Projects (or engagements) are the bread and butter of your business. As important as getting projects done correctly and on time is tracking and measuring the success of a project’s process and execution. It’s all about the key performance indicators (KPIs, for short).
When it comes to financial metrics and measuring project performance, options are endless and quite frankly, overwhelming. Instead of spending valuable time sorting through in-depth financial metrics that don’t really influence future decisions for your firm, it could be worth your while to take a step back and reevaluate the KPIs you’re currently using to measure project success.
No two firms are the same. With different clients, employees, needs, projects, and processes, your KPIs might not be the exact same as another firm. However, solid KPIs will all share a few common traits, including:
- Clearly communicated and understood by all team members
- Makes sense to your specific industry and business
- Critical measurements for tracking goal progress
- Straight-forward, well-defined, and quantifiable
Again, when looking at project performance and finances, KPIs can vary depending on the firm. But like the traits mentioned above, there are certain KPIs that every firm should be paying attention to. Keep on reading to discover the KPIs that can boost project success and performance, all while keeping you in tune with your firm’s finances.
Work in Progress (WIP)
This is work (usually time and materials) that have been charged to projects but not yet billed to clients. The key word here is yet. This KPI is important to track as an asset on your balance sheet and as revenue on your income statement. For project managers, keeping track of WIP ensures that budgets are on track and deadlines are met. To find out where staff, time, and resources could be better spent, project managers should be taking advantage of a tool like Gantt charts. See how you can use Gantt charts to boost project planning and resource management for your firm.
This shows you how profitable your current business structure is. The delivery margin includes the overhead cost in addition to the labor cost. This KPI will give you insight into operational and internal expenses that impact your bottom line.
This is what gives you insight into where your contract stands and what’s remaining. The contract analysis compares the contracted amount with what’s being spent as well as what’s remaining — all helping you stay on top of budgets and timelines.
This helps project managers gain visibility and control of the scope of a given project. It’s the total amount of write-ups or write-downs on your billable time entries. This comes into play when you want to bill your client either more or less than the billable amount, allowing you to better manage the project’s budget.
Earned Value (EV)
This shows you whether or not a project is going well and forecast its future success. The earned value tells you the project plan, actual work, as well as the value of the completed work. Simply put, it’s the amount earned/worked divided by the contract amount.
This is the amount of an employee’s available time that’s used for productive, billable work, expressed as a percentage. A really important KPI to track if you’re billing hourly or hourly-not-to-exceed, utilization shows you if you’re using your team and resources efficiently.
This stat gives you the power to boost profit from efficiency by looking at a combination of historical and forecasted data. To find out the billable utilization, track how much time is billable versus bench time, then adjust for a higher utilization rate.
This helps you glean insight into what projects are turning the highest profit. Review the revenue earned minus the labor costs associated with a project to discover how successful your revenue model is and what projects are the strongest.
This KPI is arguably the most important. It compares your costs versus what’s been billed, revealing your profit. By keeping a close eye on profitability, you’ll gain insight into larger trends and what projects are vital to your firm and the ones that might not be worth it.
This is similar to your contract analysis, however, the budget analysis is a breakdown of your services and expenses when it comes to what’s being used and what your limits are. This shows you whether your project is over or under budget.
This is a breakdown of your services and expenses — what is billable, billed, unbilled, as well as non-billable. This KPI helps you assess the buildability and productivity of a certain project, helping you to better plan for the future.
Reporting for Success
Once you and your team identify the KPIs that are critical to the success of your firm and its future projects, it’s important to have a tool with thorough reporting capabilities. BigTime’s PSA solution provides custom reporting that can be pulled in minutes to share with your leadership team. With BigTime, you also have the ability to create custom user rights for staff to view analytics that are valuable to their success without having to share full business performance metrics.