Project performance measurement isn’t just on-time and on-budget. Here are 7 ways for how to measure project performance meaningfully.
When we think about project performance measurement, it’s not really the same as measuring the performance of a team or a business process or an organisation’s strategy. So we need to think a little differently about the kinds of measures that will tell us what we really need to know to manage project performance.
When we measure the performance of the business process or team, we’re interested in how a particular business result produced by that process or team is changing as time goes by. When we’re measuring the performance of a project we are interested in the impact the project has at a point in time, or over a fixed timeframe.
This is because projects by their very definition have a start point and an end point. The reason we do projects is to make a difference and usually the difference we’re trying to make is to make some kind of result, especially in business, better. Thus, our first project performance measure is…
For project managers, measuring and evaluating project performance is a crucial part of ensuring success. But with countless potential KPIs to choose from, how do you know which ones to focus on?
In this guide, we’ll cover the 7 most important metrics and key performance indicators (KPIs) for assessing project performance and health Tracking these metrics will give you greater visibility into how your project is progressing, where there are opportunities for improvement, and whether you’re on track to achieve desired outcomes
Let’s examine these essential project performance metrics
1. Budget Performance
A project’s budget performance compares the approved budget against actual spending. This allows you to identify budget overruns or underspending.
Specific budget metrics include:
- Budget at completion (BAC) – The total approved budget for the project
- Actual cost (AC) – How much has actually been spent so far
- Cost variance (CV) – The difference between BAC and AC
- Cost performance index (CPI) – The ratio of work performed to costs incurred
Regularly monitoring these metrics ensures your project stays within budget constraints. A negative CV or CPI < 1 indicates cost overruns.
2. Schedule Performance
Schedule performance metrics evaluate whether the project is on track against the planned timeline. Important metrics include:
- Planned duration vs. actual duration – How long the project was intended to take vs. current timeline
- Schedule variance (SV) – The difference between planned and actual progress
- Schedule performance index (SPI) – The ratio of completed work to elapsed time
A negative SV or SPI < 1 shows the project is behind schedule. Reviewing critical path dependencies can identify causes for delays.
3. Scope Performance
Scope performance tracks whether the deliverables produced meet the originally agreed upon scope. Metrics include:
- Scope verification – Confirming completeness of project deliverables
- Scope creep – Quantifying new features or tasks added outside original scope
- Technical performance – Evaluating quality of deliverables and adherence to requirements
Controlling scope creep is crucial to prevent unplanned delays and costs.
4. Quality Performance
Quality performance assesses the quality of project outcomes delivered, often through customer satisfaction ratings. Metrics include:
- Customer satisfaction scores – Feedback ratings on quality of deliverables
- Quality standards met – % of deliverables meeting requirements
- Defect rates – Number of defects identified in testing or production
Low defects and high customer satisfaction indicate you’re meeting quality goals.
5. Resource Performance
Resource performance evaluates whether your team is working effectively and efficiently. Helpful metrics:
- Task progress rates – Speed of completing project tasks
- Resource utilization rates – % of team capacity being used
- Resource schedule variance – Difference between planned and actual resource usage
Optimizing team utilization ensures resources are fully applied to the project.
6. Risk Performance
Risk performance tracks emerging project risks and response effectiveness. Metrics include:
- New risks identified – Number of new risks appearing
- Risk mitigation success rate – Closed risks vs. realized risks
- Risk severity – Average impact level of current risks
More effectively mitigating risks minimizes threat levels to the project.
7. Earned Value Management
Earned value management (EVM) integrates scope, schedule, and cost data to provide an overall project health assessment. Key EVM metrics:
- Planned value (PV) – Budgeted costs for work planned
- Earned value (EV) – Budget for completed work
- Actual costs (AC) – Actual costs incurred
Comparing PV, EV, and AC shows overall project performance efficiency. EVM is a powerful integrated metric.
Key Takeaways for Measuring Project Performance
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Focus on quantifiable metrics tied directly to project objectives like budget, timelines, and quality.
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Evaluate both efficiency metrics (like utilization) and effectiveness metrics (like satisfaction scores).
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Don’t just collect metrics – regularly analyze them to identify performance gaps and improvement opportunities.
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Segment metrics by project phase, team, deliverable type, etc. to uncover specific issues.
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Share key metrics results cross-functionally to keep all stakeholders aligned.
Tracking the right performance metrics provides tremendous visibility into your project’s health and progress towards success. Consistently measuring and analyzing these KPIs allows you to course correct quickly.
Use this list of essential project metrics as a starting point and refine over time. With robust metrics in place, you can confidently gauge performance, address issues, and deliver projects effectively.
Project KPI #2 & #3: Financial Impact & ROI
A project won’t be successful if the cost of doing it was not sufficiently lower than the value of its impact. So, we need two other important measures of project success. The first one is financial impact, like costs saved or income generated. The second one is the return on investment, or ROI, which is the ratio of that financial impact to the total costs of undertaking the project.
Project KPI #4 & #5: On-time & On-budget
These are the traditional project measures, which can also help us manage the project while we’re implementing it. A well-managed project is more likely to have a big impact and big ROI. This is where the most commonly used measures of project performance come in: on-time and on-budget. But rather than just measuring these at the end of the project, they can be measured at regular milestones throughout the project, so we have opportunities to a project’s implementation back on track before it’s too late.
How to measure project performance
How do you measure project success?
Knowing how to measure the success of a project is crucial for project teams to evaluate their performance and ensure that their efforts align with their goals and objectives. While it’s common practice to measure scope, schedule, and budget, it’s important to acknowledge that they do not provide a comprehensive measure of project success.
How do you measure project performance?
Once you’ve submitted the final product to the client, you may evaluate the organization and collaboration of your team, which refers to measuring project performance. There are multiple metrics that can help you ascertain how well you managed your work and what practices you can incorporate in your next endeavor.
How does project performance affect project success?
The performance of these elements can measure a project’s success. Closure: This phase analyzes the completion of milestones and deliverables, which directly impact the success of a project. Project evaluation allows a project team to reflect on the success and failure of a project based on metrics set by the team.
Do you know the project management KPIs you need to track?
Knowing the project management KPIs you absolutely need to track and how to measure them is key to every project’s success. From cost and planning project KPIs to time and quality metrics, these are the top 20 key success factors every project manager needs to measure success — and we show you exactly how to measure them.
