Project Performance Metrics and Tools

Performance metric is used to measure an organization’s behavior, activities, and performance. It should is expected to support a range of stakeholder needs from customers, shareholders to employees. Traditionally many metrics are finance based which focused on the performance of the organization. Metrics may also focus on the performance against customer requirements and value. Under project management, performance metrics are used to assess the health of the project and consist of the measuring of seven criteria – safety, time, cost, resources, scope, quality, and actions.

Development of performance metrics

1. Establishing critical processes/customer requirements
2. Identifying specific, quantifiable outputs of work
3. Establishing targets against which results can be scored

One of the criticism of performance metrics is that at the time of computing the value of information using mathematical methods, the performance metrics professionals choose measures that have little value also known as “measurement inversion”. This means, metrics seem to emphasize what organizations find immediately measurable — irrespective of its low value. In which case they ignore high value measurements simply because they seem harder to measure.

So in order to correct for the measurement inversion some other methods, like applied information economics, introduce the concept of “value of information analysis” step in the process so that metrics focus on high-value measures. For projects, the effort to collect a metric has to be weighed against its value as projects are temporary endeavors performed with limited  resources.

Performance Metrics are often closely tied in with outputs which usually encourage improvement, effectiveness and appropriate levels of control. So in order to decide which other metrics should be tracked depends on both the industry and the project.

Process of Developing Performance Metrics

1. The first step involved in the development of performance metrics is to consider the people are responsible for the work to be measured as they are well aware about the work accomplished.
2. The next step after the people are identified and involved on board, it is necessary to then identify critical work processes and customer requirements.
3. Then identify critical results desired and align them to customer requirements.
4. Develop measurements for the critical work processes or critical results.
5. Establish performance goals, standards, or benchmarks.

Note, the establishment of performance goals must be defined within the three primary levels,

1. Objectives: Objectives generally reflect the end goals based on the mission of a function.
2. Criteria: Criteria represents the specific areas of accomplishment that satisfy major divisions of responsibility within a function.
3. Measures: Metrics are designed with an objective to drive improvement and characterize progress under each criteria. These are specific quantifiable goals based on individual expected work outputs.