KPIs (or Key Performance Indicators) are fundamental to running a project. Without them, it’s virtually impossible to understand where you plan on going and what you hope to achieve within your project.
Workplaces use KPIs to measure the success of a particular goal or activity, or to indicate how the performance of a project is progressing. They can be used for high-level assessment of the whole company, or lower-level for individuals or teams.
KPIs can cover any element of the project that you are looking to track or monitor, whether that be financial, client satisfaction or duration, and are a great source of accountability throughout the project.
What is a KPI in project management?
In the world of project management, KPIs are usually agreed on at the start of a project so that everyone involved in the project is aware of the goal, and how they can measure individual and overall success throughout the project lifecycle.
KPIs can be incredibly useful when it comes to assessing how well a project went, what can be improved upon in the future and the impact that the project had on the business. Without some sort of ongoing goals or analysis, the purpose of the project could get lost and things can quickly veer off track.
KPIs are one of the best ways to ensure that a project was worthwhile, despite the outcome, because either you will have achieved your goals, or you’ll have learned what didn’t work so well.
Project management KPIs vs. OKRs
“But don’t OKRs do this?” I hear you say? OKRs (or Objectives and Key Results) are another way of assessing the success of your project, and, on first glance, appear relatively similar to KPIs. But they’re not the same thing.
An OKR is a framework in which you set objectives for an area that needs improvement, and the key results measure your progress towards the objective. They’re on a much higher level than KPIs, since OKRs essentially outline the journey your company will take to accomplish its goals.
OKRs are much more black and white with a template that must be followed, for instance:
I will achieve (objective) as measured by (key result).
KPIs, on the other hand, often directly stem from OKRs and can be as specific as you need them to be to accurately measure performance.
Types of project management KPIs
1. Timeliness KPIs: How long the project takes to complete or to reach the goal.
2. Budget KPIs: Estimated budget versus actual budget used to reach the goal.
3. Resource KPIs: What is the resource capacity, and how many resources are required to reach the goal?
4. Client satisfaction KPIs: Whether it was the company or an external client, were they satisfied with how the project went and with the end result?
What makes for an effective project management KPI?
For a project management KPI to be worth the effort in tracking, it must be:
- Well aligned with company objectives, as well as the project vision and strategic goals. If your KPI doesn’t align with a company objective, it’s worth considering whether it’s worth the effort of tracking. Take Timely for example, we care about customer retention, so we strive to achieve 100% CSAT at all times. Satisfied customers means customers staying with us.
- Easy to track and measure. It shouldn’t be a case of setting and forgetting – you need to be able to share real-time progress with the team, and use your KPIs to gauge how the project is progressing.
- Actionable. It’s all well and good setting a KPI, but what action can you take on it during or after the project has been completed?
- Relevant. It might seem simple, but creating a KPI that isn’t going to directly help you measure the project you are doing is pointless, and will create confusion and more work.
Project KPIs to measure timeliness
Monitoring and assessing the timeliness of your project is important for many reasons. For example, maybe you need to update the client about a deadline. Or maybe you need to see how long a project will take to complete for planning future projects. Or, you charge by the hour and need to estimate how much the project will cost according to the time it will approximately take to complete.
By monitoring the duration of a project, you’ll also be able to dissect the parts that take the longest time and could use these insights to outsource some of the work in future projects, hiring more people for that specific role, or simply extending how long the task will take in future projects.
Here are a few of the most commonly used KPIs related to project timelines:
1. Planned vs. actual hours
This measures the estimated working hours of an employee compared with the actual working hours charged to a job.
To calculate this, you subtract the planned amount from the actual amount. Less than planned calculates to a negative variance.
2. On-time task completion rate
This assesses the efficiency of employees when they are doing their tasks. This is particularly useful for managers to see which tasks consume more time than expected.
To calculate this, divide the number of assigned employees who completed their tasks by the total number of assigned employees.
3. Project velocity
This is the measure of how much work on the project is getting done.
To calculate this, measure the total amount of backlog items that were delivered per sprint. This can be measured in either days, or the number of hours it takes the team to deliver the project/tasks.
4. Schedule variance
This measures whether a project is on track by calculating actual progress against expected progress.
To calculate this, work out your earned value minus your planned value.
Project KPIs to measure spend
If the project isn’t cost effective, it’s good to question why, or what factors led to it not achieving its value. By tracking the budget of a project, you will be able to see where the money was spent, whether or not this can be cut down in future projects, or whether the budget needs to be increased.
Some ways you might consider measuring the budget or spend are:
5. Gross profit margin
This measures the amount (in percentage) of revenue that exceeds the cost of goods sold, revealing the profitability of the project.
To calculate this, use the formula:
(Revenue – Cost of Goods Sold) / Revenue x 100
6. Budget variance
This measures how the projected budget for the project varies compared to the actual budget total.
To calculate this, use this formula:
Actual Spending - Budgeted Spending
7. Working capital
This measures the amount of money you have available to meet your short-term project obligations.
To calculate this, use this formula:
Current Assets – Current Liabilities
8. Planned value
This is the estimated cost for your project activities that are planned as of when the report is created.
To calculate this, use this formula:
% Project Complete (Planned) x Task Budget
9. Earned value
This identifies how much revenue has been earned based on how much of the work has been completed at the date of the report.
To calculate this, use this formula:
% Project Complete (Actual) x Task Budget
10. Actual value
This measures the total cost incurred for the actual work completed to date.
Simply keep track of all expenditures for the project. To track billable hours for employees easily, Timely is a great option. You can also apply a budget to your project in Timely, giving you great visibility over all elements of the project.
11. ROI
Return on Investment, or ROI, evaluates the efficiency of an investment. It is a ratio comparing the gain or loss from an investment relative to the cost.
To calculate this, subtract the initial value of the investment from the final value of the investment. Then divide this new number by the cost of the investment, and, finally, multiply it by 100.
12. Cost performance index
This is the measure of the actual work completed compared with the actual cost incurred.
To calculate this, use the formula:
Earned Value / Actual Cost
Project KPIs to measure resources
Planning for resource capacity requires you to understand the resource capabilities within your organization. Resources predominantly speak to the human resources involved in the project, i.e. the employees/team members who will be working on the project.
If you have a great overview of the capacity of your team members, or use a tool like Timely to help you gain an overview of your team members, planning for the capacity of a project will be easy.
Let’s say you have two ongoing projects and just received another. You might be able to see that three team members are already working 35 hours a week on these projects and have very little capacity for more work. You can then hand this project over to the other three team members who just finished another project. By knowing that you now have three people working solely on this project, you will also be able to estimate the duration of the project.
13. Resource capacity
This measures the amount of work that is able to be done by the resources you have. It determines the tasks and projects that can be completed by these resources.
To calculate this, measure the timeline and availability of employees, bearing in mind factors such as whether they are part time or full time, whether employees joined or left the company.
14. Resource utilization
This measures an employee's available time and how much of that is used for billable tasks.
To calculate this, use the formula:
Actual Number of Hours Worked / Total Available Hours
Project KPIs to measure client satisfaction
When running a project for a client or involving customers, a crucial element to measure is their satisfaction. By determining the factors affecting client satisfaction, it allows you to pinpoint the areas you can improve upon in future projects.
The satisfaction of the client doesn’t only matter at the end of a project, but is important throughout. Messaging, support and information throughout the project will be pivotal to the overall client satisfaction and experience and should be monitored consistently.
There are multiple ways to measure client satisfaction, but most project managers look at:
15. NPS (Net Promoter Score)
This consists of a single survey question which asks respondents to rate how likely it would be that they would recommend your company, product, or service to a friend or colleague.
16. CSAT (Customer Satisfaction Score)
This tracks how satisfied customers are with your products or services. CSAT is measured by a question that usually appears at the end of a customer feedback survey which asks about the overall satisfaction of the customer experience.
These are two examples of highly popular satisfaction measurements. But you might also consider opinion-based KPIs using questionnaires, live chat, social media or simply interviewing the client.
The best tools for tracking project management KPIs
Asana
Asana is one of the best known collaboration tools, and for good reason. With features that allow you to have an overview over who is responsible for what within projects, as well as the ability to assign tasks to team members and plan out stages or tasks of a project, it has everything you need to run a successful project.
Jira
For the more technical, programming focused projects, Jira is a great choice. Jira is first and foremost known for its bug tracking functionality, but it also contains a powerful task management system, allowing you to create workflows, gain visibility over the progress of tasks and see real-time performance reports.
Basecamp
Basecamp is an organized person's dream. Each project that you create in Basecamp can contain all elements of the project, including the people, the tasks, the conversations, files, dates and more. With features like automatic check-ins, you don’t have to be that guy that asks the same questions everyday.
Timely
Timely is an automatic time tracking tool that makes tracking time across teams and projects easy and accurate. With features such as live reports, people management and budgeting, Timely is perfect for teams to manage projects and resources.
A final word of advice on selecting the right KPIs for your project
Take it from me: if you choose too many KPIS to track in your project, this will lead to analysis paralysis. You want to track just enough parts of a project to give you and your team actionable insights on how projects are tracking day to day, as well as help with longer-term strategic planning. Happy project planning!
