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The Ugly Truth About Project Management KPIs

Sep 18, 2019 | By Steven Burns, FAIA | 0 Comments

Topics: KPIs, Project Management, Performance, Industry Insights

Let me first clear the air and tell you that most firms that are tracking their KPIs are making stupid decisions. Before you walk away, I did stop and think long-and-hard about the use of the word “stupid”. After trying to convince myself to be more “professional” and change my language, I realized that there is no better word for me to use and I’m going to have to explain why.

As we all know, bad data in equals bad data out. For the life of me, I just can’t understand how so many firms can continue looking at their KPI dashboards and reports and make critical business decisions yet the reliability of the underlying information is so flawed and unchallenged.

When thinking about project management KPIs one of the fundamental pieces of information is the time your team spends on the project. Furthermore, if you intend to get actionable information, from which you can base real-time decisions as well as plan future projects, understanding what specific activities your employees are doing within those projects is also imperative.

However, most firms don’t have the capability to collect real-time information and instead ask employees to complete archaic time-cards. In a previous blog article, I discuss at length how this flawed system operates, why it’s so terrible, and how to remedy it.

When your team runs over budget

Imagine how useful your car dashboard would be if it updated you on the status of your gas tank once/week while you’re on a cross-country driving trip. The one advantage your car has over your project management KPIs is that when it runs out of gas, it stops right in the middle of the road.

When your team runs over the planned hours or budgeted costs, you won’t know about it until everyone submits their time cards, they’ve been reviewed and reported back in something like a budget-versus-actual report. If only our staff would be as effective as the aforementioned car and sit motionless at their desks the moment the project ran out of gas.

While this article could be like countless other blogs and whitepapers out there and tell you the Top 10 Project Management KPIs Your Firm Should be Tracking, I really want to tell you that unless you have reliable data feeding your KPIs, you might be better off not even wasting your time looking at them.

Technology as the solution

Your number one priority must be to implement a technological solution within your firm that can not only collect real-time information about the work your staff is doing but also has full real-time integration into all your business and project financials.

The system your firm should use must be in the cloud with built-in business intelligence rather than relying on managers to pull data from disconnected sources and try to make sense of them in a spreadsheet. This manual work is not only as inefficient as a Rube Goldberg contraption, but it’s also costly, prone to many human errors and is delivered far too late to make “management” effective.

If you are a professional service firm, the project management KPIs you need are already pre-built in a fully integrated, cloud-native, platform that meets the requirements I’ve set out. It’s a system like this that gives your managers the sharpest weapons which I like to think turns a Project Manager into a Business Manager.

If you recognize that every project is really its own little business and the person charged with managing that project is like the CEO of their own little company, then you will recognize that they must have tools at-hand which will not only make the project profitable but enable all members of the team to participate in that mission. When each project has the likelihood of being real-time profitable then the firm is also profitable.

Information for information’s sake is useless

Understanding which project management KPIs your firm should measure is only half the equation. You must also utilize them in a way that provides you with clarity and focus. Information for information’s sake is useless.

Instead, look at your KPIs as giving you actionable information: my gas tank is only 20% full therefore I need to start heading towards a gas station to mitigate stress and risk running out of gas in the middle of the road.

To help you better understand what to measure and how to prepare each project so you will have success, there is this helpful acronym: S.M.A.R.T. This means everything you measure should be Specific, Measurable, Attainable, Realistic and Time-Bound.

15 project management KPIs you should know

Finally, here are 15 project management KPIs that I would expect each Project Manager to have access to at any second of the day and have the same assurance in their accuracy as we all expect when we look at any measurement on our car’s dashboard.

  1. Work in Progress
  2. Write-Up / Write-Downs
  3. Billing Status (Net Billed, Paid, Balance and percent Paid)
  4. Earned Value (actual and estimated) including showing the value of Work-in-Hand
  5. Profitability (Billed value, Cost of billed, Profit value and Margin)
  6. Contract vs Actual (Hours and Value)
  7. Budget vs Actual (Hours and Value) - Summary and Detail view
  8. Billability Analysis (Billable value Billed value Unbilled value Non-Billable value)
  9. Billable and Billed Margins
  10. Resource Capacity and Forecasting
  11. Revenue per Employee by Project
  12. Billable Utilization by Project and Employee
  13. Employee Performance and Satisfaction Metrics
  14. Client Satisfaction Metrics / Net Promoter Score
  15. Return on Investment = (Total Revenue - Total Costs) / Total Costs

The Author

Steven Burns, FAIA

Steven Burns, FAIA, spent 14 years managing his firm Burns + Beyerl Architects. After creating ArchiOffice®, the smart office and project management solution for architectural firms, Steve brought his management expertise to BQE Software, where he is perfecting the business strategy and product development.

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