Project managers need to closely monitor and evaluate how well their teams are achieving goals, hitting deadlines and delivering each project on time and on budget.
A good approach is like an early warning system that alerts you to potential problems well enough in advance to make course adjustments. Project metrics provide the framework for this early warning system to function properly. They need to be both measurable and visually compelling so that you can improve your team’s performance and avoid mistakes.
Think of project metrics like the dashboard of your car. When the oil is getting low, it’s time to add a quart. When RPMs surge, you may need to shift gears. It’s the same with project metrics: Taking action is only possible if you have the right information. That’s why we’ve identified these 16 project metrics you should be tracking.
1. Actuals (Actual Fees, Actual Costs)
Actuals are the cost from time and materials that have been charged or are scheduled that determine what it will cost your company to deliver a project. It is important to differentiate between fees and revenue, which are external costs, and the internal resource costs and expenses it will require to complete the project. Your Actuals directly impact your project margins, and therefore profitability of the work you deliver.
2. Estimate at Complete (EAC)
Your EAC offers an informed view of where a project is likely to end up if executed to plan. EAC combines cost and revenues to date with your projections of scheduled work. You can compare this metric with other metrics to determine the status on delivery and whether or not you have consumed too much budget, are running short on time, or even ahead of forecasts. Managing EAC is a critical process, because projects can often experience fluctuations to their original scopes of work. Calculating EAC keeps business managers informed of the financial impact of the changes.
3. Gross Profit Margin (Margin)
Your company needs to understand the cost of generating its revenue. Gross profit margin, or just margin, is the metric to use here. Your margin is the percentage of each dollar earned after costs have been subtracted. For instance, if you charge $100,000 for a project and it costs you $60,000 to deliver, your profit is $40,000. Your margin is 40 percent, meaning you earned 40 percent of every dollar ($40,000/$100,000). There are two ways to increase your margins: increase your price or decrease costs. Your margin is always a percent.
4. Stakeholder Engagement
It is important to measure the involvement of stakeholders in your project. Since the perception of value among stakeholders is not possible to quantify, a measure of participation in terms of direct time and frequency offers a milepost. A lack of sufficient engagement could mean your project is at risk — stakeholder involvement is key to managing expectations.
5. Return on Investment (ROI)
Project ROI can be determined based on measurable components such as Actual Cost, Planned Value and Cost Variance. While the formula used for arriving at an ROI figure varies, it is certain that a positive ROI is the objective of any project.
6. Cost Variance (CV)
To determine the Cost Variance for a project, contrast your planned budget with your actual budget figures at a specified time. This will allow you to identify if the project is running over or under the expected baseline that was forecast in your original plan.
7. Schedule Variance (SV)
Subtract the Planned Value for your project from the Earned Value to determine the Schedule Variance. If the answer is below zero this indicates that you have accomplished more than expected, while a positive number indicates you have fallen behind in your deliverables.
8. Schedule Performance Index (SPI)
This metric is equal to the Earned Value divided by the Planned Value. This simple calculation provides an index into the delivery timeline for your project. For example, if the Schedule Performance Index is greater than one, your project is running ahead of schedule while if it is less than one, your project is moving too slowly.
9. Percentage of Tasks Completed
The fraction of tasks completed for your project provides one of the quickest and easiest ways to evaluate performance. The most accurate way to measure this percentage is to base it upon the time planned for each item rather than counting the number of individual tasks, since each task will naturally have variable time associated with it.
10. Resource Utilization
This metric reveals your employees’ efficiency and productivity. It’s based on what percent of their time they spend on productive activities. You usually manage two types of utilization: total and billable.
Total Utilization: This metric measures the percent of time your employees spend on any productive work, including business development and proposal-writing.
Billable Utilization: This metric is the percentage of time you can bill to clients. Billable hours reflect your employees’ time spent specifically on revenue-generating activities (i.e., project tasks). Billable utilization is a critical concept for firms that make money by billing out resources (people) to customers. Your target utilization rate will vary based on your businesses and roles within those businesses.
11. Percentage of Cancelled Projects
Organizations that bill on a time-fee schedule often use this metric to evaluate their capacity for additional work, and to forecast profitability. It is also useful in evaluating the qualifications of the team or individuals assigned to work, as a higher percentage of cancelled projects may indicate misaligned business objectives.
12. Percentage of Projects Completed On Time
This key metric indicates the number of projects that have been delivered according to schedule and budget parameters. By selecting a baseline – for instance, 80% is common – you can determine if you need to hire additional staff or take on less work.
13. Missed Deadlines
Missed deadlines are a clear sign that you’ve overestimated your ability to achieve key project indicators or deliverables. Calculate the number of missed deadlines to date in your project and compare this to the overall number of deadlines. Should you discover that your deadlines are missed more than 10% of the time, it is time to look again at your plan and resources.
14. Customer Satisfaction Index (CSI)
An index of customer satisfaction tells you if customer expectations have been met. This often includes (but is not limited to) the number of repeat and lost clients, revenue generated from clients, the results of customer surveys, and an ongoing tally of complaints. Most companies will weight each category according to its importance. For instance, repeat and lost clients could represent 40% of your calculation, while revenue may be pegged at 15% of the equation. While this is a “soft” metric, it is key to understanding performance.
15. Change Requests (CRs)
The number and frequency of Change Requests coming from a client for an already agreed upon scope of work can have a negative impact on costs and schedules. Each time a change is requested, it requires an update to various other parameters which sets off a domino effect on work, staffing, deadlines, budget and quality. When Change Requests get out of hand, it is time to renegotiate.
16. Work In Progress (WIP)
Work in progress is work (typically time and materials) that has been charged to projects but haven’t yet been billed to clients. High performing businesses manage WIP closely to make sure hours delivered are also invoiced. (Please note: fixed-fee work is managed in a different way.)
Using project metrics allows managers to exert more influence over project outcomes. From start to finish, change can be affected to make critical decisions easier, performance more measurable, and improvement possible. Use this list as a starting point. Undoubtedly, as you adopt and then master project management metrics, you will branch out with additional command and control measures that will strengthen the impact of your team’s work and bring more and more projects to a successful closure.
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