Updated 17 May 2023: Key Performance Indicators, KPIs, are a very important quantitative measure that will allow you to see how you are progressing with a project and help you work out where you need to improve. If they are identified correctly, they can be a valuable diagnostic tool. However, they should be relevant to the project you are working on; otherwise, they can lead to frustration and hamper progress. You need to understand exactly what you should be looking for in your KPIs.
Which KPIs should you consider measuring?
There are six KPIs that are essential for assessing performance on a project.
On-time delivery KPIs
One of the critical project management skills you need to hone is the ability to coordinate all the different activities of a project. This will assist in bringing in the project by the agreed deadline. This means it is essential that your project plan considers every stage of the project and also allows for some leeway in case of any unforeseen delays. This will avoid disruptions to your project timescale.
Budget is another very important KPI that can be used to measure the success of a project. It is important in the planning stage of a project to allow for fluctuations in prices for consumables. In addition, be prepared for the possibility of something unforeseen occurring and allow an amount to cover this. Going over your budget by a small amount may not be an issue to your stakeholder. However, if it is over by a significant amount then they are unlikely to be happy, even if your project has a very successful outcome.
This refers to agreements that are made internally within the team. It is the responsibility of the project manager to continually question processes and make necessary improvements. This might be as simple as seeing where there is a time saving to be made, a financial saving or even by improving your stakeholder’s satisfaction from the end result of the project.
Relationships and communication
The project manager is the go-between for the project, talking to team members and liaising with stakeholders. It is vital for them to create good relationships with everyone. When negative or harmful relationships occur within the project there will be negativity. This can cause tension within the team, making it difficult for people to work effectively. Communication is one of the single greatest skills a project manager should have in their arsenal. It is important to understand how to communicate with a range of different people.
Risk Management KPIs
There is risk with every project. How a project manager deals with the risks they face is important for the success of the project. How prepared they are for potential risks and the impact any decisions they make is important. If a project manager wants to be effective, they need a good risk mitigation plan.
Customer Orientated KPIs
It is important for a strong project leader to validate any decisions from the customer perspective. For instance a typical key performance indicator for a website would be customer conversion rate. That’s fairly obvious but what is less clear is what are the conversion events, are they set up properly on the website and is there a meaningful series of conversion steps that enable the business to determine when and why potential customers drop out of the conversion process. Even when these indicators are well-established a business should understand what constitutes a low conversion rate and what is an acceptable conversion rate for their particular industry.
In addition PMs need to look at these customer oriented KPIs from the perspective of the stakeholder. Do they accurately reflect the stakeholders view of the business? Are they meaningful and do they connect through to the sales process? This is especially important for B2B businesses where a customer will probably not be buying a service or product online but just making initial contact via the website. Considering how a customer might initially interact with a business is an important part of the project process.