KPIs are useful in a project setting because sometimes you’ve only got a handful of short-term, specific, measurable, and time-bound objectives to track against. So how do you track KPIs? Here are the 5 steps that can be used for setting and tracking key performance indicators.
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It seems these days the chatter is all about OKRs: objectives and key results. So does the humble KPI (key performance indicator) still have a place?
I think it does. Ultimately, as long as you are tracking what you are doing and measuring outcomes so you can act on that information, you’re doing fine. I don’t think it matters much if you track KPIs or OKRs – or some other acronym that your company specifies. The point is that you have targets and a way to measure your performance.
KPIs are useful in a project setting because sometimes you’ve only got a handful of short-term, specific, measurable, and time-bound objectives to track against. I know OKRs can be used at a corporate, team, and personal level but in my experience, they work best with the big scary goals: we break those down and track performance at a department or organizational level. KPIs are what I have always used in the context of a project.
So how do you track KPIs? Here are the 5 steps that I use for setting and tracking key performance indicators.
You can’t measure what you can’t define, so the first step is to make sure you have metrics in place.
Ideally, these should stay relevant for the life of the project. If they won’t, for example, tracking number of bugs raised during the software testing phase, make it clear that a KPI is only going to be used during a defined period.
Pro tip: Make sure it’s easy to get the data! If you don’t have a way of capturing the data needed to measure performance, you’re going to have to set that up first.
It’s great thinking you’re going to measure hours spent on each project task against estimated hours, but if no one is tracking that information you’ll have nothing to report on. And will the team thank you if you ask them to start using time sheets right now? Perhaps there is a better, lower effort way to measure the same thing.
Here are some sample KPIs. Turn these generic examples into something specific for your project.
- Customer satisfaction
- Cycle time
- Resource costs per month
- Process efficiency
- Quality measures
- Schedule performance
- Cost performance.
Your PMO may have a standard list of KPIs that are regularly used on projects.
KPIs should follow the formula for SMART goals:
I’m sure you’re familiar with that format! Make sure you can phrase each KPI in a way that makes it SMART. That means setting targets for each item so you can say they are measurable.
There’s no right or wrong for your targets, as long as the stakeholders and project sponsor are happy with the way you have defined them. For example, if everyone is happy that project quality audit results are taken monthly with a target of 50%, that’s fine. In some industries, for some projects, 50% might be acceptable. If you are building a high-performance race car, a 50% target for your quality KPI isn’t going to work. Choose measures that are meaningful to your project.
My recommendation is to also set upper and lower limits so you can track whether a KPI is red, amber or green. For example:
Number of service desk calls answered within 30 seconds:
- 0-30%: KPI is red
- 31% to 80%: KPI is amber
- More than 81%: KPI is green
Make sure people know what the measures mean and how (and when) they will be calculated.
Now you’ve got your measures set up for your KPIs, you can start using them. Document the KPIs that have been agreed so everyone knows what the target is. I find it is also helpful to explain to the team why you are capturing this particular set of KPIs and why they are important to the project.
Set up your reporting and create whatever templates you need. Automate as much as possible using your project management software because it’s time-consuming to have to manually gather data regularly.
Once you’ve got your first KPI results, you can share those with the project team. It’s worth sharing them with the project sponsor first, so they don’t come as a surprise! Especially if they aren’t that good.
Be warned: the first few times you track and measure against the KPIs, the results probably won’t be that good. We improve what we measure. By shining a light on performance, you are encouraging people to do better so expect the results to improve over time.
Trends are interesting in any data set, and KPIs are no exception. Make sure you can easily compare last month’s (or last period’s) results with the current data set. String several sets of results together so you identify trends over time.
Data is only useful if you act on it, and seeing performance over time is a good way to get a view about how the project is going. As the PM, you’re often so close to the detail that it’s hard to see the bigger picture. Trending KPI data helps you take a step back and review the project’s performance as a whole.
Use that information to make smart decisions about how to take the project forward. Discuss the data as a team and think critically about what you could do to improve performance, efficiency and your KPIs measures. The only way is up!