4 Project Management KPIs Important For Performance Management

by:
on October 17, 2019

Unfortunately, the ease with which you can gather data often results in small businesses tracking more than is essential, leaving these same leaders unable to identify meaningful trends and make actionable decisions.

Hence, if you’re tracking everything, you’re not paying attention to anything.

Gartner supports this stance, stating that “more KPIs and metrics do not necessarily equate to better project management. The KPIs should help you measure progress toward a particular goal. If they don’t, they’re not worth measuring and tracking.” (Full report available to Gartner clients.)

In this guide, we highlight 4 project management KPIs that SMBs can use to evaluate and improve performance.

4 project management KPIs that can benefit small businesses

While the exact project management KPIs you track will be specific to your organizational goals, there are a few standard metrics that have proven value across industries, e.g., IT, software development, marketing and advertising.

These project management KPIs include:

1. Return on investment (ROI)

ROI helps you quantify project value and gauge an investment’s profitability.

Small businesses use this project management KPI to compare the “return” expected from different types of projects. This information helps them decide which projects within their portfolio to prioritize in the short term as well as which types of initiatives to fund in the future.

Gartner defines the purpose of tracking ROI as the KPI that allows you to quantify the project value and understand the profitability of an investment. Here’s the recommended formula for calculating a project’s ROI:

Calculation: ROI = (gain from investment minus the cost of investment) divided by cost of investment.

Factors to include when determining the “cost of investment” should travel expenses, various department budgets, and employee salaries.

Here are some common benefits and costs associated with investing in a new project management software:

benefits and costs of new software

2. Cost performance index (CPI)

CPI shows you how efficiently you’re using project funds.

You can use this project management KPI to better understand the actual costs associated with a project. This enables you to forecast future performance and better allocate funds to projects.

Calculation: CPI = Earned Value / Actual Costs

what is earned value what is actual cost

If your result is a number greater than one, your project is on track to finish under projected costs. However, if your result is less than one, you’re headed for a project overrun.

3. Schedule performance index (SPI)

SPI can tell you how well you’re executing on a project schedule.

Small businesses can use this project management KPI to understand their pace of work, which allows them to schedule projects more accurately in the future.

This is especially helpful for companies that are bidding on a project as they can say with confidence, “my team works at this pace, and we can complete this amount of work in that time.”

Calculation: SPI = Earned Value / Planned Value

What is planned value

If your result is a number greater than one, your project is on course to finish ahead of schedule. However, if your result is less than one, this indicates that you’re behind schedule.

4. Resource capacity

It’s common to overestimate employee availability. But doing so can have disastrous effects on the success of the individual project as well as the portfolio as a whole.

Small businesses use this project management KPI to see how many full-time employees (FTEs) they have available to work on projects. Then, they can allocate resources to projects based on project priority.

Calculation: Resource Capacity = (Number of People) (Availability)

To calculate resource capacity, multiply the number of people you have by the amount of time they have available to work on projects. Bear in mind that employees can realistically dedicate less than 50 percent of their work day to projects.

How to use project management KPIs to measure project performance

Start with a “S.M.A.R.T.” performance management strategy, i.e., one that is specific, measurable, agreed upon, realistic, and time-based.

This involves completing the following steps:

how to create KPIs

Next, be consistent. KPIs show trends over time, so it’s important to use a consistent set of metrics to measure performance across several similar projects.

 Pro Tip:  In addition to being “measurable,” KPIs need to be “manageable.” So you should realistically be tracking only 3 to 5 KPIs at any given time.

Any more than this and you’ll be ineffective at driving organizational change and project improvement simply because there are too many factors and a lack of cohesive analysis.

Finally, look for the following capabilities as you evaluate tools to help you measure project management KPIs and monitor the health of your projects:

Project planning Map out a project’s critical path (often with Gantt charts) , identify important milestones, pinpoint dependencies and constraints, and assign tasks to the team. Set baselines for scope, budget and timeline.
Project tracking Compare actuals to estimates (e.g., actual expenses vs. planned budget and actual schedule vs. planned timeline) and report status to stakeholders. Aggregate data, create dashboards, and run reports.
Risk management Manage both positive and negative occurrences that result from a project. Identify risks, assess their impact (perform both qualitative andquantiative analysis), respond, monitor, and control the impact.
Budgeting Manage project expenses, compare costs to budgets, and track financial performance. Proves early detection and warning of potential overruns. Helps management forecast revenue and profitability.
Resource management Identify employee skill sets, track each employee’s workload and availability, and allocate them to projects accordingly. Forecast staffing needs and make proactive hiring/training decisions.


If you’d like to learn more about the project management solutions available to help small businesses, visit our project management buyer’s guide for more information. Or if you prefer a more personal touch, give our software experts a call at 844-680-2046. The chat is free and you’ll be sure to find the best software for your specific business.

If you have questions about the project management KPIs discussed here, tweet me at @AnalystOlivia. I’d love to hear from you!

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