How does one measure success in business? There are dozens of ways, but when it comes right down to it, profit reigns supreme. Along the way, however, companies set and meet a plethora of goals and the small successes lead to larger ones. When it comes to project management, it’s important to quantify relative success upon completion in order to maintain quality and improve whenever possible.
This is measured through project management KPIs, or key performance indicators. As the name implies, KPIs are used to chart the relative success, or performance, related to specific goals for a given project. This data is invaluable, not only throughout the course of the project, but also after the fact. That’s because it gives project managers and executives a snapshot of progress for analysis, as well as a means of spotting and correcting errors and waste. Although there are dozens of possible project KPIs to track, here are the ones most likely to benefit every business, team and project.
This is one of the most important project KPIs, but also one of the most difficult to quantify. In order to quantify client satisfaction, you’ll have to get input from clients themselves and hope that it is as accurate and complete as possible.
Planned Value, Actual Cost and Earned Value
Planned value is basically the planned budget for the work to be accomplished. It is calculated at the beginning of the project and can be recalculated during it based on remaining time and budget. Actual cost goes hand-in-hand with planned value, but reflects actual money paid as the project progresses, including total expenses to date at any given time. Earned value is calculated at the end of the project (or perhaps at specific milestones) and it compares performance and value gained as related to the assigned budget. These key performance indicators form the basis of earned value management.
Return on Investment
As noted above, profit is important in business and in order to justify the expenses associated with projects, it’s necessary to measure their relative profitability, or return on investment (ROI). This is essentially how much was spent versus how much was earned in relation to a given project. Measuring project KPIs to determine ROI could include several factors under the main categories of costs (salaries, travel, etc.) and net benefits (profit, cost savings, etc.), making ROI complex and often difficult to calculate (much less forecast) accurately. However, this is a useful and necessary KPI for every project.
Project managers often underestimate the importance of resource capacity, to their great detriment. It could be argued that key performance indicators like cost performance index (CPI) or schedule performance index (SPI) are more important since they help projects to stay on schedule and within set budgets. However, a failure to accurately calculate employee availability can damage both budgeting and scheduling, so it’s crucial to start with a clear idea of resource capacity and measure it carefully throughout a project to keep everything on track. Like most project management KPIs, this is best accomplished with the help of comprehensive project management software.