“If you don’t measure something, you can’t change it. The process of leadership is one of painting a vision, then saying how you’re going to get there, and then measuring whether you’re actually getting there. Otherwise, you risk only talking about great things but not accomplishing them.” – Mitt Romney
This quote by Mitt Romney is the essence of the issue plaguing most projects that get sanctioned during a financial year. Every company starts out with the idea of a “worthwhile” initiative, that makes sense to the stakeholders and promises glory for the business, to be even considered for execution.
To this effect good companies create vision statements and action plans. But great endeavors – the ones with sustainable year on year profits all excel at executing these action plans and then monitoring the results in what is known as the CIP or the Continued Improvement Process.
In fact, we at Workzone believe it’s impossible to know just how effective your vision and values are and how well your employees are taking them to heart without a tangible way to measure the impact of your ideas. Conversely, it’s difficult to discern when an idea has become detrimental to your company’s business without a comprehensive metrics program.
It is easy to get lost in the sea of technical jargon but at the heart of the matter there is just a handful of metrics worth learning about and implementing. In this article we will divide these quantifiers into two separate buckets:
The Objective Metrics
These metrics are the traditional performance gauging tools used over the past 50 years or so of project management. They are non-negotiable – that is the way they are defined doesn’t change with respect to the niche or the type of endeavor they are being applied to. Actual cost or AC is always the total cost actually incurred in accomplishing a certain activity or a sequence of activities. Readers are also advised to peruse the Workzone Comprehensive Project Management Glossary to glean information about other quantifiers not discussed in this article.
- Planned Value (PV) – PV is the net value in terms of finances and resources that was allocated for the project. In laymen’s terms it refers to the authorized budget. Project managers all over the world view this as a fundamental performance metric – one that must be respected as far as possible.
- Earned Value (EV) – Earned Value is an interesting quantifier. It examines the work performed and then expresses the worth of that work in terms of the original authorized budget or the Planned Value. EV thus allows project managers to gauge exactly how successful the efforts have been with respect to the planning and estimations.
- Actual Cost (AC) – It is the actual cost incurred in completing the project. In the final expense sheet of an endeavor, the AC is documented as the investment made by the company. A successful initiative boasts an AC that is significantly lesser than the PV.
- Resource Utilization – Resources are the backbone of a project execution effort. Resource utilization, especially in terms of HR, is defined as the ratio between the actual effort expended by a resource and the planned billable hours set aside for that particular resource. One of the primary duties of a project manager is to ensure that each project receives the complete devotion and dedication of the allocated resources so that there is no under utilization or over burdening of key team players.
- Defect density – When a project yields a tangible final product, defect density becomes a metric of importance. It is defined as the number of defects per sample size of product. For example if we consider a software project, defect density is the number of errors per kilo line (1000 lines) of code. This sample size is determined by the company in question depending upon the demand of the product and the batch size.
The Subjective Metrics
These metrics are a relatively new precept and are more flexible than the rigid framework of the objective metrics. Subjective metrics do deal with performance but the approach is more tailored. For some enterprises the niche in which they function forces project management to change in order to adapt to the demands of the workplace.
In case of high hazard areas conventional project management metrics are not enough – they can’t provide the stakeholders with a clear picture of how the progress has been charted. Extenuating circumstances distort the results. This is where subjective metrics – a set of quantifiers designed to work within the constraints of the niche – come to the rescue.
In fact the coming generation of PMs are looking to use an excellent balance of conventional objective and innovative subjective metrics in order to completely gauge the possibility of success as well as the actual success of an activity or a project.
Performance metrics thus shouldn’t be relegated to the corner till after completion of the project. Key areas must be monitored throughout the execution phase and subjective as well as objective quantifiers used to piece together the real story at every stage of the journey. This is the mark of organized thinking and the optimum use of success metrics.
State-of-the-art project management solutions such as Basecamp and Workzone have expanded on last generation legacy software solutions in order to both deepen and widen the power and impact of commercial metrics. Technology is not only driving the engine of change, it is also bringing in an era of MIM or measure-improve-measure to ensure projects that stick to timelines and deliver more than expected.
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