Metrics for Project Management: How to Measure & Track Success
Measurement really is key to successful project management. As the old adage says: “You can't manage what you don't measure.” Collecting and measuring data is at the heart of any worthwhile endeavor.
For project management evaluation, you can use project management metrics and Key Performance Indicators (KPIs) to help you strategically meet your business goals and assess the success, or failure, of any project. Explore important metrics for project management in this guide.
In this project success metrics guide you will discover,
- Why use project management metrics?
- How do you choose metrics?
- What makes a successful project?
- 10 project management metrics
- Definitions: Metric, KPI, OKR, Objective, KPO, Goal, MBO
- What are the project management critical success factors?
- Frequently asked questions
Why use project management metrics?
Relevant project management metrics will enable us to improve our understanding by removing uncertainty so that we can make well informed decisions.
Metrics prove value
Project management metrics related to costs can prove the value of a team. For example, an on-time delivery rate or the rate of meeting SLA. Return on Investment (ROI) is a widely used metric to show this value.
If a department does not produce or contribute to the measurable objectives of a company, a smart company would dissolve the department and move resources to another area that produces results.
Metrics improve performance
While proving value is important, forward-thinking management places more value on improving performance. Relevant metrics enable you to improve your understanding of project management. This removes uncertainty so that all involved parties can make well informed decisions.
For example, if the allotted slack time is delaying subsequent task completion, you can make adjustments in slack time, so the project completion date is not at risk.
How do you choose metrics?
Each business or project requires unique metrics that align with its purpose or goal. There are three steps to choosing metrics:
- Understand the purpose or goal of the project or work
- Determine what critical success factors need to be fulfilled for you to succeed and achieve the goal
- Take each critical success factor for the project or program and identify how you will measure its fulfillment
What makes a successful project?
Before starting any project, you and your team should have a clear understanding of what makes a successful project. You don’t want to end up with a famous failed project after all. What defines a project that can be considered a success? You should have a series of success factors to score your project against, including that it:
- Delivers on time
Completing a project on time, to deadline, is one benchmark of success — especially if it’s for an external party, such as a client.
- Stays within budget
All projects have a budget in place. If you can complete yours without running into extra costs and expenditure, that’s a definite measure of success.
- Achieves its objectives
If your project has been completed and achieved its objectives — as detailed at the very start of the process — that’s a big win.
- Gets positive feedback
It's easy to evaluate the success of a project yourself and internally. But how was it received? If stakeholders and clients provide good feedback, the project should be seen as successful.
10 project management metrics.
If you’re just beginning to measure performance, get started with these 10 project management metrics to help drive success:
- Gross Profit Margin
- Return on Investment
- Earned Value
- Customer Satisfaction
- Employee Satisfaction Score
- Actual Cost
- Cost Variance
- Cost Performance
This metric looks at the overall capabilities of a company — how well it uses its resources. Productivity shows the relationship between inputs and outputs. How much are you getting out, after all that you put into a project? The ideal productivity outcome is creating more for less.
Productivity = Units of Input/Units of Output
2. Gross Profit Margin
Numbers speak louder than words. Metrics directly tied to the bottom line communicate success or failure more quickly than other metrics.
The higher the margin, the better the business is doing. Any program or work performed should contribute to the financial profit of a business. Margin is the percentage of each dollar earned after costs have been subtracted.
Gross Profit Margin = (Total Profit-Total Costs)/100
3. Return on Investment (ROI)
Return on investment specifically looks at the dollar amount earned for the amount invested in a project. Like gross margin, this is a financial equation. Instead of looking at overall profit, it looks at the specific benefit from the project divided by the costs.
To use this metric, a dollar amount needs to be assigned to each unit of data to determine the net benefits — benefits may include:
- Contribution to profit
- Cost savings
- Increased output
Costs may include resources, labor, training, and overhead.
ROI = (Net Benefits/Costs) x 100
4. Earned Value
Earned value provides strategic guidance by showing how much value you have earned from the money spent to date on a project. It compares the value of the work completed by a specific date in relation to the approved budget for the project.
Earned value is also called Budgeted Cost of Work Performed (BCWP). This metric provides a reality check during the process of a project.
Earned Value (EV) = % of Completed Work / Budget at Completion (BAC)
5. Customer Satisfaction
A customer satisfaction score provides a measure of quality for your service or product. Customer survey data results guide this metric. The Center for Business Practices outlines this as a score on a scale from one to 100. The product or service should do what it was meant to do and satisfy real customer needs.
Each company can develop a score unique to its business by weighing each variable based on its importance. Variables may include customer survey results, revenue generated from clients, repeat or lost clients, and complaints.
The Customer Satisfaction Index (CSI) is the most widely used system for measuring customer satisfaction. The Net Promoter Score (NPS) is another method to capture customer satisfaction. NPS reveals customer loyalty by probing the likelihood of a customer recommending the product or service.
Customer Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
6. Employee Satisfaction Score
Similar to customer satisfaction, survey data determines the employee satisfaction score. Why should you look at employees in measuring project management? The answer is pretty simple and obvious — employee morale is directly correlated to project success —here are four tips to measure morale.
The bottom line is that a satisfied employee creates better work more efficiently. The high costs of employee turnover for a business — totaling 50% to 200% of an employee’s salary — should be motive enough to pay attention to the people closest to the project.
The Gallup Q12 Employee Engagement Survey is a popular tool to collect employee data. An Employee Satisfaction Index (ESI) processes results into an index score.
Employee Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
7. Actual Cost
The Actual Cost is a simple number that shows how much money is actually spent on a project rather than just an estimate. 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
8. Cost Variance
Cost variance shows the difference between the planned budget and actual costs within a specific timeframe. Is the estimate above or below the actual costs?
- A project is over budget if the cost variance is negative.
- A project is under budget if the cost variance is positive (a typical measure of success).
Cost Variance (CV) = Budgeted Cost of Work – Actual Cost of Work
9. Schedule Variance
Schedule variance looks at budgeted and scheduled work. Is the project running ahead or behind of the planned budget?
The schedule variance is the budgeted cost of work performed minus the budgeted cost of work scheduled — the difference between work scheduled and completed. A negative schedule variance means the project is behind schedule.
Schedule Variance (SV) = Budgeted Cost of Work Performed – Budgeted Cost of Work Scheduled
10. 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. Forecasting cost performance allows for accurate budget estimations.
Cost Performance Index (CPI) = Earned Value / Actual Costs
Measuring project manager metrics.
To excel as a project manager, you need to do more than inspire and motivate the team around you. Ultimately, the proof is in the results — a manager needs to achieve (and exceed) business goals.
Measuring project management metrics and Agile metrics propel performance by creating checkpoints during the process to continually improve.
Definitions: Metric, KPI, OKR, Objective, KPO, Goal, MBO
Many words and phrases are used interchangeably in the business world, but at a certain point, we must refer back to their true definitions to get clarity about what’s really being said.
So, to hold meaningful conversations about your company’s true aim, you’ll need the proper knowledge about how to use the following terms correctly.
This quick guide to definitions of metrics in project management should help.
A metric is a quantifiable unit of measurement that tracks and/or gauges the status of a particular process. In terms of project management, metrics are measures of assessing performance — as mentioned in the section above. These include productivity, gross profit margin and more.
KPI stands for key performance indicator. A KPI is a metric of performance and determines if you are achieving success in an organization. KPIs are used as indicators that look backwards in most contexts. KPIs can also be found inside a Key Result in an OKR. Learn more about the difference between OKRs and KPIs.
OKR stands for objectives and key results. It is a goal-setting framework that helps create clarity, focus, transparency, engagement, and alignment. This is through organizing predetermined objectives and the key results or the metrics that show progress towards the objective. Some of the world’s best-known companies, including Google and Amazon, use OKRs.
The “O” in OKRs — the thing to be accomplished that should be specific, measurable, time-bound, and ideally, quantifiable. An objective should detail what you want to achieve. There can be more than one objective within project management, though each has one to three key results.
Where KPIs are a metric, a KPO (Key Performance Objective) represents an objective you hope to achieve. KPIs are a series of specific measurement tools and goals, aimed at ensuring every detail of a project is met and achieved.
Goals are longer-range and broader than objectives. They are typically said in the context of a three- or five-year aspiration. Goals are meant to be broad for a timeframe that extends beyond the period of one year. They can be broad and general and do not require quantification or a specific deadline.
MBO stands for management by objectives. It is an approach to business management that was first introduced by “Father of Management” Peter Drucker in the 1950s that encompasses manager/team collaboration to establish short-term goals. The MBO process involves five steps.
What are critical success factors in project management?
Here are six factors that managers can measure to create metrics that determine project success:
- Benefits resulting from the capability delivered by a project
- Time/Schedule to deliver project output
- Cost to deliver project output
- Scope of work to deliver project output
- Quality of deliverables and quality of process (customer satisfaction)
- Risks including uncertainty or threats to project success
When a measurable goal is not met, you need to make changes. When a goal is exceeded, you can repeat successful processes. So, step on the scale and take an inventory of your current status. Determine which project management metrics will best guide your business goals and then get to work.
Frequently asked questions about success metrics for project management.
What are project metrics?
A project metric is a way of measuring the success of a project. Typical examples of metrics include the:
- Expected cost of the project
- Duration of the project —time it will take to complete
- Earned value of it
Each project will also have specific metrics too, though.
Why are project metrics important?
Project metrics are important because they enable you to accurately access the success of a project against real, quantifiable goals. This is particularly important when reviewing a project and reporting on it to stakeholders. Project metrics also help with the learning process ahead planning the next project. What worked well, and what didn’t?
What are project KPIs?
Key Performance Indicators (KPIs) are a series of performance-linked goals throughout a project. These are yours to set, for each project. Typically KPIs tend to fall under four main categories, which are:
- Timeliness KPIs
- Budget KPIs
- Quality KPIs
- Effectiveness KPIs
Any number of specific criteria of assessment can be included in each.