Project Management Institute

Using metrics as a catalyst in achieving successful project performance

Introduction

It has long been recognized that metrics can be collected and utilized throughout all phases and all facets of project management. Metrics can identify important events and trends in the organization and can help guide the organization toward informed decisions. Metrics can be used to measure the status, effectiveness, and progress of project activities in order to gauge the contribution of formalized project management to the organization. Additionally, metrics can serve as the basis for clear and objective communication with project stakeholders. Additionally, metrics can promote teamwork and improve team morale by linking efforts of individual team members with the overall success of the project, and ultimately, the success of the organization.

Those organizations that follow a management-by-projects approach, and develop a performance-based style with a focus on portfolio management, continually become more sophisticated in the area of project management. Such a project management philosophy is highly formalized, carefully methodical, and it relies heavily on project measurement practices that are objective and consistent. Organizations, which are forward-looking, and progressive in their strategic plans, continually work to improve performance in achieving sustained success in all areas including that of managing projects. If the upper management of the enterprise is focused on achieving improved efficiency, a metrics program becomes a necessary business practice. Metrics can help guide the organization toward informed decisions as they provide indicators regarding the quality, adequacy, and progress of projects, processes, and products. A well-planned set of metrics can help the enterprise recognize the level of sophistication of the sum of its collective capabilities such that plans for producing and delivering products and services are consistently realistic and achievable. It is paradoxical that the same financial considerations that might tempt organizations to abandon an extensive formalized metrics system will be the ones that would realize the cost saving benefits of an effective metrics system through decreased expenses and increased profits.

The success of organizational project management is contingent on being able to make realistic assessment of project status and to make accurate prediction of performance of any given project. Such accurate performance forecasts can in turn be used to meet commitments relative to products and services. Metrics can also be used to determine the health of organizational processes that impact the successful conduct of projects. Finally, some metrics have the potential of serving as barometers of organizational project management maturity. To that end, groups of metrics can be used to show where an organization stands in terms of the sophistication with which the project teams handle any of the project management knowledge areas.

Conceivably, with the aid of an effective metrics system, each project can become an opportunity for learning for the benefit of the entire organization. This mode of thinking must be extended to the point that even each failure must be examined for its potential for learning. There is no question that the cost of mistakes may be painfully high. However, if the circumstances and sequence of events are carefully documented, they can provide a rich source of data to be used for avoiding similar mistakes on future projects. Such careful documentation can also provide insight into the level of sophistication of the current project management processes of the organization. A well-crafted metrics program will assist with the identification of areas in which processes and procedures are exemplary and should continue to be followed. The metrics system would also enable the organization to identify those areas in existing processes where improvement is needed. Finally, the metrics system will highlight those areas in which new processes are required.

It is somewhat of a common practice, albeit a short sighted one, that during times that an organization is experiencing low cash flow or low profits, it minimizes the expenditures for what it perceives to be luxuries. For functional organizations, the two activities that might appear to be luxuries, although in reality they are excellent investments, are research and training. Similarly, project-oriented organizations tend to minimize and discourage detailed project planning and comprehensive project closeout in the face of difficult economic times. The short-term benefit of these two activities is the success of individual projects. The long- term benefits impact those attributes that comprise the overall project management maturity of the organization. Planning and closeout of projects are precisely the elements that must be strengthened for improved efficiency and effectiveness in business performance. Planning activities of future projects, which in large part determine the success of those projects, directly depend on the sophistication, quality, and quantity of historical data that have been collected during the closeout of past projects

Although some metrics might seem inappropriate or superfluous in less mature organizations, metrics provide benefits to all organizations independent of the level of sophistication of the organization in project management. Some organizations use formalized detailed metrics only for major projects, even though effective metrics would allow prediction of execution details for all projects. Ideally, in order to benefit the organizational goals, metrics need to be applied across multiple projects, across all organizational divisions, and across the entire span of the project life cycle. If the organization has already established a full-scale Project Management Office (PMO), the metrics program will be part of the overall mission of the PMO. However, the abbreviated forms of the PMO, usually called the Project Office (PO), normally do not address long-range issues of the organization or even the long-term implications of the project that they serve. Thus, with the PO structure, issues that extend beyond the boundaries of the project life cycle, or the project objectives of the specific project, which is the focus of that PO, will not be addressed, even though they might be issues that are important to the financial and strategic health of the parent organization.

What is a Metric?

In the context of project management activities, metrics can offer a glimpse of the full range of expectations of a particular deliverable item or the tasks that would produce that particular item. Additionally, metrics can gauge the status of a deliverable item relative to expectations for scope, cost, and delivery date. In the latter case, metrics are also aimed at small measurable attributes that have a predictive or comparative capability. The vast majority of project metrics focus on things attributes, that are quantitative and thus clearly measurable. As people issues of projects are brought to the forefront of project management concerns, an increasing number of the metrics deal with people attributes, which have seemingly nondescript behavioral characteristics, such as morale, satisfaction, loyalty, trust, and leadership. The assignment of ratings, numbers, and ranks for the latter category can be based on questionnaires or on instruments that characterize and quantify selected attributes of team members, teams, or even the organizations as a whole. Alternately, such quantification can be based on experience and judgment of a seasoned project manager entrusted to make such observations.

Organizations can be classified as immature in project management if they have not made the transition to formalized project management. Ordinarily, these organizations tend to view technical expertise in the subject matter of the project as a fully-sufficient skill for becoming a project manager. More than likely, these organizations have very few, if any, procedures and metrics that deal with project management. If these organizations have any metrics at all, they tend to deal with project things, such as cost, schedule, and scope. Moving to slightly more sophisticated organizations, the organization might have the full suite of procedures and metrics as they relate to project things. In these organizations, it is generally accepted that, if the things issues are handled and measured properly, an acceptable and reasonable success will be achieved. Moving toward higher levels of maturity in organizations, an organization will have metrics and procedures that deal with project people as well as project things. This is important because the presumption is, and the authors subscribe to this presumption, that people make projects happen. Thus additional procedures and metrics should include human behavioral issues such as motivation, conflict management, professional responsibility, leadership, and trust. The final stage of sophistication is achieved when the project management processes, and its associated metrics, include issues that define the environment in which the project must operate, such as training, resource allocation, standard procedures, and overall organizational support.

Project Things Metrics

The quantitative facets of the projects, also referred to as project things, are the visible and tangible signs of the implementation, and eventual success, of the project. Until the 1990s, the focus of most project management metrics systems was primarily on things attributes of projects, particularly those involving schedule, cost, and resource utilization. This outlook on project metrics is still a predominant viewpoint in many organizations that have not advanced beyond the first two levels of a staged maturity scale. However, many new and more comprehensive project management tools and techniques dealing with issues beyond project things have evolved since then. To put the metrics issues in perspective, project things are one of the three sets of attributes of the project that need to be quantitatively planned and monitored.

It is fair to say that things metrics characterize tools that assess the progress and success of projects almost as if these processes run by themselves without any intervention by people. However, to be more accurate, the success of things issues is a manifestation of the success of project team members, although different facets of the project are measured if the focus of the metrics is exclusively on things. In essence, things metrics measure the symptoms of the health of a project. However, the health of the project is affected also by people and enterprise issues, although people's behavior and enterprise attributes are quantified and/or measured separately. Things metrics are designed to quantify and measure cost, schedule, scope, quality, and the overall project success in meeting the client needs. Ideally, and in order to offer more sophisticated capabilities for project tracking and control, project management tools should be integrated with business processes. If the organization has already established one of the variations of a PMO, all features that directly or indirectly influence the success of projects are applicable here. In that vein, all PMO functions would benefit the project, but specifically those that apply to handling the things issues of the projects, namely clearinghousing of project data and promulgating the best practices of project management. Therefore, all those metrics that measure the sophistication and/or effectiveness of these two functions of the PMO will also be applicable to quantification of project things issues.

Project People Metrics

It would be an appropriate metaphor to characterize project team members as those who provide the backbone and skeletal structure based on which a successful project implementation can be formulated. The premise is that people make the project happen. Project management is, or should be, primarily about people and how they work together in support of the project's objectives, and in turn, in support of the organization's goals. Project management should be secondarily about the things issues of the project. Finally, project management should always have a component for handling the organizational issues, particularly those that directly impact the success of the project, such as infrastructure support.

People metrics attempt to quantify or characterize the behavioral attributes of people, which by their very nature do not lend themselves to easy quantification. That is why there are not as many project people metrics as there are project things metrics. Project people metrics are intended to assess, directly or indirectly, whether the team members are executing their tasks well. Project people metrics are indicators of existence of procedures for conflict management, communication, collaboration, teamwork, and technical competency. The people metrics also deal with the features of the environment that promote leadership, integrity, and professional responsibility. Thus, project people metrics can be viewed as metrics that measure the friendliness of organization toward the project team, and the team toward itself.

Enterprise Metrics

Organizational metrics are those that measure and/or infer the attributes of the enterprise as a whole. They deal with structure and the environment for projects particularly as influenced by policies and procedures. By and large, organizational metrics should shed light on whether the environment is project-friendly and that in turn can be grouped into friendliness toward project people and friendliness toward project things. It is an important point that, on the one hand, the organization provides the environment for the project, and that on the other hand, the organization is the direct beneficiary of the results of the success of the project. Traditional organizational metrics also deal with business objectives of projects, and the all-important return on investment, which views the success of projects and success of the organization from the pragmatic vantage point of the stockholders. The metrics should also show whether the organization is gaining a competitive advantage through the achievement of its strategic plan. As organizations become more knowledge-intensive, and as continuous improvement becomes a prerequisite for success, the importance of knowledge and skills takes on its appropriately high plateau. In order to sustain a competitive advantage, organizations must be better informed about all aspects of projects, and about the organization as a whole. Required information includes the current state, as well as the future direction, of the enterprise and the industry.

As the culture of project management permeates the organization, the effectiveness of actual practices used should be assessed. Thus, a metric can be established to determine whether the effort associated with improvements to the project management practice is increasing, decreasing, or staying about the same. The results of a formalized maturity evaluation will further establish a baseline for improvement if the organization chooses to become highly project oriented, with the implication of becoming successful in projects.

Implementing a Metrics Program

Benchmarking is rapidly becoming a mechanism for process improvement for enlightened organizations. However, effective benchmarking requires a system for gathering and refining data on all facets of the organization, particularly projects. Metrics systems will facilitate improvements in the success of organization in achieving its business goals. Implementing a metrics system will foster improvements in the success of projects in the areas of scope, quality, cost, schedule, and client satisfaction. Although other metrics must be used for data collection and predictive models, these indices should always be addressed because they represent the client's vantage point. Having consistent tools and procedures, and having competent personnel that execute these integrated procedures, the organization will enjoy a lower overall project costs, leading to increased corporate profits.

In order to reap the full benefits from successful implementation of a metrics system, it might be useful to implement the system in stages, because even with sizeable investments, it will take several years before progressive and sustained improvements are observed in the organizational project performance. Notwithstanding, by conducting periodic assessments, the metrics system can benchmark the organization's current maturity level to the target maturity level and to industry standards of best practices. These interim assessments will chart a course for the full sophistication by identifying areas that are in need of improvement, and by demonstrating effectiveness of the metrics system in achieving the ultimate goal.

The goals of a metrics system can vary in urgency and sophistication. Further, the sophistication of the metrics system, and its funding, will vary widely depending on whether the overall goals are to improve project-by-project performance, divisional project performance, organizational project performance, or organizational project management maturity. Finally, the improvement objectives could be such that, independent of where they currently are, the performance in all project management process areas should be improved by one maturity level, or alternately it could be such that they should all reach a certain level, say, level four. If the metrics goals are project specific, the goals can be tied either to performance ratings or to overruns of cost and schedule. If the goals are division-specific, the goals would highlight the current maturity rating of the division together with the desired rating

Another example of setting performance outcomes for the metrics systems is to have a system that has all of the appropriate indices and then establish quantified threshold standards for a successful project. Thus, for each facet, one would specify the performance level that will be considered acceptable. For example, it might be specified that the cost performance be rated as superb if there is a more-than 10% under-run. The cost performance is rated as unacceptable if there is a more-than 150% overrun. To extend this concept further, one would determine how many of the current projects map unto this range of acceptability, and how many should map unto this range once the metrics system is fully in place.

There is a likelihood that an organization might not use the metrics system correctly. If the metrics system is not designed and implemented properly, the organization might not collect any data, might collect data for a lot of metrics but have no valuable use for the data that are collected, or may collect data but use only a small part of the information that can be gleaned from the metric. In some organizations, measurement of the values of the indices of the model becomes an end onto itself. Sometimes metrics might be collected only to fulfill a corporate requirement to report on information on certain arbitrarily targeted dates or to meet a specific contractual reporting requirement. Naturally, by virtue of designing the system properly, one should assure that these circumstances do not arise.

Metrics must be well defined, and guidelines for their use must be accepted by those who will use them. Metrics need to be viewed not as a one-time exercise but as a continuing initiative toward enhanced productivity and effectiveness. Metrics can serve as a historical-based benchmark for evaluations of future performance with the hopeful expectation that it will facilitate continuous improvements. The project management metrics program is the basis for actions that support project management excellence and overall organizational improvements. Clearly understood factual data that are provided by the metrics system would facilitate informed analysis, by facilitating agreement on what is happening and what should be happening.

Operational personnel must be made aware of the long-term benefits of metrics, and the obstacles that would exist during the implementation of the metrics program. In order to facilitate the metric system's successful implementation, communication about the metrics initiatives must be direct, consistent, and widespread. Every effort should be made such that the implementation of the program does not become an organizational secret, because that will only breed notions of conspiracy, especially if the organization is undergoing any kind of downsizing, outsourcing, or reorganization. Each person's involvement and expectation in the metrics program should be known and communicated. Ongoing training may be necessary to keep the metrics program in focus and on track. Implementing a metrics program requires a cultural change in the organization. Whoever is responsible for the program should have strong communications skills and must balance the metrics program's needs with the participant's readiness to accept and embrace change.

Metrics Program Design

Implementation of a metrics system must be treated just like any other project, more so because it highlights the advantages of effective planning, and monitoring. In order to consider the metrics program implementation as a project in its own right, one must follow the same steps in implementing a metrics program as in implementing a project management process. The metrics system design must include a detailed plan for the implementation of procedures and policies in using the results of the metrics system. The plan must specify incremental progress milestones, such as first visible impact, intermediate significant achievements, and completion target. Metrics can, and do, form the basis of clear, objective communication with project stakeholders. Time must be set aside for meetings with stakeholders of the metrics system to discuss the added value that the results will bring to the organization. A number of briefings, and even workshops, may be required so that people throughout the organization recognize the purpose of the metrics system. Measurement data must be incorporated into existing policies and procedures.

Summary

Metrics bring consistency and formality to project management practice. With metrics, important project decisions will be made on an informed basis. In essence, metrics bring objectivity to tools by which the progress of projects and advancement of the organization are monitored with considerable consistency, and with repeatable accuracy. When implementing a new metrics system, or simply compiling and formalizing an existing system, one needs to strike a balance between the organizational culture and the best practices of project management.

This paper is an adaptation from a book by Parviz Rad and Ginger Levin, titled Assuring Success with Metrics-Based Management, that is due for publication by JRoss Publishers in 2004

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2004 Parviz Rad and Ginger Levin
Originally published as a part of 2004 PMI Global Congress Proceedings – Anaheim, California

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