Project Tracking – KPIs and Best Practice in a Project-driven Business

Identification of the right Key Performance Indicators (KPIs) is essential for measuring success and progress of projects, for management and the shareholder. The industry typically assesses various aspects of project performance to provide valuable insights for decision-making and improvement. In a series of contributions on the subject, I discuss a set of typical KPIs used in project-driven businesses, with a focus on resource utilization, schedule adherence and risk management.

Project Profitability & Cash Flow

In measuring the financial success of a project, several KPIs such as gross margin, net profit margin, return on investment (ROI), and cash flow specific to individual projects, hinge on accuracy and availability of relevant data. Relevant data will be sourced from financial systems, but also include a project manager’s assessment of future project expense.

Project Profitability routinely also evaluates how well the project is managing its budget. It includes metrics such as actual project costs compared to the budgeted costs and calculates a cost variance.

Diligence and effectiveness of these KPIs might vary across entities, locations, or groups, unless governed by a strict process that would describe how to measure and assess risk. Common understanding of the corporate approach to estimate future cost and resource needs is essential for a weighted and balanced presentation of a project’s outlook. The result of the process drives PoC (Percentage of Completion), thus is relevant (and auditable) input for the business’ financial results.