KPIs For Project Managers: Here's What You Need To Measure
There are many Key Performance Indicators (KPIs) that a business may want to track in order to measure success. However, not all KPIs will be relevant to your industry, and not all KPIs will be relevant to your role.
In the same way that the metrics that matter to a Retail business will not necessarily matter to an Architecture practice, the metrics that matter to a CFO will not necessarily matter to a Project Manager.
KPIs for project based firms
For project-based, Professional Services firms there are certain KPIs which are essential to measure. These KPIs will likely be the same across Architecture, Consulting, Engineering, Legal, and Marketing & Communications firms.
In a study by IDC – Managing your firm for growth – Professional Services firms were asked to identify the KPIs that matter most to their business and the results clearly show the top 10 KPIs which all Professional Services firms should measure. In this blog, we specifically look at the three metrics that every Project Manager or COO needs to know – we’ll tell you what they are and how to measure them.
KPIs for Project Managers
1. Project Schedule Variance
47% of survey respondents rated this as Very Important
Project Schedule Variance is a calculation that shows how closely projected deliverables match the actual deliverable. Factors to consider include billable time, costs and resource used. If the Project Schedule Variance is significant, then you will have clear evidence of failures in planning or of inefficient operations.
You can measure Project Schedule Variance by taking the Earned Value (EV) and the Projected Value (PV) and performing this simple calculation:
- EV - PV = SV (Schedule Variance)
In order to make this calculation accurately you will need access to granular project figures.
43% of survey respondents rated this as Very Important
How much of your billable work is still incomplete? This constitutes your ‘backlog’. This is a KPI which has direct bearing on profitability. If you do not have a manageable level of projects moving through your pipeline then your business will run out of work and cash.
You should already be keeping track of project milestones and schedules, and if your records are accurate, you should be able to report on backlogs per project. However, you will also need to be able to calculate a backlog KPI for all projects to properly asses the impact on your entire business.
34% of survey respondents rated this as Very Important
Sometimes there may be a shortfall between the number of projected billable hours and the amount of hours that were actually paid for once the invoice was processed by your client. The higher the realisation value, the more accurate your quotation process and the more profitable the project.
You can calculate realisation by taking the number of billable hours quoted at the outset of the project and subtracting the amount of hours actually paid for. You can also calculate the realisation value for multiple projects across time period to gain a better insight into your quotation and billing process.
If you want to find out more about KPIs for Professional Services Firms you can download our Ultimate Guide to KPIs for a Project Based Business below.
The top 10 KPIs for your project-based company