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5 Critical Metrics for Project Management

Those in project management understand that measuring is everything! Regardless of what business or space you’re in, there are particular metrics set in stone. Project managers require KPI’s, or Key Performance Indicators, to measure several components. There are various metrics to keep tabs on, but these five are fundamental to any project:

  1. Gross Margin

What it is: Gross Margin is the big daddy of project metrics. There is no more candid measure of how the project is performing, or how much cash your business is producing.

How do you calculate it: Total Revenue – Total Project Costs (Up-To-Date). That is, you estimate how much you’ve used in (or how much you are supposed to take in), and minus from that how much you’ve spent. You can — and should — be gauging this all the time, ideally by placing up automated electronic workflows.

Why it’s crucial: Gross Margin shows you at every point in time what your gain (or predicted profit) from a project is; it’s a sort of constant bottom-line. It shows you instantly if your project is reaching its financial expectations, or if you’re consuming more than you should be.

  1. Cost Variance

What it is: Cost Variance is the inverse of Gross Margin. While Gross Margin gauges money getting in against cash moving out, Cost Variance measures estimated amount against money actually spent.

How do you calculate it: Amount Budgeted – Money Spent. The purpose is to notice if you’re within the budget or not. If the outcome is positive, then you’re within budget (i.e., “favorable”); if it’s negative, then you must have spent more than what you have budgeted, which is called “unfavorable.”

Why it’s essential: Like Gross Margin, Cost Variance can show you quickly if your budget is working fine. Measuring CV routinely helps you know what portion of your budget you’ve used; you can apply this number to evaluate your growth overall. (i.e., if you’ve used up 25% of the budget in just the first month of a nine-month-long project, you might be in crisis.)

  1. Schedule Variance

What it is: Comparable to Cost Variance, but in this instance, you estimate the amount of work done.

How do you calculate it: Amount of work required – the amount of work performed. Alternatively, if your project is quantifiable, 100% of the project – Percent of the project performed. In this situation, project management implies you’re counting in to see if you’re on the calendar to complete the project.

Why it’s crucial: Schedule Variance benefits, you calibrate the amount of work you or your team must do to get the project done timely. It shows you at every moment where you are at relativistic to your overall project timeline. If you’re forward of schedule, excellent! If you’re slow, time to start cranking.

  1. Resource Utilization

What it is: Resource Utilization estimates how much time different workers are giving on a project. It’s a measure less of overall growth than of how efficiently your company is working.

How do you calculate it: Percent of the project completed / Number of team hours spent on it. Alternatively, if you’re seeing the individual efficiency, Percent of the project done / Number of one’s hours spent on it. Importantly, to be able to scale utilization, you require having a time tracker system in place, so that you perceive how many hours it’s taking people to get various jobs done!

Why it’s essential: Resource Utilization is vital in project management for understanding how much time your team requires to perform various tasks. This can ease you program things in the future. If you’d estimated 300 hours for the first 25% of the project, for instance, but it took your team 500 hours to finish that part, you know there’s a problem with either your team’s productivity or your budgeting scheme!

  1. Change of Scope

What it is: Change of Scope maintains track of the magnitude of the project. Every change request from the clients needs you to modify your overall budget (both time and money). Change of Scope benefits you stay on top of this so that you can evade the dreaded Scope Creep.

How do you calculate it: New size of project / Original size of the project. The more this ratio rises, the more you’ll require to re-budget. For instance, if a modification request increases the size of your project by 20%, you’ll have to set your budgets accordingly.

Why it’s essential: Individual modification requests can be small but can score up. Tracking all of them in one metric informs you if the amount you’re getting paid is equivalent to the amount of work you’re supposed to do. If 15 various modification requests multiply the size of the project by 30%, you want to make sure you’re not likely to finish the project in the same amount of time, or at the same price!

Our advice is to set up a dashboard where you’re continually tracking all of these elements. Doing that proffers you instant feedback on the project and assures that your project will successfully be completed.

Alma Reed is an author and researcher dedicated to enhancing productivity. She is deeply interested in areas such as time management, increasing productivity, and fostering healthy routines. Through her writing, she aims to assist people in boosting their job performance and attaining an ideal balance between work and life.

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