7 Essential Project Performance Measures
by Stacey Barr |Project performance measurement isn’t just on-time and on-budget. Here are 7 ways for how to measure project performance meaningfully.
When we think about project performance measurement, it’s not really the same as measuring the performance of a team or a business process or an organisation’s strategy. So we need to think a little differently about the kinds of measures that will tell us what we really need to know to manage project performance.
When we measure the performance of the business process or team, we’re interested in how a particular business result produced by that process or team is changing as time goes by. When we’re measuring the performance of a project we are interested in the impact the project has at a point in time, or over a fixed timeframe.
This is because projects by their very definition have a start point and an end point. The reason we do projects is to make a difference and usually the difference we’re trying to make is to make some kind of result, especially in business, better. Thus, our first project performance measure is…
Project KPI #1: Direct Impact
The size of a project’s impact on a business performance measure is a measure of a project’s success. It’s the the difference between the level of performance before the project’s start time, and the level after the project’s end time. You can easily measure the direct impact of a project with an XmR chart of the business performance measure the project aims to improve.
Project KPI #2 & #3: Financial Impact & ROI
A project won’t be successful if the cost of doing it was not sufficiently lower than the value of its impact. So, we need two other important measures of project success. The first one is financial impact, like costs saved or income generated. The second one is the return on investment, or ROI, which is the ratio of that financial impact to the total costs of undertaking the project.
Project KPI #4 & #5: On-time & On-budget
These are the traditional project measures, which can also help us manage the project while we’re implementing it. A well-managed project is more likely to have a big impact and big ROI. This is where the most commonly used measures of project performance come in: on-time and on-budget. But rather than just measuring these at the end of the project, they can be measured at regular milestones throughout the project, so we have opportunities to a project’s implementation back on track before it’s too late.
Project KPI #6 & #7: Stakeholder Support & Engagement
Not many projects can succeed if they don’t have the support of the people they will affect. Nor will they succeed if the important stakeholders don’t feel engaged along the way. Stakeholder perception of value can be a good proxy to measure support. And a good way to monitor stakeholder engagement might be the amount of stakeholder participation in project tasks and events.
Your Project Performance Measure Checklist
So we now have a basic framework of the project performance results that are worth measuring, and it can be somewhat of a checklist for what types of KPIs to design for your project:
- Business financial impact
- Business performance measure impact
- ROI
- Milestones completed on-time
- Milestones completed on-budget
- Stakeholder perception of value
- Stakeholder participation
With these seven result areas for project performance, the next step is to decide how to choose the tailored KPIs to measure them. There is no one right answer to this, because each project is different. But there is a step-by-step measure development process to help you design the quantitative measures right for your project.
DISCUSSION:
What frameworks do you use for measuring project performance?
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Director: Stacey Barr
Many people focus on the in-project metrics only… and forget the outcome stuff… so thanks, Stacey, for keeping us focused in that way.
The in-project metrics you mention (milestones on-time and on-budget) are ‘OK’. But as the in-project metrics are only performance measures you’ve got until the thing is completed, I think it would be good to have more detail in this area… pretty please.
The other challenge that these [in-project] measures present is that the on-time and on-budget presupposes that your initial plan was accurate… which, as it was a forecast in the first place, is a dubious assumption.
Wondering if you can shed any more light in this area?
Smiles and hugs from England,
Bryan
Hi Bryan, nice to hear from you!
Take a look at Marty’s measures in his comment on this post. He monitors things like days over planned duration, which are great for managing projects day to day. You’d measure this at each and every important milestone through the project, not just as the end. Projects can have major milestones and also mini ones too, to help with this.
Remember, we don’t measure performance to judge, we measure to learn. So even though our time estimates are just estimates, doesn’t mean it’s not useful to track against them in order to keep learning how to produce better estimates in the future.
Dear Stacey Barr,
I think it would be helpful to distinguish between business case and project.
In the business case you find out wether you should initiate a project or not and here the KPI No. 1, 2 ,3, 6 and 7 are relevant.
If you decide to initiate the project KPI 4 and 5 are relevant. Other KPI might be relevant as well, depending on the project. If you combine the KPI with a stage gate model it would be even better.
Kind regards
Thanks Jens. I still believe that all the KPIs are relevant even after you’ve accepted the business case, and go ahead to implement the project. Implementing a project on-time and on-budget is not evidence that it did in fact deliver the intended impact that the business case anticipated/specified. I see this a lot: that once people decide that a project could work, they just assume it is working as they implement it. But often the project didn’t do what was desired, and because they didn’t measure it, they missed the learning opportunity.
I agree with Jens that we talk about 2 different levels. In large companies it is quite common to have the project team responsible for carrying out just the project itself. Off course those other measurements are important, however responsability for decsions is often taken to another level. We even face pilot projects that only have as task to give a proof of concept and to feed management with data to calculate the business case. Once the pilot has ended, we move on to implementation, where more of the mentioned measurements can be aplied. So basically one cannot say all these should be measured. It really depends on the nature of the project. What we do can say is that above list are good condidates to be considdered.
We have a few which are specific to our issues (as it should be), but we also have some which should be useful for any Project Management Office. These include:
Delivery Performance Index at Solution Delivery (on time delivery)
For all projects for the current FY
the current and previous FY – by month and total for the FY
Efficiency (current and previous FY)
Hours over estimate
Days over planned duration
Functionality Delivered
Schedule Performance Index (on time closure)
For all projects for the current FY
the current and previous FY – by month and total for the FY
*Active Projects (Early Warning System)
Project KPIs (how well did we do?)
Functionality Delivered
Schedule
Budget
Overall score (using weights for the three factors)
Happy for suggestions!
Sorry lost indentations!
Delivery Performance Index at Solution Delivery (on time delivery)
–For all projects for the current FY
–the current and previous FY – by month and total for the FY
Efficiency (current and previous FY)
–Hours over estimate
–Days over planned duration
–Functionality Delivered
Schedule Performance Index (on time closure)
–For all projects for the current FY
–the current and previous FY – by month and total for the FY
–*Active Projects (Early Warning System)
Project KPIs (how well did we do?)
–Functionality Delivered
–Schedule
–Budget
–Overall score (using weights for the three factors)
That’s interesting, Marty. Sounds like your system is well-embedded. Is ‘Functionality Delivered’ more of a qualitative commentary or do you have performance measures that quantify what was delivered?
We do measure the budget against performance with respect to expenditure and income.
We look at delivery in comparison to the project plan
Impact review with respect to quality of life
Financial results against budget
Your KPI for projects is practical and educative
Thanks for sharing what you measure, Alex, about projects. I’m curious about how you measure the impact on quality of life?
Hi Stacey,
Good to see the no1 KPI, Business impact, which should be the one and only reason the project is started. In delivering the project i think there are many KPI’s, which depend on the methodology/approach which is taken. An agile methodology is measured differently then a waterfall style, although in the end, the Business Impact is for all the same end-goal. We sometimes forget that delivering the scope, on time and on budget is NOT what the ultimate goal is, and that there are multiple ways to get to Rome.