What are the key performance indicators for program cost control and efficiency?

2 Program cost control methods

Program cost control is the process of tracking and managing the actual spending and performance of the program against the planned budget and schedule. This involves collecting and analyzing the cost and schedule data from each project, comparing them with the baseline and forecast values, and identifying and reporting any variances or deviations. Program cost control also requires implementing corrective actions and preventive measures to address any issues or risks that may affect the program scope, quality, or benefits. Some popular methods include earned value management (EVM), cost variance analysis, and cost performance index (CPI).

3 Program cost control KPIs

Program cost control KPIs are essential metrics for measuring the efficiency and effectiveness of the program in delivering the expected benefits within the allocated budget and time. These KPIs help to evaluate the program performance, communicate the program status and progress, and support the decision-making and improvement processes.

Common program cost control KPIs include budget variance (BV), schedule variance (SV), cost variance (CV), schedule performance index (SPI), cost performance index (CPI), and benefit-cost ratio (BCR). BV is the difference between the planned and actual budget for the program or a project, while SV is the difference between the planned and actual schedule. CV is the difference between the earned value (EV) and the actual cost (AC) of the program or a project. SPI is the ratio of the earned value (EV) to the planned value (PV) of the program or a project, and CPI is the ratio of the earned value (EV) to the actual cost (AC) of the program or a project. Finally, BCR is the ratio of the total benefits to the total costs of the program or a project.

4 How to use program cost control KPIs

Program cost control KPIs can help you to monitor and improve your program performance by providing you with valuable insights and feedback. To use them effectively, it is important to define and communicate the KPIs and targets clearly and consistently to all stakeholders and team members. Additionally, you should collect and report the program cost and schedule data regularly and accurately from each project, and use reliable and standardized tools and methods to calculate and analyze the KPIs.

You should compare and benchmark the KPIs against the baseline and forecast values, as well as the industry standards and best practices. Moreover, you should use the KPIs to evaluate the program performance, identify the strengths and weaknesses, and highlight the risks and opportunities for improvement. KPIs can also help you implement the necessary corrective actions and preventive measures to optimize the program cost and schedule performance. Finally, you should aim to review and update the KPIs and targets periodically and adjust them according to the changing program environment and requirements.

5 Program cost control best practices

Program cost control is not a one-time activity, but a continuous and iterative process that requires constant attention and improvement. To achieve and maintain a high level of program cost control and efficiency, you should align the program budget and schedule with the program vision and objectives, and ensure that they are realistic, feasible, and flexible. Involve and engage the program stakeholders and sponsors in the program budgeting and cost control processes, and establish and maintain a clear and effective program governance and reporting structure. Monitor and control the program scope and quality, and implement and follow a consistent and comprehensive program risk management process. Additionally, try to foster a culture of collaboration and communication among the program team members and project managers, and learn from the program cost and schedule performance and outcomes.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?