Understanding KPIs for project managers

KPIs offer a clear way to evaluate a project’s performance in terms of time, cost, scope, such as project size or number of deliverables, and other business considerations.

When well-selected, KPIs provide insights that help govern a project and support timely decision-making. Effective KPIs are specific, measurable, actionable and aligned with project and business goals.

Key categories of project management KPIs

Project management performance indicators typically fall into four major categories: timeliness, budget, quality and effectiveness. These KPIs help project managers track current progress and overall outcomes. They can use these metrics to measure how successfully a project is working toward or has met defined objectives.

1. Timeliness

Timeliness KPIs help you measure how closely project progress aligns with planned schedules. Such KPIs can highlight missed deadlines, help forecast delays and support proactive communication and on-the-fly adjustments to project work. Monitoring timeliness KPIs closely also helps project leaders keep team members informed about project momentum.

Common timeliness KPIs include:

• On-time completion percentage
• Schedule variance
• Schedule performance index (SPI)

2. Budget

Budget KPIs track how well a project adheres to its financial plan. They offer insight into how well labor, materials and other expenses align with expectations. Project managers and business leaders can use them to assess project cost efficiency and identify overspending risks early.

Common budget KPIs include:

• Cost performance index (CPI)
• Cost variance
• Planned value
• Actual cost

3. Quality

Quality KPIs focus on whether the project meets defined standards and satisfies collaborator expectations, which can be especially important in industries where client satisfaction or compliance directly affects revenue or reputation. These indicators can evaluate deliverable accuracy, product or service quality and customer satisfaction. Tracking quality metrics helps ensure project output meets business goals.

Common quality KPIs include:

• Rework rates
• Customer satisfaction scores
• Project team satisfaction scores

4. Effectiveness

Effectiveness KPIs assess how well project resources, including labor and tools, are utilized to meet project requirements. Such indicators help evaluate productivity and optimize the team and resources to reduce burnout potential.

Common effectiveness KPIs include:

• Resource utilization rate
• Task progress
• Billable hours vs. actual hours worked

Essential KPIs for project managers

While every project is unique, the following KPIs are among the most commonly used by project managers. Depending on your goals and industry, you may choose to track additional metrics alongside these essential ones.

1. Net profit margin

Net profit margin is a financial KPI that indicates how much profit a project generates. It reflects the project’s overall financial health and efficiency.

To calculate the net profit margin, divide net profit (total revenue minus total costs) by total revenue and multiply the result by 100 to express it as a percentage.

Example:

A software improvement project generates $100,000 in additional revenue. The costs for the project were $30,000.

The net profit would be ($100,000 – $30,000)/$100,000 = 0.70, or 70%.

2. Schedule variance

Schedule variance is a KPI that measures the difference between planned progress and actual progress of a project. It helps project managers understand whether a project is ahead of or behind schedule.

To calculate schedule variance, subtract the planned value (PV) from the earned value (EV). A positive result indicates the project is ahead of schedule, while a negative result indicates delays.

Example:

A project was expected to complete $40,000 worth of work by June 15 (the PV). As of June 15, the actual EV is $50,000.

The schedule variance is ($50,000 – $40,000) = $10,000, indicating that the project is ahead of schedule.

3. Cost variance

Cost variance evaluates the difference between budgeted and actual project costs. It helps managers monitor financial performance and control overspending.

To calculate cost variance, subtract the actual cost (AC) from the earned value (EV). A positive result means the project is under budget, while a negative result signals overspending.

Example:

A project earned $80,000 in value but has a cost of $85,000.

The cost variance is $80,000 – $85,000 = -$5,000, indicating that the project is over budget.

4. Cost performance index (CPI)

CPI measures cost efficiency by comparing the value of work performed to actual costs. It shows how well the project is utilizing its financial resources.

To calculate CPI, divide earned value (EV) by actual cost (AC). A CPI greater than 1 indicates that the project is likely cost-efficient.

Example:

The EV for a project is $60,000, and the AC is $50,000.

The CPI is $60,000/$50,000 = 1.2, indicating that for every dollar spent on the project, the return was $1.20.

5. Return on investment (ROI)

ROI tracks a project’s profitability relative to its cost. It’s a critical KPI for evaluating the value generated from project spending.

To calculate ROI, subtract the total cost from total revenue and divide the result by the total cost, and multiply by 100 to get a percentage.

Example:

A new product generates $200,000 in revenue. The project cost $50,000.

The ROI is ($200,000 – $50,000)/$50,000 = 3, or 300%.

6. Planned value (PV)

The planned value is the estimated cost of work to be completed by specific points in the project schedule. It’s used to measure project progress against the original project plan.

To calculate PV, multiply the total project budget by the percentage of work you plan to finish by the relevant point.

Example:

You have a budget of $120,000 for the entire project. You expect the team to complete 25% of the work by September 15.

The PV on September 15 is $120,000 x 0.25 = $30,000.

7. Earned value (EV)

Earned value reflects the budgeted value of the work actually completed at a given time. It helps assess how much value a project has delivered up to that point.

To calculate EV, multiply the total budget by the actual percentage of work completed.

Example:

The project’s budget is $80,000. The team completed 50% of the work by October 1.

On October 1, the EV is $80,000 x 0.50 = $40,000.

8. Resource utilization rate

This KPI measures how effectively a team uses its available time for productive work, involving any billable tasks. For example, this can include client meetings or project research. It helps prevent the overuse or underuse of team members.

To calculate the resource utilization rate, divide the total hours worked by the total available hours and multiply by 100.

Example:

A developer worked 30 hours out of a 40-hour work week.

The resource utilization rate is (30/40) x 100 = 75%.

9. Project burn rate

Burn rate shows how quickly a project is spending its budget over time. It’s useful for understanding the spending pace and forecasting budget shortfalls.

To calculate the project burn rate, divide the total amount spent to date by the number of time units. You need to know whether you’re measuring project time in days, weeks or months.

Example:

A project team spent $50,000 in the first 2 months.

The burn rate is $50,000/2 months = $25,000 per month.

10. On-time completion percentage

This KPI tracks the percentage of tasks or milestones completed on or before their scheduled deadlines. It reflects scheduling accuracy and team productivity.

Calculate the on-time completion percentage by dividing the number of tasks completed on time by the total number of tasks completed, then multiply by 100.

Example:

A project team completed 30 scheduled tasks to date. They completed 28 of them on time or early.

The on-time completion percentage is (28/30) X 100 = 93.3%.

11. Billable utilization

Billable utilization shows the percentage of time spent on revenue-generating activities. It’s often used in service-based industries to monitor profitability but can also be valuable in various project settings.

Calculate billable utilization by dividing billable hours by total available hours or hours worked or paid. Multiply by 100 to get a percentage.

Example:

A project team member worked 20 hours on the project but only logged 15 hours of client billables.

Billable utilization would be (15/20) X 100 = 75%.

12. Employee churn rate

Churn rate tracks the percentage of employees who leave during a project. High churn can disrupt workflows and increase project costs. Note that employees may not leave the organization. They might be reassigned to focus on something else.

To calculate the employee churn rate for a project, divide the number of employees pulled off the project for any reason by the average number of employees working on the project, then multiply by 100.

Example:

An average of 10 team members work on a project. During the project, two employees leave or are reassigned.

The churn rate is (2/10) X 100 = 20%.

13. Cycle time

Cycle time measures how long it takes to complete a task or project from start to finish. Shorter cycle times usually indicate greater efficiency. However, a longer cycle time may be expected for projects with greater complexity or quantity increases.

Calculate cycle time by counting the days from the start of the task (or project) to the date the task is completed (or the project is delivered).

Example:

A team starts an app development project on April 1 and delivers the product on April 20.

The cycle time is 19 days.

14. Task progress

This KPI compares the hours planned for a task to the actual hours spent on the task. It helps you track efficiency and identify potential delays.

Calculate task progress by dividing actual hours worked by planned hours, then multiplying by 100. Task progress above 100% can indicate a potential delay.

Example:

The project manager allocated 20 hours for a task, but the team took 25 hours.

Task progress is (25/20) x 100 = 125%.

15. Customer complaints

This KPI tracks formal complaints from collaborators or customers. It’s a quality indicator that highlights areas for improvement in delivery or communication.

To monitor this metric, simply count the number of complaints received during a project.

Example:

The team receives five complaints about communication, product quality or other factors. While there’s no calculation, the number of complaints or the trends appearing in them could indicate potential issues to resolve.

How to select the right KPIs for your project

Selecting the right project management KPIs may ensure you’re measuring what truly matters for your business, team and efforts. Well-chosen KPIs provide actionable insights and align directly with business goals, customer expectations and your project methodology.

Tips for selecting KPIs for your projects include:

• Aligning them with project objectives: Choose metrics that assign numeric values to specific goals in your project plan.
• Using the SMART goal framework: Make KPIs specific, measurable, achievable, relevant and time-bound.
• Limiting the KPIs you track: Focus on a manageable set of metrics to avoid overwhelming the team or spending excessive time on data.
• Involving team members: Collaborate with project champions and customers to choose KPIs that are meaningful for everyone.
• Referencing benchmarks: Use historical data or industry standards to set realistic targets.
• Reviewing KPI use periodically: Re-evaluate KPIs as project needs change to ensure you’re tracking the most useful metrics.

Best practices for tracking KPIs in project management

Best practices can help you stay focused on performance and make informed decisions using KPIs. Consider:

• Using project management software to automate data collection and improve accuracy
• Incorporating visual dashboards with charts and graphs to make KPIs easier to interpret
• Sharing KPI data regularly with team members to promote transparency
• Monitoring indicators of future performance alongside metrics that measure current efficiency and spending

Leveraging project management tools for KPI tracking

Project management tools play a key role in tracking KPIs by simplifying data collection and enhancing visibility across teams. Many platforms like Jira, Monday.com or Asana use real-time data for customizable dashboards and easy monitoring.

Visual tools like Gantt charts, Kanban boards and task lists help project managers track planned versus actual performance at a glance. These features may make it easier to identify trends, bottlenecks and resource gaps.

Automated reporting can potentially save time and reduce errors by generating consistent performance updates so teams can stay focused on outcomes while keeping collaborators informed.

Real-world examples of KPI success in project management

Tracking KPIs can lead to measurable improvements in project outcomes. By monitoring performance data, teams can make informed adjustments that improve efficiency, cost control and delivery timelines. Here are a few examples of how skilled project managers might use KPIs in real-world settings:

• A construction team might monitor ROI, adjusting project budgets to help reduce costs. Positive results could include increased profit margins.
• Marketing teams may assess cost per lead (CPL) to determine whether marketing efforts are successful and cost-effective, such as campaign messaging or targeted buyer personas.
• An IT department might review scheduling KPIs to identify common delivery delays. By addressing those delays, the department can improve on-time delivery rates.
• A creative agency might track resource utilization to understand workload efficiency. Based on that data, it might redistribute workloads to maximize team productivity.

Future trends in project management KPIs

KPI tracking is likely to evolve as project environments become more agile and technical. Real-time dashboards, AI-powered insights and adaptive governance models are helping project managers respond quickly to change. These trends support more proactive decision-making and continuous improvement across all phases of project execution.

Frequently asked questions

What’s the difference between KPIs and project milestones?

KPIs are metrics used to assess performance throughout a project. Milestones are specific events or checkpoints that mark progress. Milestones are binary. Either you achieved them, or you didn’t. KPIs offer continuous measurement that helps evaluate how effectively a project is meeting goals over time.

Do the same KPIs apply to every project?

Not necessarily. Some KPIs, such as budget or schedule metrics, may apply to most projects. However, each project has unique goals and challenges. It’s best to tailor KPIs to the specific scope, objectives and niche of each project. This ensures more meaningful and actionable insights.