If you are into project management, you know the importance of tracking your progress. Project management metrics show you how well you are doing and can help find room for improvements.
Cost, time, scope, quality, risk, and other data can be metrics, so you must select which ones best suit your objective.
Project Management Metrics
Project management metrics have a critical role in monitoring and controlling project progress. You will identify them as per your organization’s guidelines in the initiation phase. Metrics are tracked and validated during each milestone to confirm that everything is going as planned.
You can use project management metrics to track parameters like resource utilization, cost performance, and schedule projections.
These show you whether you are meeting your planned progress or not. If a certain milestone isn’t met, you should take corrective action. Project metrics allow you to identify issues and opportunities to improve the process.
Project management metrics enhance the quality of your deliverables, provided that they are relevant and meaningful to the project.
No one size fits all, so you must tailor the metrics to suit your requirements.
How to Choose Project Management Metrics
First, determine the objective you want to achieve. Then choose metrics by:
- Asking questions about what you want from these metrics.
- Identifying Key Performance Indicators (KPIs).
- Examining the data being collected and used to make decisions
Once you understand your requirements, finding your metrics will be easy.
The project management metrics should be:
- Consistent over time
- Relevant to the project
- Meaningful to your team
Key Project Metrics in Project Management
Earned Value Management
EVM helps measure project performance numerically. This allows for the identification and analysis of variances and performance. Earned value management provides accurate information in terms of schedule and cost so you can assess performance properly.
EVM can be used to:
- Track progress against the plan
- Identify potential project problems
- Assess the health of the project
- Help in forecasting
This metric measures how much the project schedule has changed from the original plan. It is calculated by subtracting actual duration from planned duration.
Schedule Variance = Planned Duration – Actual Duration
This measures how much the project budget has changed from the original plan. It is calculated by subtracting actual cost from planned cost.
Cost Variance = Planned Cost – Actual Cost
The higher the cost variance, the more the project is over budget.
Cost Performance Index (CPI)
This metric measures how well a project meets or stays within its budget. It can be calculated by dividing the earned value by the actual cost.
Cost Performance Index = Earned Value / Actual Cost
The higher the CPI, the more money spent on a project.
This measures project efficiency. It shows how well a company uses its resources to generate the desired outcome.
Productivity = Units of Input / Units of Output
This is how well a product or service meets requirements and expectations. Quality can be measured at different points in time, such as during design, production, delivery, or use.
Some common quality metrics include Defects per Unit (DPU) and Failure Rate.
Scope of Work
This metric refers to the size and/or complexity of a project. It can be measured in terms of time, money, or resources. To calculate the scope of work:
Scope of Work = Total Estimated Cost / Average Hourly Rate
Customer satisfaction is how well the customer perceives that their needs have been met. This metric can be collected through surveys, interviews, or focus groups.
Customer Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
Gross Profit Margin
Margin refers to the difference between what a company charges for its products and services and the direct costs associated with producing and delivering them.
Gross Profit Margin = Gross Revenue – Cost of Materials and Labor
The higher the gross profit margin, the more money a company makes on a project.
Return On Investment (ROI)
This measures the benefit or value of an investment. It is calculated by dividing the benefit of the investment by invested cost.
Return on Investment = (Benefit – Cost) / Cost
The higher the ROI, the better the investment is.
It can also be expressed as a percentage and looks like this:
ROI % = [(Gain from Investment – Costs)/Costs] x 100%
Employee Satisfaction Score
This metric is used to measure the happiness of employees. It can be collected through surveys, interviews, or focus groups.
Employee Satisfaction Score = (Total Survey Point Score / Total Questions) x 100%
There is a direct correlation between the satisfaction and morale of employees and business success.
Benefits of Using Metrics in Project Management
- Evaluation of Project Performance: By tracking and measuring metrics, you can evaluate how well your project is progressing.
- Improvement of Process Efficiency: By identifying and monitoring bottlenecks in the project workflow, you can improve process efficiency.
- Find the Trend: Monitoring key metrics helps you identify how the project is trending.
- Prediction of Future Outcomes: By following current progress, you can predict the future outcome using the earned value management calculation.
- Job Satisfaction: Using data to guide business decisions gives employees a greater opportunity for success and personal achievement, leading to an overall feeling of accomplishment.
- Identification of Process Improvement Opportunities: By monitoring and analyzing metrics, you can identify areas where the process can be improved. This helps to streamline the workflow.
- Higher Chance of Meeting Deadlines: By understanding how much time is needed to complete a task, you can better meet deadlines.
- Accurate Estimation Resource and Duration: You can develop a more accurate estimate time and resources required by tracking metrics.
Implementing Project Metrics
Once the project metrics have been identified, the next step is to use them. How you implement depends on the metrics and tools available for your organization. This can be manual entry or automated tracking.
Sales metrics will require manual entry into an Excel spreadsheet or other tool by the sales team. The metric will later help you find total closed deals.
Website hits can be tracked automatically using web analytics software. You can see how many visitors went to your site during a given time.
Automated tracking is possible for project duration by using project management software that includes time tracking features.
There are many ways to implement project metrics, and the method chosen will depend on the type of metric being tracked. You must ensure that it is tracked accurately and consistently recorded.
Some common ways to implement metrics include:
- Recording data in a spreadsheet or database
- Displaying data on a dashboard or other visualization tool
- Sending alerts and notifications when thresholds are crossed
- Running reports periodically or on-demand
The method used for implementing project metrics will vary depending on the organization’s needs and preferences. Find a system that works well for the team and provides accurate data.
You can track several metrics and perform analysis when it comes to project management. You saw a few in this post, but the list is endless. To have an optimal plan going forward, identify your main goals and decide which metrics will best help you achieve them.
What project management metrics do you use most often in your projects? Please share it through the comments section.