Do you know which KPIs are best suited for your projects? More and more leaders are looking for metrics, tools and strategies to help manage their projects. The good manager today is, without a doubt, one who manages to measure the factors of the projects he manages well – mainly the critical factors.
The expectation of any board with its managers is that the projects not only happen, but that they are executed in a healthy and planned way. The manager’s role, therefore, includes measuring his projects to deliver maximum results with minimum effort and cost.
There are several design tools and metrics. An essential for every good manager are KPIs, metrics focused on the most critical issues of a project. What’s up? Are you interested in finding out more? So continue reading people and know everything!
What are KPIs
KPIs are performance analysis metrics to indicate critical factors related to any project in a company. It is important to understand the difference: every KPI is a metric, but not every metric is a KPI. In English, “Key Performance Indicators” are “key performance indicators”: while the metrics observe a behavior over a long period of time, a KPI focuses on critical issues that directly influence the project’s outcome.
Every project has critical issues that, without proper attention and metrics, can frustrate the planned result. Through the use of KPIs, the manager can identify where communication noise, production delays, delivery failures, etc. are occurring. and, from there, make assertive decisions towards possible solutions.
5 characteristics of every KPI
The performance indicators (KPIs) that you choose for your project must, necessarily, have some characteristics so that they really serve as the necessary metric. In this post you will see how to choose the most suitable for your reality, but regardless, every KPI should be:
- Measurable: a KPI is only valid when it is possible to analyze its data and factors and offer the leader and team a measured information on the subject in question (be it cost analysis, productivity, time invested, etc.);
- Attainable: a KPI for indicating and measuring deadlines, for example, must, as well as any goal, be attainable – and not built based on an idealistic reality that is not consistent with the team’s daily life;
- Understandable: a KPI, a metric or any other indicator is only useful if those involved can understand the data indicated. Remember: an indicator can be complex, but never complicated. Clarity is critical to the effectiveness of a KPI;
- Temporal: a KPI that does not consider a specific time is neither a KPI nor an effective metric. It is necessary to define in what time and context the metric will be applied;
- Realistic: a KPI must be realistic to the point where the manager can openly present to the team which points were taken into account to support the indicator. For this, the indicator must be used in a realistic way to all contexts involved in the project.
What can I metrify with a KPI?
By applying a KPI to your project, you can measure critical situations such as costs, deadlines, productivity, etc. There are infinite KPIs and not all are suitable for every type of project, but some are indispensable for every manager to be able to measure their results. Among the most used KPIs, let’s talk about three that can bring immediate benefits to managers and teams who put it into practice! Check out:
KPI to measure effort deviation
The project schedule includes, necessarily, a planning of how much effort will be spent for a given delivery. This planning can be in hours, days or months, depending on the size of the demand, and also in sprint, in the case of agile project methodologies .
This effort estimate can be based on previous experience, reports of projects already executed or on the PERT (Program Evaluation and Review Technique) technique, which basically consists of establishing three effort estimates (one excellent, one probable and one very bad). Based on the result of using this KPI, it is possible to assess where the planning was inaccurate and improve it for the next steps.
KPI to measure project costs
One of the most used indicators, the IDC – Cost Performance Indicator is used to measure whether the planned costs for a task have been respected or if the budget has been extrapolated. This measurement is essential so that the overall budget of the project is not compromised and the necessary corrections can be put into practice.
In general, the IDC is calculated by dividing the amount actually spent on the activity by the estimated amount. If the calculation results in 1, you are within budget; if it results in less than 1, it is out of budget; and if it results in more than 1, it is better than the previously planned budget.
KPI to measure the project’s profitability
ROI (Return on Investment) is possibly the most widely used KPI in all areas of management that involve project cost and profit. The ROI basically consists of a calculation that considers the profit of the project and subtracts the cost from it. For example: for the development of a system the company will charge 15 thousand reais and will have a total internal cost of 5 thousand reais. The KPI in question will indicate that the ROI, the return on investment, is 10 thousand reais.
Our e-book KPIs in project management: the complete guide teaches you how to use in practice some of the techniques mentioned here, and what the results of the formulas mean. Access and continue your learning!
4 steps to identify the most suitable KPIs for your project
Knowing what KPIs are, what are their main characteristics and knowing some of the main ones, on the question: “How to identify which KPIs are most suitable for my project?”. So that you know how to choose the best indicators for your reality, we have brought 4 practical steps for you to perform today!
1. Assess objectives and demands
As good as an indicator is, it will have no meaning if it is not in line with the demands of your project and the objectives of your management. For example: if you are interested in knowing your average sales revenue, an average ticket KPI (value sold divided by the number of sales) will be much more useful than a conversion rate KPI (percentage of sales earned on each attempt) );
2. Consider qualitative and quantitative KPIs
To assess project delivery on time or a productivity index according to demands, a quantitative KPI works well for removing subjectivity from the data. Now, when it comes to customer satisfaction, interest in new purchases or the possibility of loyalty and recurring sales, numbers are not enough – and qualitative KPIs based on surveys and interviews can work well.
3. Prefer KPIs with storable data
The performance indicators you choose will serve your demand at the time of analysis. When, however, the manager builds not only an analysis of information, but a database with the KPIs used, there is the possibility of a posteriori surveys that can consider the team’s evolutions and errors in the long term. For this to be possible, it is essential to choose KPIs that suit the characteristics we have indicated at the beginning of this post!
4. Project management with indicators makes all the difference!
After delving into the possibilities of KPIs, you will certainly be able to measure your team’s performance in your projects in a much more qualified way. If you want to do even more for your management, access our demo on how Artia works , complete system to help you manage your projects!