KPIs Every Consulting Firm Should Track (Part 1: Project Management)

Understanding benchmarks and tracking key performance indicators (KPIs) is a strategic imperative for consulting firms wanting to optimize their performance and drive sustainable growth. In fact, according to the Project Management Institute (PMI), organizations that use benchmarking are 20% more likely to complete projects on time and within budget. But where do you start? Our new blog series “KPIs Every Consulting Firm Should Track” explores the top KPIs tracked by consulting and professional services organizations and gives benchmarks to help you compare your firm to industry standards.  Part 1 will focus on project management benchmarks, part 2 will focus on people, and part 3 will focus on sales & marketing benchmarks.

Key Project Management Benchmarks for Consulting Firms

Benchmarking in project management helps consulting firms measure their performance, identify gaps, and implement best practices. It provides a clear picture of where a project stands in relation to industry standards, enabling firms to make data-driven decisions.  Following is a list of key project management benchmarks and KPIs that consulting firms should track.

Utilization Rate

Utilization rate is the percentage of billable hours versus total available hours for consultants. Effective resource utilization maximizes consultants' time for billable work, directly impacting profitability. According to the latest data from professional services research firm SPI Research, the average utilization rate for consulting and professional services organizations is just over 71%. However, the top-performing consulting firms should aim for a utilization rate of 80% to optimize resource allocation and enhance efficiency.

Utilization Rate Goal: 80%

Average Project Overrun

Average project overrun refers to the typical percentage of projects exceeding their originally planned budget or timeline. It is a key metric to assess project management effectiveness in professional services. Effective project management and accurate forecasting are vital to minimize cost overruns and ensure projects remain profitable. Based on research from PMI, the average project overrun is 28%; however, this includes construction and IT projects. General management consulting firms have a lower average project overrun rate. According to SPI Research, high-performance consulting and professional services organizations average 7.8%

Average Project Overrun Goal: 8%

On-Time Project Delivery

This measures the percentage of projects completed on time and within scope. According to the PMI, about 70% of projects meet their original goals and business intent. SPI Research agrees with this data, finding that high-performance consulting and professional services organizations (those in the top 20%) deliver projects on time at 85.7% vs. an industry average of 73.4%.

On-Time Project Delivery Goal 85%

Project Profit Margin

Project profit margin is the profit made on a project after all costs have been accounted for. Project margins reflect the financial health of a project. Maintaining healthy margins ensures the firm's sustainability and ability to invest in future growth. According to MNC Consulting, professional services average around 30%. SPI Research suggests that firms should be aiming for a project margin of 40%.

Project Profit Margin Goal 40%

Client Satisfaction Goal 78%

Client satisfaction scores are often captured through surveys or feedback forms and directly influences the number of referenceable clients your firm will have. High client satisfaction leads to repeat business and referrals, which is vital for growth. Ideally, this number would be 100%, but not every engagement succeeds. According to a survey by Consulting Success, the average client satisfaction score in the consulting industry is around 8 out of 10. Consulting firms should aim to consistently score above the industry average to build strong client relationships.  According to SPI Research, 78.3% of clients are referenceable at high-performance consulting and professional services organizations.

Client Satisfaction Goal 78%

Conclusion

Let the benchmarks above serve as a reference, but the right KPIs for YOUR firm will depend on many variables, including company size, customer needs and industry(s) served. For more details on these (and other) KPIs or to learn how to calculate them, download our Ultimate Guide to Consulting KPIs. And speaking of KPIs and visibility … click here to see how Deltek Vantagepoint helped Greenprint Partners improve utilization by 12% thanks to increased visibility and real-time access to KPIs