When measuring performance, it is best to focus on the big picture. You want to have a clear cut formula to correctly assess and precisely identify where change is necessary for improvement. To do so you’ll need to setup mechanisms that can measure, track and gauge every aspect of your project including the incremental improvements. That is where metrics come into play.
A metric is a standard of measurement with which progress, efficiency, productivity, performance and the quality of a process or project can all be assessed. The use of metrics help to build predictability within your projects and improve your decision making abilities with regards to what is working and what is not. This includes decisions about your team with regards to their contributions and those about set procedures.
It is important to setup performance metrics in project management because they are vital in assessing the status of all your ongoing projects. They will also assist you as the project leader, to spot and deal with small issues before they become huge problems. Importantly, these metrics will help you keep a closer eye on the projects profitability and the productivity of your remote team.
Not all projects are the same, and therefore there will be different metrics set and defined for different projects based on their nature and complexity. You need to select those metrics you wish to track, and then set the appropriate Key Performance Indicators (KPIs) for each metric so as to make certain that all the people involved are on the same page.
Below are two of the most common performance metrics groups that cover the key aspects of a project to measure for most projects; and how you can set them up to measure the progress of your team so as to determine whether a change is necessary as well as spot a team member who is lagging behind:
1. Schedule and Cost Variance Metrics
The purpose of these metrics is usually to gauge the progress and performance of a project against the signed baselines. Earned Value Management (EVM) is a concept commonly used to track this metric. EVM integrates the scope, schedule and cost measures of the project to gauge and provide accurate forecasts of problems in the advancement and performance of a project. Studies have actually shown the principles of EVM to be significant positive predictors of success for a project.
To setup the metrics for schedule, variance and cost variance, you need a project plan that will detail the work to be done, a valuation of the planned work often referred to as the planned value or the budgeted cost of work, and the pre defined rules of ‘earning’ to calculate the work completed or the earned value.
Here’s how it works: Say you have a project from your client with an approved duration of 6 months and a budget of Y amount (the project plan). In your initial briefs with you team, it was planned that 50% of the budget will be spent for the first 3 months (the planned value or budget budgeted cost of work). Now 3 months later and you see that they have actually spent 50% of the budget. Normally it would appear as though your team and the project are squarely on the right track, but that information alone is not enough to correctly conclude so.
With predetermined ‘earning rules’ (metrics) to quantify the work done, you are going to be able to tell exactly how much work has been done. Your team could have spent 50% of the budget, but only done 30% of the work (earned value). That would mean the team is way off course and is not doing well at all. On the other hand they might have spent 50% of the budget and accomplished 70% of the work, meaning that they are doing splendidly well.
2. Productivity and Resource Utilization Metrics
These metrics will serve the purposes of letting you assess both under and over utilization of resources as you measure productivity. Both of these results are going to have an impact on the profitability of the project and the company as a whole, and therefore very important in determining whether the team or someone in the team is causing losses.
To set up and have better control over these metrics, you’ll need a robust time reporting system that is made available to everyone in your team. That can be easily achieved using your project management software. Once set up, you will be able to analyze the distribution of effort from each team member across different phases of the project in terms of time utilization.
With those metrics, you will also be in a good position to tell how much time is being spent by everyone in the team on specific tasks and calculate their specific productivity with regards to work accomplished and the amount of time resource that was spent. Where more time is being spent unnecessarily on certain tasks while less is spent on others, you will be in a position to correct the distribution of that resource and set a good balance for future projects.
It has been said that you cannot change something if you don’t measure it. As a leader, it is your job to paint a vision for your team, state how you are going to achieve it and then assess or measure the progress to be certain that you are in fact getting there. Without measuring, you risk failure and no way of predicting and preventing it.
As a project manager, what metrics do you focus on when gauging the performance of your team? How do you tell when a team member is slipping or when a particular procedure needs change? Do you have any of the metrics stated above setup for your business? Do share your tips and thoughts about this, including any questions that you may have regarding performance metrics.
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