Even a project that’s written in the stars can be hindered by problems during its life cycle. Having a clear objective and a committed team helps for sure, but tracking the performance is what truly ensures a project’s success. A project manager can track several project management metrics, but it’s crucial to choose the right ones as project management KPIs.
Key Performance Indicators (KPIs) are metrics that indicate a project’s progress, and highlight areas of concern and potential bottlenecks. This article will walk you through the different types of KPIs, and how to categorize and choose the best KPIs to help you make data-driven decisions.
Categorizing the Project Management KPIs
It’s essential to have an integrated approach while choosing project management metrics as KPIs to track various aspects of the project’s progress.
The four main project management KPIs are:
- Schedule Management KPIs
- Cost Management KPIs
- Project Quality KPIs
- Project Effectiveness KPI
The knowledge gained by tracking KPIs in the categories mentioned above helps you understand what works and what doesn’t in a process lifecycle. With the best project management certification, you can make the right decision to ensure a project’s success.
Let’s take a detailed look at the various categories of project management KPIs.
1. Schedule Management KPIs
As a project manager, schedule management is one of the most important project management KPIs as it ensures your projects’ timely completion.
As per the new PMP exam patterns, the process domain has questions about schedule management-related activities. A project manager is responsible for the proper planning, from estimating the project tasks to preparing a schedule and measuring progress. A project management institute certification will give you further insights to add value to your role.
Project management KPIs for data-driven decisions based on schedule management:
- Cycle Time: It is the time taken for a particular task and helps plan when specific tasks are periodically repeated in the project.
- Time Planned vs. Spent: The actual time taken to complete a project can be different from what’s planned. Monitoring this KPI helps you take corrective actions to bring the project back on track and plan more efficiently.
- Schedule Variance: It’s essential to track how far ahead or behind your project’s planned schedule is running.
- Schedule Deviation: The number of times changes have been made to the initial schedule indicates the team’s efficiency and overall project planning efficiency.
- Resource Capacity: Resource capacity is the availability of adequate resources based on the total working hours needed for a project.
- Resource Conflict: A project operating with inadequate resources or too many shared resources involved in other projects can’t comply with the expected schedule constraints. Identifying such resource conflicts in the organization and putting together a strong team is crucial for a project’s success.
2. Cost Management KPIs
The project manager’s responsibility is to estimate the budgetary needs of a project and plan and manage resources accordingly. Monitoring the budget variations and taking corrective actions to avoid future budget challenges is crucial for a project. The best project management certifications help you in identifying the most effective cost KPIs o track.
Project management KPIs for budget management insights:
- Planned Value: This is an indicator of the project’s overall budget estimate as finalized when kick-starting the project.
- Actual Cost: It’s essential to ensure the project’s actual cost requirement does not deviate from its original planned value.
- Earned Value: It’s the actual cost that the management has sanctioned for the concerned project-related activities to date.
- Line Items in Budget: Keeping track of the budget spent on individual project activities helps a detailed understanding of how the overall project budget is spent.
- Cost of Managing Process Lifecycle: It’s the indicator of the cost spent managing the time and resources involved in the project. Inefficient planning and allocation of resources can result in higher costs spent on managing the project alone.
- Cost Variance: It’s the deviation between the planned budget and the actual cost of project execution. A project management institute certification equips you to take the right corrective action in the case of a deviation.
- Cost Performance Index(CPI): The ratio of the planned budget value and actual cost spent on a project. CPI is an indicator of a project’s cost efficiency.
3. Project Quality KPIs
A project manager ensures project quality from determining how quality is defined for a particular project to continuous monitoring of the quality parameters. A project management certification online equips you to recommend solutions for improving project quality based on the data indicated by appropriate metrics.
Project management KPIs to track project quality:
- Stakeholder Satisfaction: Stakeholder satisfaction with project progress is a direct indicator of the project quality. This can be ensured through effective communication channels and measure with the help of periodic review meetings.
- Error Factor: The number of times a project deliverable had to be reworked indicates the overall project quality. Repeated revisions to deliverables can have an impact on the schedule and cost constraint of the project.
- Project Escalation: The number of escalations raised internally can reflect the overall team coordination, efficiency, and quality of the work done during a project lifecycle.
- Employee Churn Rate: When the percentage of employees leaving the company is higher, it impacts the project’s progress. Continually hiring new resources and training them can hinder the timely achievement of project milestones.
4. Project Effectiveness KPI
The project’s effectiveness is a measure of the project’s outcome with respect to the various resources invested in it. It also considers the quality of the deliverables and the overall seamless execution of a project lifecycle.
Project management KPIs to track project effectiveness:
- The Number of Project Milestones Achieved on Time: When sequential project activities are completed on time, it ensures efficient project execution with milestones being achieved as per the schedule.
- Project Onboarding: The time taken to deliver tangible project deliverables from the time of the actual project start date is a measure of project onboarding efficiency.
- Number of Change Requests: The total number of changes requested by the stakeholder in the project impacts the cost and schedule management. A higher number of revisions also affects the overall project quality and efficiency.
- Billable Man-hours: When the resources spend more time on administration and internal coordination, the actual project hours billable to the client takes a hit. This also affects the project progress as less time is spent on revenue-generating project-related tasks.
Choosing the Right Project Management Metrics as KPIs
A good project management KPI has the following characteristics streamlined to indicate the project outcome:
- Aligned with the project milestones
- Clearly defined without any vagueness.
- Measurable and easy to report
- Realistic and Achievable
- Lead to an actionable outcome
- In line with the stakeholder expectation, organization efforts, and team dynamic
- Benchmarked based on historical data
How a PMP Certification Can Help
Preparing for a PMP certification is more than just receiving the ‘PMP tag.’ It helps you become the project manager who can add value to their role and establish team synergy within the organization. The world needs more project managers who can do this!
One of the critical tasks you will be responsible for, as a project manager, is to plan and manage project compliance in a business environment. A thorough understanding of this task will help you choose the right project management KPIs that can help you deliver value to the project.
An ideal project manager does many hats, including cost management, schedule management, risk analysis, and project quality management. The most effective means of making the right decision on various project management fronts is tracking the right project management KPIs.
Best Project Management Certification – The PMTI-vantage
The one thing that nobody tells you about PMP certification is how it can make you more confident about yourself. It introduces you to the nuances of the art of project management like never before.
Whether choosing the most useful project management KPIs to track or recommending appropriate data-driven corrective actions, you become a pro at it. Making critical strategic decisions in a dynamic project environment becomes ingrained in the way you work.
Project Management Training Institute (PMTI) is an Authorized Training Partner of PMI. (Project Management Institute) When it comes to project management institute certification, we have maintained a consistent pass rate of 99% and offer a money-back guarantee. Whether you register for our in-person PMP boot camps or our project management certification online, you can be assured that you are with the best hands in the industry.
PMTI wishes you the best ahead in your project management journey. Feel free to write to us at [email protected] for any project management certification related queries.
Yada is not just the leader of the Project Management Training Institute (PMTI). He helped to write significant portions of the project management standards worldwide. He is helping PMI right now in reviewing, directing, and leading the development of the 7th edition of the PMBOK(r) Guide to incorporate the most monumental changes to project management standards in 35 years. He shares his wisdom with readers via the PMTI blog.