases of the project before moving forward to the next one.

 

  • Why do it? Basically, to close loose ends and look back for missed items. Planning and Project initiation reports are compared with the project completion report. Thereby providing critical takeaways and improvement scope on the forthcoming project.

End of project learning and feedback gives a retrospective view of the vulnerabilities endured and lessons learned. With a properly executed project analysis, one can set a checklist to catalog missed items and use it well for the future.

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Key Take-Aways

A project manager’s performance depends on his/her ability to quickly resolve project or resource bottlenecks. Project management metrics can be overwhelming, considering the various constraints in any project. By breaking down the metrics into these five main parts, it can be easier to convert gathered data to gauge project health.

They are instrumental in understanding, controlling, and evaluating the project outcomes. With software-driven metrics guiding you, your organization’s most vital assets aren’t sidelined to the net profit margins.

What metrics do you evaluate while managing projects?

The Glossary:

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The Saviom Solution

SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software that is customizable as per business requirements.

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