The project was delivered on time and under budget … and you failed. All signs pointed to it being a success, but once implemented, the project had very little value for the client.
If the failure came as a surprise, the culprit more than likely was a set of metrics that were too narrow in scope. A more complete grouping of measurements could have forewarned of a problem and allowed the project manager to make changes to rectify the issue.
Collecting and measuring data is an integral part of successful project management. But it is not enough to just collect data, you have to gather the right information. The task is made more difficult with the various metrics and methods readily available.
Project managers most often use ROI and schedule performance to measure their project’s progress. While time and budget are two key factors, quality of work and stakeholder satisfaction are two equally important considerations.
Below is a four-step process to establish a system that gives a more complete view of your project’s track towards success.
1. Define Success
Everyone wants a project that finishes on time and under budget, but do you really know what success looks like for the project? Is an on-time delivery the most important factor? Customer satisfaction the fundamental goal? Finishing under budget a key concern?
In reality, it is likely a combination of several these factors. When looking to create a measurement plan for these goals, selecting the right metrics in tandem will help attain a more precise view of the project’s path.
2. Choose Your Metrics
Once a success criterion has been outlined, it’s time to select the metrics that will provide the most value. This is a crucial step in that one cannot control nor improve upon what one does not measure.
Below is a sampling of metrics that could be used:
- Planned Value
The estimated cost for your project activities planning/scheduled as of reporting date. You can compare PV with other KPIs to determine if you are running ahead or behind schedule on a project
PV= (the hours left scheduled on the project) x (project worker’s hourly rate)
- Schedule Variance
Schedule variance looks at budgeted and scheduled work. The schedule variance is the budgeted cost of work performed minus the budgeted cost of work scheduled – the difference between work scheduled and completed
Schedule Variance (SV) = Budgeted Cost of Work Performed – Budgeted Cost of Work Scheduled
- Actual Cost
The Actual Cost is a simple number that shows how much money is spent on a project. This cost is determined by adding up all the expenses for a specific project over the timeline.
Actual Cost (AC) = Total Costs per Time Period x Time Period
- Earned Value
Earned value provides strategic guidance by showing how much value you have earned from the money spent to date on a project. This metric provides a reality check of your cost efficiency during the process of a project.
Earned Value (EV) = % of completed Work/Budget at Completion
- Cost Performance
Cost performance is a cost efficiency metric. Divide the value of the work actually performed (earned value) by the actual costs it took to accomplish the earned value.
Cost Performance Index (CPI) = Earned Value/Actual Costs
- Cost Variance
Cost variance shows the difference between the planned budget and actual costs within a specific timeframe. A project is over budget if the cost variance is negative. A positive cost variance shows a project is under budget.
Cost Variance (CV) = Budgeted Cost of Work – Actual Cost of Work
This metric looks at overall capabilities of a company – how well it uses its resources. How much are you getting out after all that you put into a project?
Productivity = Units of Input/Units of Output
- Stakeholder Satisfaction Score
Stakeholder satisfaction means that expectations were met. A customer satisfaction score provides a measure of quality for your service or product. Each company can develop a score unique to its business by weighing each variable based on its importance.
Stakeholder Satisfaction Score (SSI) = (Total Survey Point Score/ Total Questions) x 100
3. Measure Your Progress
The proper metrics have been implemented and data has started to be collected. While the metrics used may differ, one constant component is having an online dashboard that pulls real-time information and data from your project management system. An effective online dashboard gives up-to-date information and reduces your reliance on lagging indicators. This approach allows to you to act earlier and more efficiently when changes need to be made.
4. Refine & Improve
The importance of continuous process improvement cannot be understated. One should always be looking at ways to improve in order to be more efficient and profitable. Once the data has been compiled, questions should be asked about the data and the way it has been captured.
First, are you using the correct metrics? Is the data collected helping track the project’s progress and allowing for proper decisions to be made? Add or subtract the metrics you need to make better and more informed decisions.
Second, how efficiently is the data getting collected? If time is being spent tracking down and calculating results, the project’s tracking efforts are getting bogged down. Go back to the data capture and make tweaks with an eye towards efficiency.
There are hundreds of different metrics that can be used to measure a project’s progress, but these seven essential metrics will help build a more precise picture.
Regardless of the metrics utilized, having a project management software platform that provides real-time analytics is of key importance. Sign up for a free demo and see how PM Vitals can help you remain on schedule, raise your customer satisfaction and improve on cost efficiency.