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According to a project management survey, 55% of organizations do not have access to real-time project KPIs. Understanding Key Performance Indicators (or ‘KPIs’) is key to ensuring the success of a project.
But in project management, simply tracking random, irrelevant KPIs just won’t do. Choosing the right KPIs to track for your project is vital.
So, let’s start at the very beginning – what KPIs are and how you can choose the right ones.
What are Project Management KPIs? Why do they Matter?
There’s more to project success than sticking to budgets or schedules.
Enter KPIs, measurable metrics that show you if your project is headed towards success (or off the rails). They go beyond potential indicators, giving you a reliable, data-led picture, helping you track time, budget, quality, and resources. They’re a great way to measure digital transformation, too.
Your KPIs are your project’s report card. They tell you where you are, whether you’re on track, highlight potential risks, and provide guidelines, so you can course-correct in time.
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Key Categories of Project Management KPIs
Project KPIs typically fall into two categories:
- Leading KPIs → Predictive indicators. They’re the ones that see things coming, spotting issues before they happen. Leading indicators can predict potential issues in resource allocation, project timelines, project health, etc., giving you a chance to improve your processes in advance.
- Lagging KPIs → Outcome indicators. They’re great at painting an accurate picture of what happened. Issues such as variances in the budget or timelines can be analyzed and corrective measures can be taken by leveraging lagging indicators.
Both are important. Leading KPIs keep you proactive, while lagging KPIs keep you accountable. Finding the balance between leading and lagging performance metrics can help you shape your project for success.
Choosing the Right KPIs for Your Projects
The truth is, not every KPI is essential. Some are ‘great add-ons,’ while others are ‘must-haves’. It’s important to be able to distinguish between the two, and ensure the right KPIs are being tracked.
So, how do we choose the right KPIs for a project?
- Align KPIs with project goals – Be specific. Make sure you clearly define what your project should achieve. Your KPIs need to be aligned with SMART goals to ensure
- Keep it simple – It’s not about quantity, it’s about quality. Choosing a limited number of solid KPIs over irrelevant data is key.
- Find the balance – Balance leading and lagging. Look back (lagging) and track predictors (leading) that help you stay ahead of the game.
- Review and revise – Regularly review your KPIs to ensure they’re relevant and up-to-date. With changes in the business climate, you’d need to adjust your KPIs to ensure you’re staying ahead.
Simply put, ask yourself this – “Will this KPI help me make a decision or take action on my project?”
If the answer is no, it’s probably not worth the effort.
10 KPIs Project Managers Should be Tracking
To ensure your project is a success, you need to choose the right KPIs for your project. Here are 10 KPIs that every project manager should track.
Planned Value
Planned Value serves as a baseline (or a foundational metric) to compare actual project progress with the initial plan.
By comparing Planned Value to Earned Value (EV) project managers can determine if the project is ahead of, behind, or on schedule. PV is also a key component in measuring the project performance quantitatively.
Earned Value
Earned Value (or EV) is the actual value of the work you’ve done, measured against your budget.
Think of it as a progress report, outlining how much you’ve achieved at this point in time. EV helps project managers ensure projects stay on budget and on schedule, allowing them to adjust other parameters accordingly.
Cost Performance Index
This tells you if you’re getting good value for your investment. The Cost Performance Index (CPI) measures the cost efficiency against the financial effectiveness.
If the CPI is greater than 1, you’re under budget. But if it’s lesser than 1, you’re over budget.
Using CPI as a predictive tool and analyzing trends from early stages of the project empowers you to make proactive adjustments to optimize your project’s financial trajectory.
Budget Variance
Budget Variance (BV) is the difference between the budgeted expenses and the actual expenses incurred to get work done.
Also known as cost variance, it gives you a good idea of whether your project is within the budget or not. It helps managers understand where they need to allocate remaining resources to ensure optimal performance by tracking expense items within projects.
The best way to keep things under budget is to track your BV in regular intervals. That way you can detect budget issues and make adjustments before things get too out of hand.
Schedule Variance
Schedule Variance (or SV) compares planned project timelines with the actual time taken to complete the project.
This essential metric indicates whether your on time, ahead of time, or lagging behind, helping you understand exactly how long it will take to accomplish the tasks.
Schedule Performance Index
Simply put, Schedule Performance Index (SPI) is the ratio of Earned Value (EV) to Planned Value (PV).
It tells you how well you’re using the time allocated for the project, helping you keep the project timeline in check.
If your SPI is greater than 1, it means you’re ahead of the game. But if it’s less than 1, it means you’re falling behind.
Resource Utilization Rate
As the name suggests, resource utilization rate measures the percentage of time that the members of your team spend on tasks.
This KPI gives you a good idea of how effectively you use your employees. By tracking team efficiency and revenue generation, it helps you make the best use of your employees.
Planned Hours Vs Time Spent
Often, the actual execution time of a task differs from its scheduled duration. Understanding the difference can help project managers get an idea of the overall progress and take steps to maximize it.
PMs can track an employee’s progress against set tasks, helping them align activities more intuitively, schedule the right amount of time for a task, and combat unproductivity.
Gross Profit Margin
This financial metric focuses on the company’s profitability, demonstrating how well your company uses resources in the production process.
Simply put, the higher the gross profit margin, the more profitable your company is.
But you need to make sure that you analyze the metric in context with industry standards. Only then can you reassess your processes effectively and impact the outcomes positively.
Customer Satisfaction Score
As the name suggests, the CSAT helps you see what your customers actually think about your product. It tells you if they’re satisfied with the project quality.
This is an essential KPI to track because at the end of the day, the goal is to deliver a product that your customers truly enjoy and want. That’s the only way to build lasting loyalty.
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Making KPI Tracking Easier
Still tracking your project management KPIs on spreadsheets? Tracking KPIs needn’t be so messy. By choosing the right approach, it can feel seamless and effortless.
- Instead of starting with 25+ KPIs, start small. Stick to the essentials, monitoring KPIs that directly contribute to your project goals.
- Don’t be afraid to automate. Manual spreadsheets tend to take up more time and effort, and are prone to manual errors. Using tools like edison365 that can do the job well for you would improve efficiency, eliminate errors, and keep things going.
- Creating custom KPI dashboards that give you a clear picture of your metrics can go a long way.
- KPIs are a great way to build accountability. So, keep things transparent, giving your team a good idea of where your project stands.
- KPIs shouldn’t be set in stone. You’ve got to revisit and revise from time to time, facilitating change management.
That’s why tools like edison365 make all the difference. With KPI dashboards, seamless workflows, templates, Gantt charts, and other game-changing features, it makes tracking your KPIs and enabling digital transformation as easy as possible.
Using KPIs to Make Data-driven Decisions
Project management KPIs play a crucial role in helping evaluate their current state and make strategic decisions for the future. By measuring and tracking the right KPIs, organizations can gain valuable insights into their strengths, progress, capabilities, and even areas for improvement.
But project management KPIs aren’t just a checklist, they’re real-time indicators of project performance. So, pick the right KPIs that align with your goals, track them consistently, and use them to make timely data-driven decisions.
Need a hand with handling projects, tracking KPIs and making data-driven decisions? Give edison365 a try (you can try it for free!) and unlock unmatched efficiency and endless possibilities!
Deliver powerful end-to-end projects with edison365
From project plan to project perfection. Do your best work, every step of the way with edison365
