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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. The key is analyzing relevant aspects, eliminating human bias, and produce actionable data that can be easily used for preparing, planning and managing upcoming projects.
That’s where KPIs come into play. Key performance indicators, or KPIs, are used as a quantitative measure of project success. However, the number of KPIs used in various companies’ practice exceeds the reasonable number for tracking within a specific project.
Determining the right KPIs for a project is usually tricky. The point is choosing the minimum of indicators that will reflect crucial parameters and trends. We’ve selected basic KPIs and grouped them by specific areas of project management – this way, it’s easier to choose the most informative ones.
- 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.
- 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.
- Cycle time
This indicator represents time necessary for completing specific task, assignment, or part of work. Having this data at hand helps planning time and resources required for completing repetitive tasks and activities.
- 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.
Cost & Revenue KPIs
- Return on Investment (ROI)
This is one of the most important financial indicators for any project. ROI is a ratio between net profit of a project and 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.
- 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.
- 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 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.
- 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. Cost performance index helps assess cost efficiency of a project.
Work Efficiency KPIs
- 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.
- 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.
- Overdue tasks
This KPI can be defined as 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.
- 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 efficiency of management activities and improve managers’ workflow.
Work Quality KPIs
- Customer satisfaction/ loyalty/ retention
The end purpose of delivering a project is keeping 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.
- 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.
- 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).
- 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.
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.