Key performance indicators (KPIs) are metrics that help you understand how your organization or team is performing. Because each business has different goals and ways of working, their vital KPIs will vary. Still, quality KPIs share common traits, and there are certain ones that most firms should use.
A good KPI should act as a guide for you and your team. You don't want to follow a miscalibrated compass, so you need to choose your KPIs carefully. Identifying the right ones will depend on your goals. Profit, revenue, new client growth, customer lifetime value, overhead, project profitability, and staff utilization rates are just some of the ones that might be right for you.
In short, all effective KPIs are...
- Well-defined and quantifiable
- Communicated thoroughly to every employee
- Crucial measurements for tracking the progress of your goals
- Applicable to your business and industry
Here are 4 project management KPIs that you should consider using.
- Return on Investment (ROI): I'm sure you're familiar with ROI, and there's a reason why. It's one of the ultimate gauges for whether or not your endeavors are profitable and, consequently, worth your time and resources. Any project, tool, or even employee can be assessed on the basis of ROI. The generic formula is that ROI = (gain from investment - cost of investment) / (cost of investment). When you multiply that number by 100, you'll get it as a percentage.
- Cost Performance Index (CPI): You can use CPI to learn the true costs associated with a project, and thus understand how efficiently you're using project funds. As a result, you'll be able to better plan for the future. CPI equals (earned value) / (actual costs). If the resulting number is bigger than 1, there's no need to worry. However if it's less than 1, your costs are greater than the value of the project.
- Resource Capacity: Resource capacity is the amount of time your team can devote to a project. This is a crucial KPI for any project, as it relates to your most valuable asset: your employees. To calculate it, simply multiply (number of employees) x (available time each has). Unfortunately, it's unrealistic to assume that every employee can fully devote 8 hours every day to a project. You need to assume that their available time is far less than that.
- Schedule Performance Index (SPI): SPI illustrates whether or not your team is on schedule. All you need to do to calculate it is divide (earned value) / (planned value). If the number is larger than 1, you're doing fine (just like with CPI). If it's smaller than 1, you need to catch up.
A solution like BillQuick makes measuring these and other KPIs much more straightforward. For example, its revenue forecaster uses task data to forecast revenue, while its employee workload forecaster lets you view employee schedules and track both present and future availability. Other dashboards include data on project efficiency, profit analyses, earned value, and much more. If you're serious about holding your firm accountable with KPIs, it's worthwhile to quickly calculate such valuable information with BillQuick's help.