Project management is a complicated process and without setting some Key Performance Indicators (KPI), you can never calculate the success of your project. Think of it as something you record along the way to track your performance. Just like you cannot lose weight without knowing where you currently stand, your project cannot be a success without devising any way to measure progress towards certain goals.
No, we are not talking about avoiding common project management mistakes. Instead, we are talking about certain metrics the implementation of which will help you decide whether your project has been a success or a complete failure. So, without further ado, let us discuss the crucial metrics that can guide you towards success!
1. Productivity
Productivity is the output you get for every input. Overall, this metric examines the entire working capabilities of any organization. In a way, it keeps a track of how well the organization is using up its resources. A simple way of measuring productivity is by analyzing the number of projects accomplished per employee or by keeping a track of code lines produced by every employee, etc.
Without productivity metric in place, you will have no way of knowing how much output you are getting from all the efforts you have put into a single project.
2. Customer Satisfaction
Customer satisfaction is a crucial factor since it can provide enough information that could be helpful in measuring the quality of any services or products. Every organization can define unique metrics to gather data regarding customer satisfaction metric. For instance, they may include revenue generated from customers, gaining or losing consumers, customer survey results, complaints, and more.
Many of the organization use the Customer Satisfaction Index (CSI) that comprises hard measures (consumer’s buying and using behavior) and soft measures (consumer’s feelings and opinions).
3. Return on Investment (ROI)
This metric is used to figure out how much you have made on how much you have invested. This is a financial equation that breaks down the total amount of the investment to help you figure out how many dollars you have earned. The best way of evaluating total investment is by dividing the Net Benefits by the total cost. Then, multiply the result with 100 and you will find out the average return for every penny you invested.
4. Gross Profit Margin
Digits are crucial as a success metric since they can instantly tell if your project is a success or a failure. The GPM is obtained by subtracting the cost of the goods sold from the total revenue and then dividing the result by 100. So, the higher the margin is, the better the profit will be. In a sense, all the work performed should increase the overall financial profit of the project.
5. Cost Performance Index
A cost-efficiency metric, cost performance index is a measure of financial efficiency and effectiveness of any project. It is an amalgamation of completed work for every unit of money spent. It is obtained by dividing the value of the work performed by the total costs that it took to hit a monetary goal or an actual cost.
This metric is extremely helpful since it aids the organization in accurately allocating capital, reducing the capital cost and limiting financial risks.
6. Employee Satisfaction
The employee satisfaction score is familiar to the customer satisfaction score. There are various hard and soft measures that can help in determining employee morale. Finding out about the satisfaction of the employee is extremely important since it is co-related to the project’s success. So, the happier the employees are, the better and efficient the result will be.
To collect data on your employees, Gallup Q12 Employee Engagement Survey tool will come in handy. Additionally, you can also boost your employee’s morale by following the advice given in this article.
7. Schedule Variance
Schedule variance deals with the completion time of the project along with the budget. This is used to figure out whether the project is right on the budgeting schedule or if the project is running behind the planned budget! To find out if your project is in financial trouble, you need to subtract the budgeted cost of the performed work from the budgeted cost of the scheduled work.
If the obtained value is in negative, it would mean that your project is behind the scheduled budget.
8. Cost Variance
Cost variance is the process of identifying the entire financial performance of the project. In addition, it compares the initial budget, set before the start of the project, with the budget that was spent on the completion of the project. The purpose of knowing the cost variance is to track the financial expenses that you may have incurred during the progress of your project.
You can achieve the cost variance by figuring out the difference between the budgeted cost of the performed work and the actual costs of the performed work.
9. Earned Values
Earned value management is a project management approach where the project plan, the estimated amount of work, and the actual work accomplished is monitored to see if the project is sailing smoothly or not. Additionally, it is used to figure out the amount of value that has been generated from all the money which has been spent on the project.
Sometimes known as the Budgeted Cost of Work Performed (BCWP), earned value provides a much-needed reality check regarding the progress of the project.
10. Cost of Quality or Actual Costs
This is the additional financial expenses that your project incurs simply because the product or service was not up to the mark in the first try. This includes additional material, labor costs, and overhead expenses that are accumulated because the first attempt failed to impress the masses. The additional costs would include rework, duplicate work, inspection, replacements, refunds, scrapping rejects, complaints, damage to reputation, and loss of customers, etc.
Conclusion
As a project manager, your job is more than just to inspire or motivate your workers to perform their best. Instead, it involves setting some performance metrics where you can figure out how many business goals you have achieved and how many more are yet to achieve. That said, setting some metrics will propel your performance by acting as the checkpoints where you can stop and analyze the entire project’s progress until a specific point. This will help you make up for the losses and will allow you to improve your performance.
Performance metrics aside, managing a project is not an easy task and any little help can generate positive results. Ditching the traditional methods for managing projects, you can set up any digital management tool to help you with this task. For this purpose, you can simply look for any MySQL and PHP web development company that specializes in creating such web apps and you are all good to go!
About the author:
Shawn Mike has been working with writing challenging clients for over five years. His educational background in the technical field and business studies has given him the edge to write on many topics. He occasionally writes blog articles for Dynamologic Solutions.
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