14 Project Management Metrics & KPIs You Need to Track
There’s more to project management than just ensuring that the project is completed on time. As a project manager, you are also responsible for optimizing the use of resources to ensure the project is done better, faster, and at minimal cost.
To do this, you need to track project metrics and key performance indicators (KPIs) to give you an accurate idea of how all aspects of the project are going, and uncover ways to improve the project.
With dozens of metrics and KPIs that you can track, however, things can quickly get confusing. Which metrics should you focus on? How do you choose the right metrics for a specific project?
This guide will provide you with answers to these questions and help you determine the project management metrics and KPIs you need to track.
Why Use Project Management Metrics?
Keeping track of project management metrics provides you with relevant and accurate information about a project, which in turn helps you make better decisions. Some of the benefits of using project management metrics include…
1. Metrics Are A Proof Of Value
Measuring project management metrics can help provide proof of the value of a project or team. For instance, if metrics show that a team has consistently delivered all its projects on time, and within budget, then these metrics are a proof of the value of this team.
2. Metrics Allow Improvement
You cannot improve what you do not measure. Keeping track of metrics allows you to measure current performance and use it as a baseline for future improvement.
For instance, if you want to improve client satisfaction on projects, you have to start by measuring the current satisfaction levels. Armed with this information, you can then come up with strategies to improve the satisfaction score.
After implementing the strategies, you’ll then need to measure again to determine whether the strategies actually helped improve the satisfaction score.
How To Choose The Right Metrics To Track
Keeping track of project metrics is important, but you need to make sure you’re tracking the right metrics. What’s more, the right metrics will differ from one project to another. So, how do you figure out which metrics you need to track?
1. Think About Your Goals
To determine which metrics you need to track, you have to first think about what goals you want to achieve from the data.
For instance, if your aim is to reduce the time spent on projects, you should focus on metrics related to time, project scheduling and productivity. Sure, tracking metrics related to cost might be great, but these metrics won’t help you achieve your goal in this case.
2. Choose Metrics That Are Simple And Accurately Measurable
The harder it is for you to measure and understand a metric, the less likely the metric is to help you. In addition, when choosing a metric to track, you want to make sure that the metric can be measured with a high degree of accuracy.
Let’s say, for instance, you are trying to measure how satisfied clients are with your services. Asking your clients to rate your services as poor, fair, good, or excellent can be used as a metric to measure client satisfaction, but it is not very accurate.
Such a metric is subjective, since what one client considers to be fair might be excellent for another client, and therefore, this metric cannot be measured accurately.
What you need to do instead, is to come up with an objective metric that you can accurately measure repeatedly. In this case, for instance, you can use a tool such as Net Promoter Score (NPS) to accurately measure your customers’ satisfaction with your service.
Critical Project Management Metrics To Track
If you’re just getting started with tracking project management metrics, below are 14 metrics that will help you improve your performance in projects.
1. Planned Value
Planned value, sometimes known as Budgeted Cost of Work Scheduled (BCWS) refers to the approved budget for completing various phases of a project.
Planned value is calculated by multiplying the project budget with the expected completion of a project at a certain point in time.
Let’s say, for instance, you have a project scheduled to take 5 months, with a budget of $100,000.
At the one-month mark, the planned value of the project is $20,000 (1/5 x $100,000). At the two-month mark, the planned value of the project will be $40,000 (2/5 x $100,000).
It’s good to keep in mind that planned value is calculated before a project has started, and does not translate to the actual cost of the project.
By itself, planned value is not very important. However, it helps project managers to determine the performance of a project by acting as a baseline for comparing with other project management metrics.
2. Earned Value
Planned value is a good way of estimating the value of a project at different stages, but once the project is underway, it doesn’t provide a way of tracking performance. This is where earned value comes in.
Also known as Budgeted Cost of Work Performed (BCWP), earned value looks at the actual value of a project based on work that has already been done, rather than the scheduled work.
Earned value is calculated by multiplying the percentage of work that has been completed at a certain point in time with the budgeted value.
For instance, if the project is scheduled to take 5 months on a $100,000 budget, but by the third month, only 40% of the project has been completed, then the earned value of the project would be $40,000.
Since the planned value at this stage of the project was $60,000, this is an indicator that the project is behind schedule.
3. Actual Cost
Actual cost refers to the total amount of money spent on a project up to a certain point in time. This metric is sometimes referred to as Actual Cost of Work Performed (ACWP).
To calculate actual cost, you only need to add up all the costs spent on the project so far. However, actual cost only tracks expenses on project work that has already been done. Many of the best project management tools and software in the market will calculate actual cost for you in a few clicks.
By itself, actual cost doesn’t provide much information, but it can be combined with other project management metrics to give you a better view of how a project is performing.
4. Schedule Variance
Schedule variance is a metric that is used to determine whether a project is ahead of schedule, or whether it is lagging behind. Schedule variance is calculated by finding the difference between earned value and planned value.
To explain this, let’s go back to our project with a budget of $100,000, and scheduled to be completed in 5 months. By month three, however, only 40% of the project has been completed.
In this case, the planned value for month three is $60,000 (3/5 x $100,000), but the earned value is $40,000 (40% x $100,000). Therefore, the schedule variance would be $40,000 – $60,000 = -$20,000.
If schedule variance is a positive number, it means that the project is ahead of schedule. Where schedule variance is a negative number, it means that the project is lagging behind.
If earned value and planned value are equal (meaning schedule variance is zero), this means that the project is going according to plan.
5. Cost Variance
This metric is used to evaluate the financial performance of a project by comparing the amount spent on a project at a particular point in time with the budgeted amount. In other words, it tells you whether a project is within or over budget.
Cost variance is calculated by finding the difference between earned value and actual cost.
Let’s say, for instance, that we have a project with a budget of $20,000 and a 4-week timeline.
By week 2, 75% of the project has been completed. This means that the earned value at week 2 is $15,000 (75% x $20,000). However, the total amount spent on the project is $12,000.
In this case, the cost variance of the project $15,000 – $12,000 = $3,000. This means that the project is operating under budget.
A negative cost variance means that the project is running above budget. If the earned value and the actual cost are equal, this shows that the project is operating right on budget.
6. Schedule Performance Index
Just like the schedule variance, schedule performance index (SPI) tells you whether a project is running within schedule, or whether it is taking longer than expected. The key difference, however, is that schedule performance index is expressed as a ratio, rather than absolute figure.
Schedule performance index is calculated by dividing earned value with planned value.
Let’s say, for example, a project has a 5-month timeline and a $25,000 budget. At month 4, only 60% of the project has been completed. This means that the planned value is $20,000 (4/5 x $25,000), while the earned value is $15,000 (60% x 25,000).
In this case, the schedule performance index would be:
$15,000 / $25,000 = 0.6
This is an indicator that the project is lagging behind. An SPI ratio greater than 1 indicates that the project is ahead of schedule, while an SPI ratio of less than 1 shows that the project is lagging behind. If the SPI ratio is equal to one, the project is moving exactly as planned.
7. Cost Performance Index
Cost performance index (CPI) is similar to cost variance in that it tells you how the project is performing in relation to its budget. Just like schedule performance index, however, cost performance index is expressed as a ratio, instead of an absolute figure.
Cost performance index is calculated by dividing earned value with the actual cost incurred during the project.
Let’s assume, for instance, that a project has a $25,000 budget and needs to be completed in 5 months. At month 4, the project is 60% complete, putting the earned value at $15,000 (60% x $25,000). However, the project has already spent $20,000.
In this case, the cost performance index would be:
$15,000/$20,000 = 0.75
This is an indicator that the project is running above budget. A CPI ratio of above 1 means that the project is operating under budget, while a CPI ratio below 1 means that the project is operating above budget.
8. Utilization Rate
When managing a project, it’s important to keep track of the productivity of your available resources. Utilization rate is one of the metrics that can help you do this.
Utilization rate measures the rate at which your resources are being utilized, against their total available time. This metric is calculated by dividing the total hours a resource has worked by the resource’s total hours. Utilization rate is expressed as a percentage.
For instance, if you have an employee who was available for 1,500 hours over the course of a project, but the employee only worked for 1,200 hours, then their utilization rate would be:
1,200/1,500 x 100 = 80%
It’s good to keep in mind that utilization rate looks at the total time a resource spends working on a project, whether that work is billable or not.
For instance, if you are working on a project to design a website, your resources’ utilization rate will include all the hours actually spent on building the website, as well as the hours spent on non-billable work such as meetings, administrative work, and so on.
9. Realization Rate
Just like utilization rate, realization rate tells you the percentage of time a resource spends on work compared to their available hours. However, realization rate specifically looks at the time spent on billable work, that is, work that brings revenue into the business.
For instance, let’s say a designer spends 30 hours coming up with website designs for a client, and 10 hours training other staff members, attending meetings, and so on.
In this case, the designer’s billable time is 30 hours, since the time spent on meetings and training cannot be charged to the client.
Realization rate is calculated by dividing a resource’s total time spent on billable work by their total billable hours, then multiplying the result by 100 to make it a percentage.
If a resource has 120 available hours, of which 100 hours are billable, and the resource then spends 80 hours on billable work and 10 hours on non-billable work, their realization rate would be:
80/100 x 100 = 80%
Realization rate helps project managers to determine whether they are utilizing their resources profitably.
10. Project Gross Profit Margin
Project gross profit margin is an important metric that helps determine the profitability and cost effectiveness of a project. This metric specifically looks at the amount of profit generated by each dollar of revenue gained from a project.
Project gross profit margin is calculated by dividing profit by the revenue generated by a project. Profit is the difference between revenue and cost of goods sold (COGS), which denotes all project expenses. Project gross profit margin is expressed as a percentage.
Project gross profit margin is a more effective way of evaluating how good a project is at generating profits compared to just looking at the gross profit.
For instance, if project A brings in $10,000 in profits from $200,000 in revenue (5% gross profit margin), while project B brings in profits of $2,000 from a revenue of $8,000 (25% gross profit margin), it means that project B is more profitable than project A.
In other words, every dollar earned from project A generates just 5 cents in profit, while every dollar earned from project B generates 25 cents in profit.
11. Customer Retention And Loyalty
Acquiring a new customer is 5-25X more expensive than retaining an existing customer, so it is important for project managers to measure and track their customer retention and loyalty rates.
Customer retention and loyalty tracks the number of project clients who re-order your services after the first project.
The easiest way to measure customer retention and loyalty is to use repurchase ratio, which is calculated by dividing the number of clients who re-order a similar project by the number of one-time clients.
12. Net Promoter Score
Net Promoter Score is an important metric that measures customer loyalty and satisfaction. It does this by asking customers to rate, on a scale of 1 – 10, how likely they are to recommend your services to their friends or colleagues.
Customers who give a rating of 9 – 10 are classified as promoters. They are greatly satisfied with your services and will gladly refer others to your business.
Those who give a rating of 7 – 8 are classified as passives. They are satisfied with your services, but not enthusiastic enough to refer others to you.
Customers who give a rating of 6 or below are classified as detractors. This group of customers is unhappy with your services, and might even spread negative word-of-mouth about your services.
To calculate your Net Promoter Score, find the percentage of respondents who are detractors and subtract it from the percentage of respondents who are promoters. A high Net Promoter Score means that the majority of your clients are happy with your services.
13. Employee Satisfaction Score
This metric tells you how satisfied and motivated your employees are. Measuring employee satisfaction and motivation is important since it has an impact on how productive your employees are, which in turn affects the success of your projects.
Employee satisfaction score is determined by asking your employees a series of questions about their workplace experience, which they have to rate on a 0 – 10 scale.
The score is then calculated by dividing the total points by the total number of questions, and then multiplying the result by 100 to make it a percentage. A higher score corresponds with higher employee satisfaction.
14. Project ROI
The project return on investment (ROI) metric looks at the financial value gained from the project against the amount of money invested into the project. Project ROI is calculated by dividing the net benefit earned from the project by the project cost.
It’s good to note that some of the benefits realized from a project are not always financial in nature. For instance, implementing a project could lead to benefits like faster production. To accurately calculate the net benefit, you have to assign a dollar value to such benefits.
How To Track Project Metrics Effectively
Tracking project metrics can sometimes turn out to be a lot of work. Depending on the number of metrics you are tracking, as well as the nature of these metrics, you might find yourself having to collect a lot of data, which can be hectic when you are also in charge of managing the project.
A better way to effectively track project metrics is to use project management software. Project management software allows you to automate the process of collecting project data, which you can then use to calculate your metrics.
Some project management software and tools even go a step ahead and track some of these project metrics for you as the project progresses.
Below, let’s take a look at some of the best project management software you can use to effectively track project metrics.
Best Solution For Visualizing Project Metrics And KPIs
Monday.com is one of the best and most powerful project management tools on the market today, and is a great option for keeping track of project metrics in a highly visual manner.
Monday.com comes with an advanced reporting dashboard that allows you to keep track of multiple project metrics and KPIs, including…
- Resource utilization and realization rate
- Nnet promoter score (NPS),
- Actual cost
- Completed tasks
- Missed milestones.
Best For Collaboration And Seamless Project Metrics Tracking
ClickUp is a reliable and user-friendly project management platform that combines excellent collaboration features with robust project tracking features.
ClickUp comes with a KPI dashboard that provides you with a central place for tracking your project metrics and KPIs. With ClickUp, you can keep track of metrics like project ROI, actual cost, profit margin, employee satisfaction, net promoter score, and so on.
Best Project Management Platform For Beginners
If you’re just getting started with project management software and are looking for a solution that is simple to use, Teamwork is your best bet.
Teamwork allows you to easily create dashboards from where you can track metrics like task count, resource utilization and realization rates, project budgets, actual cost, cost and schedule variance, and many more.
Best Solution For Those Looking For Enterprise Level Features
Wrike is a robust workflow management tool and project management platform that simplifies the process of managing a project and gives you complete visibility of project data, making it easy to track project metrics.
Wrike comes with an Analytics tab that gives you an overview of important project metrics, including task duration, tracked time, complete and missed milestones, completed tasks, project budget, actual cost, and resource utilization.
Best Solution For Small And Medium Enterprises
Scoro is an end-to-end work management software that gives you access to powerful project reporting and team collaboration tools.
With Scoro, you can track billable and non-billable hours, budgets, gross profit margins, actual cost, schedule and cost variance, planned and earned value, and so on.
You only need to select the metrics you want to track and Scoro will give you an easy-to-read report showing your selected metrics.
Best Project Management Platform For Issue Tracking
Celoxis is a versatile project management software that gives you access to enterprise-class features while remaining relatively easy to use.
Celoxis comes with dynamic dashboards that can be customized to keep track of multiple project metrics and KPIs, including budget spend, planned versus earned value, profitability, billable and non-billable hours, and project ROI.
Best Tips On Project Metrics And KPIs
Below are six tips and best practices that will help you take full advantage of project metrics to improve project performance.
1. Always Be Selective With Your Metrics And KPIs
There are several dozen metrics and KPIs that you can track during the lifetime of a project.
Just because these metrics exist, however, this doesn’t mean that you have to track them all. You’ll only end up wasting your time tracking metrics that do not help you.
What you need to do, instead, is to identify the metrics that are most relevant for you, and then focus on tracking these metrics only. In addition, make sure that you have the tools and resources to accurately track these metrics.
2. Go For Metrics That Are Simple To Track
Keeping track of project management metrics and KPIs is important and beneficial, but it should not come ahead of the actual work that needs to be done. If you have to spend more time tracking project metrics than on work that actually moves the project ahead, it’s time to reconsider that metric.
Ideally, you should choose project metrics that can be measured easily, and where possible, the data gathering should be automated.
For instance, instead of having to manually track the time your employees spend at work, you can use task management software to automatically keep track of how much time they spend on each task.
3. Have A Baseline And Targets
While keeping track of project metrics is important, many of the metrics are not very useful by themselves.
Let’s say, for instance, you have determined that the earned value of a project that is halfway complete is $50,000. Is this earned value good or bad?
To tell whether your metrics are good or bad, you need to compare them to a baseline or a target.
For instance, if the planned value of a project was $60,000 at the halfway mark, but the earned value at 50% completion is $50,000, comparing the two tells you that the project is lagging behind. However, without using planned value as a baseline, the earned value metric would not tell you anything useful.
When selecting your project metrics and KPIs, therefore, you should always have a baseline or target that you’ll compare the metrics against. The baselines and targets will help you make sense of the metrics you are tracking.
4. Always Have A Contingency Plan For Handling Troubled Projects
One of the benefits of tracking project metrics is that it allows you to identify potential issues and risks long before they become threats to the success of the project. However, being aware of potential issues is only half of the equation.
For the insights gleaned from these metrics to be useful, you have to put in place a plan on how to prevent the issues from jeopardizing the project, and if the project is already veering off the track, how to bring it back on course.
5. Ensure Proper Documentation
If you want to accurately keep track of project metrics and KPIs, you have to maintain proper project documentation.
Let’s say, for instance, you want to calculate the earned value of a project. If you don’t have proper records of all project costs spent on the project up to that point, it would be impossible to accurately calculate the earned value.
Proper documentation applies to all aspects of the project, from spending and time tracking to scheduled and completed tasks and even decisions made. Basically, everything that happens within the project needs to be recorded.
6. Always Have A Project Debrief
A lot of project managers keep track of project metrics while a project is underway, but once the project is complete, they do not have a look at the final project metrics. Failure to have a final project debrief can rob you of insights that could help improve the performance of future projects.
To avoid this, it’s always advisable to have a project debrief after completing a project. Look at things like the project cost versus the budgeted cost, resource utilization and productivity over the course of the project, whether the project met its specifications, and so on.
Doing this will provide you with beneficial data points that will help you make better decisions to ensure improved performance on future projects.