No matter what kind of task, undertaking, or project you’re doing, you need indications of how things are going. After all, how do you know if you’re going in the right direction? Are you on schedule and staying on budget? Just like signposts show us where we’re going, we need indicators to show that we are on the right track to a successful project.
That’s why today we’re covering Key Performance Indicators, or KPIs for short. This article defines project management KPIs, the role of the KPIs in project management, the types of project KPIs, tips for project managers using KPIs, and how you can become a certified project manager.
We begin by defining project KPIs.
What Are Project KPIs?
Project management is defined as using specific knowledge, skills, techniques, and tools to lead a team in achieving goals or delivering something of value to customers within a particular timeframe. Key performance indicators are quantifiable metrics that help project managers monitor project performance, measure progress, and ensure that the project aligns with organizational goals and objectives.
There are many project key performance indicators, but they typically fall into one of four broad categories.
- Budget. Are the costs exceeding the project budget?
- Effectiveness. Are time and money being spent appropriately, or could the project be managed more effectively?
- Quality. Is the project progressing well? Are the project teams satisfied with how things are turning out? Is customer satisfaction high?
- Timeliness. Is the progress of the project meeting with the project schedule? If not, the project manager must track where it’s gone off-target and adjust the estimated completion date.
Our next section will move from these general categories to more specific project management KPI examples.
Examples of KPIs in Project Management
Depending on which source you consult, you can find anywhere from a dozen to over two dozen KPIs. Our article presents two dozen key performance indicators for your benefit. Luckily, few projects use all these KPIs, but the entire collection can help teams brainstorm ways to manage a particular project. Furthermore, these KPIs can be applied equally effectively to any project management methodology your team uses, provided the entire team and every involved party agree upon all KPIs. The KPIs should then be used as measuring and monitoring tools for decision-making until project completion.
Many of these KPIs cover project aspects such as resource capacity, project success, project goals, schedule variances, and planned values. As a result, project leaders and managers can see where things are going off-course and ideally initiate course-correction measures by comparing planned values versus actual values.
These two dozen KPIs in project management are broken down into the four categories mentioned above.
- Cost Performance Index. This index compares the budget cost of what the entire team has done so far with the amount of funds spent on the project, resulting in calculating the project’s expense efficiency.
- Budget Creation Cycle Time. This KPI shows the time needed to create an adequate budget. This value includes the total duration of the research, the final agreement, and the overall planning related to assembling the project’s budget.
- Budget Variance. This project KPI shows how much the actual budget’s initial value assigned to the project development process has changed. This activity requires studying the expected values and baseline expenses.
- Line Items in Budget. This KPI helps project managers keep track of their expenditures and show how the budget was spent on the project.
- Number Of Budget Iterations. This value shows the number of iterations the budget when through before getting finalized.
- Planned Value. This KPI shows the value of the project development process’s tasks left to be completed.
Effectiveness KPIs in Project Management
- Average Cost Per Hour. This value measures the effort needed to complete a project, including salaries, benefits, equipment, office space, etc. Tracking this average cost and comparing it to the project results helps project managers to determine if the employees’ time was used effectively.
- Billable Utilization. This value represents the percentage of project hours billable to the client. Billable hours should be limited to revenue-generating, project-related tasks.
- Number Of Canceled Projects. This KPI value tracks how many projects were paused or canceled. High numbers may indicate a lack of goal alignment, lack of planning, or the inability to take on new projects.
- Number Of Project Milestones Completed on Time With Sign Off. This value indicates how many project milestones were completed on time and if the buyer completed and signed off the milestones.
- Number Of Change Requests. This value tracks the frequency and number of changes requested by the client. Too many changes may negatively affect resources, budgets, timelines, and the deliverable’s overall quality.
- Resource Profitability. This value shows if every team member’s time is being used effectively. The project manager needs the Average Cost Per Hour and billing rates to get this value.
- Customer Complaints. This value is a misnomer, as the term “customer” refers to members of the team and any complaints they have with the workload and people’s contributions to the tasks.
- Customer Satisfaction/Loyalty. This project KPI refers to the client’s loyalty to the specific project, product, or company itself.
- Employee Churn Rate. This KPI shows the total percentage of employees that have left the organization. If the development team’s turnover rate is relatively high, there must be changes to improve the work environment and management.
- Number Of Errors. This value measures the number of errors or instances when project-related things must be redone. For example, this KPI includes the number of times you must re-write or remodel something; this consists of the project’s calendar or budget revision.
- Cycle Time. This value represents the time needed to complete a specific project task or process in the development process. It is useful when many different functions are repeated in the development process.
- FTE Days Vs. Calendar Days. This value compares the time spent on the project development process, broken down by calendar days or hours. Teams can optionally calculate the time based on full-time equivalent workdays.
- Number Of Adjustments to The Schedule. How many times has the team adjusted the completion date of the entire project?
- On-Time Completion Percentage. Was the project completed by the assigned deadline? This value can also be individual assignments or tasks completed by a given deadline. Overall, it shows how many tasks were done on time.
- Planned Hours Vs. Time Spent. How much time did you estimate a project would take, and how long did it really take? So, this value compares planned hours versus actual hours. If the time spent differs significantly from the expected amount of time, it’s a flag that someone underestimated the budget or resource allocations, which may affect your timeline.
- Time Spent. This value represents the time team members and project managers spend on the entire project’s development process. This value can also be broken down by individual team members.
- Resource Capacity. This project management KPI shows the number of team members working on a project multiplied by the percentage of time available to work on it. This value helps allocate resources, including any needs and set an accurate timeline for completing the project.
An Extra KPI
- Return On Investment (ROI). Here’s a bonus indicator that falls outside the above categories. Rather, ROI calculations encompass all the previous four KPI categories measuring the project’s financial worth compared to the cost. What is the project’s economic potential or value? Will this project result in a positive payback for the client or company? Are there other projects that would yield a higher ROI? This KPI is an asset used to decide whether to initiate a project or compare the value of two different projects. Finally, it can also be used to evaluate the impact of an entire portfolio of projects.
We now have a robust collection of KPIs in project management. Let’s look at some tips for effectively creating and using them.
Tips For Creating and Using Project KPIs Effectively
Here’s how to make good KPIs in project management and use them effectively.
- Make the KPIs clear and focused. KPIs must be SMART, which stands for specific, measurable, attainable, relevant, and time-bound.
- Ensure that your measures have a point. Many teams track things because “that’s how we’ve always done it.” However, this leads to a glut of questionable KPIs. Instead, track only a few critical measures most relevant to what you’re trying to accomplish. Drop it if you can’t find a good reason to justify a KPI. Remember, the more KPIs you have, the more time and effort it takes to respond to them. Additionally, needless KPIs will flood you with useless information you must wade through.
- Always include a target. Companies just beginning to use project management KPIs often feel they need more historical information to assign accurate targets. But if the team doesn’t have a target, it adds unwanted subjectivity to the measurement, and how will anyone know if the team is doing well? So, choose KPIs that let you make an educated guess using past performance information or industry research.
- Know when to discontinue a KPI. If you’re not using a KPI in your planning sessions or strategic brainstorming meetings, perhaps it’s not worth the effort. Don’t expend energy tracking something that doesn’t provide value.
Available Project KPI Tools
Today’s top three most popular tools for tracking KPIs in project management are Asana, Jira, and Trello. Other popular project management tools available include Monday or centralized project management dashboard solutions like Basecamp, Databox, Harvest, Teamwork, and Wrike.
You Can Become a Project Management Expert
If you want to improve your existing project management skills or are looking for a career change, you need to attend this vital project management certification bootcamp.
The University of Massachusetts’ Isenberg School of Business Management turns you into a qualified digital-age project leader with their Post Graduate Program in Project Management six-month bootcamp.
This certification course is aligned with PMI-PMP® and IASSC-Lean Six Sigma. It provides you with live online interactive classes and real-world capstone projects, helping you gain valuable project management skills such as:
- Agile Management
- Customer experience design
- Design Thinking
- Digital Transformation
- Leadership Skills
- Lean six sigma green belt LSSGB
- Project Management
- Project Risk Management
At the end of the bootcamp, you will earn a PMP certificate and 146 PDUs that help you keep up your CCR for PMI-related certifications. Additionally, you are awarded a membership in the UMass Amherst Alumni Association.
According to Glassdoor.com, project managers in the United States make a yearly average of $85,100, with a low range of $53K and a high end of $137K. If you gain ten years of project management experience, you can earn $105,438.
Sign up for this valuable bootcamp today and take your first important step into the exciting world of project management. Do it today!