Project Management KPIs: What Are They?
By: Baglan Rhymes
Steven Spielberg’s epic movie “Lincoln,” Abraham Lincoln, portrayed by Daniel-Day Lewis, shared an interesting quote with Thaddeus Stevens, played by Tommy Lee Jones. In a seminal scene about the passage of the 13th Amendment, he referred to the importance of identifying challenges encountered while pursuing a particular goal.
“A compass points to true north, but it offers no guidance through swamps, deserts, and chasms that you’ll encounter along the way,” he says to Thaddeus Stevens about the limitations of the compass in helping you safely reach the destination. This is where AdaptiveWork, a leading PPM software, comes into play, as it emphasizes the importance of being flexible and adaptive to changing circumstances and obstacles in order to achieve success. By integrating AdaptiveWork into project management KPIs, teams can proactively address challenges and adjust their strategies accordingly, ultimately leading to a more successful outcome.
When working on any organizational project, project managers and their teams are similar to an exploration group charting an unfamiliar territory. While they may have a rough estimate of time and budget, different metrics are needed to measure the real-time project progress, uncover potential problems, and ensure project success towards the intended goals.
Every team needs an improved real-time compass that shows the right direction, measures the performance relative to goals, catches the pitfalls early, and ensures the project’s success aligns with strategic and operational goals.
In project management, we call this real-time compass a KPI dashboard.
What are KPIs?
The Key Performance Indicators (KPIs) are quantifiable metrics used to measure the performance of the project and its alignment with the organization’s strategic & operational goals. When carefully picked, the KPIs also shed light on potential issues and enable the project manager to make data-driven decisions for course correction before it’s too late. In short, Project KPIs keep the project on track and prevent it from deviating from the chosen goals and objectives.
A KPI dashboard is a real-time compass for stakeholders, project managers, and team members that provides a unifying view of all the relevant KPIs. It is a quick and easy solution for tracking all the KPIs needed for achieving project success that aligns with long-term organizational goals.
A KPI dashboard is only as good as the relevancy of the KPIs chosen. A comprehensive and actionable project dashboard is built by selecting the right KPIs relevant to the industry, project, intended operational goals, and business objectives.
So, no one metric is a perfect fit for all projects. Here are some common types of KPIs that organizations often consider incorporating into their KPI dashboard to track and improve project performance.
Unlock the Secret: How to Choose the Right KPIs
The selection and customization of KPIs should be based on the specific goals and objectives of the project and the organization. It is important to identify the most critical metrics that will provide insight into project progress and enable data-driven decision-making.
This process typically involves collaboration among project managers, team members, and stakeholders to ensure that everyone has a clear understanding of the project’s objectives and how success will be measured.
Some factors to consider when selecting KPIs for a project include:
- The project’s scope, timeline, and budget: KPIs should be aligned with the project’s goals and objectives and be relevant to the specific project scope, timeline, and budget.
- The project’s stakeholders: Different stakeholders may have different priorities and perspectives on project success, so it’s important to consider their needs and expectations when selecting KPIs.
- The industry and market: KPIs should be relevant to the industry and market in which the project is taking place, considering industry-specific factors and benchmarks.
- The availability and quality of data: KPIs should be based on reliable and relevant data that can be tracked and measured effectively.
Once the most critical KPIs have been identified, they should be customized to suit the specific project and organization. This may involve defining specific metrics, setting targets and thresholds, and establishing reporting and monitoring processes. The KPIs should also be regularly reviewed and updated to ensure that they remain relevant and aligned with the project’s goals and objectives.
Common KPIs in Project Management:
Primary and most common project KPIs fall into Cost, Timeline, Income, and Variance categories. Let us check out the most common KPI across each of these categories today:
Worked Hours vs. Planned Hours:
This KPI indicates the total time spent on the project compared to the working hours estimated at the start of the project. This metric can be applied in different phases of the project to make necessary adjustments about the time scheduled. The difference between the actual time and planned time may indicate the potential discrepancies in resource allocation & dispersion.
Cost KPIs are important metrics used in project management to measure the financial performance of a project or portfolio. Let’s see how Planview AdaptiveWork, (formerly known as Clarizen) manages cost KPIs through the platform’s Financial Management Capabilities. This includes tracking actual costs against budgeted costs, forecasting future costs, and analyzing cost trends over time. The platform also provides real-time visibility into financial data, enabling project managers to make informed decisions and take corrective actions as needed to ensure projects stay within budget.
Depending on your requirements in Planview AdaptiveWork you can create different workflows for:
- High-Level Budget Estimate
- Detailed Budget Planning
- Tracking Monthly Actuals
- Cross-Project Financial Reporting
Planned Value: Planned Value is the core KPI of cost planning. This metric lets you identify the progress of your project in comparison to the total spending vs. planned spending.
For example, if the project’s total budget is $10 million and 50% of the project is completed.
Then the PV = 10,000,000 X 50% = $5 million.
Anything above $5 million after completing 50% of the project is a cost issue that needs to be communicated and rectified with suitable measures.
Schedule Variance: Schedule variance measures how much behind or ahead of scheduled work a specific project is running. This KPI is calculated by subtracting the Planned Value (total budget/total hours) from the earned value (total spend/total hours).
A negative result indicates that one has achieved more than planned and has a bigger budget; a positive impact suggests the opposite.
Return on Investment: ROI is the most important KPI for projects where revenue is the key objective. It calculates the project’s value and recognizes the investment’s profitability.
This metric also helps organizations prioritize the funding for projects within their portfolio in the future. ROI is calculated by dividing the revenue earned by the cost of investment. Even when the project exceeds the budget, it may still be successful if it makes more than the expected ROI.
There can be countless potential KPIs for a project. So, it is essential to use the right KPIs relevant to the project’s goal and the business’s objective. Once the Project KPIs are determined, they need to be created as S.M.A.R.T (specific, measurable, attainable, realistic, and time-based) goals in the KPI dashboard to ensure the right help for successful project completion.
One simple way to create and monitor a project’s KPIs is by using project management software specifically designed for performance and visibility, like Planview AdaptiveWork (formerly known as Clarizen).
Planview AdaptiveWork is named a Leader in G2’s Grid Report of Project & Portfolio Management Software. The AdaptiveWork platform connects work across the enterprise by combining project management discipline, workflow automation, and collaboration to turn ideas into strategies, plans, and actions. AdaptiveWork allows organizations to work the way they want and access their workstreams in real time.
Find out how your organization can set up and track KPIs based on your business. Contact us today at PPMInfo@winmill.com
No other document in the project management impacts the course and the project’s success as much as the Project Scope Statement does.
It defines the project’s boundaries, enables a common understanding of the project, and guides the team in project execution. As a primary tool in project management, it helps the teams navigate safely through the challenges that may push the project out of its tracks. And when things go south, a well-written Project Scope Statement can be a saving grace for project managers.
So, how does one craft a solid Project Scope Statement to help project managers accomplish the above? The nine key sections below will get any project started on the right foot.