Project KPIs: How to track progress and measure success of your project
The objective of this article is to provide a short overview of KPIs that can be used to monitor a project’s progress. Of course, the list is not exhaustive and every project manager has to decide which KPIs are best suited for their project.
What makes a project successful?
A project has a specified goal with a defined time period and defined resources. Successful then means optimizing budgets and resources whilst delivering a result that meets the stakeholders’ expectations.
Why do you need project metrics?
A project team usually consists of members across different departments and can even include external partners. The project manager is not involved in all operational tasks and needs to always be on top of things and oversee the diverse team. To assess the project and if necessary intervene early to bring the project back on track, they need metrics that act almost like a warning system. These metrics are defined in the initiation phase of a project and from thereon regularly tracked to make sure the project is on track. A project management software like OpenProject pools all information and allows the project manager and team to always be up to date on the project’s status and make informed decisions about next steps.
KPIs to measure your project’s progress and hence success
KPIs are the most important metrics that help define your strategy and measure your critical goals. Focus on these while trying to track your project’s progress.
Timelines to measure project progress
Time is directly linked to costs. Any additional time spent on the project increases not only labor costs but also e.g. opportunity costs when doing test runs on a production line or any material costs for something that needs to be redone or refined. There are different KPIs that can be used to measure if the project is on time:
Milestones
Milestones or on-time completion tells you if deadlines have been met. Thereby, you can also measure how often deadlines had to be adjusted because they were missed in the first place which gives you again an indication for the future planning.
Forecast accuracy
This refers to actual time spent versus time planned. If the forecasted time was exceeded, the project manager needs to find out the reasons and implement corrective measures.
Cycle time
Cycle time refers to how long it takes to complete task. You use it ideally for recurring tasks to optimize your future planning.
Sprint completion
Especially in software development you should measure how often sprint items got completed as planned. As a result, you can improve your planning.
Billable resource utilization
You can measure your team’s productivity by measuring the time spent by team member on a task against their capacity. The manager can then allocate tasks better to team members whose capacity is not used enough or shift work from team members that have too many tasks.
Budget and costs to measure the use of resources
A project’s budget is the plan of required resources. In order to maximize revenue, the project manager wants to stay within the planned budget. The budget contains labor and material costs.
Cost performance index (CPI)
The CPI measures the actual work completed versus actual cost incurred at a certain point in time. It helps the project manager to evaluate if the project is on budget. With a CPI >1.0, the project is better than planned, is the CPI <1.0 the project is behind plan.
Budget variance
The budget variance is the difference between forecast and actual. Running the budget variance from time to time, the project manager can check on budget overruns.
Line items
Certain budget items are grouped together to line items and then tracked as line item expenses. If the project manager sees that a line item exceeds its budget, they can limit the spent on another line item to make sure the project overall does not exceed the budget.
Budget adjustments
By checking on how often budget amounts overall, on single items or groups have changed, the project manager gets an indication of the budget accuracy.
Earned value (EV)
Earned value tells you if you are behind schedule or over budget on your project. You measure work completed against the plan by multiplying the percentage complete by the total project budget. As EV is quite a complex topic, we recommend you read in more detail about EV in project management.
Team structure to measure performance
The team is one of the most valuable resources of a project. Roles and team members are planned at the start of a project but if you want to find out if they perform well and also as planned, you should put some measures in place. Then accordingly you can adjust your plan if needed.
Capacity
Check availability of team members. Not only their hours overall but also at specific peak times when they need to be available.
Time spent per person on a project
These are the actual hours versus budgeted hours. Is a team member more efficient than planned or were extra hours necessary.
Communication
In order to deliver the project effectively and use the resources in the best way, the team needs to work closely together. Only if the communication in the team is streamlined, will the team work effectively together. You can measure unanswered messages or emails, pending work packages, agenda points not touched to find out about the quality of communication in the team and what is hindering them on performing better.
Quality of the delivered result
Not only the efficient utilization of resources makes a project successful. Also the customers’ and stakeholders’ needs must be met. Hence, you should continuously track the quality of delivery and the customer satisfaction level.
Net promoter score
This KPI is relatively easy to capture with a quick survey. It measures the customer experience by asking how likely a customer would recommend a product, company etc., usually on a scale from 1-10.
Customer retention rate
Measure how many customers you retain over time. It shows the quality of your work and client satisfaction. A customer with a great experience is likely to buy from or work again with you.
Project return on investment (ROI)
In order to calculate your project’s ROI, you subtract the actual or estimated costs from the actual or estimated income to get to the total profit. Divide the total profit by the costs to get to the ROI. The ROI tells you about the profitability of a project and helps you make decisions regarding adjustments of the costs.
Project closure
After having hopefully successfully delivered a project, the project manager should do a recap of why the project went well, critical takeaways and lessons learned. This learning for future projects is incredibly valuable and also allows to create a checklist for upcoming projects to make them a success as well.
In order to easily pull the KPIs and monitor them on an ongoing basis, we strongly recommend using a project management software like OpenProject that provides access to all project information. Having all team members use one space to collaborate and exchange information increases accuracy and prevents misinformation or missing information.
