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How do you prevent your project from deviating, or worse, failing altogether?
The answer is to identify KPIs that will keep your projects on track from the beginning.
KPIs, or key performance indicators, use data to measure the factors that make a project successful. They help pinpoint how work is progressing and show areas of weakness in your process. They’re a great way to uncover areas that could lead to failure and to make corrections before it’s too late. Unlike subjective project indicators, KPIs use quantitative data to determine the health of your projects.
Before we discuss some common KPIs, let’s look at project success metrics and how they differ.
KPIs are clear cut indicators of how a project is going that are set and agreed upon prior to the project start. Metrics also measure progress, although they’re less important indicators. So, while all KPIs are metrics, only the most important metrics are KPIs.
To maintain focus, use a limited number of KPIs to help you meet the project objective and create true indicators of success.
Data is crucial in determining a project’s success, which is why you should be looking at return on investment, productivity levels, cost performance, customer satisfaction, and more. It’s important to choose KPIs that you can measure with real data, and not assumptions.
Although there are countless potential KPIs, you really want to choose only a handful to focus on during a project.
These will help any team get on the same page and know what they’re working toward.
To help you get started, check out these four main types of KPIs in project management.
Budgets should be set at the beginning of your project. Unforeseen issues can arise throughout, and as a result, budgets may need to be modified or reallocated to support shifts within the project.
It’s also important to understand why, how, and where the budget shifts occurred, which is why cost-related KPIs are so beneficial. Here are a few examples:
Cost Performance Index (CPI) - Ratio showing costs so far vs. the amount to be earned
Budget variance - How the actuals compare to estimated as the project advances
Budget adjustments - How often amounts have changed since the start
This will help you to budget more effectively for future projects.
Another valuable project management KPI looks at teams.
Using S.M.A.R.T. goals, which are covered in the next section, you should determine what roles you will need before a project gets off the ground. However, once you get into a project, you may find certain tasks take longer than expected. Or that some team members lack the necessary training to complete certain aspects of the project.
KPIs can be set to understand why these changes occurred, and how resources could be better planned and allocated in the future, and might include metrics such as:
Resource capacity - Tally team members and their available hours to determine capacity
Time spent per person on a project - Compare actual hours tracked vs. budgeted hours
Projects should be broken out into key phases and organized using work breakdown schedules. When a project is complex or has several moving parts, milestones along the way can get missed.
When this happens, it throws off the project flow and team in the process. So documenting KPIs around timelines is helpful. These might include:
Deadline adjustments - How often have milestones been pushed back or missed
Cycle time - How long it takes to complete a task
Sprint completion - How often are sprint items completed as planned
This will help get a derailed project back on track quickly.
While overall budget is important, it’s equally important to see how close you are to meeting your return on investment (ROI) goals.
By using ROI as a KPI, you’ll understand when costs are getting out of hand to the point of risking the entire project’s value. It also helps determine risk management for future projects.
Once you determine which KPIs will help you measure success, you’ll want to use some best practices when it comes to tracking them. This includes making sure your KPIs are created as S.M.A.R.T. goals: specific, measurable, attainable, realistic, and time-based.
Let’s look at each one of these criteria and how to set yourself up for success. By applying these tips, you’ll ensure your KPIs are capturing the necessary data to make sound decisions.
Take a look at the KPIs you have identified. Are they clear?
If they are too vague, they can’t be measured properly. And if they can’t be measured, how will you determine your success?
And if you can’t determine your success, project management deliverables will be missed along the project lifecycle, and the objective won’t be met.
The success or failure of using project management KPIs rely on data. But if you are either pulling data from multiple sources or are using a best guess to determine the outcome, creating KPIs is pointless.
You won’t predict a current or future project outcome. So make sure all your data is synced so that your KPI is measurable and easy to report on.
KPIs need to be achievable by the team you have assembled.
If your KPIs are too lofty, not only will they be missed, but team members won’t be engaged. They will resent the fact that the goals are too high and as a result, might not even try. In the long run, morale goes down and nothing is measured.
KPIs need to be relevant to the project. This seems like a no- brainer, but if multiple team members are adding KPIs, irrelevant KPIs can start slipping in.
So periodically checking that your KPIs align with the project objective will help keep your project on track.
A great way to keep yourself organized is by using Agile project management software. It acts as a dashboard in project management, giving you an overall view of your current projects, what has been accomplished, and what is coming up next.
If you are using Agile project management methodology, then you know that projects are not always linear.
So when you are creating KPIs, you want these to follow a similar pattern.
They should be actionable at any step within the project, while still outlining clear deadlines for milestones.
Ask yourself, what are you learning from your KPIs along the way? If you learn for example to go back and tweak something during the planning stage that will lead to a better outcome during the testing phase, then your KPIs should lead you to action.
Your KPIs should be steering you in the right direction even if it deviates from what you set in the beginning.
KPIs in project management are a great way to keep a project on track using concrete data.
Remember to choose a handful of KPIs to benchmark and no more than seven.
Keeping your dashboard clearly defined will allow you to fully concentrate, keep your budget in line and focus on the high level metrics critical to your success.
One way to easily track projects is with an Agile project management tool like Hubstaff Tasks. You can add due dates to tasks, create Epics, build Sprints, and see the number of tasks completed during each one.
Plus, integrating Hubstaff with Hubstaff Tasks gives you a deeper reporting dashboard for everything from budgets to invoices to schedules and more.
With both, you can see how often shifts are on time, how much of the budget has been used, and if deadlines are being met. Or, use Hubstaff Tasks' built-in project time tracker.
Hubstaff Tasks streamlines and visualizes work for project success.