Analyzing project success is a challenging task – yet it is essential for running projects more efficiently, planning them more accurately, and achieving better customer satisfaction.
You just need to analyze relevant aspects, eliminate human bias, and produce actionable data that can be easily used for preparing, planning and managing upcoming projects.
That’s where key performance indicators (KPIs) come into play.
Project management KPIs are used as a quantitative measure of project success. However, each company and each project require a different set of KPIs. And determining the right KPIs for a project may be tricky as they should reflect some relevant parameters and trends.
So, we selected the most common project management KPIs and grouped them into four categories: Time, Cost and Revenue, Work Efficiency, and Work Quality. Explore them all to choose the best KPIs for your case.
What Is a KPI?
A KPI is a predefined value that allows companies to measure how effectively they meet the set objectives and goals. Project management KPIs may target multiple levels of performance – you can use them to assess specific processes in different teams or evaluate your overall business achievements. Yet regardless of what a KPI is targeted at, it should always be quantifiable and perfectly aligned with your unique business needs.
Find some examples below to understand which project management KPIs could work for your team and projects best:
25 Essential Project Management KPIs
Time KPIs
1. Time spent on project work
This indicator is basically the amount of time spent on entire project works, summarized for the entire team or individual team members – depending on what you need to assess on the basis of this data.
This indicator is helpful for planning typical projects, and for estimating resources needed for completing a project. Using a time tracking solution is a convenient way to get the data for monitoring this KPI.
2. Planned vs. actual hours
This indicator shows the accuracy of time planning for project tasks. Comparing planned and actually spent hours is essential for improving planning skills. It is indispensable for estimating time required for typical tasks that usually are a significant part of any project.
Tracking the dynamics of this parameter helps understand estimation accuracy progress.
3. Cycle time
Cycle time represents the time necessary for completing a specific task, assignment, or part of work. Having this data at hand helps planning time and resources required for completing repetitive tasks and activities.
4. Lead time
Lead time indicates how much time passes from the moment a task enters into a workflow until it is done. For example, in a manufacturing business, lead time shows how many hours or days a team used to deliver a final product after a customer placed an order.
The greater the lead time figure your company shows, the less efficient it is. Reducing lead time will help you boost productivity and increase revenues. So, be sure to track this KPI first by using the following formula: Lt = Od – Or, where Lt means “lead time,” Od stands for “order delivered” and Or is “order received.”
5. On-time completion rate
The percentage of tasks and work assignments completed within set deadlines. This indicator shows planning efficiency and estimation accuracy. It can also indicate the amount of changes in work procedure that cause delays and missed deadlines.
6. Resource capacity
This KPI is useful in determining whether you have enough employees available for work on a project and if you have a chance to deliver it successfully on time. To identify your business’s resource capacity, divide the number of hired staff members by the number of working hours they have at hand.
Checking on resource capacity throughout the project will allow you to promptly identify any recruitment needs, improve resource allocation and prevent significant work delays.
7. Number of schedule adjustments
This KPI shows how successful you are in managing projects from the start to the end. If you don’t have to remake a schedule even once, it means you do a great job with task estimation, timeline development, and progress control. However, if you need to readjust it multiple times throughout the project, you don’t manage your resources that effectively.
Thus, decide which number of schedule adjustments is acceptable within a project. Then, use it as a KPI to track your results and see whether your approach to project management requires improvement.
Cost and Revenue KPIs
1. Return on investment (ROI)
This is one of the most important financial indicators for any project. ROI is a ratio between the net profit of a project and its investment cost. It works as a measure of financial worth of a project and serves for evaluating the efficiency of investments. ROI can be used to compare the value of different projects, or to estimate the perspectives of starting a new project.
2. Budget variance
Estimated budget vs. budget actually spent upon completion of the project shows the efficiency of budget planning in the project preparation process. The dynamics of this figure, combined with analysis of changes in the course of the project, allows to reveal typical modifications in the project course that factor in the resulting budget.
3. Planned value
This indicator is used during completion of a project to figure out where the project is and adjust the budget if necessary. It represents the total project budget multiplied by the percent of project works completed. The point is analyzing how much has been spent vs. how much you should have spent.
4. Cost performance index
This index is used to analyze the dynamics of project work costs. It compares budgeted cost of project works as of current date to the costs actually spent. The cost performance index helps assess the cost efficiency of a project.
5. Revenue per hour
This KPI demonstrates how much money your business earns per hour of all employees’ work. To calculate it, you may divide the number of hours within a standard workweek (i.e., 40) by the total revenues gained during that week.
Knowing how much money you pay to both the salaried and hourly workers, you can easily identify which revenue per hour rate is acceptable for your business and use this KPI to see how productive and profitable you are at any time.
6. Labor cost per employee
This KPI reflects how your staff-related costs are changing over time. To calculate it, you need to divide the total staff-related costs by the number of full-time workers on your team.
Remember that getting a high labor cost per employee doesn’t always mean bad financial performance – you may just have well-paid talented people on your team that actually enable your business to get more revenue. The primary rule here is to compare how your labor costs per employee change over time and notice whether they decrease, increase or stay the same. Plus, it’s useful to compare your costs per employee to revenues per employee – in case the latter is lower than the former, you are likely in trouble.
Apply actiTIME to track your staff-related costs and project revenues. Learn how it can help in this post.
7. Net income
Net income depicts how much profit your business has made over time and whether it managed to earn more money than it spent. In other words, net income is the key indicator of company profitability, and it’s calculated using the following formula: Revenue – Cost of Products Sold – Overhead Costs.
Use this KPI to analyze the changes in your profitability, understand if you’re moving in the right direction and getting closer to your financial goals.
Work Efficiency KPIs
1. Billable utilization
Billable utilization is the relation between total hours of project work and hours that you bill to the customer. It indicates profitability of project activities and helps reveal where optimization is possible or required.
2. Number of change requests
This indicator represents the number of changes to the initial scope of project work requested by the client or stakeholders. It helps identify and fight problems related to project planning, weak management, and compliance with timelines and budgets.
3. Overdue tasks
This KPI can be defined as a fixed number or percentage of tasks that remain overdue. It can also represent the number or the percentage of missed task deadlines. Its purpose is indicating problematic activities and providing quantitative basis for possible improvements.
4. Cost of management processes
Management activities are always time-consuming, and this KPI helps monitor whether the reasonable amount of management efforts is exceeded. This indicator also helps analyze the efficiency of management activities and improve managers’ workflow.
5. Number of objectives met
If your staff fails to meet too many of the set performance objectives, something isn’t right. The problem may be in the way you plan your projects and communicate work requirements to the team. It may be linked to the lack of necessary tools or your employees’ approach to their daily work. In either case, unmet objectives point to some efficiency issues. And the best method to reveal what they are is by comparing the number of objectives met to the number of objectives you initially set. If those numbers match, you’re on the right track.
6. Rate of return
This KPI mainly applies to the supply chain management scenarios, and it shows the rate at which the shipped orders or goods are returned to your company.
To make this KPI work, you need to figure out how many returns a week / month are acceptable for your business. And besides, you need to track the reasons why the orders get returned to gain a better insight into the problems better and fix them for good.
Work Quality KPIs
1. Customer satisfaction / loyalty / retention
The end purpose of delivering a project is to keep the customer happy. This KPI, being a quantitative measure of customers’ happiness, can take the form of loyalty and retention rate. Calculated upon conducting a survey, it also includes a qualitative component that helps understand what parts of the project have been performed excellently and which ones need improvement.
2. Number of customer complaints
The opposite of the previous KPI, this indicator is also used to identify areas where improvements are necessary. Besides the plain numbers, it’s also reasonable to log the subject of each complaint to see what exactly needs to be corrected in quality assurance and project workflow in general.
3. Net promoter score
This KPI is used by managers and business owners to analyze the loyalty of customer pool and see how the feedback of existing customers can affect attraction of new ones. Basically, net promoter score can be correlated with the company’s clientele and revenue growth. Calculated upon a survey, it distributes existing customers by three groups: detractors (dissatisfied customers), passive (satisfied but unenthusiastic customers) and promoters (satisfied customers who are likely to recommend your service and fuel growth).
4. Employee churn rate
Satisfaction refers to the employees engaged in the project too – and this KPI is the indicator that helps measure employees’ happiness and satisfaction. Of course, project work efficiency is not the only thing that factors in it, but a detailed analysis can help identify organizational, financial and other flaws that negatively affect project teams. It’s more informative when combined with employees’ feedback and data collected on exit interviews.
5. Number of errors
Errors are a significant indicator of poor work quality. In technical fields, such as software engineering, they may result in a dysfunctional product. And when committed by a customer service manager, they may mislead your clients, cause their anger and dissatisfaction.
To measure work quality by the number of errors, you need to identify what’s considered an error in your business in the first place. Think of which employee mistakes may pose a critical danger to your company and which are just minor problems. Identify how many errors per period / task / project your business can afford to incur. Then, implement the right tools to scrutinize the quality of work and log all the errors. Finally, compare the results to your benchmark and make your conclusions.
Ready to Introduce Project Management KPIs?
Managing a project is an art of finding a perfect balance between various components of work process. Using key performance indicators is a science-backed way to achieve better performance, quality, customer satisfaction, and, eventually, revenue growth. Select the indicators that provide relevant information for your management purposes, monitor their dynamics, and make your project work more efficient.
