The Five Most Critical Project KPIs
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This presentation will discuss the five most critical metrics that every project-based business needs to have readily available, and how to calculate them, so you can turn your data into decisions. To watch the presentation with audio, follow this link: https://hubs.ly/H08_TzK0
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The Five Most Critical Project KPIs
- 1. The Five Most Critical Project KPIs PRESENTED BY Neil Frye Senior Business Intelligence Consultant Mavenlink
- 2. The Illusion of Success Information silos in services organizations can lead to: Difficulty forecasting revenue Uncertainty in resource planning against demand Lack of real-time visibility into project profitability and utilization
- 3. KPI # 1 Project Margin Project margins reveal a project’s revenues, costs, and expenses INFORMATION REQUIRED _______________________________________________________ ● Fixed fee revenue and time and materials revenue ● Non-billable expense ● Resource cost rate x hours logged
- 4. KPI # 2 Billable Utilization Actual vs. Scheduled Billable Utilization reports highlight the relationship between an individual’s actual and scheduled hours and help minimize “margin leakage” INFORMATION REQUIRED _______________________________________________________ ● Billable actual hours ● Scheduled billable hours ● Utilization targets ● Resource work weeks
- 5. KPI # 3 Billable Performance to Target Billable performance to target is a good indication of efficiency from a group or employee standpoint; it shows actual and scheduled billable hours relative to target hours INFORMATION REQUIRED _______________________________________________________ ● Billable actual hours ● Scheduled billable hours ● Target hours ● Resource work weeks
- 6. KPI # 4 Total Availability By Month Total availability by month helps companies see if they have enough resources to complete their work (or take on more work) INFORMATION REQUIRED _______________________________________________________ ● Total monthly availability ● Planned availability ● Scheduled availability
- 7. KPI # 5 Supply vs. Demand The supply and demand metric should display planned and scheduled availability vs. remaining hours needed per project INFORMATION REQUIRED _______________________________________________________ ● Planned hours ● Scheduled hours ● Task estimated hours
- 8. L A T E S T E B O O K Check for this follow up piece For Professional Services teams everywhere! W H A T ’ S I N S I D E : ● Project Margin ● Billable Utilization ● Billable Performance ● Total Availability by Month ● Supply vs. Demand The Five Most Critical Project KPIs
Editor's Notes
- Many businesses chase growth at the expense of profit, especially in the services industry. But at what expense? Most services organizations are operating with information stored in silos, including key data points about their people, projects, and financial performance. Multiple issues can result from these information silos, including difficulty forecasting revenue, uncertainty in resource planning against demand, and a lack of real-time visibility against project profitability. This is why Organizations need to apply business intelligence techniques such as the use of Key Performance Indicators or KPI’s to make sense of their Big Data
- The first KPI we will discuss is project margin. The best-run services companies put together a profit and loss statement, or P&L, for each individual project. Project P&Ls include details about a project’s revenues, costs, and expenses, revealing the amount of profit generated by the project. Once you find the margin for projects, you can see which ones meet or exceed target margins. With that information, you can more accurately predict project outcomes. Knowing a project’s margin at completion will allow you to determine whether moving resources around or modifying project scope would allow you to increase margins at project completion.
- The next KPI on our top 5 is Billable Utilization. Companies can have profitable projects and yet still lose money because of too many resources working on non revenue-generating projects. This Often referred to as issue as “margin leakage.” But being able to monitor schedule and actual billable utilization can help dramatically help to mitigate this schedule billable utilization measures the allocated time your resources are expected to spend working on billable projects. Actual billable utilization, then, is a view into how much work a particular resource has actually worked or logged time towards thus far on each project. This metric helps companies see whether resources are hitting their expected schedule month-by-month; it compares actual, scheduled, and target hours. Ideally you want your actuals to be as close to your targets as possible If resources go over their targets they run the risk of burnout. If they go under their target, the business is losing out on potential billable time and ultimately more revenue schedule vs actual utilization can also be used to help resource managers make hiring, staffing, and overall personnel usage decisions more effectively.
- The next KPI on our top 5 is Billable Performance to Target Now it’s great to compare allocations to actuals but what do we do if resources are falling short? With this KPI, not only can you can see whether a person or group is likely to achieve or miss their target, but you can also see when that is happening If an individual is not on pace to hit their target billable hours, the person may not be working on the right projects or working on non billable projects too much. For example, if i filter to kevin, his team member valerie missed her target because she has 284 hours of time logged to productive non billable projects - and if i click on her name, we can see a good portion of that time was spent on a proposal.
- The next KPI on our top 5 is total availability by month. Services firms are constantly struggling to manage supply versus demand. Total availability by month helps organizations determine whether they have enough resources to complete their work, and also helps determine whether they can take on more work. As a resource being able to compare what was planned to what was actually allocated or scheduled on projects is a big game changer. Not only will it allow a resource manager to Identify resource constraints but also be able to find available capacity when needed. Having the ability to properly visualize availability by month allows for better forecasting better planning and overall better Staffing for your organization.
- Which brings us to our final KPI, supply vs. demand Failing to recognize when resources are available to work can significantly hurt a services organizations. It’s necessary to have a dashboard that helps you understand what may be needed to complete a project and what resources can finish it. With the ability to measure supply and demand we can Clearly see what's remaining on a project and whether assignments need to be made. For example the angle Rock Project has a thousand on assigned tasks hours and only 416 planned hours meaning that we have over 500 hours of work that will need to be planned out and ultimately assigned to resources. That can be a big challenge for resource manager if they don't have the ability to see who's available from a planning perspective however within this report right here on the left we can see exactly who's the most available and then plan for them to work on these projects accordingly.
- Thanks for watching! To read more about the KPIs you should be tracking, go to http://hubs.ly/H07K4sk0 and download our eBook. If you are looking for more content like this, subscribe to our blog at blog.mavenlink.com.