Important KPIs and Metrics for Project Portfolio Management (PPM)

The famous management expert Peter Drucker has been quoted as saying, “What gets measured, gets managed.” You’ve probably heard this quote before, perhaps many times. Drucker never said it, but it somehow still rings true. Despite this advice, the important thing to realize is that just because you’re measuring, it doesn’t automatically mean you’re managing it, and vice versa. It certainly doesn’t mean you’re measuring the right thing.

To determine project metrics, find the project activities or assets that most affect project outcomes.

Measuring something that doesn’t matter wastes everyone’s time and might end up making the project fail. Not measuring the right things will definitely put your project portfolio at risk.

So how do you determine what should be measured? And how can you strike the right balance between under-and over-measuring?

The best solution to these questions is to only measure things that are directly linked to outcomes. Ask yourself (and your team) the question, “What does success look like?”  You might think this is a simple question, but you may be surprised how many differing answers there can be.

Of course, success usually means the project delivered on its charter. It can be on-time, on-budget, and on-scope and still have been a terrible project to be part of. If your team is on salary, there’s higher likelihood that it was a tough slog to get that final outcome. Should you measure team satisfaction? If it is tied to productiveness, yes, you should.

The first step in determining your metrics for success is to find out what to measure. Find the project activities or assets that most affect project outcomes. If they can be measured, they should be.

The second step is to evaluate the impact and likelihood of each measure to affect the project or project portfolio positively or negatively. Sometimes project managers have blinders on when it comes to how their project affects other projects in the portfolio. Every project is #1 for the PM. It’s difficult to do project prioritization if all the PM is looking at is his or her projects. You need some way to score and select the most impactful projects in a portfolio.

This is where Project Portfolio Management (PPM) comes in.

Key Performance Indicators

The emperors of the Chinese Wei Dynasty (221-265 AD) may have been the first to use Key Performance Indicators (KPIs) when they rated the performance of members of their family, but the KPI really took off in the 1990’s when the first Balanced Scorecard was used.

Simply put, KPIs are a set of quantifiable measurements used to gauge performance or progress of a business program or project. KPIs must be specific and must clearly define or contribute to the goal of an effort. They also must be relevant, quantifiable, and outcome based. Good project portfolios evaluate KPIs often, perhaps quarterly, monthly, or even week by week. Such measurement can affect future project success by delivering a clearer understanding of past performance. says organizations using Key Performance Indicators can:

  • Provide objective evidence of progress towards achieving a desired result
  • Measure what is intended to be measured to help inform better decision making
  • Offer a comparison that gauges the degree of performance change over time
  • Work most effectively when balanced between leading and lagging indicators
  • Track performance measures such as:

KPIs and other metrics such as Objectives and Key Results (OKRs) are important tools that can provide project and portfolio managers with an immediate understanding of how an organization’s project portfolio is performing.

It’s up to management to decide which potential measures are KPIs. Depending on the organization, the KPIs for your project portfolio could be based on typical project concerns, such as:

  • Timeliness
  • Quality
  • Effectiveness

Or they could be financially oriented, like:

  • Budget Variance
  • Planned Value
  • Cost Performance Index

KPIs can also be built on customer measures like:

  • Customer Satisfaction
  • Customer Loyalty
  • Net Promoter Score
KPIs and other metrics such as Objectives and Key Results (OKRs) are important tools that can provide project and portfolio managers with an immediate understanding of how an organization's project portfolio is performing.

There are myriad other important measures you can use to evaluate your portfolio. These measures should also be embedded in your project reports and dashboards that include project metrics or PPM metrics (for the whole project portfolio).

The following KPIs and metrics should be part of your comprehensive project reporting.

Operational Efficiency KPIs

These metrics and KPIs measure resource utilization and team performance. Typically, this information is presented in a Gantt Chart or Reporting Dashboard.

  • Resource Allocation: Measures percentage of time spent by a single resource (or group of resources) over the project duration. Shows tasks completed by resource in certain time span. Resource productivity is measured and should be evaluated by the manager in charge of a project.
  • Project Effort: Measures time devoted to working on a project.
  • Project Churn: Measures projects that are on stand-by or have been forfeited over a period of time. Conveys changes in a project and how it will adjust and keep up with these changes. Eliminates excessive projects that might otherwise disrupt the balance of the project portfolio causing project churn.

Execution KPIs

These metrics illuminate project implementation and impact once projects are deployed for assessment. They reveal whether projects are successful and show costs accumulated during the project operation. These KPIs are usually presented via dashboard or report.

  • Project Success Rate: Measures rate of success or failure for a portfolio of projects based on time, budget, and fulfillment of requirements through delivery of expected results. This metric takes into consideration stakeholder satisfaction.
  • Budget Variance: Estimates costs included in the planning stage of the project. Computes or estimates via budgeted task cost, actual task cost and earned value.

Business Value Delivered KPIs

Business value metrics are used for measuring the expected value of projects. Projects rely on return value to determine if they are successful or not.

  • Customer Satisfaction: Measures customer satisfaction through both client and stakeholder feedback after the project is delivered.
  • Business Value Realized: Measures whether projects are properly selected and implemented at the proper time interval. Estimated benefits can be computed from the date of the project’s delivery. Measured benefits include revenue added, cost savings and customer satisfaction.

Strategic Alignment KPIs

Alignment KPIs measure whether projects are congruent with an organization’s objectives, target, and unit investments.

  • Percentage of Projects Aligned with Objectives: Measures the percentage of existing projects that are aligned with the business objective of a company.
  • Investment Class Targets: Estimates the investment made in a project through the following components: run, grow, and transform.
  • Business Unit Investment Targets:  Measure existing business units by setting targets for effort and cost. Once these investments are spent, it will be assessed against the two factors.

What metrics are you using?  Any from these lists? Any to add?  Let us know!