Metrics in Project Management

by Crystal Lee, PMP

 

Metrics may not be the sexiest subject in project management, but the success of the project management office (PMO) you work in, indeed, perhaps your job as a project manager, may be dependent on whether you have a metrics program in place. In tough economic times, there are even more amazing opportunities for a PMO to prove its real worth to the organization. The information in this article can help you to create your metrics program or assess if your existing program is doing enough to justify your existence.

A metric, by definition, is any type of measurement used to gauge some quantifiable component of performance. A metric can be collected through observation, such as number of days late, or number of software defects found; or the metric can be derived from directly observable quantities, such as defects per thousand lines of code, or a cost performance index (CPI). When used in a monitoring system to assess project or program health, a metric is called an indicator, or a key performance indicator (KPI).

 

Metrics Management Defined

Intense interest in metrics within the project management community has spawned an entire subfield of study called metrics management. Project metrics can be categorized into three main categories:

 

1. Pure project management measurements (Example: Estimation accuracy)
2. Indicators of project success (Example: Stakeholder satisfaction)
3. Indicators of business success (Example: ROI).

When reporting metrics to management, it is important to keep the time factor in mind. True success or true failure may not be apparent until long after a project is formally closed. For example, a new software application may turn out to be a colossal failure six months after it is put into production, when it finally reaches its planned usage targets.

Examples of macro-level metrics include: number of successful projects, percentage of failed projects, and number of hours spent per project or program.

At the micro level, metrics management means identifying and tracking tactical objectives. It is only by looking at the task level metrics that status of higher-level work packages can be ascertained, which can then be reported to project stakeholders and customers. Different types of projects will require different types of metrics—a software development project will call for different measurements than, say, a merger and acquisition transition project.

The following criteria are the most common tactical measures people want to be updated about:

Tactical Measure	Question Answered	Sample Indicator
Time	How are we doing against the schedule?	Schedule Performance Index (SPI) = Earned Value ÷ Planned Value
Cost	How are we doing against the budget?	Cost Performance Index (CPI) = Earned Value ÷ Actual Cost
Resources	Are we within anticipated limits of staff-hours spent?	Amount of hours overspent per software iteration
Scope	Have the scope changes been more than expected?	Number of Change Requests
Quality	Are the quality problems being fixed?	Number of defects fixed per user acceptance test
Action Items	Are we keeping up with our action item list?	Number of action items behind schedule for resolution

 

Putting a Metrics Program into Place

A common saying you may hear about metrics is: “If it cannot be measured, it cannot be managed.” Clearly the lack of metrics can make it harder for a project manager to do the best job possible.

At the same time, metrics are useful only if they are just that – useful. Tracking metrics just to have something to put on your status report is not effective use of your time, or your team’s time.

If you want to put an effective metrics program in place, set aside time to plan the following items in the following order:

	What information are you going to collect? (Hint: Keep it simple).
	How are you going to collect the information? (Hint: Keep it easy. Use information already being collected for other purposes.)
	What methods will you use to process and analyze the information? (Hint: The more actionable the analysis the better.)
	How and when will you report on the results?

A special word on reporting: The way you present your metrics depends on who is asking. The executive usually just wants to know the general health of the project and get a “warm and fuzzy,” while the PMO auditor wants to know that you are “two days behind, due to the approved scope change, but that you are crashing the schedule in order to make it up.”

The best way to showcase your information is usually the simplest. Some project management software packages include an automated dashboard feature, which may or may not fit your needs. Visual displays, such as a simple graph to illustrate trends, or the classic “traffic light,” are effective ways to show the status of key metrics indicators. A simple traffic light chart can be built in Excel, using colors to show status. Typically:

• Green means “So far so good.”
• Yellow means “Warning – keep an eye on me.”
• Red means “Urgent attention needed.”

Your traffic light report should show detailed indicators and one rollup indicator for status at a glance.

If using a traffic light format, be sure to set rules for when to change colors on the lights; work with the project sponsor or PMO to get this done if not already standardized. You may have had the fun experience of trying to decide when exactly you should turn that little dot yellow, or not be allowed to turn it red because your manager does not want you do so.

For example, for a schedule-based indicator, the rule can be “Turn the indicator yellow when the number of overdue tasks is greater than two.” Indicators can also be split into monthly target ranges so that trends in progress can be gradually visualized. It is better to turn the traffic light yellow when the overall schedule is five days late during Month 1, than to turn it yellow when you are 15 days late during Month 3, when it is too late to react.

Take Metrics Management to the Next Level

As you continue to accumulate metrics about the projects in your company’s portfolio, you are building a valuable database of internal benchmarking data. Compare your metrics to other projects in your portfolio to see where process improvements can be made, or where you might introduce compliance requirements. You can also compare your metrics to benchmarked project data from other companies in the same industry.

One resource for the latest news in metrics management is the Project Management Institute’s Metrics Special Interest Group (MetSIG). MetSIG’s premier event is its Global Online Congress, held annually in April. The Congress is a month-long series of online “webinars” on metrics-related topics. As a sign of the importance of metrics to the project management community, MetSIG estimated that almost 50,000 participants would attend the MetSIG 2008 Online Global Congress, and another 50,000 would view the archived video presentations (see www.metsig.org for more information).

Project management as a discipline continues to grow and shows no sign of slowing. As PMI Chief Executive Officer Greg Balestrero quoted in his Keynote Speech at the 2007 MetSIG Congress, over 87 percent of organizations already report project status to Boards of Directors, and 17 percent of PMOs report to CEOs (KPMG, Global IT Project Management Survey, 2005).

The challenge is to make sure that the project status includes metrics that demonstrate the value of project management. As you have seen, there are many tools and techniques available to communicate and manage metrics at a project (tactical) or PMO (strategic) level. Take this opportunity to think about how people around you perceive the value of your project management services, and see if you can think of ways to promote and protect your position as a champion of project management in your organization.