KPIs or Metrics for Project Managers in IT Industry

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Key performance indicators (KPIs) are high-level snapshots of an organization or a business process based on specific predefined measures. KPIs are typically captured and conveyed in a combination of reports, spreadsheets, or charts. In developing KPIs, a user or developer defines target performance levels and then decides the best way to represent variance from that target.
If a Key Performance Indicator is going to be of value, there must be a way to accurately define and  measure it.  For example, “Generate More Repeat Customers” is useless as a KPI without some way to distinguish between new and repeat customers. “Provide excellent project management and business analysis ” won’t work as a KPI because there is no way to measure this.
Defining KPIs is a standardized skill for business improvement (BI) analysts.  However, if you try to find KPIs to measure business analysis, you will find little written on the subject. This article is intended to provide ideas of how business analysts and project managers can best define KPIs to improve business analysis and project management results. I would welcome your comments and suggestions on this subject.  I can be reached by leaving me a comment on the blog or you can send me an email at prashcom at gmail dot com.
Business Analysis KPIs
Below are representative KPIs to measure the effectiveness of business analysis for projects.
  • % of rework attributable to requirements – Rework is a serious problem on most projects, representing about 40% of total project cost.  According to industry studies, about 70% of this rework is related to ambiguous, inaccurate, or missing requirements.
  • % of projects with prioritized requirements – Prioritizing requirements is critical to ensure that project teams first focus on items that deliver high value to the business.
  • % of requirements fully implemented – This is part of requirements traceability; requirements must be traced through design, test, and deployment.
  • % of approved requirements not implemented- A test of the likelihood of user satisfaction with the final result.
  • Developer Requirements Satisfaction Index- Developers should be surveyed to determine their satisfactions with requirements. This actually should be presented as a series of requirements questions concerning quality such as
    • Clear
    • Accurate
    • Complete
    • Testable
    • Feasible
    • Testable
  • Project Stakeholder Satisfaction Index – Project stakeholders should be interviewed to determine if they felt their needs were met and their overall satisfaction with the requirements. This might be done with a series of questions such as:
    • Do the requirements address the business needs?
    • Were the requirements gold plated by BAs or developers?
    • Were stakeholders adequately involved in the requirements process?
  • QA Requirements Satisfaction index – QA should be surveyed to ensure that the requirements were testable.
  • % of Requirements Tested – One good measure to determine if the requirements were testable and implemented is to determine what % of the requirements were actually tested.
  • Number of missing requirements – Missing or incomplete requirements is always a major problem for projects. This KPI tracks the number of requirements that were added after the baseline was approved.
  • User Satisfaction Index – Are the users satisfied with the delivered solution?
Project Value KPIs.
An important way to measure the success of business analysis and project management is to assess the value delivered to the business. Below are sample KPIs that could be used to measure value delivered to the business.
  • Deviation of planned ROI – The deviation of the planned Return on Investment (ROI) is the difference between Return on Investment in the planned baseline and the actual Return on Investment. ROI is the return an investment will generate annually as a percentage of the total investment.
  • Deviation of net present value (NPV) – The deviation of the planned net present value (NPV) is the difference in value between the planned baseline against the actual net present value. NPV is a method used in discounted cash flow analysis to find the sum of money representing the difference between the present value of all inflows and outflows of cash associated with the project by discounting each at a target yield.
  • Deviation of planned break-even time – The deviation of the planned break-even time is the difference in time between the planned baseline against the actual break-even time. The break-even time is determined by the point where the business expenses equal the income (or cost reductions) generated, with neither profit nor loss.
  • Business Process Productivity Increase % – The actual increase in business productivity after the system has been implemented.
  • Cycle Time Reduction % – The decrease in cycle time that occurred after the system was implemented expressed as a percentage.
Project Management KPIs
The KPIs below can be used to measure the effectiveness of project management.
  • Deviation of planned budget – The deviation of the planned budget (cost) is the difference in total costs between the planned baseline as compared against the actual budget.
  • Cost of managing processes – Periodic costs of managing processes, usually based on the number of Full Time Equivalent personnel (FTEs) involved in management functions or processes.
  • Deviation of planned hours of work- The deviation of the planned work is the difference in work hours between the planned baseline as compared against the actual statement of work.
  • Deviation of planned time schedule for project/program – The deviation of the planned time schedule is the difference in time between the planned baseline against the actual schedule.
  • % of FTE actually working on project that were not initially assigned – Percentage of FTEs actually working on project that were not initially assigned.
  • % of milestones missed – Percentage of milestones as recorded in all projects/programs that have been missed.
  • % of overdue project tasks – Percentage of overdue project tasks.
  • Budgeted Cost of Work Scheduled (BCWS) – The budgets of the activities that are planned or scheduled to be completed. Another term for BCWP is “”planned value.”
  • Number of milestones missed – Number of milestones of project missed.
  • Actual Cost of Work Performed (ACWP) – The sum of actual costs of activities that are completed.
  • Budgeted Cost of Work Performed (BCWP) or Earned Value – The planned or scheduled cost of activities that are completed. Another term for BCWP is “earned value.”
  • Cost Performance Index (CPI) – Earned Value divided by the actual cost (BCWP/ACWP).
  • Cost Schedule Index (CSI) – Cost Performance Index times Schedule Performance Index (CPI x SPI). CSI measures the likelihood of recovery for project that is late and/or over budget.
  • Cost Variance (CV) Earned Value minus the actual cost (BCWP-ACWP).
  • Estimate at Completion (EAC) – The actual cost of work performed (ACWP) plus the estimate to complete (ETC) for all of the remaining work.
  • Schedule Performance Index (SPI) – Earned Value divided by the planned value (BCWP/BCWS).
  • Schedule Variance (SV) – Earned Value minus the planned budget for the completed work (BCWP-BCWS).
Project Portfolio KPIs
Another way to look at KPIs is to examine the project portfolio.  Below are some representative measures that can be used to measure the project portfolio.
  • % of initiated projects without business case – Often projects are started without a clear business case. This KPIs tells what % of your projects were started in which this was the case.
  • % of projects on time – Percentage of projects that are executed in the planned time-frame based on their baseline.
  • % of projects with missed milestones –Percentage of projects that have missed milestones.
  • % of projects on budget –  The % of projects that were completed within budget.
  • % of Cancelled projects – The percentage of projects that were started and then cancelled.
  • % of Challenged Projects – The percentage of challenged projects.  The definition of challenged project needs to be defined such as projects that met one of the following criteria:
    • Exceeded budget by 15%
    • Delivered more that 60 days late
    • Major scope not delivered
    • % of projects completed on time – The percentage of projects that were completed on time.

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