Project Management Metrics: 5 KPIs and How to Track Them

Project management metrics, KPIs, performance indicators… whatever you call them, now’s the time to track them.

It’s crucial not only to project progress, but the sustainable functioning of your business. But which success metrics are the most important to your project and business goals? And then, do you collect and analyze your KPIs?

We’ll be covering these questions in our article, so keep reading to learn more.

Metrics in project management are standardized, quantifiable indicators that provide valuable insights into a company’s key resources: time, employees, and finances.

Project KPIs should deliver real-time feedback on whether project milestones are moving forward as planned, in terms of both project timelines and budget.

Tracking and understanding key metrics helps project managers:

A project manager can track a variety of metrics depending on the specific project or industry; such as throughput and goodput in IT capacity planning, lead conversion and generation in marketing project management, or cycle time in website project management.

However, certain key performance indicators (KPIs) are crucial to supporting project performance regardless of the field. These project performance metrics include:

Let’s explore them in more detail.

Setting time estimates and managing task completion is important for multiple reasons. Without good estimation, you won’t be able to realistically plan out a project schedule. In fact, according to the Standish Group Chaos Report, unrealistic expectations and incomplete requirements account for almost 20% of the main project challenges.

By analyzing estimated vs actual time, you can also improve your estimation for future engagements. It also helps you pinpoint potential inefficiencies or bottlenecks in your strategies so they can be addressed on time.

With Productive, you can create time estimates on project tasks. Then, by tracking time, you can get granular insights into your project’s progress.

While your time to complete and worked time help you monitor tasks as they progress towards completion, the most interesting metric here is variance at completion. It shows the difference between the initial estimate and the estimate at completion (or full time worked on tasks). Ideally, you’ll want your variance at completion to be 0 or positive. Negative schedule variance means that your estimate was off.

You can also view consolidated information on your schedule variance in project management by using Productive’s Reporting feature and building a custom report — for example, if you offer multiple services, you can check estimated vs actual time worked per business unit to see where negative or positive variances are most prevalent.

The resource utilization metric (also known as billable utilization or billability) is one of the most important for your agency, because it shows how business resources are used, and how much of this time can be charged to clients. Since an agency’s profitability hinges on delivering billable work, you can see why it’s important to ensure balanced resource utilization.

The basic resource utilization formula looks like this:

Resource utilization = amount of billable hours worked / total hours worked (x100)

So, if an employee tracked 20 billable hours in a 5 day x 8h workweek, this would mean that their resource utilization for that week is exactly 50%.

What constitutes as billable vs non-billable work can sometimes differ depending on your industry and client contract, but the gist is: billable work relates directly to finalizing a project, while non-billable work involves things like internal meetings, administrative tasks, or employee skill-building.

With Productive, you can visualize your employee utilization across various metrics, such as individual employees, departments, seniority, and more. You’ll want to strike a healthy balance between billable vs non-billable hours. Industry standards recommend a range between 70 to 90% for production-level staff.

Directly connected to your resource utilization is forecasted resource utilization. The formula is a bit different, as forecasting requires examining not hours worked but hours scheduled to work.

In the example below, we see a company’s resource plan, created in Productive. It shows that the employee is utilized only 1% in the upcoming 30 days, which tells you that they’re able to take on more work.

The benefit of tracking forecasted utilization is not only easier allocation but also strategic decision-making.

For example, if you’re considering whether you have the manpower to take on new projects, you don’t have to rely on guesswork. Instead, you can check exactly which departments or employees are available to work in the upcoming months.

You can also use these insights to guide your human resource planning strategies. Maybe a certain department is highly utilized throughout the entire year. You can then consider hiring more staff to lighten the load.

Good project budget management is one of the cornerstones of successful projects. To monitor your budgeting as your project progresses, you’ll need to manage two essential things: billing rates and tracked billable hours. You can do both with Productive.

Your budgets will be updated in real time as time is spent working on the project. In the photo below, we see that 5 billable hours have been tracked. Multiplied by the billable rate of $100/h, we get a $500 budget used.

The Budgeting chart can be used to gauge cost variance in project management and budget performance without manual calculations. Add estimates to the services you offer to control your budget spending more easily, in tandem with the hours tracked. Custom warnings can be set when a certain percentage of billable hours is reached to make cost performance management even easier.

Find out more about managing your project costs and expenses in our guide to project billing. You can also check out earned value in project management to learn about the EVM methodology.

While you need budgeting information to ensure positive project outcomes, profit margins, and revenue are tied to your business growth. With forecasting, you’ll be able to see the exact point at which your projects become unprofitable.

The benefits are similar to calculating your cost performance index in project management, but Productive does this automatically.

You can use forecasting to try out different scheduling options and monitor how they impact financials. Let’s say the client wants to expand the project scope, and the project is at risk of scope creep. You can add additional bookings and see exactly how additional tasks impact budget burn and overall profit margins.

Forecasting also supports better budget/profit-related decision-making. For example, even if you’re over budget, your project can still have a fair profit margin. With Productive, you can decide to go a little more over the budget to keep the client happy and do this without worrying about your bottom line.

Learn how you can drive your agency’s profitability with Productive.

In addition to metrics that measure success on individual projects, there are several key performance indicators (KPIs) that help businesses assess the performance of their strategic initiatives and internal departments.

Here are a few to consider:

Check out our article on capacity management metrics if you want to learn more about specific success indicators.

The metrics we’ve detailed in this article are a good place to start for project management. These include estimated vs actual time, resource utilization, budget spend, and profit and revenue. They cover a good range of essential aspects involved in monitoring progress, identifying potential issues, and making informed decisions for keeping projects aligned with business goals.

When expanding to additional metrics, keep in mind that you should not stretch yourself too thin. Since KPIs need to be regularly collected and reviewed, tracking too many at once might cause analysis paralysis. You might easily see yourself dedicating time to tracking numbers without making any significant decisions or breakthroughs in your processes.

Focus on metrics that are crucial to your company’s current context. Smaller companies may want to focus on cash flow management, client satisfaction, and project completion rates.

Larger companies often have the capacity (and need) to track a broader range of metrics. They can consider adding utilization forecasting, employee attrition, and customer profitability analysis.

To successfully track and get the most out of your project metrics, it’s essential to address three main challenges:

This is mainly a question of which project management software you’ll be using to gather your data. There are many options available, but it’s best to consider a platform that provides end-to-end project management support. It should include features such as time tracking, budgeting, billing, resourcing, and project management in order to provide a consolidated view of your project progress.

However, simply having a project management tool isn’t enough. You’ll need to be consistent with your software to get the most out of it. Time tracking can be a particular challenge for businesses — how detailed should entries be? Should employees use timers or manual entry? These specifics need to be established with the entire team to avoid skewed metrics.

Once you’ve collected your data, you’ll need to translate it into a format that’s easily understandable, and then figure out the best way to share it. Reporting tools usually offer some type of visualizations, such as charts, graphs, and dashboards. Visualizations make it easier to spot trends, compare performance across different metrics, and quickly identify areas that need attention.

To share your insights, you can of course use manual methods, such as exporting your reports and sending emails. But you can also consider setting up custom dashboards and sharing them with specific users to make the process more efficient.

With Productive, you can also set up an automated sequence for report sending (to Slack or email).

So, you have all your data in one place, it looks nice, and it’s readily accessible to project stakeholders. But having organized data is just the beginning. Making true data-driven decisions demands a deep understanding of how to interpret and apply it effectively to drive meaningful outcomes. It’s not just about what the data shows, but also about understanding the context behind the numbers and how they relate to your project goals.

Here are some tips from Andrew Chen, an author and general partner at Andreessen Horowitz, on how to approach your project management metrics:

In short, data analysis takes time and experience. So make sure not to make the mistake of doing everything at once, expecting too much, or ignoring your intuition entirely.

If you’re looking for a tool that can help you manage your actual progress with real-time insights into crucial metrics, Productive is the solution for you.

It’s an all-in-one software designed to support professional services workflows, including marketing, design, consultancy, development, and in-house teams.

This includes capabilities such as project management, time tracking, resource planning, budgeting and billing, and more.

With Productive’s reporting and financial management features, you can:

And there’s much more, such as custom permissions, automations, and various native integrations for connecting your tech stack.

Book a demo with Productive today to find out how you can support your agency’s growth.