Project Management Metrics

Introduction

Organizations have invested in the use of the earned value technique which reports the percentage of work completed and the percentage of the budget expended. The use of this project performance measurement techniques is not sufficient to give the executive managers the right message on where the project stands and organizations should, therefore, come up with various metrics that will help in reporting every aspect of the project. This paper looks at the need for project management metrics by analyzing a case study of a particular organization experiencing problems in effective reporting. In analyzing the case study, it will particularly look at the risks associated with reporting too many metrics as well as saying too few metrics.

The need for project management metrics

To accurately report on the health of an organization in managing various projects, project management professionals highly rely on the wealth of data. The modern world is characterized by a massive growth of business intelligence tools and, as a result, there is more access to information at a faster rate. Companies are now realizing the importance of data collection and have understood that metrics are important in making sense of the progress of various projects (Hauser and Katz, 1998). The case study illustrates that a company can experience various problems if it lacks effective management of its projects. The company experienced failure in seven out of twelve projects that it had been managing and this was attributed to the innovation problems brought about by poor project management metrics (Kerzner, 2013b). The main challenge is that the projects that failed consumed a lot of time and resources and yet they did not lead to the development of new products. Additionally, the projects had gone into the late phases of the project lifecycle before the company made the decision to abandon them.

From the case analysis, it is clear that the company lacked proper project management metrics that could warn the organization about the possible projects that were unlikely to yield the expected results. This way, the company could have avoided dedicating time and resources to the unfruitful projects and instead focus those resources on projects that were likely to succeed. In addressing the issue in the case study, the CEO of the company formed a team which came up with various recommendations (Kerzner, 2013b). There was a need for every team member to understand what metrics are and how important they are to an organization. A company cannot effectively manage innovation projects without putting in place good metrics with accurate measurements that are capable of providing complete information for making viable decisions (Kerzner, 2013a). According to the team in the case study, metrics have various potential benefits to an organization which includes the improvement of future performance, improvement of future estimating, validation of baselines, and validation of the ability of an organization to hit the targets. Metrics can also help an organization track mistakes before they lead to more serious mistakes as well as help improve the satisfaction of customers and capture best practices and lessons (Hauser and Katz, 1998).

Reporting on too many metrics

To rectify the challenges; experienced by the organization, the team should make a decision to focus on the establishment of metrics to be used for continuous health checks on the organization’s innovation projects. The metrics were to serve as an early trigger of risks associated with the organization’s projects. The ability to decide what to do and how to do it effectively raises a serious challenge in using project management metrics. The company’s business side had been using various metrics related to profitability, market share, cash flows as well as other measurements (Kerzner, 2013b). The new metrics to be developed had to be broader and more detailed, and this has a potential of leading to more resistance as opposed to supporting. This presents the issue of the risks of reporting on too many metrics. Reporting on too many metrics is likely to lead to confusion in the organization and less innovation. Many organizations commit the mistake of setting too many metrics combined with the measurement of the wrong aspects of projects, setting out particular goals that require the development of a specific metric, and misaligning some metrics with the strategy of the organization (Hauser and Katz, 1998). Some metrics can, therefore, lead to misinformation because whatever is being measured by one metric may not be successful by measuring it with another.

In using specific metrics to measure performance, it should be known that the process of gathering the relevant information requires the dedication of resources and data, which takes time, as one has to accumulate and filter through the team managing the project. The elapsed time between the data collection and presentation of measurement should not be increased as this is likely to devalue the results. In reporting, having a lot of information is a good thing, but it is necessary to develop a hierarchy that will enable one to fully understand the value that comes with the metrics (Hauser and Katz, 1998). Depending on the industry an organization is operating in, it is important to have few key performance indicators. From these indicators, it is possible to develop alternative metrics that may support and influence the outcomes of the project (Turner and Zolin, 2012). There are some metrics which look useful but contain no actual weight in the innovation process of the business. The organization should choose enough metrics based on their impact on the business and ability to align with the goals of projects. Just because an organization has the capabilities of tracking many metrics does not imply that it should develop many matrices. Having a massive source of information is helpful, but it can also lead to chaos if there is a constant shift of focus between the various matrices (Kerzner, 2013a). Many key performance indicators (KPIs) make the metrics less valuable because one cannot easily manage plenty of priorities. According to a team member from the case study, accepting all workable metrics is likely to do more harm than good to the organization (Kerzner, 2013b). This is because all metrics are required to be measured and, therefore, having too many of them is likely to force the team members to use more time for doing the measurement and reporting in the expense of doing other important tasks in the organization. There are some metrics with little or no value to the organization’s innovation projects, and if the executives are to be provided with such information, then they may be unable to determine the most critical information (Wysocki, 2011).

Reporting on too few metrics

Reporting on too few metrics can equally be disastrous to an organization and as one of the team members from the case study denotes, too few metrics are likely to cause the executives to overact to bad news based on just a few metrics. They may not present them with the actual true story unless the managers are educated on how to correctly understand such metrics (Turner and Zolin, 2012). Failure to provide the right information may deny the executives an opportunity to make the informed decisions promptly. Another member also notes that he was part of a team that had established the company’s business and financial metrics a few years ago and, in the process, they had to establish that all the metrics they selected were worth collecting. They had to be sure that whatever they collected could be useful and the metric was detailed and informative (Kerzner, 2013b). This implies that the metrics to be reported need to be sufficient enough to offer detailed information that is likely to guide the decision makers in making the right choices.

Conclusion

From the analysis of the case study, metrics are critical components in the management of project risks. The project metrics act as important triggers of possible risks by providing data that can be used to manage future problems. Projects are complex systems and, therefore, using only one metric is not adequate to monitor all projects. The reporting of too many metrics is likely to cause severe problems including the excessive costs and time required for the collection and evaluation process. Whenever there is too much data, it becomes easy to forget or overlook important information that might impact the decision-making process. Reporting too few metrics, on the other hand, may also contribute to the making of inappropriate conclusions, which results in undesirable behaviors and decisions. It is, therefore, paramount for organizations to find an appropriate mix of metrics that are necessary to give an equitable view that is consistent with the organization’s goals as well as values.

References

·      Hauser, J., and Katz, G. (1998) ‘Metrics: you are what you measure’. European Management Journal, 16(5): pp517-528.

·      Kendrick, T. (2005) Defining and implementing metrics for project risk reduction. Hewlett Packard.

·      Kerzner, H. (2013a) Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.

·      Kerzner, H. (2013b) Project management case studies. 4th ed. Hoboken, NJ: Wiley.

·      Turner, R., and Zolin, R. (2012) ‘Forecasting success on large projects: developing reliable scales to predict multiple perspectives by multiple stakeholders over multiple time frames’. Project Management Journal, 43(5): pp87-99.

·      Wysocki, R. (2011) Effective project management: traditional, agile, extreme. John Wiley & Sons.