“If you don’t know where you are going, you’ll end up someplace else.” ~Yogi Berra
To succeed as an agency — or a business of any kind — you need a clear vision of what success looks like.
Is success more revenue? More clients? Higher customer satisfaction? A Super Bowl ad? All of the above?
Key performance indicators (KPIs) are a time-tested way to measure performance and the success that strong performance generates. Tracking KPIs is also a part of project management best practices.
In this post, We’ll show you 14 of the best KPIs for most agencies, how to know if a performance metric is a good project management KPI, and what you gain by tracking the right ones.
What are project management KPIs
Project management KPIs are measures of how well an aspect of a project is going based on project data you collect along the way. They can measure project progress, adherence to budget, adherence to schedule, resource allocation, and more.
Anything that can be measured and quantifiable (expressed as a number) and that helps define project performance qualifies as a project management KPI.
What makes a good KPI for project management?
A good KPI for project management will:
Provide insight on whether those goals are being met
Be quantifiable (quantitative data, not qualitative)
Show problem areas quickly
Have a clear definition and goal
Most good KPIs are also SMART goals.
14 effective KPIs for project management
There are a dizzying number of project metrics that an organization could track — but let’s be real: you can’t track them all.
So where should you focus?
These 14 KPIs are a great place to start for agencies and organizations of all shapes and sizes.
1. Project cycle time
Project cycle time measures the length of the project lifecycle or how long it takes to complete a given project from start to finish. It can also be used to measure repeated tasks or milestones within a project.
Project cycle time is an effective KPI because it establishes a baseline. For example, if a typical campaign has a 90-day cycle time, you’ll know something’s amiss when one stretches to 120 days. Or you might want to look at what went right (or got skipped) if a similar campaign finishes in just 30 or 60 days.
2. Cost variance
Cost variance measures what was actually spent (or has been, to this point) against the budgeted project cost. It’s a simple formula: Budgeted amount – actual costs = cost variance.
This metric shows you whether your project is over or under budget and by how much.
3. Resource capacity
Resource capacity looks at the number of hours available to work on a project.
A simple formula might look like this: Available work hours per day x number of FTEs on the project x number of days on the project schedule.
If two employees can each give three hours of work a day (this figure must exclude break time and time spent on other projects), that’s 30 hours of work per week (less if there’s a holiday). So, on a four-week project, you’re getting a maximum of 120 hours of work.
When coupled with a fully fleshed-out project plan, resource capacity is a telling metric. If the project plan expects 160 hours within four weeks, but your resource capacity caps at 120, something’s got to give. You’ll either need to extend the project timeline, add resources, or cut the scope of the project.
4. Resource utilization
Resource utilization measures your available resource levels versus your used resource hours.
It can be expressed as a percentage, such as 90% or 100% resource utilization. It’s a good measure of how efficient your resource planning has been, and it can reveal potential burnout (from maxed-out utilization or overutilization) or project delays (from underutilized resources) before they reach crisis levels.
Let’s return to our 160-hour project. Let’s say you solved the resource capacity issue: now you have enough people with enough hours on your project team to get this project done on the four-week timeline.
If those people can’t (or don’t) work on the project when they have those free hours, you’re going to run into the same problems as before. Seeing resource utilization numbers well below 100% tells you there’s a problem (even if it doesn’t tell you exactly what the problem is).
5. On-time completion rate
It’s not exactly a mystery that this one measures how often projects finish on time.
It’s also always expressed as a rate or a percentage. For example, If John completed five projects on time out of six total projects, you’d divide 5 by 6 (0.833) and then multiply that number by 100 (an 83.3% on-time completion rate).
Now, we can’t tell you whether 83.3% is good or bad — the answer depends on all sorts of factors. But you can compare performance internally using this metric.
All else being equal, if John hits 83.3% but Kelly hits 90%, it’s easy to see who’s doing better (and who has room to improve).
6. Net promoter score
Net promoter score evaluates customer satisfaction. It breaks down survey respondents into three categories: promoters, passives, and detractors.
The respondents are typically answering a question like “how likely would you recommend our product or service” on a scale of zero to 10. Promoters are those who score highly — the people who are most likely in real life to promote your product (for free). Neutrals are in the middle, unlikely to promote or harm your brand. Detractors are those who hold a negative opinion about your brand and could actively hurt your image.
To calculate the net promoter score, or NPS, subtract the percentage of detractors from the percentage of promoters. (Ignore the neutrals.)
Here are two examples:
If you have 80% promoters, 10% neutrals, and 10% detractors, your NPS is 70 (80 minus 10)
If you have 10% promoters, 50% neutrals, and 40% detractors, your NPS is -30 (10 minus 40)
7. Earned value
Earned value is the amount of the project’s budget (or anticipated earnings) that corresponds to how much of the project has been completed.
If you’re 50% finished with a project that has a $100,000 budgeted cost, your earned value is $50,000.
8. Cost performance index
The cost performance index measures how much you’ve spent at a point in the project compared to the earned value (see above).
If you’ve earned $50,000 of the $100,000 budget but have only actually spent $35,000, then your cost performance index is looking great. On the other hand, if you’ve burned through $75,000 and have just now reached an earned value of $50,000, you might be in project peril.
9. Planned value
Planned value is the value you expected to have on the project up to this point in time.
Let’s say you keep plugging along on that $100,000 project. Now you’re 60% of the way through, so your earned value is $60,000. And great news: you’re actually ahead of schedule! According to the schedule and budget, you should be through $55,000 of the work. So you’re $5,000 ahead of the planned value.
Earned value, cost performance index, and planned value all help you align your project budget with reality (or adjust your future resources and project scope if the budget can’t budge).
10. Schedule performance index
The schedule performance index, or SPI, is your earned value divided by your planned value.
According to the Project Management Institute, an SPI greater than 1 means your project is ahead of schedule or under budget, or both. An SPI less than 1 means the opposite.
11. Schedule variance
Schedule variance compares the percentage of work completed against the percentage of schedule depleted (or how much work you expected to be completed by this point in the schedule).
Essentially, schedule variance is a calculation of how far behind (or ahead of) schedule a project has run.
12. Planned hours vs. actual hours
This project management KPI adds up the planned duration and then subtracts the actual amount of time spent on the work. If your number is less than zero, then the project has taken longer than planned.
13. Employee churn rate
This KPI measures the rate at which employees have left your company over a given span (a year, six months, that sort of thing). You can calculate it using this formula:
(the number who left) / (total number of employees) x 100 [expressed as a percentage]
If you employ 50 people and lost four last year, then the calculation looks like this:
4 / 50 x 100 = 8% churn rate
Measuring churn rate can help identify overall health and culture issues. The lower, the better, and if you see spikes in the churn rate, you can investigate to determine why.
14. Return on investment (ROI)
ROI compares the money spent on a project with the expected (or actual) value delivered by the project.
Here’s the formula: (value or revenue) / (cost of the project) x 100 [expressed as a percentage]
If that $100,000 project generates $500,000 in new sales (let’s pretend for a second that there’s no overhead or materials costs — we aren’t that good at math!), the ROI formula would look like this:
$500,000 / $100,000 x 100 = 500% ROI
(Now, that’s a project worth pursuing!)
Benefits of tracking the right KPIs
Even if you start with just this list of 14 project KPIs, you’re already committing to a significant amount of tracking and number-crunching. It’s fair to wonder if the juice is worth the squeeze.
We believe it is — and that you’ll enjoy these four benefits when you zero in on the right KPIs for your agency or business.
Improved project performance
People have a hard time hitting targets and meeting goals when they don’t know those targets and goals exist.
Tracking the right KPIs gives your agency (and your clients and stakeholders) real data about performance, and it broadcasts to everyone exactly what areas to focus on. People know what matters to you (and to the client), so it’s easier to improve overall performance — not just in general, but in the ways that actually matter.
(There’s more to project delivery than “on budget” and “on time.” Get the scoop in our realist’s guide to big picture project management KPIs!)
Increases client satisfaction
Your clients want to see results, not marketing lingo or vanity metrics. Tracking the right set of KPIs will give your clients clear visibility into what you’re achieving for them.
When you take vague notions of progress and replace them with clear performance indicators, you show your clients the actual results and value they’re paying you for. Assuming those results are worth the cost, your clients will be more satisfied working with you.
Improving performance requires knowing the goal or target — you can’t get by on intuition or educated guesses for long. In a similar way, making the right decision every time requires more than good business sense or good luck. You need access to performance data.
Consider a question like this: Does your agency have the resources to take on that new client (without hiring additional staff)?
Without data, it’s easy to say “yes!” to every new client without considering the cost — but that’s a recipe for burnout and declining returns. When you’re tracking resource capacity, resource utilization rate, on-time project completion rate, and schedule variance, you’ll know with confidence what it will take to onboard that new client.
Better resource management
Last, tracking the right KPIs allows you to manage resources more effectively. If you don’t know that one account manager is badly overloaded while another is underallocated, you can’t fix the problem. The right mix of KPIs can help you discover problems like this faster and fix them more precisely.
Track the right KPIs for project success with Teamwork
Tracking the right set of KPIs helps your agency move forward with better decision-making and more confidence. But getting started at KPI tracking requires the ability to collect and understand project and performance data.
Teamwork is the project management software solution that makes tracking project data simple, including the data points feeding your KPIs. It’s built for agencies, so it will slide right into your existing ways of working — and your team won’t hate using it.
Start tracking project data (including KPIs) using a project management solution built for agencies like yours.