Key performance indicators (KPIs) in project management consist of various specific measurement tools for indicating how well teams are achieving specific goals. Project management KPIs are generally agreed upon early in the project. They reflect the organization’s central concept of the project and solidify project responsibility across administrative divisions.
While each team may have different tasks to complete and roles to play, they all support the KPIs in their own way. Understanding the role of KPIs in project management can help build team synergy and provide a framework for the data collection needed to keep track of organizational project success.
What Makes a Good KPI for Project Management?
Key performance indicators consist of the most important performance goals across all aspects of team involvement in a project. Effective KPIs should be:
- Agreed upon by all parties before the project begins
- Meaningful to the intended audience
- Quantifiable measurements that can be shared and analyzed across organizational divisions at any time
- Regularly measured
- Directed toward the benefits the project seeks to deliver
- A basis for critical decision-making throughout the project
- Aligned with objectives
- Realistic, cost-effective and tailored to the organization’s culture, constraints and time frame
- Unified with organizational efforts
- Reflective of an organization’s success factors
- Specific to the organization and the particular project
Collectively, KPIs are a powerful management tool to bring about organization-wide success. Keeping track of accurate metrics from varying teams can identify where more direction is needed or where incentives, plans and other resources, such as training, should be allocated.
Project Management KPIs
While the scope and terms of an organization’s KPIs may differ from project to project, there are various types of data that can be helpful to any organization. Top project management benchmarking measures include return on investment (ROI), productivity, cost performance, cycle time, customer satisfaction, schedule performance, employee satisfaction and alignment with strategic business goals.
Examples of KPIs within project management include:
- Project schedule
- Estimate to project completion
- Current development backlog
- Labor costs spent per month
- Current resource allocation
Four specific topic areas can include:
1. Deviation of Planned Budget
Knowing how, where and why project budget deviated is important in tracking down waste and inefficiency, as well as for planning better for the unforeseen challenges inherent to most projects.
2. Deviation of Planned Hours of Work
Understanding what tasks took more or less time can help in the efficient allocation of consulting and training time. In addition, understanding which teams had to go above and beyond can help build a meaningful incentive and reward program, as well as improve time allocation planning.
3. Percentage of Milestones Missed
Projects shift over the 5 phases of the project lifecycle. Identifying milestones and achieving goals are important for maintaining project momentum. When too many milestones are not achieved or are shifted, employees may feel frustrated. Identifying when milestones are missed can help restart a project and mitigate similar challenges in the future.
4. Cost Variance
Keeping accurate records related to cost variance can provide a detailed profile of which teams and processes are most efficient. It can also help companies decide whether a project was worth the investment and assist managers in deciding whether to initiate similar projects.
Best Use of KPIs
Savvy project managers can use KPIs not only as a performance management tool, but also as a motivational tool. When all teams are united with common goals, their individual contributions can shine. Team competition, incentives and rewards can be a powerful motivating tool to keep project momentum pushing forward. Using quantifiable and consistent KPIs can help project managers assess project goals in an objective, fair and powerful way.
Project performance and success isn’t always easy to measure. Harnessing the power of a strong key performance indicator strategy can help project managers lead their teams to higher standards, greater goals and successful projects.
Interested in learning more about project management? Whether you’re new to the industry or have years of project management under your sleeve, Florida Tech’s 100% online MBA in Project Management might lead you to a more experienced position within the field.
Related Reading:
10 Essential Skills for Effective Project Managers
Understanding and Applying Effective Project Management Methodologies