Key performance indicators (KPIs) are integral to every project manager’s job. Although they vary based on factors like industry, goals, and resources used, the data provided by KPIs will help you see where you’re succeeding and where you need to make adjustments.
KPIs come in various forms to measure different goals. You can use certain KPIs to ensure your project progresses on time, while others focus on the overall quality of completed work. Some KPIs are budget-focused, helping you determine if your resources (time and money) are performing effectively.
When you track these measures during a project, you can catch hiccups and major issues before they happen. However, figuring out which KPIs to measure isn’t always easy. Too many, and you risk your team's information overload. Too few, and you miss out on essential information that should have been easily caught.
How can you provide just the right amount of information from the massive available data influx? The answer is to determine which KPIs are crucial to your goal. Here, we list the most common key performance indicators to help you measure your project’s success.
1. Measuring Effectiveness
Is what you’re doing working effectively? This concern is one of the most important questions you can ask as a project manager. Otherwise, that race to the finish line might be done with work that won’t be acceptable to the client or good for your company’s profit — or reputation.
You want to check for effectiveness across the board, so the KPIs you’ll use in this category will cover everything from budget to risk management. Keep in mind that this will change by industry, as the factors most important to a clothing boutique may not be the same for an engineering company. (See more specific information about managing projects as an engineer in this resource by Accelo.)
These KPIs are frequently used to monitor effectiveness:
- Project Milestone Completion: Are milestones being completed on time and signed off on by the client?
- Training and Research: How many hours or courses does it take to learn how to complete the project? Were those accounted for in the budget and timeline?
- Returns, Changes or Cancellations: What’s the return rate of the moving parts involved in the project? How many canceled projects were incomplete, or were change requests submitted by the client? Are these negative responses ongoing or occasional? How do they impact the project budget?
- Risk Management: How effectively are you or your team identifying, assessing, and avoiding risks? This is determined by the number of identified risks versus unmitigated risks.
Consider these KPIs as you measure the effectiveness of your project timeline and completion, and choose those you feel are most relevant.
2. Measuring Timeliness
As you plan for the scope of future projects, you can use KPIs from previous or current work to determine how long to estimate for each area. Timeliness KPIs also ensure you can see at a glance where someone may be running behind schedule so that you can check in with them.
Most timeliness KPIs are similar industry-wide. Still, you may have some that aren’t on this list that could help you manage your project more effectively. As you monitor the data, check for these vital time-related KPIs:
- Time on Task: Measuring a team member’s time spent on a particular task provides a rich bed of information.
- Cycle Time: Knowing how much time a certain task typically takes lets you allocate enough resources in your schedule and budget.
- On-Time Completion: Watching the percentage of your on-time projects versus late submissions provides valuable insight into your success.
- Schedule Adjustments: Is there a pattern of changes in the schedule? Have multiple changes been made that would throw your deadline off course?
- Planned vs. Actual Time: When you submitted your proposal, you allocated a set timeframe for the project. Monitoring the KPIs for this lets you know if you planned too long, need more time, or have just enough.
- Resource Capacity of Teams: Knowing the bandwidth of each person on your team helps you to prevent overloading them. If their project tasks seem to be getting close to a full plate, you may want to communicate with them and verify that they’re still on task and feeling confident about meeting deadlines.
When time is managed efficiently, your project is more likely to follow the predetermined schedule and stay within budget.
3. Measuring Budget
Yet, even with everything flowing smoothly and your efficiency and timely KPIs on target, your budget can fluctuate. Maybe the parts you needed for part of a project cost more than anticipated, or someone needed to work overtime to stay timely. Whatever the reason, you don’t want to be blindsided when your budget isn’t on target.
In addition to recognizing and avoiding the mistakes that set your budget up for failure, watch for KPIs that give you insight as to how well your money is performing, such as:
- Cost Performance Index (CPI): This KPI evaluates the budgeted cost of your work to what you’ve actually spent.
- Budget Variance: Taking the CPI into account, your budget variance is how much your total budget varies from the projected number.
- Line Items: This KPI provides a breakdown of individual expenses to quickly find places where the budget was off projection.
- Planned Value: The formula for a planned value KPI takes the budget minus what has been spent and compares the result to the planned cost of the incomplete parts of the project.
Each of these factors is crucial to evaluating your budget. You’ll have a bird' s-eye view of your spending and an up-close vision of every expense.
Conclusion
Following your KPIs may seem overwhelming at first, but once you know which targets to watch, it becomes an exciting part of the job. With the right analysis, you can make changes at the moment they’re necessary and change the trajectory of your project to a more successful path.
