Measuring project effectiveness in a software development environment is challenging. One method of measuring a project’s success or making sure the project is on track is to make use of project management metrics. These metrics offer project managers an objective way to assess project performance and pinpoint areas for improvement. In this tutorial, we will explore some of the most common and useful PM metrics and discuss how to implement them in your organization.
- What are project management metrics?
- Time Metrics
- Cost Metrics
- Quality Metrics
- Scope Metrics
- Risk Metrics
- Pitfalls of project management metrics
What are Project Management Metrics
Project management metrics are measurable values that provide insights into how well – or unwell – a project is performing. At a glance they let project managers know if a project is on track or is aligned with the project goals. These metrics are compared with the project time and budget constraints to gather an overall health check of the project, so project managers can make data-driven decisions to help ensure the success of the project.
These metrics measure several key elements of project management, including:
We will discuss each of these PM metrics in the sections below.
Time delays can create a substantial impact on project costs and success, which is why time metrics are important to measure. The following are considered important time metrics for project management:
- Scheduled Variance
- Scheduled Performance Index
- Cycle Time
Scheduled Variance – or SV – enables project managers to measure the divergence between a software project’s planned schedule and its actual progress. To calculate this number, you have to subtract the Planned Value – which represents the estimated value of the work to be completed – from the Earned Value – a representation of actual work completed. If the result of this calculation is positive, it implies the project is ahead of schedule. If the value is negative, the implication is that the project is behind schedule.
The Scheduled Variance should be monitored and evaluated consistently so that project managers and developer leads can identify and address any issues with scheduling.
Scheduled Performance Index – or SPI – is used to determine how efficiently a project is being managed. It is calculated in a similar manner as Scheduled Variance, except you divide versus subtract:
Planned Value/Earned Value = Scheduled Performance Index
Ths calculation results in a ratio representing the difference between planned and earned project value. A result of 1.0 means the project is exactly where it should be. Anything less than 1.0 means the project is behind schedule.
Cycle Time is a metric that is defined by the project manager and the development team during project planning. It measures the amount of time it takes to complete either the project as a whole and/or a process within the project. In software development, you calculate Cycle Time by measuring the difference between the First Commit Time and the Release Time, where First Commit Time is the amount of time it takes for a developer to begin work on a branch and then release it to production.
Monitoring Cycle Time between processes and projects can help project managers and developers identify ways to streamline the development process and increase efficiency. For example, a project with a low Cycle Time should be studied because it indicates a smooth running operation from which you can borrow workflows from, while a high Cycle Time means that there are steps you can take to improve efficiency.
Cycle Time also helps project managers better predict future project durations and timelines, increasing the effectiveness and reliability of project planning.
Cost metrics let project managers better evaluate whether a project is staying within planned budget or not. They measure the financial performance and how well resources are being utilized, resulting in better control of budget and more accurate budget planning. Important cost metrics include:
- Cost Variance
- Cost Performance Index
- Return on Investment
Cost Variance – or CV – measures the difference between the budgeted cost of work performed against the actual cost. If the number is negative, then the project is deemed over budget.
Cost Performance Index – or CPI – is another way to measure the value of completed work compared to its actual cost. This is calculated by dividing the budgeted cost of work by its actual cost. If the number is below 1.0, then the project is likely over budget.
Return on Investment (ROI) is the ration of total net profits against the total cost of the project. A positive ROI indicates a profitable project.
Quality metrics, as the name implies, are used to assess the quality of the deliverables in the project. Project managers use them to ensure these deliverables meet the standards, requirements, and expectations of the time, as well as those of the industry. It also looks to make sure that best practices are followed. Important quality metrics include:
- Test Case Success Rate
- Defect Density
- Customer Satisfaction
Test Case Success Rate is a calculation showing the percentage of test cases that a project successfully passes. It can be calculated using the following formula:
(Total number of tests passed / Total number of test cases) x 100
The higher the number, the better the quality of deliverables is considered to be.
Defect Density is used to measure the number of defects in a deliverable by the deliverable’s size. For software development that means measuring how many issues or bugs are detected for every thousand lines of code. A high percentage outcome indicates poor software quality.
Customer Satisfaction is usually measured by input received from polls, surveys, and customer feedback once a project has been released. As you might suspect, it tells project managers how satisfied a client or customer is with the final product.
If project scope is used to define a project and its objectives, then project scope metrics are used to ensure that a project does not deviate from its original goals. These metrics measure and track project changes in an effort to avoid scope creep (when a project expands beyond its initial plans without adjustments to time, resources, or budget). Important scope metrics include:
- Scope Variance
- Scope Creep
Scope Variance is used to measure the amount of scope creep in a project. It is calculated by subtracting Planned Value from Earned Value. A positive value means that the project is on track or maybe even over-delivering.
Scope creep, as a quantifiable metric, involves measuring the number of changes added to a project by its original objectives: The percentage result shows the amount of scope creep that has occurred.
Risk metrics let project managers identify possible risks, gauge their effect on a project, and create risk mitigation strategies. They are an objective measurement of the uncertainty is inherent in projects and can be used to either prevent these risks from becoming issues or limiting their effect on the project. Risk metrics include:
- Number of Identified Risks is the number of potential risks that could affect a project.
- Risk Severity is an assessment of the potential damage a risk could cause within a project.
- Risk Exposure adds the probability of a risk occurring and its probably impact to the project in an effort to predict its potential risk.
How to Implement Project Management Metrics
The first step to implement the above project management metrics is to determine which are relevant to your project, as not every metric will apply to your project. Next you will want to create a process and workflow for collecting and analyzing the data. One way to simplify this process is to use project management software and tools, which often have PM metrics built-in.
Example of Smartsheet Project Management Software
Using these metrics involves more than their initial implementation. Project managers will want to continuously monitor and review the results throughout the lifecycle of the project to ensure the project is completed successfully.
Pitfalls of Project Management Metrics
Despite their many benefits, project management metrics can have their drawbacks as well. Some common pitfalls of implementing PM metrics include:
- Overcomplication: Relying on too many metrics – and therefore too much data – can make analysis complicated. Instead of using every metric imaginable, focus only on the most important ones.
- Objective alignment: If you have metrics that do not align with project goals, be sure to remove them, as they can negatively impact decision making.
- Vanity metrics: Vanity metrics are those that look “impressive” but that do not actually provide real value or result in actionable insight. Remove these and instead focus helpful metrics.
- Irregular Reviews: A common pitfall for project management metrics is not reviewing them regularly. Data can become outdated and irrelevant quickly, so it is a best practice to review collected data on a frequent basis to ensure project success.
- Qualitative versus quantitative metrics: Avoid emphasizing quantitative data (real data) over qualitative data (experiences). Instead, seek a balance between the two types of data.
Final Thoughts on Project Management Metrics
Project management metrics are a helpful tool project managers can use to gain invaluable insights into the projects and the processes their software development teams create. Successfully implementing the metrics discussed in this tutorial can greatly increase the chances of delivering projects on time, within budget, and with a high-degree of success.
In particular, we discussed five types of project management metrics, including measurements for time (to ensure projects are on-track to hit their deadline), cost (for monitoring and controlling budget inflation), quality (to measure product quality and customer satisfaction), scope (for monitoring the amount of scope creep in a project), and risk (which is used to mitigate risks and create strategies for them).
Finally, to implement, measure, and monitor some of these project management metrics, we recommend employing project management tools and software to make sure you are properly measuring the success of your team’s software projects.