Key Performance Indicators (KPIs) for Success: An Overview of Project Manager Performance Metrics

How Do You Evaluate the Performance of a Project Manager?

It is widely acknowledged that it is difficult to measure the success of project managers due to the fact that the majority of their responsibilities are qualitative and, therefore, cannot be quantified. When project management is lacking, it is typically easy to recognise as communication channels become ineffective, team members become uncertain of what others are working on, and unexpected obstacles lead to delays. On the contrary, when project managers are present and everything is running smoothly, many of their colleagues may be unable to identify the specific duties they are performing.

The evaluation of performance has been made increasingly complex due to the transformation of the project management profession. The proliferation of Agile methodologies has led to the formation of new roles such as product owner and scrum master, which have taken on some of the responsibilities that were traditionally held by project managers. As a result, the traditional project management landscape has been substantially altered.

Additionally, the roles of project manager and product manager are often intertwined in many organisations and teams. In certain cases, one individual may take on the responsibility of both positions. The project manager can be regarded as the Chief Operating Officer of a product, taking charge of the methods and timing of its development, while the product manager is akin to the Chief Executive Officer, responsible for the purpose and rationale behind the product’s creation. The project manager is responsible for the process, while the product manager is in charge of the contents. Consequently, it is important to appraise the project manager’s proficiency in project delivery.

With this as a background, there are six key performance indicators (KPIs) that serve as the basis for evaluating a project manager’s success:

• Delivery on time:
  • Projects with a set deadline
  • Agile projects
• On-budget
• Process enhancements
• Communication and relationships
• Risk administration
• Customer orientation

It is essential to have an understanding of Key Performance Indicators (KPIs) in order to effectively evaluate the capabilities of any project managers that you may be considering for inclusion within your organisation or team. Moreover, having a familiarity with KPIs provides a solid basis for providing constructive feedback.

Delivery on Time

The Project Manager is responsible for the successful implementation of the project strategy, ensuring that all deliverables are prepared in a timely fashion and that the budget is sufficient to achieve the desired outcome. This involves careful planning and oversight to ensure that the strategy is implemented effectively and efficiently.

Project managers in an Agile development team must manage team communications to ensure that the product is delivered on time to the market. Although it is understood that the Agile process is meant to be flexible in order to create the most optimal solution for clients, if the trade-offs are not properly handled, this could lead to scope creep, which would inevitably result in delays. In order to deal with this, the scrum master, or an equivalent Agile coach, is responsible for the development team’s internal productivity and for making sure that sprints are completed on schedule.

It is important to be aware that delays can occur at any point during the launch of a product, not only in the engineering and testing phases. This could be a result of a tactical or strategic decision taken by the executive team. Additionally, delays may be caused by the legal or deal desk not being ready to accept orders and bids, or by marketing attempting to time the release to coincide with a particular event.

A skilled project manager would regularly compare the plan to the actual progress to identify any irregularities.

DELIVERY ON TIME IN FIXED-TIME PROJECTS

An assessment of the project manager’s performance requires a more comprehensive approach than a simple yes or no metric. A tiered approach, which takes into account the originally agreed-upon timeframe and scope of a project, would provide a more nuanced evaluation of the project manager’s on-time delivery. This approach would involve evaluating the project’s completion against the established timeline and determining a rating based on the degree to which it was fulfilled.

• Expectations exceeded:

  completed earlier than anticipated

• Excellent:

  completed on time

• Acceptable:

  late

• Unsatisfactory:

  Significantly late

The varying levels of assessment can be highly beneficial when comparing the outcomes of different initiatives. Depending on the company’s objectives, these levels can be adjusted accordingly. For instance, if the projects are subject to a contractual agreement with the client, and late delivery results in financial penalties, the assessments for being late should be significantly stricter. The same tiers can be applied not only to the entire duration of the project, but also to shorter periods, such as milestones.

DELIVERY ON TIME IN AGILE PROJECTS

Agile projects can be undertaken in fixed-timeframes, in which case the metrics discussed in the previous section can be applied. However, many businesses now operate without a specific timeline, prioritising delivering actual value to the client over adhering to a rigid growth schedule. To ensure customer satisfaction and protect the reputation of the brand with the client, it is essential for the project manager to set realistic release expectations and maintain channels of communication with all stakeholders.

Given the team’s interdependence, third-party delays can often hamper the project team’s ability to deliver efficiently. These types of delays can include, but are not limited to, issues such as difficulty in obtaining resources, difficulty in obtaining approval, or difficulty in scheduling meetings. Not only can these delays cause a disruption to the project timeline, but they can also lead to increased costs and decreased productivity. It is therefore crucial for the project team to be aware of the potential for third-party delays, and to be proactive in mitigating them.

• We are awaiting permission from stakeholders.
• Waiting for developer operations to set up the necessary environment
• Waiting for marketing to produce content for a public website
• We are waiting for co-dependent feature teams to complete their portion of the overall scope.

A tiered assessment technique is also required for Agile projects with a variable schedule:

• Expectations exceeded:

  third-party delays were essentially non-existent.

• Good:

  The majority of third-party dependencies were controlled, and delays were kept to a minimum.

• Acceptable:

  Third-party delays sometimes impacted team delivery.

• Poor:

  Third-party delays continuously and significantly impacted the team’s delivery.

On-budget

Project managers can help to avoid unexpected costs by closely monitoring the three major aspects of budget management: expense tracking, forecasting, and variance analysis. Expense tracking involves keeping track of all expenses associated with the project, including any unexpected costs that may arise. Forecasting is the process of predicting and budgeting for future costs based on past performance. Finally, variance analysis is the practice of comparing the actual costs of the project with the planned budget and determining any variances that may exist. By keeping track of these three budget management aspects, project managers can help to ensure that projects remain on budget and that any potential overruns can be identified and addressed in a timely manner.

1. Resources (headcount and corresponding cash budget)
2. Development operations resources (DevOps)
3. Network operations resources (NetOps)

Whereas increasing profit margins is an essential goal for any business, it is the responsibility of project managers to ensure that the operational expenses of items (other than those related to sales and marketing) are kept under control. If, due to a budget crunch, it is not possible to reduce expenses any further, a competent project manager will liaise with the product manager to seek approval for additional funds to manage the situation before it escalates.

Effective budget management is a critical element of project success, and can be evaluated in terms of both the qualitative and quantitative considerations. On a binary level, the question is whether the project manager was able to complete the project within the allocated budget. However, to gain a better understanding of the project manager’s budget management skills, it is also necessary to assess the extent of any savings or overruns, as well as the planning efforts that were made to ensure that the budget was adhered to throughout the duration of the project.

• Exceeded expectations:

  The project was finished with a 10% or greater savings, and budget milestones were scheduled and met.

• Good:

  The project was finished with a 0-10% cost reduction, and budget targets were scheduled and met.

• Acceptable:

  The project budget was overrun by less than 10%, and financial goals were set but not met.

• Poor:

  The project budget was more than 10% overrun, and financial milestones were not met.

Process Enhancements

Processes are internal agreements that dictate the manner in which tasks are conducted within teams and organisations. The majority of employees tend to adhere to these procedures without question. However, the project manager is responsible for taking a proactive approach and continually questioning the established processes in order to identify potential areas for improvement. This is particularly relevant in Agile project management, where the assessment criteria includes the timely delivery of projects, but goes beyond that. By seeking process enhancements, it is possible to:

• Eliminate unneeded dependencies to save time.
• Save money by automating operations and removing the need for human labour.
• Improve the customer experience and increase customer satisfaction by simplifying interactions.

It is essential to include effort as an evaluation factor when assessing process improvements, as these changes often require modifications to other areas of the organisation that may not be within the scope of the project manager. Effort in this case would indicate that all necessary steps were taken to maximise efficiency in the current conditions of the company. To ensure the greatest efficiency gains, it is essential to focus on the most profitable process improvement available. When assessing process improvements, project managers should examine them in the following tiers:

• Exceeded expectations:

  Process enhancements were implemented on a regular basis and generated meaningful efficiency benefits the majority of the time.

• Good:

  Process enhancements were implemented often and generated significant efficiency benefits the majority of the time.

• Acceptable:

  Process changes were implemented often, but only produced minor efficiency increases.

• Poor:

  Almost no process improvements were implemented.

Communication and Relationships

As the primary contact for all organisations involved in the development and release of a product, the project manager must ensure that all connections remain in line with their goal of providing an exceptional solution that meets the client’s requirements and is completed within the specified time frame. To ensure this, the project manager must ask three key questions to determine if the partner company has the capacity to meet the project’s needs.

1. Can you accomplish it with the skills you have?
2. When will you be able to deliver it?
3. What can I do to assist?

Engaging with personnel from various departments can provide valuable insight into the strength of relationships established by the project manager. A comprehensive assessment of the project manager’s interpersonal and communication skills through a 360-degree evaluation would be a more comprehensive approach to gauging their performance. The results of such an examination can then be used to make an informed assessment of the project manager’s performance.

• Exceeded expectations:

  Proactively interacted with other departments, and other departments proactively engaged with the project manager or their team.

• Excellent:

  Proactively engaged with other departments.

• Acceptable:

  Interacted reactively with other departments.

• Poor:

  Very little interaction with other departments.

Risk Management

Every project inherently involves a certain degree of risk, which must be either identified and ignored or actively managed. Poorly managed risks can easily lead to devastating consequences, and a bad project manager will usually be held accountable for any damage that results. It is more difficult, however, to assess the capabilities of a competent project manager, since any risks that have been successfully managed will not have caused any harm, making it difficult to quantify the value of their prevention efforts.

A successful project manager should thoroughly assess the potential risks before beginning a project and develop a risk mitigation strategy to identify any potential hazards that require attention and action. By doing so, they can ensure that they are adequately prepared and can anticipate the consequences of their choices.

• Exceeded expectations:

  Maintained a risk mitigation strategy with specific steps and was able to properly convey their conclusions.

• Good:

  Maintained a risk mitigation strategy, but reactions to hazards were not well thought-out or feasible.

• Acceptable:

  Did not have a risk mitigation strategy, but had given it some attention and was able to convey at least some hazards.

• Poor:

  Did not consider dangers and dealt with them as they emerged.

Customer Centricity

A skilled project manager should always ensure that the decisions they make are in alignment with the customer’s requirements and the organisation’s profitability objectives. They should be able to assess how a customer may react to a particular course of action and be able to represent the customer’s perspective in product choices. When evaluating a project manager’s approach to their job, look for an attitude that is focused on achieving mutually beneficial outcomes for both client and company.

The project manager should create objectives with the client’s best interests in mind for a comprehensive review. In order to identify any potential issues that could jeopardise the relationship between the company and the client, the project manager should collaborate with all departments within the business. When working with the entire corporate team, the project manager should ask questions such as:

1. Where are we in relation to the deadlines?
2. Are we prepared to address prospects’ questions?
3. Can we get an order in?
4. Do all of the services function as expected?
5. Is customer service available to address questions?
6. Are we prepared to accept new customers?
7. How can clients update their accounts?

The following stages may be used to assess a project manager’s client orientation:

• Exceeded expectations:

  Added the customer’s point of view to all conversations and decisions, and was able to balance it with corporate objectives.

• Good:

  Brought the customer’s point of view to most talks and choices, and was sometimes able to balance it with company objectives.

• Acceptable:

  Frequently brought the consumer viewpoint to talks and decisions, but was unable to balance it with corporate objectives.

• Poor:

  Rarely represented the client and was only concerned with commercial aims.

KPIs for Project Managers Help a Well-oiled Machine

Project managers must act as a lubricant, striving to ensure that the project runs smoothly. They should be prepared to provide regular performance assessments that measure their progress against a mutually agreed set of performance indicators. These assessments should be available for review at any time.

Consider the following performance metrics when determining how to quantify project manager performance:

The initial review meetings are an essential part of the process for measuring the performance of a project manager. These reviews should be held to establish a benchmark and recognise the areas in which the project manager needs to improve. Following the initial review, further reviews should be conducted at intervals of three, six, or twelve months, with the aim of assessing the project manager’s performance indicators and gauging the success of any agreed improvements. These performance measures are beneficial to both the project manager and those supervising them.

This post examines the various Key Performance Indicators (KPIs) that a project manager and their supervisor should consider when assessing the success of a project. It is essential for all stakeholders to be aware of the range of options available, and to select the most appropriate KPIs to monitor in order to gain a clear understanding of the project’s progress. Although the importance of each KPI may differ from team to team, it is important to keep track of them in order to measure success.