Project management is riddled with complications. It is imperative to keep track of performance metrics throughout the entirety of a project's lifecycle. Keeping track of key performance indicators allows a more accurate understanding of project status, success, and profitability. Check out these 10 examples of key performance metrics that every project manager can't afford to miss.
1. Planned Value (PV):
The estimated cost for your project activities planning/scheduled as of reporting date. You can compare Planned Value with other KPIs to determine if you are running ahead or behind schedule on a project.
PV = (the hours left scheduled on the project) x (project worker’s hourly rate)
Also referred to as: Budgeted Cost of Work Scheduled (BCWS)
2. Actual Cost (AC):
Indicates how much money you have spent on a project as to date. Including costs from time and materials that have been charges or are scheduled.
AC = Add up all the project-related expenses you’ve used to date
Also referred to as: Actual Cost of Work Performed (ACWP)
3. Earned Value (EV):
This is the approved budget for all the performed project costs and activities completed by a specific date. This metric allows you to see all the work that has been done, and at what budget it was completed.
EV = cost of completed work
Also referred to as: >Budgeted Cost of Work Performance
4. Cost Variance (CV):
Compare your Planned Budget vs. Actual Budget at a given point in time. This allows you to identify if the project is running over or under the expected baseline that was originally forecasted.
CV = planned budget vs. actual budget
5. Scheduled Variance (SV):
The difference between the Earned Value and Planned Value. Measures how much ahead or behind of planned budget your project is running. Subtract the actual budget spent from the estimated budget set at the beginning of the project.
SV = (Earned Value) - (Planned Value)
6. Schedule Performance Index (SPI):
An insight into the delivery timeline for your project. If SPI is >1, the project is ahead of schedule. If SPI <1, the project is behind.
SPI = (Earned Value)/(Planned Value)
7. Cost Performance Index (CPI):
Approximation of how much time you are behind or ahead of the approved project schedule.
CPI = The ratio of the Planned Budget vs. Actual Money Spent
Also referred to as: the indicator of the project’s cost efficiency
8. Return on Investment (ROI):
A measure of the benefits vs. costs of a project. If the benefits exceed the cost, you have a positive ROI.
ROI = Use Actual Cost & Earned Value metrics
9. Gross Profit Margin (Margin):
The cost of generating revenue at your business. Margin will always be a percentage and is the percentage of each dollar earned after costs have been subtracted
Margin = (Total Profit) - (Total Costs) / 100
10. Resource Utilization:
The measure of how team members are spending their time while working on a project. It is the comparison of billable vs. non-billable activities.
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.
Now that you can identify 1o example of performance metrics, it is time to apply them to your project, client, or business. Enhancing operations requires a in-depth understanding of the metrics you need to keep track of to keep your business afloat.
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