A Review of Project Performance Measurement
The management of engineering projects in any type of industry is becoming a challenge to professional engineers and technical managers as competitions for business opportunities arise in an increasingly competitive market place for effective project management and control systems in compliance with clients’ contractual requirements. Never before have the pressures on project managers been as great as they are today to successfully satisfy the criteria of time, cost and quality in the completion of the projects for which they are responsible. Delayed Projects cost 1, 64,000 direct jobs and Rs. 2.5 lakh crore investment says ...view middle of the document...
Project performance, on the surface, seems easy to measure; just track time, cost and scope and it’s done. But when we look more deeply we find that it is not that simple.
First, we find that there is confusion about what we actually want to measure. Is it the success of a single project, the success of project performance across many projects, or the success of project management and a project office? If our objective is to measure the success of a single project, are we looking at the project during its life or at the project after it has been completed?
Once we determine what we really want to evaluate we can identify the key performance indicators (KPIs) that will tell us whether we have been or are being successful or not and to what degree. KPIs give managers the most important performance information to enable them to assess the performance of a project or process. Generally we look for from two to five or so indicators. One is not enough for any complex process and project performance is a complex process. Too many KPIs make it difficult to see the big picture clearly. Too few make it difficult to diagnose and correct the issues that get in the way of optimal performance.
Project and Business Objectives
Keep in mind that KPIs are not objectives. They are readings that enable a manager to assess performance towards the achievement of objectives. On a personal level we use KPIs such as weight, blood pressure, and cholesterol level to assess general health. The objective is general health, the measures are indicators that can be used to determine if we are tracking towards the objective, or not.
Project objectives are to deliver goods and services, within time, cost, quality and other constraints, satisfying stakeholder expectations. Project deliverables are used to deliver benefits to satisfy the needs of sponsors and clients.
Note the difference between project and business objectives. Projects deliver goods and services that are generally used after the project has ended to achieve business objectives such as reducing costs and risks, increasing revenues, etc. Projects are initiated to achieve business objectives. Project objectives are a means to that end.
When measuring project success, particularly when the project is on-going, it is necessary to focus on the project objectives and performance against schedule and budget estimates. In most cases, we cannot measure a project’s success in achieving business objectives until well after the project has ended. Further, there are factors that are outside of the control of the project that influence benefits realization. For example, in product development the performance of sales and marketing, market conditions, and other factors impact the degree to which expected benefits are achieved.
Project Performance – Schedule and Budget
Performance measurement during a project is to know how things are going so that we can have early warning of problems that might get in the way of...