The Deep Dive into Key Performance Indicators (KPIs) for PM

Has someone ever told you, “No matter what it takes, get things done”?

That is precisely what your job entails—getting things done. You have to stay within budget and on schedule while ticking off all the boxes on the project’s to-do list. You have to make the perfect plan that never fails.

But is there a universe where every plan is perfect, except in our imagination? No. You’re on Earth, where plans fail more often than you expect. And you still have to get things done.

Wouldn’t it be great if you could spot any risk before it turns your project into a disaster? (No, we’re not talking about the perfect world again.)

It IS possible if you pick the right key performance indicators (KPIs) for your project.

Let’s look at the 16 essential KPIs that every project manager should track in 2024. We’ve gathered the latest data, insights, and expert advice to get your project moving in the right direction.

What Are KPIs for Project Management?

Let’s kick things off with the basics.

A key performance indicator (KPI) is a measurable variable that shows how well your project performs against its objectives and whether it meets stakeholders’ expectations.

The results you get from calculating and analyzing KPIs can help you to:

• Track the progress of your project.
• Identify the strengths and weaknesses of your project.
• Make data-driven decisions for future projects.

In a nutshell, KPIs make project management easier. But if not chosen and tracked correctly, they do the opposite—they turn your project into a nightmare for the whole team.

4 Tips for Choosing the Right KPIs for Your Project

Below are the four tips for choosing the right KPIs that will lead you toward your strategic goals.

1. Use SMART Criteria

A good KPI is SMART, which means it is:

• Specific
• Measurable
• Attainable
• Relevant
• Time-bound

Let’s say your business objective is increasing the brand’s social media visibility through analytics. A SMART KPI for this objective could be to increase the number of followers on your Instagram account, with a specific goal of gaining 5,000 new followers in the next two months and acquiring 2500 new followers each month.

2. Always Set a Target

You need a golden standard, such as a fixed number or a percentage, to know whether your KPI is met.

If you have historical data from previous years, use it to run a retrospective analysis and determine realistic targets.

If you don’t – use industry benchmarks or competitors’ performance as a reference point. For example, your industry’s average growth rate of Instagram followers would be helpful.

3. Stick to a Small Number of KPIs

Luca Castelli, the CMO of Detectico, said, “The adage ‘less is better’ applies to any KPI strategy. Setting too many metrics creates a false sense of control over your project’s direction.”

We can’t agree less with him.

You may be tempted to set as many KPIs as possible, especially if you have a long-term goal. But, like we said before, these metrics should simplify decision-making, not complicate it.

Having too many KPIs will eat up your time and resources because you have to analyze and sometimes compare all of them.

So, at the planning stage of the project lifecycle, pick only the most essential KPIs that align with your company’s objectives.

4. Drop Irrelevant KPIs

This tip comes from the previous one.

On your way to hitting a goal, you might spot a few KPIs that collect dust on the shelf because you don’t really use them to make decisions.

Check them off your list and focus on the ones that truly matter.

For example, if your goal is to increase conversions rather than website traffic, then measuring the number of page views is not a relevant KPI.

16 Essential Project Management KPIs You Should Know

The key project management KPIs lay a firm foundation for your project’s success: budget, timeliness, quality, and effectiveness. Picture them as a complex 3-D function graph where your objectives stay in the center.

Whenever you change the value of one of your KPIs, the graph shifts and the other KPIs change too.

Timeliness goes down, budget goes up, and so on. Your role here is to find a way to balance them all.

To help you reach that balance, we’ve taken a non-traditional approach and put together a list that doesn’t just lay out essential KPIs for you. It goes from basic metrics to more complex ones and shows how they work together.

Budget KPIs

1. Actual cost (AC)

There is no universal formula for calculating actual cost, but you don’t need one.

Actually, it’s quite simple. You need to sum up all the money you’ve spent on the project, including the cost of resources and salaries.

The salary part can get a bit tricky if your team includes a large number of employees who are paid an hourly rate. You need to consider sick leave, vacations, and other factors that are not equal for everyone.

If that hits too close to home, use resource management software. It sums up all the hours employees have logged and calculates their salaries automatically.

2. Earned value (EV)

It shows how much of the planned work you have already done, taking into account the budget and time allocated. Like AC, it calculates more complex metrics that we’ll discuss later.

Formula: EV = % of work done * total project budget.

For example, if your project budget is $100,000 and you have completed 75% of the work, your EV would be $75,000.

3. Return on investment (ROI)

If you’ve been managing projects for a long time, you know what ROI is and how many formulas there are to calculate it. Maybe you even used some yourself! Either way, let’s have a quick refresher.

ROI essentially measures the profitability of an investment. In project management, it shows how much value your project has generated compared to its actual cost.

Formula: (EV– AC) / AC * 100%

Results:

• Negative: unprofitable project
• Positive: profitable project

4. Planned value (PV)

Indicates how much of the budget you have planned to spend at a specific point in time.

Formula: PV = % of time elapsed * total project budget.

5. Cost variance (CV)

Determines whether your current expenses are below or above what was planned.

Formula: CV = EV – AC

Results:

• CV > 0: You’re staying below the planned budget.
• CV = 0:  You’re exactly on budget.
• CV < 0: You’ve exceeded the approved budget.

6. Cost performance index (CPI)

It shows how efficiently you use the project’s resources to complete the planned work.

Formula: CPI = EV / AC

Results:

• CPI > 1: The project is under budget.
• CPI = 1: The project is performing on budget.
• CPI < 1: The project is over budget.

7. Budget creation cycle time

This one shows how long your project management team takes to create and finalize a budget.

Formula: Budget Creation Cycle Time = End Date – Start Date

Results: Faster doesn’t mean better. If your team creates a budget too quickly, they might miss important details or make inaccurate estimates, which could result in going over budget later on.

Timeliness KPIs

8. On-time completion percentage

This simple metric indicates how well your team manages their time and meets deadlines.

Formula: (Number of projects completed on time / Total number of projects) * 100%

If you want to estimate the completion of smaller tasks instead of entire projects, replace “projects” with “tasks” in the formula. Then, you’ll be able to evaluate the performance of individual team members to see whether you need to adjust their workload, provide additional resources, or develop a time management action plan.

9. Planned hours Vs. time spent

Formula: Planned hours vs. time spent = Planned hours – Time taken to complete a project/tasks

Results:

• Below 0: You’ve underestimated the time needed to complete projects/tasks.
• Above 0: Your team is completing projects/tasks faster than planned.

10. Schedule performance index (SPI)

It tells you whether the project is ahead or behind the planned schedule

Formula: SPI = EV / PV

Results:

• SPI > 1: The project is ahead of schedule.
• SPI < 1: The project is behind schedule.

11. Schedule variance (SV)

Measures the difference between the planned schedule and the actual progress.

Formula: SV = EV – PV

Results: 

• SV < 0: You’re behind schedule.
• SV > 0  You’re ahead of schedule.

Quality KPIs

12. Net promoter score (NPS)

The latest Edition of the PMBOK (7th Edition) defines NPS as a user satisfaction KPI that measures “the degree to which stakeholder (usually the customer) is willing to recommend a product or service” on a scale of 0 to 10.

So, how do you calculate it? Run a one-question survey and ask your stakeholders how likely they are to recommend your product or service. Customers who answered 9 or 10 fall into the Promoter category, while those who answered 0 to 6 are Detractors.

Then, calculate the NPS with this formula:

(Promoters – Detractors) / Total number of responses * 100

The results will range from -100 to 100, and high positive scores indicate strong customer loyalty and satisfaction.

13. Employee churn rate

Changes (and challenges) are an essential part of any project, but when it comes to your team’s structure, you want consistency and stability. Monitoring the employee churn rate helps you spot any issues with retention early on.

Formula: Number of employees who left during a period / Average number of total employees during the same period * 100

Effectiveness KPIs

14. Billable utilization (BU)

Shows how much time your employees worked on client projects compared to their total working hours.

Formula: Total billable hours / Total working hours * 100

15. Training/Research needed for the project

You can add up the hours spent on research/training and compare them to other KPIs to see whether the yielded results justify the investment in time and resources.

Has your SPI gone up since the last training session? Is your team now more efficient and productive? If yes, you’ve allocated just the right time for training and research. This measurement might also help you set more accurate timelines for future projects.

16. Number of project milestones hit on time

This metric takes into account only the milestones that were completed and signed off by the client. It reflects how effectively your team manages time and delivers the promised results. If you see that the number of missed milestones is going up, re-evaluate your project management strategies.

How to Track Project Management KPIs

Knowing what KPIs to track will not get you far if you haven’t decided how to track them.

Good ol’ Google Sheets might be enough to track your KPIs if you’re working on a small project. Create a table, type in some formulas, and enter your values from time to time. You know the deal.

But if you’re handling a big project that involves multiple teams working on interconnected tasks, you need a more robust solution.

The one that collects the most essential data in one place gives you real-time access to the progress charts and frees up your team to focus on what really matters.

It may sound like a lengthy to-do list, but our go-to project management software, Paymo, checks all these boxes at once. It’s a cloud-based multi-featured tool streamlining all processes, from task assignment to in-depth reporting.

The last one is the most impressive. Paymo calculates the essential data, such as time spent on tasks, earned money, percentage of work done, and more, in a visual form.

Key Takeaways

Working with KPIs is more challenging than it seems.

You and your team must pull out your best skills and pick a handful of KPIs that make the most sense for your project before it moves onto the execution phase. You must also be ready to remove those that hold your progress back.

Some best practices, such as setting SMART metrics, comparing your results to industry benchmarks, and regularly reviewing your KPIs, might help you. The most essential KPIs might also give you a starting point.

Still, the most valuable information for setting (or creating) the right KPIs comes from analyzing your data on the go.

You can do that without sacrificing your limited time and resources. The online project management software Paymo gives you a head start in setting, tracking, and analyzing your KPIs in one place. Try it risk-free now to mine your KPIs for insights that matter!