Project Management Metrics, KPIs, and Dashboards A Guide to Measuring and Monitoring Project Performance

Essential strategies from Harold Kerzner on measuring project management performance

The maze-like path of today's projects reflects a business environment that's growing in complexity. Factors influencing projects, such as new advancements in computer technology, an unpredictable economy, and the increase in stakeholder involvement make metrics and key performance indicators (KPI) for project management an important focus. Such measures are commonly used to help an organization define and evaluate how successful it is, typically, in terms of making progress towards its long-term organizational goals.

Project Management Metrics, KPIs, and Dashboards helps functional managers gain a thorough understanding of what metrics are and how they can be best implemented to gain traction in a fast-paced and diverse working atmosphere. With content aligned with PMI's PMBOK® Guide, this book offers extensive coverage on KPIs and how they may be monitored, using techniques such as business dashboards to assist in prescribing meaningful business strategies. After reading this book, functional managers will bolster their awareness of what good metrics management really entails—and be armed with the knowledge to measure performance more effectively.

This book begins with basic KPI principles, helping functional managers deal with such key issues as:

• Successfully integrating KPIs and metrics into managing a project within a business strategy

• Important business dashboard techniques used in monitoring performance

• What is really important to different stakeholders in a project

• Managing resistance to change

Next the book explores the key questions to ask before implementing a dashboard or reporting system. Some of these questions include:

• What are your needs?

• What is involved in integration?

• What's involved in operations and maintenance?

• What does the system cost?

• How long will the system last?

Throughout the book, helpful illustrations clarify complex concepts and processes. These illustrations are also available as PowerPoint slides for course and seminar presentations.

Harold D. Kerzner, Ph.D., is Senior Executive Director at International Institute for Learning, Inc., a global learning solutions company that conducts training for leading corporations throughout the world. He is a globally recognized expert on project, program, and portfolio management. Dr. Kerzner is the author of bestselling books and texts, including the acclaimed Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Tenth Edition, published by Wiley.

INTERNATIONAL INSTITUTE FOR LEARNING, INC. (IIL) is a global leader in training, consulting, coaching, and customized course development, with operating companies all over the world and clients in 200 countries. IIL's core competencies include: project, program, and portfolio management; business analysis; Microsoft® Project and Project Server; Lean Six Sigma; PRINCE2®; ITIL®; leadership; and interpersonal skills. Using their proprietary Many Methods of Learning, IIL delivers innovative, effective, and consistent training solutions through a variety of learning approaches, including Traditional Classroom, Virtual Classroom, simulation training, and interactive, on-demand learning. IIL is a PMI® Charter-Global Registered Education Provider, a member of PMI's Global Executive Council, an Accredited Training Organization for PRINCE2 and ITIL, a Microsoft Gold Certified Partner, and an IIBA® Endorsed Education Provider. Now in its twentieth year of doing business, IIL is proud to be the learning solutions provider of choice for many top global companies.

1 THE CHANGING LANDSCAPE FOR PROJECT MANAGEMENT 1

1.0 INTRODUCTION 1

1.1 EXECUTIVE VIEW OF PROJECT MANAGEMENT 2

1.2 COMPLEX PROJECTS 4

Comparing Traditional and Nontraditional Projects 5

Defining Complexity 8

Tradeoffs 9

Skill Set 10

Governance 10

Decision Making 11

Fluid Methodologies 11

1.3 GLOBAL PROJECT MANAGEMENT 12

1.4 PROJECT MANAGEMENT METHODOLOGIES AND FRAMEWORKS 13

Light Methodologies 16

Heavy Methodologies 16

Frameworks 16

1.5 THE NEED FOR EFFECTIVE GOVERNANCE 19

1.6 ENGAGEMENT PROJECT MANAGEMENT 20

1.7 OTHER DEVELOPMENTS IN PROJECT MANAGEMENT 22

1.8 A NEW LOOK AT DEFINING PROJECT SUCCESS 23

Success Is Measured by the Triple Constraints 23

Customer Satisfaction Must Be Considered As Well 23

Other (or Secondary) Factors Must Be Considered As Well 24

Success Must Include a Business Component 24

Prioritization of Success Constraints May Be

Necessary 25

The Definition of Success Must Include a “Value” Component 26

Multiple Components for Success 27

The Future 28

1.9 CONCLUSIONS 28

2 THE DRIVING FORCES FOR BETTER METRICS 29

2.0 INTRODUCTION 29

2.1 STAKEHOLDER RELATIONS MANAGEMENT 30

2.2 PROJECT AUDITS AND THE PMO 40

2.3 INTRODUCTION TO SCOPE CREEP 41

Defining Scope Creep 42

Scope Creep Dependencies 44

Causes of Scope Creep 45

The Need for Business Knowledge 46

The Business Side of Scope Creep 47

2.4 PROJECT HEALTH CHECKS 48

Understanding Project Health Checks 49

Who Performs the Health Check? 52

Life Cycle Phases 52

2.5 MANAGING DISTRESSED PROJECTS 53

“Root” Causes of Failure 54

The Definition of Failure 56

Early Warning Signs of Trouble 56

Selecting the Recovery Project Manager (RPM) 58

Recovery Life Cycle Phases 59

The Understanding Phase 59

The Audit Phase 60

The Tradeoff Phase 62

The Negotiation Phase 64

The Restart Phase 64

The Execution Phase 65

3 METRICS 67

3.0 INTRODUCTION 67

3.1 PROJECT MANAGEMENT METRICS: THE EARLY YEARS 67

3.2 PROJECT MANAGMENT METRICS: CURRENT VIEW 71

3.3 UNDERSTANDING METRICS 71

3.4 CAUSES FOR LACK OF SUPPORT FOR METRICS MANAGEMENT 74

3.5 CHARACTERISTICS OF A METRIC 75

3.6 METRIC CATAGORIES AND TYPES 77

3.7 SELECTING THE METRICS 79

3.8 METRICS AND INFORMATION SYSTEMS 82

3.9 CRITICAL SUCCESS FACTORS 82

3.10 METRICS AND THE PMO 85

3.11 CHURCHILL DOWNS INCORPORATED’S PROJECT PERFORMANCE MEASUREMENT APPROACHES 89

Toll Gates (Project Management–Related Progress and Performance Reporting) 90

4 KEY PERFORMANCE INDICATORS 97

4.0 INTRODUCTION 97

4.1 THE NEED FOR KPIs 98

4.2 USING THE KPIs 101

4.3 THE ANATOMY OF A KPI 102

4.4 KPI CHARACTERISTICS 103

Accountability 105

Empowered 105

Timely 105

Trigger Points 105

Easy to Understand 106

Accurate 106

Relevant 107

Seven Strategies for Selecting Relevant Key Performance Indicators 107

Putting the R in KPI 108

Take First Prize 111

4.5 CATAGORIES OF KPIs 111

4.6 KPI SELECTION 112

4.7 KPI MEASUREMENT 117

4.8 KPI INTERDEPENDENCIES 119

4.9 KPIs AND TRAINING 120

4.10 KPI TARGETS 121

4.11 KPI FAILURES 123

4.12 BRIGHTPOINT CONSULTING, INC.—DASHBOARD DESIGN: KEY PERFORMANCE INDICATORS AND METRICS 124

Introduction 124

Metrics and Key Performance Indicators 125

Scorecards, Dashboards, and Reports 126

Gathering KPI and Metric Requirements for a Dashboard 126

Interviewing Business Users 127

Putting It All Together—The KPI Wheel 128

Start Anywhere, but Go Everywhere 129

Wheels Generate Other Wheels 130

A Word about Gathering Requirements and Business Users 131

Wrapping It All Up 131

5 VALUE-DRIVEN PROJECT MANAGEMENT METRICS 133

5.0 INTRODUCTION 133

5.1 VALUE OVER THE YEARS 135

5.2 VALUES AND LEADERSHIP 136

5.3 COMBINING SUCCESS AND VALUE 139

5.4 RECOGNIZING THE NEED FOR VALUE METRICS 142

5.5 THE NEED FOR EFFECTIVE MEASUREMENT TECHNIQUES 145

5.6 CUSTOMER/STAKEHOLDER IMPACT ON VALUE METRICS 151

5.7 CUSTOMER VALUE MANAGEMENT (CVM) 152

5.8 THE RELATIONSHIP BETWEEN PROJECT MANAGEMENT AND VALUE 155

5.9 BACKGROUND TO METRICS 160

Redefining Success 161

The Growth in the Use of Metrics 163

5.10 SELECTING THE RIGHT METRICS 166

5.11 THE FAILURE OF TRADITIONAL METRICS AND KPIS 170

5.12 THE NEED FOR VALUE METRICS 170

5.13 CREATING A VALUE METRIC 171

5.14 INDUSTRY EXAMPLES OF VALUE METRICS 177

5.15 USE OF CRISIS DASHBOARDS FOR OUT-OF-RANGE

VALUE ATTRIBUTES 182

5.16 ESTABLISHING A METRICS MANAGEMENT PROGRAM 183

5.17 USING VALUE METRICS FOR FORECASTING 185

5.18 METRICS AND JOB DECRIPTIONS 187

5.19 GRAPHICAL REPRESENTATION OF METRICS 187

6 DASHBOARDS 197

6.0 INTRODUCTION 197

6.1 TRAFFIC LIGHT DASHBOARD REPORTING 200

6.2 DASHBOARDS AND SCORECARDS 201

Dashboards 202

Scorecards 202

Summary 203

6.3 BENEFITS OF DASHBOARDS 205

6.4 RULES FOR DASHBOARDS 205

6.5 BITWORK, INC.: TEN QUESTIONS TO ASK BEFORE IMPLEMENTING A DASHBOARD OR REPORTING SYSTEM 206

1. What Are Your Needs? 206

2. What Do You Have in Place Already? 206

3. What Is Involved in Integration? 206

4. How Long Does Installation Take? 207

5. How Easy Is the System to Use? 207

6. Who Will Use the System? 207

7. Can You Get Customizations? 208

8. What’s Involved in Operations and Maintenance? 208

9. What Does the System Cost? 208

10. How Long Will It Last? 209

6.6 BRIGHTPOINT CONSULTING, INC.: DESIGNING EXECUTIVE DASHBOARDS 209

Introduction 209

Dashboard Design Goals 210

Defining Key Performance Indicators 210

Defining Supporting Analytics 210

Choosing the Correct KPI Visualization Components 211

Supporting Analytics 213

Validating Your Design 217

6.7 ALL THAT GLITTERS IS NOT GOLD 218

6.8 DASHBOARD DESIGN TIPS 239

6.9 PURESHARE, INC. 240

PureShare White Paper #1: Metric Dashboard Design 241

White Paper #2 Pro-Active Metrics Management 252

6.10 LOGIXML, INC.: DASHBOARD BEST PRACTICES 262

Executive Summary 262

Introduction—What’s New about Dashboards? 263

How Modern Is the Modern Dashboard? 264

The Dashboard versus the Spreadsheet 264

Designing the Dashboard 266

The Business-Driven Dashboard 267

The Implications for the IT Provider 268

Implementing the Dashboard 268

Organizational Challenges 269

Common Pitfalls 270

Justifying the Dashboard 271

Return on Investment 271

Ensuring Service Level Agreements 272

Conclusion 272

6.11 A SIMPLE TEMPLATE 273

6.12 SUMMARY AND CONCLUSIONS 273

The Importance of Design to Information Dashboards 273

The Rules for Color Usage on Your Dashboard 276

The Rules for Graphic Design of Your Dashboard 278

The Rules for Placing the Dashboard in Front of Your

Users—The Key to User Adoption 279

The Rules for Accuracy of Information on Your Dashboard 280

7 DASHBOARD APPLICATIONS 281

7.0 INTRODUCTION 281

7.1 DASHBOARDS IN ACTION: VENTYX, AN ABB COMPANY 281

7.2 DASHBOARDS IN ACTION: JOHNSON CONTROLS, INC. 282

7.3 DASHBOARDS IN ACTION: COMPUTER ASSOCIATES, INC. 288

Introduction 288

Project Operational Alert Dashboard 290

Project Operational Alerts Drill Down 292

Project Listing Dashboard 292

Resource Planning Dashboard 295

Resource Planning Drill Down 295

7.4 DASHBOARDS IN ACTION: PIEMATRIX, INC. 295

PIEmatrix Overview 298

PIEmatrix Executive Dashboard 299

Executive Dashboard and To Do—Where Does All This Data Come From? 310

Project—Governing and Executing the Project in a Visual and Friendly Way 313

Project—Planning the Project 316

Project—Breaking Down Silos 324

Authoring—Where the Best Practice Content Comes From 324

From Authoring Back to the Executive Dashboard 328

7.5 DASHBOARDS IN ACTION: INTERNATIONAL INSTITUTE FOR LEARNING 329

7.6 DASHBOARDS IN ACTION: WESTFIELD INSURANCE 329

7.7 DASHBOARDS IN ACTION: MAHINDRA SATYAM 333

8 MEASUREMENT-DRIVEN PROJECT MANAGEMENT 339

8.0 INTRODUCTION 339

8.1 MEASUREMENT CONCEPTS 340

If It Matters, It Is Detectable 340

If It Is Detectable, It Can Be Measured 340

If It Can Be Measured, It Can Be Managed 340

It Has Probably Been Done Before 341

There Is More Available Data Than You Think 341

You Don’t Need As Much Data As You Think 341

What Gets Measured, Gets Done 341

You Have to Think Differently Than Most People 342

8.2 DEFINITIONS 342

Information Requirement 342

Entity 342

Attribute 342

Process 342

Measurement 343

Uncertainty 343

Accuracy 345

Precision 345

Measure 345

Indicator 345

Information Solution 345

8.3 MEASUREMENT PROCESS 346

Preliminary Research 346

Case Study: Customer Loyalty Project 346

Identify Information Requirements 347

Case Study: Customer Loyalty Project 349

Analyze Information Requirements 351

Case Study: Customer Loyalty Project 352

Case Study: Customer Loyalty Project 353

Create Indicator 353

Case Study: Customer Loyalty Project 354

Integrate Measurement into Project Processes 363

8.4 ADDITIONAL INFORMATION ON MEASUREMENT CATEGORIES 365

8.5 FINAL COMMENTS 366

INDEX 367