by Dharam CW2 | Oct 13, 2023 | General
Organizations may stay profitable and competitive using project management practices that help identify process improvements or cost-cutting opportunities. Metrics may assist in discovering areas for improvement, data to focus on, and how to quantify the success and efficacy of a company’s efforts. Knowing more about project management metrics that can assess performance will help one acquire professional skills for any business and advance their career in project management.
Every organization needs to ask,
- “Are we getting the outcomes we want?”
- “Are we accomplishing our project objectives?”
- “Are we meeting the requirements for customer success?”
- “Are we getting the intended return on investment?”
Project Management Metrics May Assist
Success depends on the ability to forecast and meet product and service commitments. With projects becoming more common, it is critical to show additional value to the business using project management strategies, tools, and procedures. Therefore, a metrics program is required. Metrics may assist in identifying significant events and trends, distinguishing between challenges and opportunities, and guiding companies to make wise decisions.
How can we know whether the project management efforts make a difference and contribute to corporate success?
- It has long been known that suitable measuring methods are essential to basic management tasks, including project planning, monitoring, and control, and metrics are present at all stages of project management.
- As project management grows prominence and more firms embrace a project-based management approach, objective and performance-based management highly depend on measurement processes.
- To assist decision-making, project selection, portfolio management, and lead product and process improvement, metrics must be integrated into project life-cycle activities.
- In addition, metrics may be used to assess an organization’s project management maturity.
- Metrics aid in understanding capacities, allowing for developing strategies based on creating and delivering goods and services. They also enable people to recognize significant events and patterns and distinguish between challenges and opportunities.
- Metrics can assist in improved cost and schedule management, decrease risks, increase quality, and guarantee that objectives are met.
Measuring is an end goal in some businesses. Individuals in such businesses who have obtained project management certification and use specific project management tools and processes are the ones who often recognize the significance of project management. At the same time, individuals at the top may only accept this value partially. A metrics practice put in place is one of the best methods for successfully explaining the benefits of project management to top executives.
What are Project Management Metrics
What are Project Management Metrics?
Project management metrics are data sets, algorithms, and calculations that allow businesses to assess the performance of a project. They assist managers and organizations in reviewing how a project progresses, evaluating team productivity, project completion deadlines, and costs, and identifying, reducing, or eliminating risks. Project management metrics are numerical instruments that firms use to build successful strategies, carry out continuous improvement initiatives, and assess employee and customer sentiment.
Benefits of using metrics in project management
Project management metrics are an efficient approach to assessing a project’s progress. Measuring the project’s performance against key parameters helps to understand the management process. These indicators in project management also assist in steering project objectives, allowing teams to assess success and make improvements as needed.
Following and evaluating the right indications can provide the company with critical insights regarding the team’s performance – from both a high-level and individual standpoint. In addition, you’ll be able to identify process bottlenecks and other inefficiencies, which one can subsequently fix, adding to the project assumptions list and enhancing future project performance.
Furthermore, tracking and collecting this sort of data might be useful when the time comes for the project management performance review. Taking responsibility for the team’s work by analyzing project outcomes, identifying inefficiencies, and developing improvement plans sends a strong message to management. It displays that one can be a real leader committed to the business’s success.
Benefits of Using Metrics in Project Management
- Measure team productivity
Relevant metrics in project management can reflect a team’s productivity. For example, the on-time delivery (OTD) rate or service level agreement (SLA) rate might be used to calculate the project’s ROI.
- Optimize team performance
While it is critical to maintain the team’s performance, forward-thinking management seeks development opportunities. Relevant project metrics enable one to broaden their understanding of project-related aspects. Project performance measurement reduces uncertainty and allows individuals to make better, more informed decisions.
- Track ongoing progress
Management performance metrics also track a project’s progress over time. These metrics are critical to discover obstacles early and help adjust the track as needed.
Project Management Metrics: How to Measure and Track Success
Relevant project management metrics will help enhance our understanding by eliminating uncertainty and making well-informed decisions.
Metrics prove value
Cost-related project management indicators may demonstrate the value of a team—for example, a rate of on-time delivery or a rate of satisfying SLA. Return on Investment (ROI) is a popular statistic for demonstrating this value. If a department fails to generate or contribute to a firm’s measurable objectives, a smart business would dissolve the department and redirect resources to another area that provides results.
How to choose the Metrics
Metrics improve performance
While demonstrating value is crucial, forward-thinking management prioritizes performance improvement. Relevant metrics help you have a better grasp of project management. This aspect reduces ambiguity, allowing all parties involved to make informed decisions. For example, assume that the given slack time is causing the completion of the following task to be delayed. You can adjust the slack time to keep the project deadline.
How to choose the metrics?
Each business or project requires metrics specific to its purpose or aim. Metrics are determined in three steps:
- Understand the project’s objective or goal.
- Determine which crucial success elements must be met to succeed and reach the objective.
- Consider how you will measure the achievement of each key success factor for the project or program.
What makes a successful project?
What makes a successful project?
Before starting any project, you and your team should know what constitutes a successful project. After all, you want to avoid being known for a famous failed project. So what makes a project successful? First, you should establish a set of success criteria for your project, including the following:
- Delivers on time: Completing a project on schedule and under budget is one measure of success, especially for external parties, such as clients.
- Stays within budget: A budget is in place for all initiatives. You will have succeeded if you can finish yours without incurring more fees and expenses.
- Achieves its objectives: If your project was completed and met its objectives — as stated at the outset — that’s a huge accomplishment.
- Gets positive feedback: Assessing a project’s internal and external success is simple. But how did it fare? If stakeholders and clients offer positive feedback, the project will be considered a success.
Key Project management metrics
Project management metrics may be established based on the purpose and complexity of the project. However, the ten key project metrics listed below often cover the most important measurements:
Key Project management metrics
- Productivity
This indicator examines a company’s total skills — how well it uses its resources. Productivity demonstrates the connection between inputs and outcomes. For example, how much do you get out of a project after your efforts? The optimal productivity outcome is to produce more with less.
Productivity = Units of Input/Units of Output
- Gross Profit Margin
Numbers are more powerful than words. Indicators directly related to the bottom line indicate success or failure faster than other metrics.
The larger the profit margin, the better the business. Any program or effort done should add to a company’s financial profit. The margin is the proportion of each dollar generated after expenses are deducted.
Gross Profit Margin = (Total Profit-Total Costs)/100
- Return on Investment (ROI)
Return on investment especially considers the dollar amount earned for the amount spent on a project. This metric is a financial calculation similar to gross margin. However, instead of focusing on a total profit, it considers the specific benefit of the project divided by the costs.
To use this metric, a dollar value must be assigned to each unit of data to calculate the net benefits, which may include:
- Contribution to profit
- Cost savings
- Increased output
Costs may include resources, labor, training, and overhead.
ROI = (Net Benefits/Costs) x 100
- Earned Value
Earned value provides strategic guidance by displaying how much you have derived from the money invested in a project to date. It compares the value of work performed by a given date to the project’s approved budget.
Earned value is often called the Budgeted Cost of Work Performed (BCWP). This statistic serves as a reality check during the project’s execution.
Earned Value (EV) = % of Completed Work / Budget at Completion (BAC)
- Customer Satisfaction
A customer satisfaction score is a quality indicator for your service or product—the findings of a customer survey influence this metric. In addition, the product or service should perform as intended and meet genuine client demands.
Each organization may create a unique score by weighing each component depending on its value. Customer survey results, money earned from clients, repeat or lost clients, and complaints are examples of variables.
The Customer Satisfaction Index (CSI) is the most extensively used metric for customer satisfaction. Another technique for measuring customer satisfaction is the Net Promoter Score (NPS). NPS measures customer loyalty by determining the chance of a consumer suggesting a product or service.
Customer Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
- Employee Satisfaction Score
Survey data determines employee satisfaction in the same way that customer satisfaction is. So why should workers be included while evaluating project management? The answer is straightforward: employee morale is directly related to project performance.
In the end, a satisfied employee does better work and more efficiently. In addition, the high costs of employee turnover for a firm — which may range from 50% to 200% of an employee’s salary — should be motivation enough to focus on the people closest to the project.
The Gallup Q12 Employee Engagement Survey is a well-known data collection tool. An ESI procedure yields an index score.
Employee Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
- Actual Cost
The Actual cost is a simple statistic that displays how much money is spent on a project rather than simply an estimate. This cost is calculated by adding all the expenses for a specific project across the timeline.
Actual Cost (AC) = Total Costs per Time Period x Time Period
- Cost Variance
Cost variance describes the difference between the intended budget and actual expenses during a given time period. Is the estimate higher or lower than the actual costs?
- A project is over budgetif the cost variance is negative.
- A project is under budgetif the cost variance is positive(a standard measure of success).
Cost Variance (CV) = Budgeted Cost of Work – Actual Cost of Work
- Schedule Variance
The schedule variance examines both budgeted and scheduled work. Is the project running ahead of or behind schedule?
The schedule variance is the difference between work scheduled and work accomplished, calculated as the budgeted cost of work executed minus the budgeted cost of work scheduled. A negative schedule variance indicates that the project is running late.
Schedule Variance (SV) = Budgeted Cost of Work Performed – Budgeted Cost of Work Scheduled
- Cost Performance
Cost performance is a cost efficiency metric. Divide the value of the work performed (earned value) by the actual costs incurred to get the earned value. Forecasting cost performance provides for more precise budget estimates.
Cost Performance Index (CPI) = Earned Value / Actual Costs
Implementing Project Metrics
Once project metrics have been established to meet the company’s goals, it’s time to apply them. First, interact with users to help them understand the process, its value, and how analytics may enhance projects. Then, provide specific examples, such as “the dashboard will indicate where we need documentation, so we may prevent delays by gathering the necessary information.”
Create a project management metrics strategy with criteria everyone can understand to help you get support. Explain the significant indicators you’ll be measuring, how you’ll track them, and the goals you intend to achieve. The strategy should then be put into action. Understand that project metrics should lead to action; else, they are worthless. As you discover unusable metrics, revise the plan.
Final Thoughts
Project management metrics are critical to the success of any organization. They track the progress of initiatives, assist managers in defining success, and verify that the team is heading in the right direction.
It is complicated to analyze and evaluate a project’s development without appropriate metrics in project management. With precise, trackable KPIs, the company can assess project progress and identify when it’s time to change strategy or where the team is experiencing difficulty. If the company does not make the essential changes, it may face serious obstacles and lead to failure. As a result, measuring important project management metrics is vital to the company’s success.
Feel free to check out my discussion on this topic with Justin Buckwalter in YouTube
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by Dharam CW2 | Aug 11, 2023 | General
A project manager or leader is much more than someone who develops a strategy and controls all operations within a project. These experts, for example, must be skilled in communication and connection-building because the work requires them to do it frequently. The capacity to develop long-term, trusted relationships with stakeholders is a critical component of project managers’ and leaders’ success. Whether they like it or not, diverse stakeholders directly impact the business. As a result, companies with managers who can foster a deep connection with their stakeholders have a substantial competitive edge in today’s interconnected business environment.
Stakeholders
Why Stakeholders are Important to a Project
A stakeholder is an individual, group, or organization whose interests are affected by the success of a business venture or project. As the name suggests, stakeholders are interested in a project’s success. They might be internal or external to the entity funding the initiative. Stakeholder relationships may positively or negatively impact the project’s life cycle. Therefore you’ll need to identify your key stakeholders and develop a stakeholder management plan to fulfill the requirements.
Every project you manage has stakeholders, whether internal or external. One of the most common reasons for project failure is that the deliverables differ from what the customer requested or did not meet the customer’s demands. To guarantee project success, one should be familiar with the project’s main stakeholders, how they communicate their needs, and what acceptable results are.
Engaging stakeholders throughout the project, especially at the start, will assist, reduce and discover hazards and boost overall “buy-in.” When stakeholders are fully engaged, their impact is amplified. Stakeholders are vital to a project in the following ways.
Importance Of Stakeholders In Project
- Providing Expertise
Stakeholders are a source of information about current processes, historical data, and industry expertise. When gathering and documenting requirements, it is critical to include all essential stakeholders. Project managers and those in charge of deliverables may be experts on only a few projects. Key stakeholders can contribute to industry-specific needs or limitations that can be useful in identifying project constraints and risks.
- Reducing and Uncovering Risk
The more one engages and involves stakeholders in the project, the more they will decrease and identify risks. For example, during discussions, stakeholders may raise concerns regarding satisfying original specifications, project demands, and limits. Identifying risks and developing a plan to manage them before issues arise will significantly improve your initiatives’ success.
- Increasing Project Success
Stakeholders should be aware of the project scope, significant milestones, and when they will be asked to evaluate deliverables before final acceptance. Set expectations early in the project life cycle if the business must satisfy stakeholders’ demands due to competing needs or priorities. This move will assist in maintaining the relationship throughout the process.
- Granting Project Acceptance
The more frequently you interact and include stakeholders from the beginning, the more likely you will have a successful project outcome. By the end of the project, team members should be aware of delivery expectations and risks and how to reduce those risks. The final acceptance is their last stamp of approval at the project completion phase.
Stakeholder Relationships are key
Building relationships with stakeholders leads to improved trust. People collaborate more readily and successfully when there is trust. Investing time and effort in discovering and cultivating stakeholder connections may boost project confidence, reduce uncertainty, and accelerate issue resolution and decision-making. This concept recommends making a deliberate decision to devote time, attention, and effort to stakeholder relationships. In addition, personal qualities such as self-awareness, mindfulness, respect for others, and courage may be essential to developing trustworthy, open, and honest relationships.
Ways To Approach Stakeholder Relationships
How could we approach it?
- Determine the stakeholder hierarchy.
- Create profiles for individual and group stakeholders.
- Create relationship maps.
- Determine who should interact with whom and when.
- Always maintain a professional and genuine demeanor.
- Build trust and confidence through controlling and satisfying expectations, acting with integrity, honoring commitments, and being trustworthy.
- Consider how you can assist your stakeholders rather than just how they can assist your project.
Risks of overlooking this concept include:
Risks Of Overlooking Into Stakeholders Relationship Concept
- Increased project risk in terms of time, cost, and quality.
- Greater known and unknown project opposition.
- Project management is shattered.
- Reduced team motivation.
- Low cohesiveness within the project community.
- Personal and corporate reputational damage, as well as recrimination.
The benefits of applying this concept include the following:
Benefits Of Building Stakeholder Relationship
- Mutual trust and confidence have grown.
- Stress reduction and a more pleasant working atmosphere.
- Improved problem-solving and decision-making.
- Increased bid value and increased possibilities of keeping clients and employees.
- Opportunities for personal development, maturity, and career progress.
- Sufficiently prepared to deal with challenging circumstances.
- Legacy to carry on with future endeavors.
Ways to build good relationships with Project Stakeholders
Stakeholders must be effectively taken care of for any firm to succeed. These include the customers, suppliers, partners, investors, workers, and the general public interested in your company. When a stakeholder is neglected, the organization can feel the consequences. Building great connections with stakeholders requires work, time, and a well-thought-out action plan.
Building trusted relationships with key stakeholders and maintaining communication throughout your project is essential. Through active engagement and speedy resolution, engaged stakeholders motivate individuals and keep the project on track.
Project managers establish trust and interact with important stakeholders at the outset. However, as the project progresses and the team size rises, we need to catch up on the importance of maintaining those connections. If unengaged, it usually results in communication failures, a mismatch of expectations, delayed decision-making, and, in extreme cases, misaligned project goals with company strategic objectives.
Here are six suggestions for developing and maintaining effective stakeholder relationships.
Ways To Build Good Relationships With Project Stakeholders
- Identify the key stakeholders.
In every project or program, the project manager oversees the initiative and identifies all stakeholders involved in planning, status reporting, or managing the dependencies. However, the focus here is on how you engage your important stakeholders. Who are the most important stakeholders? It is determined by project type, organizational structure, industry, and internal and external relationships.
Key stakeholders in project engagement are:
- Persons who have decision-making authority.
- Influence.
- A vested interest in the project’s result.
They might be part of your project’s organizational structure (such as a project sponsor or business sponsor) or an extended stakeholder (like external customers or funding partners).
Identifying these important stakeholders early in the project allows the PM and team to build trusted relationships and understand their expectations of project deliverables, their role, and their level of engagement on an ongoing basis.
- Analyze the individual stakeholders
Analyze the individual stakeholders identified at the previous stage to determine the amount of involvement and time required to create the connection. Historical data, team brainstorming sessions, focus groups, and interviews might provide the necessary knowledge for analysis. Next, each important stakeholder is examined to determine their attitude toward the initiative, level of support, influence, and acceptance of the change.
The project manager would decide on the amount of engagement based on their interest in the project and their ability to affect change. When there is more ambiguity about the program’s scope, objectives, and expected outcome, the PM’s role in managing expectations and relationships is more significant.
- Plan on how to keep your stakeholders engaged in your project
Consider organizational culture and attitudes toward the project while developing an engagement plan. For example, understand the stakeholder’s level of support or resistance to team talks.
Define how you will assess when a stakeholder becomes disengaged as part of your strategy; the metric may be anything like the number of mandatory meetings missed by the stakeholder in a month. When a significant stakeholder consistently skips a needed meeting or fails to make timely decisions, it is a source of contention. If not handled, this disengagement will begin to undermine the project.
- Keep all key stakeholders informed and updated
The project manager is responsible for keeping all key stakeholders informed and updated as frequently and as early as feasible during the project. Therefore, maintain a proactive approach in your discussions with them.
To build a standardized onboarding process, new stakeholders should become acquainted with a collection of standard artifacts (like the charter, communication plan, business case, and risk register). Also, take the chance to hear from current stakeholders. Feedback from stakeholders who no longer have a vested interest in your endeavor may help you adjust your path.
- Maintain involvement
It is critical to maintain your involvement, especially in long-term initiatives. At the end of a project, we’ve seen project teams wear out, with stakeholders eager to move on to the next big thing. The project manager must keep the engagement going. The connections and reputation you build via this involvement can help you succeed in future efforts in large businesses. Maintain contact with your key stakeholders long after the project has been completed and delivered.
Project Management Trends That Will Shape the Future
Project management is crucial in deciding how businesses and organizations will fare in the marketplace. Projects might include implementing a corporate plan, running marketing efforts, or organizing business events. Teams work to interact, manage, and communicate as effectively as possible to complete tasks and meet deadlines.
Organizations flexibly responded to the pandemic’s disruption by developing new methods of operation. However, they were thrust into the era of digitization and had to reconsider their methods of operation. These top 6 project management trends in the future demonstrate the ongoing need for technical innovation and digital transformation regarding the function of project management software in the future by building great stakeholder relationships.
Future Project Management Trends
- AI Automation and Implementation
The use and usage of artificial intelligence are the most obvious of the new current trends in project management. Knowing which initiatives are more successful enables teams to precisely determine which aspects are vital if the firm is to reduce costs and risks. As a result, organizations may increase transparency and productivity. The main factor driving the current increase in the adoption of such software is this characteristic of project management systems.
Let’s look at a few instances:
- A few businesses currently use automated and machine learning technologies to get alerts about potential issues the company could run into. For instance, suppliers might now get notifications about possible obstacles like bad weather and traffic.
- Building machine learning algorithms to support a project manager’s decision-making capabilities by evaluating data from several projects in the project portfolio is a promising study area.
- Globalized Project Management
As working circumstances got more flexible due to the forced work from home caused by the worldwide pandemic, businesses and teams became even more globalized. It has long since established roots. Mercer estimates that 70% of businesses want to use the hybrid work model.
Although the remote work and hybrid model trend allows for the employment of creative and inventive individuals worldwide, project management has to keep up with it. Collaboration, for example, is challenging when team members are unavailable due to competing schedules created by different time zones.
Software for project management provides a tool that could address this issue. The platform enables all brainstorming sessions and discussions to take place in a single setting, allowing businesses to access talent worldwide.
- Hybrid Project Management
The third new development in project management is the rising use of the hybrid approach, which refers to how project teams combine the Waterfall methodology, the systematic approach, with the Agile methodology, which is the quick-moving methodology. A hybrid approach aims to elevate teams to become aware of the specific project lifecycle while providing the ability to support them in changing the plan as necessary.
How do you know what will work for you, and how can you prepare for this trend?
PMs must learn about the most recent techniques, examine some of the fundamentals, and analyze how to use them correctly to obtain a greater understanding of the project situation and its aspects, such as the clients, the corporate objectives, and the purpose of the project, and the team’s attitude.
There is an increasing requirement to adapt your strategy and develop a project plan that enables you to lead projects unconventionally and comprehend different components of multiple techniques that cater to the demands of your team, perceived timeline, environment, end goals, etc.
- Stakeholder-Centered design
The fourth most recent trend in project management is an emphasis on delivering transparency for the benefit of the company’s stakeholders and developing products centered on the human perspective. Project managers may communicate with, collaborate with, and inform stakeholders. This design makes it easy for investors and customers to support any project launched as part of a company’s business plan.
- Soft Skills
Soft skills have become an essential component of project management. Project managers must interact with stakeholders, clients, and project teams. They will mitigate risks, resolve internal disagreements, and keep the project team engaged. Having a high level of emotional intelligence will also be useful in project management. Therefore, organizations should begin investing in tools and programs that assist employees in acquiring soft skills.
- Predictive Data and Simulation-Based Analyses
The most difficult and demotivating aspect of managing several projects is when unanticipated repercussions jeopardize their success. Project managers seek a solution to give them the knowledge to account for the unexpected. Project teams with predictive and data analytics skills may fully use KPIs and benchmarks and execute them proactively by developing data-backed best practices.
Companies cannot afford to bear the repercussions of project failure, given the competitive environments of most markets. Therefore, projects must be started successfully to stand out from the competition. The most recent advancements in project management software demonstrate that technology will play a role in this element of corporate operations in the future. Suppose you want projects to succeed and businesses to thrive. In that case, you should consider introducing project management solutions to simplify your, your teams, and your stakeholders’ lives.
Final Thoughts
Stakeholder involvement will become essential to optimize success as knowing stakeholders becomes increasingly critical for firms. For example, stakeholder engagement may assess reactions, track public impressions of a company’s operations, and assure collaboration and partnership with all stakeholders. In addition, an organization’s long-term performance may be determined by its connections with stakeholders, which provide commitment and buy-in to future initiatives and difficulties. As a result, the company becomes more aware and responsive to the demands of all its users and stakeholders.
Stakeholder management must place a greater emphasis on involvement to move projects from installation to execution. Stakeholder management must be less hierarchically centered while considering companies’ changing political nature. Projects should begin by identifying diverse stakeholders, engaging with them consistently, and coordinating continuously to increase project success.
As a project proceeds, Stakeholder management processes need to account for the dynamic nature of stakeholders’ commitment to a project and the interactions between various stakeholders. As a result, project teams will get the competitive advantage they want by focusing not just on their stakeholder position but also on the other major stakeholders in a project and how they interact. To achieve more effective stakeholder involvement, follow these three steps:
- Create a stakeholder map and keep it updated as the project progresses.
- Prioritize essential stakeholders and regularly evaluate assumptions about commitment levels and impact.
- Create essential stakeholders and increase their commitment to the change.
Feel free to check out my discussion on this topic with Justin Buckwalter in YouTube
For any questions related to your Project Management career, training, and certifications, you can book an obligation free 15 minutes session with me by visiting talktodharam.com
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