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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.

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.

KPI.org  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:
• Effectiveness
• Project performance
• Personnel performance or resource utilization

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:

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

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!

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Portfolio Management Metrics: How to Measure Your Portfolio's Performance

Discover some of the most critical portfolio metrics and why you should track them.

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Portfolio management is vital for executing long-term strategies as it enables organizations to manage projects, initiatives, and investments in alignment with strategic objectives. A McKinsey research on portfolio optimization suggests that efficient portfolio management allows companies to increase growth-related spending, cut costs, improve margins, and reduce overall business complexity.

This is where measuring a portfolio’s performance comes in. Organizations use portfolio metrics to improve their resource allocation, mitigate risks, and prioritize initiatives that contribute to long-term goals. These metrics help to ensure successful strategy execution and maximize the value delivered by the portfolio.

Let's dive deeper into the definition of portfolio metrics and what are some of the most important ones you should consider tracking.

What Are Project Portfolio Metrics?

Project portfolio metrics are quantitative measurements used to assess the performance of a collection of projects inside an organization. These metrics help stakeholders evaluate the overall effectiveness of their project portfolio as they can make informed decisions regarding resource allocation, project portfolio prioritization , and risk management.

Project portfolio metrics are not only measurable and clear but are also agreed upon and highly transparent to all stakeholders. They are tracked in real-time and are most effective when they measure things that are directly linked to the outcomes that matter the most.

Why Is Tracking Portfolio Management Metrics Important?

Thanks to measuring project portfolio KPIs, portfolio managers can prioritize the initiatives that provide the highest value to the organization and, at the same time, contribute to achieving the organizational goals. Portfolio management metrics should be quantifiable, relevant, outcome-based, and clearly defined. As such, they can help you measure current vs. past performance and derive valuable insights for future actions.

What Are KPIs for Portfolio Management?

Some of the vital key performance indicators (KPIs) for portfolio management include:

• Financial metrics
• Execution metrics
• Operational efficiency metrics
• Business value metrics

Let's take a look at some examples.

Financial Metrics

The financial category includes metrics such as budget variance and net present value (NPV) which can assist stakeholders in optimizing resources and making informed investment decisions.

• Budget variances: Budget variances indicate the difference between estimated and actual costs allocated for specific activities or projects within the portfolio.
• Net present value (NPV): Net present value (NPV) is a portfolio metric that calculates a project's expected cashflow against the initial investment indicating the project's potential profitability and value.

Delivery Metrics

Portfolio execution or delivery measurements are used to evaluate the progress and performance of projects within a portfolio. They focus on tracking the timely and successful completion of projects. Examples of portfolio execution metrics include project delivery success rate, project completion rate ( throughput ), on-time delivery, and schedule variance.

• Project completion rate: The completion rate of projects within a portfolio is the ratio of projects that are successfully finished compared to the total number of projects. It provides a measure of how many projects are completed within designated timeframes and budget constraints.
• On-time delivery rate: The on-time delivery rate is a project portfolio metric that measures the percentage of projects completed within their scheduled deadlines and shows the ability to meet time constraints.
• Schedule variances: Schedule variance is a project portfolio metric that quantifies the deviation between the planned schedule and the actual progress of projects, providing insights into whether projects are ahead or behind schedule.

Operational Efficiency Metrics

These metrics focus on evaluating the effectiveness and efficiency of processes and operations within the portfolio. They provide insights into resource utilization, productivity, capacity allocation, and overall operational performance.

• Project flow efficiency: Monitoring project flow efficiency shows how long people have been actively working on a project vs. how long they were waiting on external factors to resume their work. By optimizing every workflow, teams can improve their overall performance, complete more projects, and improve their on-time delivery rate, leading to increased efficiency of the overall portfolio execution.

• Resource utilization: Resource utilization is a portfolio metric that measures the load on resources across projects. It's important for managers to understand whether they're allocating resources in the most efficient way to decrease the likelihood of cost or timeline overruns. Furthermore, tracking capacity across projects helps make informed re-allocation decisions to increase efficiency across most priorities.

Business Value Metrics

Arguably, the most impactful metrics evaluate the value delivered by projects within the portfolio. Business value metrics assess the impact of projects on the organization's bottom line, market position, and overall business objectives. By keeping track of ROI, customer satisfaction, and realized business value, organizations can effectively prioritize the projects that bring the highest value. Furthermore, understanding how many of the completed projects have contributed to the execution of specific strategic initiatives measures your overall strategic alignment .

• Return on investment (ROI): ROI assesses the financial gain or loss relative to the investment made in the portfolio, indicating the profitability created by the portfolio.
• Customer satisfaction: Customer satisfaction reflects how the product or service we deliver meets the customer expectations through the use of surveys, net promoter scores, etc.
• Realized business value: Realized business value refers to the tangible and measurable outcomes, benefits, or returns achieved by executing projects within the portfolio.

Risk Assessment Metrics

Risk assessment project portfolio metrics help in managing the potential risks associated with projects within a portfolio. Metrics such as risk exposure, risk severity, and risk probability can be used to identify and quantify risks to mitigate them on time.

• Risk probability: Assessing a project’s risk probability allows portfolio managers to see what's projected to be at risk or off track based on current work progress. The same is true for the progress of outcomes defining your organizational goals.

• Risk severity: Risk severity or risk impact indicates the expected harm due to exposure to risk. Risk severity levels are usually represented using an ordinal scale where factors such as size and complexity affect the actual risk severity ranging from “negligible” to “maximum” level.

How To Set Up Your Portfolio for Performance Measurement?

Measuring portfolio management in practice involves a systematic approach that should be ongoing and iterative. Here are the five essential steps to effectively evaluate your project portfolio.

• Define Measurement Objectives: Clearly identify the objectives of evaluating your portfolio. Determine the specific aspects of portfolio management that need to be measured, such as financial performance, risk management, stakeholder satisfaction, or operational efficiency.
• Select KPIs: Identify and choose the appropriate KPIs that align with the defined measurement objectives. KPIs should be measurable, relevant, and directly linked to the desired outcomes of portfolio management. Consider a mix of quantitative metrics (e.g., financial metrics, delivery metrics) and qualitative metrics (e.g., stakeholder or team satisfaction).
• Collect Data: Gather relevant data to measure the selected KPIs. Data can come from various sources, such as project reports, financial statements, risk registers, stakeholder surveys, or operational performance metrics. Ensure data accuracy and reliability by using standardized data collection methods and tools.
• Communicate Results: Present the measurement results in a clear and concise manner to stakeholders, including senior management, project teams, and relevant decision-makers. Foster a culture of transparency and accountability in sharing the measurement results.
• Continuously Review and Improve: Frequent evaluation of project and initiative progress showcases their alignment with strategic goals . Based on the results, portfolio managers can take appropriate actions to address gaps, improve performance, and enhance their portfolio management approach. For instance, incorporating regular reviews such as cadences across an organization can enhance the flow of information across the company so everybody is on the same page about the most important portfolio metrics.

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Project portfolio metrics provide a way for organizations to inspect their performance, evaluate and make data-driven decisions in the process of achieving business goals. The most used types of portfolio metrics include: 

• Financial metrics 
• Execution metrics 
• Operational efficiency metrics 
• Business value metrics 
• Risk evaluation metrics

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The top 10 PMO KPIs you should be tracking (+ how to track them)

Outstanding project portfolio managers have a set of PMO KPIs they track to showcase the business value of their office.

The work of the project management office is messy, complicated and, hard to track. Although most business leaders are supportive of their PMO, few can succinctly describe the results it’s directly responsible for.

In this article, we offer a list of worthy KPIs to track and a few guidelines on how to report them to your stakeholders. Specifically, we discuss:

Why do PMO leaders need a unique set of KPIs?

The 10 pmo kpis outstanding project portfolio managers track, how to track pmo kpis without losing focus, how to build a no-fluff report for your stakeholders that they’ll want to read.

To prove their worth, the necessity of their existence.

Nearly every project portfolio manager has experienced the soul-crushing reality of having to prove the value of the PMO, the return on investment (ROI) of his/her work. To prove that their office is a good investment whose valuable job increases productivity and profitability. And the best, if not the only, way to persuade business leaders of the value of any particular investment is with numbers. Good numbers.

Thus, if you want to be a PMO leader with a long tenure, make sure you keep track, and in good shape, of relevant and unique to your office KPIs.

The number 1 priority of every PMO leader

PMO leaders that face existential threats should focus on one thing:

This is not a “never give up” sentiment. It’s the best measure of effectiveness.  Research shows  that the longer the PMO offers its services, the more effective it is. Thus, the more valuable it is and the easier it is to prove the value it brings. 

The project management office should not be considered a short-term solution to emergency scenarios nor an innovation factory (though it’s possible for the PMO to give birth to priceless innovation).

No, the PMO should be considered as a long-term investment into improving operational execution and the company’s adaptive capabilities. When the PMO is working well, projects are completed faster, products are delivered on time and within specifications, sales increase, and the competitive advantage is managed much smoother.

The longer the project management office runs, the higher its effectiveness.

Proving the office’s value is easier said than done.

Let’s see some PMO KPIs examples the best project portfolio managers track separated into three big categories.

Strategic alignment & ROI KPIs

One of the best ways the project management office can showcase its business value is by connecting its effort with the company’s strategic plan.

Specifically, how the work of the PMO has resulted in increased revenue, reduced cost, respected deadlines, and a smoother execution of the plan. In other words, connect the work of the office with what the stakeholders care for. This is sales 101, sell the benefits. Good or bad, PMO leaders are required to sell the value of their work to senior leadership.

So, the following KPIs are a bit loosely defined because certain terms like “strategically aligned” projects are determined differently in each company. Here are the questions you want to keep in mind when defining the following KPIs:

• What are the right projects we should be working on?
• What are our top 3 priorities? Ideally, you have one single top priority, but if you don't, then go up to 3. If you end up with more than 3, go back to  strategic planning .
• How do we eliminate distractions and focus our resources on the projects that truly matter?

Here are some KPIs that help you align people’s daily work with the business’s plan:

Percentage of projects aligned to strategy

Number of active projects aligned to strategy to total number of projects.

This is a simple measure to track, as long as you’ve clearly defined “aligned.” Here’s an example: a project is aligned to strategy when it contributes directly to a certain KPI or initiative. There are many definitions, choose the one that fits your particular business and industry.

Strategic alignment is your first filter for choosing the important projects from the rest.

The genius of this percentage is that you can take historical data (if they’re available) to demonstrate the improvement of focused work, better utilization of resources, and the overall efficiency that your office has brought. The tenet behind this key performance indicator is that the actual cost of a misaligned project is much higher than the resources allocated to it due to opportunity loss.

The trick here is to establish a formal project closure process that includes the date of completion and applies to most, if not all, projects.

Percentage of projects with validated business cases

Number of projects that have approved business cases to total number of projects.

It’s important to track the currently active projects with validated business cases because it’s a strong indicator of strategic alignment and planned value. It also helps to determine the return of investment in each project and the whole portfolio, as well. When making a case for the ROI of the office, an increase in this KPI is a powerful arrow in your quiver.

But to avoid spending too much time on gathering data, you need a management system for your documentation that is accessible and consistent company-wide.

Percentage of benefits delivered per year

The value of delivered business-case benefits to planned business-case benefits in a given period, e.g., a fiscal year.

This measure takes you a step further from the previous vanity metric — it’s vain because the business cases are projected, not realized — and proves the earned value of strategic alignment and the project management office’s efficiency. The best way to measure the “value” of the benefits is with dollars. Calculating this number is like drawing a circle. It sounds simple, but it’s incredibly hard to do it well. 

The “incredibly hard” part lies in the coordinated effort it requires. It’s impossible to calculate the value of business-case benefits without the voluntary cooperation of other areas of the business. A simple, but consistent system to measure ROI, though, makes the job a little easier.

PMO performance KPIs

Strategic alignment is a great compass to guide resource allocation and direct the focus of the organization’s concentrated effort.

However, it’s only the first step in demonstrating the PMO’s value. Here are some performance metrics that get you a little deeper in the weeds:

Percentage of completed projects VS canceled projects within a given period

Number of completed projects to total number of planned projects  versus  the number of canceled or on-hold projects to the total number of planned projects in the last X months.

Pick a specific period that makes sense for your business, e.g., 12 months, and calculate these two numbers. Pair it with the percentage of successful projects, however you define that (your definition has to be clear). Highlight the ones that were delivered within their deadlines and within budget to emphasize efficiency. Reinforce the KPIs’ importance by comparing them to previous periods.

Just make sure there is a formal process of activating and canceling projects to make tracking effortless.

Percentage of project status reports older than X number of days

Number of project status reports older than X days to number of projects in the portfolio.

Determine the number of days that makes sense to your business. Don’t try to guess it, use data to evaluate on which day a project status report is too old to provide an accurate picture of the project’s current state. Use that as a baseline to assess report timeliness. Standardize status reports as much as possible and make sure it includes all essential information.  If you want to know what goes into great project status reports, read our guide.

There is one important concern, though. Tracking this number could take huge amounts of time when reporting happens in static tools like spreadsheets and slides. These tools require a manual approach that renders them time-consuming and highly inefficient.

Time gap between project proposal and project activation

Average number of elapsed days since project conception and project activation (counting only activated projects).

In large organizations, it’s tough to improve time to market due to rigid processes. Tracking it is a good practice, but rigid business structures don't leave a lot of room for improvement.

You’ll need established processes for project proposal and reviewing to be accurate with this KPI.

Time gap between project conception and project completion

Calculated in days, like the previous KPI.

This is a much more meaningful metric to keep track of since its decrease strengthens your business case for the PMO. Contrast this number to previous periods to highlight progress made.

Again, you need an established process for project proposals.

# of project dependencies being resolved

Number of dependencies and single points of failure you eliminated.

Rarely do people celebrate or even take into account catastrophes averted. The best project management professionals (PMOs) don’t just resolve crises, they prevent them. And that’s virtually impossible to attribute. That’s what this KPI tries to alleviate.

The highest risk in a project portfolio is clusters of projects that are dependent on a single project’s success/completion. Managing these dependencies early prevents irreversible catastrophes and saves project teams from extremely unpleasant scenarios.  There are many strategies to manage dependencies , but eliminating them tops the list of the most impactful ones.

Map project dependencies when  formulating your strategy  and map them again later when you have eliminated the biggest threats.

Adapting KPIs

Most of the PMO’s work takes place during the execution of the strategic plan. 

That’s when he is called to resolve resource conflicts, reevaluate project budgets and scope changes, remind strategic priorities and business goals, assess project performance, report, and perform so many other PMO functions.

It’s when the most important trade-off decisions are made.

These tough decisions are what generate actual business value, and with the following KPIs, you can generate perceived value as well.

Percentage of on-time completed projects with approved scope changes

Number of on-time completed projects with approved scope changes to the total number of projects in the portfolio in a given period, e.g., a fiscal year.

Few projects retain their initial scope. It’s a natural part of  project management . However, changing the scope of a project and delivering within the initial deadline is often nothing sort of a miracle. Doing it multiple times shows a fierce dedication to execution and immense respect for the deadlines. These are qualities a project portfolio manager can capitalize on.

Tracking completed project milestones is a good practice if you want to be more granular.

Establish a formal process of scope change to acquire this data. Needless to say, you’ll need to track active projects with scope changes, another useful metric.

Percentage of projects delivered within budget

Number of completed projects within budget to total number of projects in the portfolio.

This is one of those KPIs that should not be tracked on its own. It’s NOT a north star metric. It helps tell a holistic story only when it’s accompanied by some of the aforementioned metrics.

Focus too much on budget restrictions, and you’ll sacrifice the quality of the deliverables.

The truth is that the most impactful KPIs demand a lot of effort to be accurate.

And without the proper processes, tracking these key performance indicators is time-consuming.

In the PMO KPIs list above, we mention the necessary processes that you need to have in place to save time and energy when collecting data. It’s important to remember, though, that it’s hard to change people’s behavior and make a new process stick in every single department. Let alone multiple processes. Unfortunately, there is no magic formula or solution that you can implement and have instant results. People don’t work like that.

But there are a couple of things you can do today that will have a massive impact on your efforts.

Be strategic and strategy-oriented

Strategic in your choice of PMO metrics you track and focused on delivering (and showcasing) strategic value.

Being strategy-oriented precedes being strategic. That’s why the strategic alignment KPIs are the most important set to determine. It’s also the hardest because of the heavily subjective nature of the term “strategic alignment.” As a PMO, you need to start by defining that term and then educating the rest of the company to follow that definition if they want their project to align with the business’s strategy and be approved.

Then, being strategic is a matter of experimenting. Track multiple metrics until you find the set with no redundant information. Don’t track numbers for the sake of tracking. Every metric should inform the decision-making process.

If you find yourself consulting only a small set of KPIs when making decisions, ditch the rest of them and congratulate yourself with a cocktail for the resources you saved.

Choose the right tools

A Google sheet, or any kind of a spreadsheet, isn’t a good place to track these KPIs.

Because these are static tools, and even though they encourage collaboration, they are messy, massive, and hard to navigate. They create too much informational noise and introduce various practical problems. “Is the Strategy final FINAL.xlsx the latest version?”

A far better choice is a  dynamic digital platform like Cascade  that is accessible by everyone and is a single source of truth for your project portfolio. You can monitor the health of your portfolio easily and create targeted reports for each stakeholder group.

Monitoring and reporting are maybe the two most time-consuming aspects of project portfolio management, so the more processes you automate, the more time you have to focus on improvement and following through.

Make the first with  our KPI template  and create in-depth reports effortlessly.

Adjust each report to the stakeholder you’re addressing

Not every stakeholder group cares for the same things.

Jeremy, your COO, cares about project deadlines and whether they’re on track, not whether project managers use the Agile or the Waterfall method. Laura, on the other hand, is a customer success manager and cares more about customer satisfaction than the projects that were canceled due to unrealistic expectations.

Leave out the information and metrics your target audience pays no attention to and doesn’t inform their decisions.

For a proactive approach, ask each stakeholder group what they’re most interested to learn about. Frame the question as the benefits they want to see and not what they want you to tell them. If you feel it’s a tough ask because you might come off as inexperienced or insecure, frame it as a best-to-be-prepared and leave-nothing-to-chance question.

Nullify any doubts by delivering a killer report with all the requested and relevant KPIs.

Change the order of the information

Engaging and retaining your stakeholders’ attention is no easy task.

The traditional way of reporting starts at the beginning. You provide the context, recount the decision-making process, present the data that informed your decisions, mention the mistak.. ahem, lessons along the way, and finally, you announce your decisions. The problem with the traditional way of reporting is that you’ve probably lost your audience’s attention somewhere between the context and the  Lessons Learned .

So, how can you tell the same story but make it engaging and memorable?

You flip the script on its head.

Start the reporting presentation by announcing your decisions. “For the next quarter, we decided to do X, Y, and Z.” That way, you hit the road with the information your audience wants most to hear, and you force them to ask the “Why?” question, keeping them engaged. Then you refer to the lessons learned, the data, your decision-making process, and finally, the context. You start with the decisions and close with the objectives your office or business aims to achieve.

That way, you keep the stakeholders engaged and include all relevant information while connecting everything together neatly. Make sure you refer to every trade-off you made and the reasons you did so.

Are you ready to automate the tracking of your KPIs?  See how Cascade can help with a free demo today.

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Building a Metrics-Driven PMO:  35 essential KPIs to consider in Project Portfolio Management

What are the metrics and KPIs that a PMO should consider to measure and evaluate the performance of its project portfolios? As a PMO manager , you already know the importance of monitoring the performance of each project to get a quantitative and objective view of the progress, quality, and value delivered by the projects.

But it is not only limited to that. The KPIs and metrics you establish must be connected to the overall business objectives. This is essential for our data analysis processes to be relevant and help you improve your decision making and adopt a culture based on continuous improvement.

What are you going to learn in this post?

• Factors to consider before selecting the metrics to measure.
• A detailed list of 35 metrics and KPIs that every PMO should have on its radar.
• How your performance measurement and evaluation processes can drive the performance of your project portfolios.
• The importance of having a PPM software like Triskell to link the strategic objectives with the KPIs of your PMO.

TABLE OF CONTENTS

• Key factors to consider when deciding the most relevant KPIs for your PMO.
• Project Portfolio Management KPIs and Metrics every PMO should consider.
• How to use Project Portfolio Management KPIs to drive data-driven decision making and continuous improvement.
• Triskell, the all-in-one PPM software to measure all your PMO metrics.

Key factors to consider when deciding the most relevant KPIs for your PMO

What are the KPIs that I should monitor on a daily basis to evaluate the success of the PMO? Are they also relevant to the organization’s managers and executives? Should these metrics be quantitative only, or also qualitative? And how can this task be made much more productive and not reduced to filling in spreadsheets to which most PMO stakeholders do not have access?

As the PMO manager, you should consider several key factors when deciding your most relevant KPIs and metrics to prove the value you bring to the organization. It is not enough to have the PMO as an administrative office from which to supervise that the different projects are completed within the agreed budgets and deadlines. That vision is now obsolete. Now, the PMO must be a relevant department to drive the organization’s success .

And, in order to prove the value that the PMO brings to the company, you must be very careful when selecting the indicators with which to monitor the performance of your project portfolios.

The PMO cannot be perceived as an administrative office that solely oversees the progress of projects

See the Triskell platform in action in a personal demo​

These are the most fundamental aspects that you should take into account when selecting the most relevant KPIs for the PMO :

• Identify your organization’s objectives.
• Centralize KPIs in a single source of information.

Identify organizational goals

Before selecting the right KPIs, it is crucial to be clear about your organization’s strategic objectives. This involves understanding the company’s vision, mission and core values.

Aligning the KPIs of the PMO with the overall objectives of the organization will allow you to:

• Focus on measuring and improving the most important aspects of project portfolio management in pursuit of achieving the organization’s objectives.

For example, imagine that your company’s overall goal is to gain a 10 percent market share in the next 2 years. Your PMO, as a result of this objective, can prioritize those metrics that are related to customer satisfaction with the company’s project and product portfolios. And, consequently, establish the CSAT metric as a key performance indicator.

As you see, if you have a vision of the overall objectives of your organization, you will be able to focus on measuring and optimizing those aspects that are key to its success.

Effective project management is based on setting SMART objectives . That is, the objectives should be:

By applying this approach to the objectives of each project and program managed by the PMO, you can ensure that the KPIs are clear, measurable and oriented towards achieving the overall objectives of the organization.

Some examples of SMART Objectives that can be applied in any Project Management Office would be the following:

• Increase customer satisfaction, as measured by surveys, by 15% by the end of the year.
• Reduce project delivery time by 10% for the next quarter.
• Increase project risk management maturity by implementing a formal risk management process within 6 months.
• Improve project quality by reducing defects by 20% compared to the previous year.

With this SMART approach, KPIs will be clear, measurable and focused on business objectives

As you can see, setting SMART goals will provide you with a solid foundation for accurate performance measurement and effective tracking of progress toward established objectives.

Centralize all PMO KPIs in a single source of truth

For efficient KPI management, it is essential to have a single source of information that brings together and visualizes all relevant data from your project and product portfolios. This is where a PPM tool can make a difference.

A tool like this allows you to centralize and consolidate data from projects, programs and portfolios managed by the PMO into one integrated platform. With a complete and up-to-date view of all KPIs, you can make informed decisions based on accurate, real-time data.

Moreover, a PPM software will also make it easier for you to generate reports and effectively communicate results to relevant stakeholders, as you can control who has access to all this information yourself.

Project Portfolio Management KPIs and metrics every PMO should consider

And now, let’s get straight to the point. Surely when you have seen number 35 you might have wondered: is it really necessary to monitor all these metrics? The answer is simple: NO.

And then the next question that will come to your mind will be: how many KPIs should I track? The truth is that there is no clear answer to this question. The number of KPIs you should track will depend on numerous factors, such as:

• Size of the organization.
• The complexity of project portfolios.
• The specific business objectives and needs.

However, when it comes to choosing metrics, keep it simple. It is important to find a balance between the number of KPIs you need in order to obtain a complete view of project portfolio performance without having to overwhelm stakeholders with an excessive number of metrics.

So the number of KPIs you are going to be monitoring is up to you: 5, 8, 10, 12. There is no exact guideline to which you should adhere. Instead, there are a number of best practices that you should follow:

• Start with the basics: whether you are implementing new analytics and data measurement processes in your PMO or refining existing ones, start by monitoring a small set of KPIs. And, as you gain experience, you can gradually expand or refine those KPIs as your needs evolve.
• Avoid information overload: having to keep track of too many KPIs can make you lose focus of the data that is really relevant, and stakeholders may not have clear visibility of the metrics they consider most critical.
• Focus on the most critical areas: identify those areas and project portfolios that have the most significant impact on the business and monitor the most relevant KPIs that give you better visibility into these areas.

So, here are 35 metrics to consider for your PMO . And, depending on the size, complexity and needs of your organization, you should choose a smaller set of KPIs. Here we go!

1. PMOs KPIs to measure schedule and Financial performance

• ROI (Return of Investment): this is a key metric, as it calculates the financial return generated by projects, programs and portfolios compared to the investment made, which will allow you to know the profitability of each of them.

Formula: ROI = (Net Profit / Total Investment) * 100

• Earned Value (EV): it integrates elements such as project scope, timelines and costs to measure the value of the work performed, which helps to evaluate and predict project performance.

Formula: Earned Value (EV) = % of project completed * Planned Budget

• Cost savings: This is a very important metric for enhancing the value of your budget management processes. It represents the cost reductions achieved in the projects compared to the initially established budgets.

Formula: Cost Savings = Planned Budget – Actual Cost

• Cost performance index (CPI): It is an indicator that will help you measure the profitability of projects in terms of how their budget is used. It compares the value of the work performed with the actual costs incurred, indicating whether the project is over or under budget.

Formula: CPI = Earned Value (EV) / Actual Cost (AC)

• Schedule variance (SV): how many projects are on schedule and how many are not? This metric will help you to monitor not only that projects are completed on schedule, but to identify potential bottlenecks and risks related to the project schedule.

Formula: Schedule Variance = Earned Value (EV) – Planned value (PV)

• Cost variance (CV): how many projects have not met the initially agreed costs? This metric shows the difference between earned value and actual project costs, and will help you manage adherence to project costs and identify cost-related issues.

Formula: Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

• Budget variance (BV): this is another metric that will help you manage project portfolios finances and identify budget related challenges. It compares budgeted costs to actual costs to determine the budget variance.

Formula: Budget Variance (BV) = Planned Budget – Actual Cost (AC)

If the cost variance or budget variance is negative, it means that the projects have exceeded costs and/or budget

• Benefit Cost Ratio: this KPI measures the financial effectiveness and feasibility of a project by comparing the costs incurred with the anticipated benefits gained. It helps determine whether the financial investment in a project is justified and provides insights into the project’s profitability and value.

Formula: Cost Benefit Ratio = Total Anticipated Benefits / Total Project Costs

• Expected monetary value (EMV): more than a metric, it is a technique for assessing the financial impact that a risk or unforeseen event may have on projects. It involves assigning a monetary value to each possible outcome of a risk event and calculating the expected value based on the probabilities of occurrence.

Formula: EMV = Probability x Impact

To clarify, this formula consists of a 3-step process:

• Assess the probability of an outcome to occur.
• Calculate the monetary value or impact of the outcome.
• Then multiple Probability and Impact to calculate the Expected monetary value.
• Benefits realization rate: This KPI measures the extent to which the expected benefits of a project or initiative have actually been achieved. It compares the expected benefits with the actual benefits achieved and calculates the percentage of benefits that have been realized.

Formula: Benefits Realization Rate = (Actual Benefits / Expected Benefits) * 100

2. KPIs for Resource Management

• Resource Utilization rate: It measures the efficiency of resource allocation and utilization to ensure optimal use of them and identify gaps and areas for improvement.

Formula: Resource utilization Rate = (Actual Work Hours / Available Work Hours) * 100

• Resource cost variance (RCV): unlike the ‘Cost Variance’ metric, this one focus only on resource costs. It measures the deviation between the planned cost and the actual cost of the resources used in the projects. Therefore, it will help you assess whether or not the budget allocated to project resources has been exceeded.

Formula: Resource cost variance = Actual Resource Cost – Planned Resource Cost

• Resource effort variance (REV) : similar to the previous one, but in this case what is measured is the difference between the number of hours planned for each project and the actual hours spent. It will provide you insights into whether projects are on track in terms of resource allocation and usage.
• Resource Profitability: It evaluates the efficiency and effectiveness of resource usage in generating revenue or adding value to the organization. It helps to assess the financial impact of resource allocation decisions and to optimize their use for better results.

Formula: Resource Profitability = (Revenue Generated or Value Delivered by Resources – Cost of Resources) / Cost of Resources * 100

3. PMO KPIs for Customer Satisfaction and Quality

• Customer satisfaction (CSAT): It is an essential metric for assessing the satisfaction level of customers and stakeholders with the results of your project portfolios. It is obtained from surveys.

Fórmula: CSAT = (Total Sum of Scores / Total Number of Responses) * 100

• Quality index: It evaluates the overall quality of project deliverables based on predefined quality criteria. This way you can ensure that the processes and quality standards established by the PMO are met.

There is no global formula for this metric. The result of this metric will depend on how you measure quality in your organization.

• Defect density: it analyzes the number of defects or errors found in the project deliverables (e.g., defective lines of code in a software). Moreover, it provides you with insights into the quality of the product and the effectiveness of defect management.

Formula: Defect density = Number of defects / Size of the deliverable

4. KPIs for Project Health and Performance

• Project Health index: this metric will provide you with a holistic view of project health based on multiple factors. Broadly speaking, it will help you identify risks, areas for improvement and the overall status of each project.

It is an indicator that combines multiple metrics, such as Earned Value, Budget Variance or Risk Exposure.

• Change request volume: It tracks the number of change requests submitted, approved and delivered. This will give you visibility into changes in project scope and change management effectiveness.

Formula: It is calculated as the sum of the number of change requests received in a given period of time.

• Change Request Management: if you need to measure the level of efficiency of your change management processes, you should take this KPI into account. It assesses factors such as the number of change requests, response times and the ability to evaluate and incorporate changes while minimizing disruptions.

Formula: Change Request Management = (Number of change requests successfully implemented / Total number of change requests) * 100

• Stakeholder engagement: It serves to measure the degree of commitment and collaboration with project stakeholders, and thus ensure the levels of communication, support and alignment that each project requires.

As with Customer Satisfaction, this metric is obtained through surveys or direct feedback from stakeholders.

• Risk exposure: It is a qualitative indicator with which you will be able to evaluate the risk exposure of each project. It will help you identify, quantify and mitigate potential risks.

It’s usually assessed based on the risks identified and their potential impact on the project.

• Risk response time: this metric will give you visibility on the average response and resolution time of detected risks.

Formula: Risk Response Time = (Time of Risk Identification) – (Time of Risk Response Initiation)

5. KPIs to measure Process and Efficiency

• Start date variance (SDV): this metric will give you visibility on possible deviations between the planned start dates and the actual start dates of the projects or their tasks. It will help you assess whether projects are starting on schedule and identify dependencies between projects and even bottlenecks.

Fórmula: Start Date Variance (SDV) = Actual Start Date – Planned Start Date

• Requirements Stability index: this indicator will give you an overview of the stability or volatility of the project requirements. It will give you insights to optimize your change management processes and avoid deviations in project scope.

Fórmula: Requirements Stability Index = (Number of Stable Requirements – Number of Volatile Requirements) / Total Number of Requirements

• Productivity Index: if productivity is emphasized in your organization, this metric should be taken into account. It measures the productivity and efficiency of teams and individuals involved in projects. This indicator will help you optimize resource allocation and improve performance.

Formula: Productivity Index = (Earned Value (EV) / Actual Cost (AC)) * 100

• Cycle time: This metric of the Lean methodology is very useful for improving efficiency and your continuous improvement processes. It calculates the time it takes to complete a specific process or task of a project.

Formula: Cycle Time = (End time of the process/task – Start time of the process/task)

6. PMO KPIs to measure Project and Portfolio performance

• % On-time delivery: This indicator is still basic for any PMO today, as it will give you insights into the efficiency of your processes for the execution of projects within the established deadlines. It basically measures the average time it takes to deliver projects from initiation to completion.

Formula: % On-time Delivery = (Number of Projects Completed on Time / Total Number of Projects) * 100

• Project Success Rate: this metric will provide you with an analysis of the percentage of projects that achieve the established objectives and meet stakeholder expectations. It takes into account various factors such as scope, quality, customer satisfaction, budgets and project timelines. A high project success rate will be a clear indicator of the efficiency of your PMO processes.

Formula: Project Success Rate = (Number of Successful Projects / Total Number of Projects) * 100

• Percentage of projects delivered within budget: It evaluates the percentage of projects that have been completed within the agreed budgets. Indicates the cost control and financial management capability of the PMO in executing projects within the allocated funds.

Formula: Percentage of Projects Delivered Within Budget = (Number of Projects Delivered within Budget / Total Number of Projects) * 100

• Project completion rate: In parallel to the last 3 metrics, you will also find it useful to measure this indicator in order to assess your organization’s ability to deliver projects on time and within scope. It measures the percentage of projects successfully completed within the agreed deadlines.

Formula: Project Completion Rate = (Number of Completed Projects / Total Number of Projects) * 100

Set realistic targets for each KPI based on historical data, benchmarks, and organization’s capabilities

• Number of cancelled projects: This KPI will provide you with insights into the stability of your project portfolios and the effectiveness of your selection and project initiation processes. As a result, you will be able to assess the frequency and reasons for project cancellations, and then take appropriate measures to improve the success rate of your projects.
• Completed projects vs canceled projects within a given period: a complementary metric to the previous one, as it will give you information on the efficiency of PMO processes and opportunities for continuous improvement.

Formula: (Number of Completed Projects / (Number of Completed Projects + Number of Canceled Projects)) * 100

• Time gap between project proposal and project activation: it measures the duration of time lapse between project the submission of a project idea and the actual initiation of the project. This KPI will provide you insights into the efficiency of your Demand Management processes.

It can be calculated by subtracting the date of project activation from the date of project proposal submission.

• Time gap between project conception and project completion: is a complementary metric to the previous one, except that in this case it will give you greater visibility on the efficiency of the execution and delivery of each project.

It is calculated in the same way as the previous one, subtracting the project completion date from the project conception date.

How to use Project Portfolio Management KPIs to drive data-driven decision making and continuous improvement

You’ve decided what metrics to measure. You also have tools that allow you to set up dashboards and reports to inform executives and all stakeholders in the organization about the performance of your project portfolios. Now what?

Another purpose of data analytics is to improve your internal decision-making processes and drive continuous improvement of your PPM processes. This approach will help you improve all PMO management processes.

Analyze the data to gain insights into performance trends, strengths, weaknesses, and potential areas for improvement

Here are some examples of how PMOs can benefit from data analytics:

• Assess the health of project portfolios: by measuring project success rate, resource utilization, budget and schedule adherence, or customer satisfaction, you can identify areas of improvement and take corrective actions to improve the performance of your project portfolios.
• Optimize Resource Management: by analyzing resource management data, you will be able to identify bottlenecks, skills gaps, or the over- or under-utilization of resources. This will enable you to make informed decisions on resource allocation, identify skill needs and ensure that the right resources are allocated to the right projects at the right time.
• Risk analysis and mitigation: By integrating KPIs related to risk management into your analytics processes, you will be able to identify recurring risks and develop risk models to predict and prevent potential problems.
• ROI and benefits analysis: By defining and measuring KPIs related to project objectives and expected benefits, you will be able to assess the real value delivered by each project or program. You will be able to compare projected benefits with realized benefits, identify gaps and take corrective actions to maximize the ROI of project portfolios.

Triskell, the all-in-one PPM software to measure all your PMO metrics

We have already mentioned that one of the factors to take into account when selecting the metrics you are going to measure and analyze is to have PPM software that allows you to connect the strategy, execution and KPIs with which you are going to measure the performance of your project portfolios.

Triskell Software is an enterprise portfolio management PPM solution that enables organizations to effectively manage and optimize their project portfolios. Triskell enables real-time monitoring, data-driven decision making and collaboration, and will be your main ally in driving success and achieving your strategic goals.

Why Triskell? Here are 5 compelling reasons why Triskell is the PPM tool any PMO needs:

• Strategy and execution in one place: thanks to its strategic planning capabilities , you will be able to evaluate all project requests, analyze whether or not they are aligned with the objectives, and define their KPIs based on your predefined criteria.

• Centralized data repository: make Triskell your single source for PMO data. You have at your disposal a PPM tool from which to capture and consolidate all project-related information, including plans, financial data, resource allocation and performance metrics.
• Customizable dashboards and reports: with Triskell you can easily customize and create your own dashboards, scorecards and reports to get the necessary visibility on the performance of your project portfolios. In addition, you can automatically export and extract the data to Excel and exploit it there according to your needs.
• Real-time performance tracking: Triskell Software solutions cover all aspects of Project Portfolio Planning and Management. With Triskell you will have visibility over Resource Management , Financial Management or Demand Management , which will help you identify problems, trends and areas for improvement.
• Collaboration and communication: Triskell has a set of collaborative tools that facilitate the exchange of information and feedback with teams and stakeholders. This will facilitate transparency, alignment and communication between teams, and the monitoring and management of KPIs by stakeholders.

And we finally come to the end of our journey through the amazing world of PMO metrics and KPIs. As you can see, understanding and properly using this data is essential to the success of the PMO and projects in general. By adopting data-driven management, we can make informed decisions, continuously improve and achieve extraordinary results.

Having a PPM software like Triskell Software will allow you to measure and track all aspects related to your organization’s project portfolios . With Triskell you will be able to prioritize projects and link them to strategic objectives, as well as manage resources, risks and budgets of each project and program efficiently.

Request a demo of Triskell Software

Triskell meets all the requirements for your organization’s PMO to take a step forward in aligning your project portfolio with strategic planning.

FAQs about Project Portfolio Management KPIs and metrics

Are there any industry-standard pmo kpis.

There isn’t a universally accepted set of PMO KPIs. The best metrics for your organization will depend on your specific goals, industry, and project types. However, as the article points out, there are some general PMO KPIs that are widely used and can be a good starting point. These include metrics like return on investment (ROI), on-time delivery rate, and project health index.

How often should I track and report on PMO KPIs?

The frequency of tracking and reporting on PMO KPIs depends on your needs and the dynamics of your projects. Here’s a general guideline:

• For real-time insights : Track KPIs daily or weekly for projects with critical deadlines or high risks.
• For ongoing monitoring : Track KPIs monthly for projects with standard timelines.
• For strategic decision-making : Compile and report on KPIs quarterly or biannually to assess overall PMO performance and identify trends.

Remember, the key is to find a reporting cadence that provides valuable information without creating information overload.

Is there a difference between PMO KPIs and project metrics?

Yes, there’s a subtle difference between PMO KPIs and project metrics.

• Project metrics are specific, measurable data points that track the progress and performance of individual projects. They focus on aspects like budget adherence, resource utilization, and task completion rates.
• PMO KPIs , on the other hand, measure the effectiveness of the PMO itself. They look at the bigger picture, considering how the PMO’s processes, tools, and methodologies impact project success rates, resource allocation, and overall project portfolio health. PMO KPIs use project metrics as inputs but focus on the PMO’s contribution to project outcomes.

Where can I find more information on PMO KPIs and project portfolio management metrics?

There are many resources available to learn more about PMO KPIs and project portfolio management metrics. Here are a few suggestions:

• Project Management Institutes (PMI) : PMI offers a wealth of resources on project management best practices, including guidance on selecting and using KPIs.
• Industry publications : Many industry publications and websites publish articles and reports on PMO best practices and relevant metrics.
• Books and online courses : Several books and online courses delve deeper into PMO KPIs and project portfolio management metrics, providing a more comprehensive understanding.

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KPIs: The Project Portfolio Performance Checklist

Project Management Offices create organizational added value. To ensure that this is also recognized by all stakeholders, you should ensure the acceptance of your PMO through a high degree of transparency: Project portfolio performance must be quantified and communicated on an ongoing basis.

In this Capture blog post we, therefore, address the following questions:

• Why are project portfolio metrics essential for internal PMO acceptance?
• What characterizes high project portfolio performance?
• Which project portfolio KPIs (Key Performance Indicators) are there?
• Why should project portfolio KPIs be evaluated regularly?
• How do PMOs and project managers benefit from PPM analytics tools?

The internal standing of PMOs

Do you know this? As the person responsible for the PMO, you are very satisfied with the performance of your team. Within the company, however, you have to justify the work of the project management department. You practice professional project portfolio management . However, your stakeholders tend to perceive the inevitable project difficulties instead of the process-related improvements.

Rest assured: most cross-departmental organizational units naturally face similar challenges. However, the measurability of numerous factors influencing the company's success makes it much easier to establish cross-sectional functions in a sustainable way.

Project portfolio performance: a strategic and operational responsibility 

Depending on the organization, project portfolio management can take different forms. However, a project management office will only do justice to the intended activity profile if operational project control is strongly interlinked with strategic goals . To evaluate and successively increase project portfolio performance, it is therefore necessary to define operationally and strategically relevant key figures.

Central project portfolio KPIs at a glance 

We have summarized 13 central project portfolio performance KPIs for you.  These can be adapted and prepared multi-dimensionally - for example, broken down to different projects, departments, or employees.

Less is more: The art of smart data reports

For efficient data management in the Project Management Office, you need project portfolio management software . Among other things, it supports you in ensuring that data collection and analysis follow a uniform project management methodology. This way, PMO performance indicators remain comparable across projects.

The analytics functions and integrations of the PPM software with other systems offer sufficient scope for sophisticated data analyses . First, however, simple data reports need to be developed to generate "quick wins". The development and maintenance of a KPI system is not an end in itself, but ideally a management tool that is used on an ongoing basis to optimise and communicate project portfolio performance.

5 steps to measurable project portfolio performance

With PPM software you can relatively quickly create a data-based foundation around your PMO activities:

• identify and focus on individual areas of improvement in PMO work.
• define meaningful key performance indicators for these focus areas
• track these key performance indicators at specific intervals and derive concrete measures
• regularly check whether existing or new indicators are used in strategy discussions and coordination and adapt your indicator system if necessary
• use the available data to draw attention to the performance of the Project Management Office and all project participants throughout the company.

The benefits of a data-driven project management culture

The effort required to quantify PMO work is manageable thanks to PPM software. The benefits of a strong data culture, on the other hand, are enormous and, in sum, can be seen as high project portfolio performance:

• Project failures are significantly reduced due to a better decision-making basis and learning curve.
• In the medium term, realized projects are characterized by a significantly higher business benefit.
• The improved transparency of operational project management work promotes an optimized cost structure and effective use of resources
• The need for further, possible process standardization is recognized more quickly
• If appropriate measures are derived from the key figures, stakeholder and employee satisfaction increases and thus also work productivity.

Capture reading recommendation: KPIs in resource management

It cannot be emphasized often enough: Demonstrably good project portfolio performance has a strong leverage effect on overall business success. When decision-makers recognize this connection, PMOs also get internal support and necessary implementation powers.

In practice, we observe that many CEOs demand better use of resources in their companies above all else. This topic could be a first concrete starting point when introducing KPIs in the Project Management Office.

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Up Your Project Management with Project Portfolio Management

If you are a project manager of any kind, you could be facing the ever-growing challenge of managing multiple projects while ensuring they all align with strategic goals. Project Portfolio Management (PPM) is a structured approach that takes project management to the next level.

Let’s delve into the essence of PPM, its significance within organizations, the critical steps involved in managing project portfolios, and the invaluable role of PPM software in simplifying the process.

What is Project Portfolio Management?

At its core, Project Portfolio Management (PPM) helps organizations select, prioritize, and execute projects that align with their strategic objectives (and financial constraints). PPM acts as a framework that allows businesses to make informed decisions, allocate resources efficiently, and optimize their project portfolio for maximum returns. PPM is all about ROI.

What are the Differences Between Portfolio Management, Program Management, and Project Management?

Depending on how teams are structured, there are distinct differences in each management role and their jurisdiction. 

A project has a defined deliverable or endpoint, a program can consist of several projects, and a portfolio focuses on ongoing strategic goals. Portfolios allow organizations to prioritize and allocate resources efficiently, ensuring that all projects within the portfolio are aligned with the organization's overall strategy and objectives. This strategic approach helps organizations maximize their resources and work toward continuous improvement and success.

Portfolio Management focuses on strategically aligning and managing multiple projects within an organization. It involves selecting, prioritizing, and monitoring projects to ensure they collectively meet overarching business goals.

Program Management deals with a group of related projects managed together to achieve common objectives. Program Managers coordinate between projects within the program to maximize their impact.

Project Management includes planning, executing, and overseeing individual projects to create specific deliverables on time and on budget.

In some organizations, Program Managers manage a team of Project Managers, while Portfolio Managers meet with Program and Project Managers to align each project with broader objectives and performance metrics.

See also: Program Management vs. Project Management: Who Manages What?

Benefits of Project Portfolio Management

Implementing PPM offers a plethora of benefits for organizations:

• Alignment with Strategic Goals PPM ensures that every project undertaken contributes to achieving the organization's strategic objectives.
• Resource Optimization Efficient allocation of resources (including budget, time, and talent) ensures optimal project performance.
• Risk Mitigation PPM provides a holistic view of project risks, enabling proactive risk management and mitigation strategies.
• Enhanced Decision-Making Informed project selection and prioritization leads to better decision-making, reducing the risk of taking on projects that aren’t viable.
• Improved Communication PPM fosters transparency and communication, ensuring stakeholders are well-informed about project progress and performance.

What is the Project Portfolio Management Process?

The PPM process includes the following steps that increase an organization’s overall efficiency and productivity. 

• Establish Business Objectives  Define your organization's financial and strategic goals and criteria for evaluating project success.
• Research Potential Projects Identify and assess potential projects based on how well they will help achieve the objectives, expected returns, and resource requirements.
• Select Best Projects Use defined criteria to choose projects that offer the most value and strategically align with your organization’s goals.
• Project Portfolio Feasibility Evaluate the feasibility of the selected projects while considering capacity planning and resource allocation. Ensure that resources are available and can be allocated efficiently.
• Monitor Performance and Make Adjustments Continuously monitor project performance, making necessary adjustments to align projects with strategic goals. Assess project risks and take proactive measures to mitigate them.

Tips for Successful Project Portfolio Management

How do you maximize PPM at your organization? Like most things, strong leadership and communication will go a long way. 

• Appoint a dedicated PPM leader (sometimes called a PMO) or team to oversee the process and ensure its successful execution.
• Conduct regular portfolio reviews to assess performance, prioritize projects, and make informed decisions.
• Maintain open lines of communication with stakeholders to keep them informed about project progress and changes in the portfolio.
• Be adaptable and ready to adjust the portfolio to respond to changing market conditions or strategic shifts.

Project Portfolio Management Software

If this all seems like a lot, don’t worry; robust PPM software is available to assist you. PPM software, like Forecast, simplifies and streamlines the PPM process and offers features like resource allocation, data organization, project tracking, easy reporting, and predictive analyses. 

Plus, it can integrate with software you’re already using for accounting, task management, financial planning, or other processes to become your company’s one source of truth for reporting, project progress, and overall business health.

Organizations can optimize their project portfolios, allocate resources efficiently, and make well-informed decisions that drive success by following a structured PPM process and leveraging PPM software. Embracing PPM is not just a strategic move; it's the pathway to realizing the full potential of your organization.

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How to Manage Project Portfolio: Best Practices for Success

Ever feel like you're drowning in projects, with deadlines looming and resources stretched to the breaking point? It's a nightmare scenario for any project portfolio manager. But there's a solution...

Project Portfolio Management (PPM) offers a methodology for you to consider and gain back control. It helps you put a framework around prioritization of projects that truly align with your company's goals and ensures you have the resources to drive them to success.

Let's explore how PPM can bring order to your project landscape. We'll cover its definition, proven best practices, the powerful benefits it offers, and even the challenges you'll need to overcome.

What is Project Portfolio Management?

Project Portfolio Management , or PPM, is a way to strategically manage a bunch of projects so they all work towards your company's big goals. Manage projects in a portfolio takes advantage of managing many capital projects together, making trade-offs and synergies impossible if managed individually.  It helps you pick the projects that really matter to your business, making sure you have the resources to make them successful. Think of it as the key to making every project count and avoiding wasted effort.

Best Practices in Project Portfolio Management

Strategic alignment  .

Strategic alignment involves clearly defining organizational goals and translating these into actionable project objectives. Projects should be prioritized based on their strategic value, which involves assessing them against criteria like potential impact, resource requirements, and alignment with long-term goals. A robust prioritization process ensures that resources are allocated to projects with the greatest potential return.

Governance Structure  

A strong governance structure is crucial for defining clear roles, responsibilities, and decision-making criteria within the PPM framework. This structure should facilitate transparent and consistent decision-making across the portfolio, including project approval and resource distribution. Accountability mechanisms are also vital to ensure that team members are responsible for their contributions to the portfolio's success.

Standardization

Developing and implementing consistent project management standards and practices across projects to improve efficiency and effectiveness for the entire program of work. This includes "templatizing" work such as cost trackers ,  risk registers , management plans , and reporting . 

Balancing the Project Portfolio  

A balanced portfolio reduces overall risk through diversification, mixing high-risk and high-reward projects with more stable ventures. This balance should reflect the organization's strategic objectives and risk tolerance, ensuring a healthy mix of innovative and core business projects.

Regular Portfolio Reviews  

Regular reviews of the portfolio are necessary for ongoing success. Continuous monitoring helps track project alignment with strategic goals, facilitating timely adjustments. Periodic health checks assess the portfolio's overall performance, helping to pinpoint trends and emerging risks that could impact project outcomes.

Optimizing Resources

Resource optimization ensures that resources are used efficiently across the portfolio. Advanced allocation techniques help manage capacity and skill distribution, while resource forecasting tools predict future needs to prevent shortages and optimize project staffing.

Performance Metrics and Measurement  

Developing KPIs and utilizing dashboards that reflect the portfolio's health and alignment with strategic objectives is important. These metrics should be understandable, relevant, and capable of driving decision-making. Benchmarking these metrics against past performance and industry standards can highlight areas needing improvement.

Engaging Stakeholders

Maintaining a clear communication plan to keep all stakeholders informed about project progress and decisions is crucial. This openness fosters trust and minimizes resistance, making it easier to implement strategic changes. Additionally, establishing a feedback loop ensures that stakeholder insights are integrated into the decision-making process.

Risk Management Across the Portfolio  

It is essential to identify potential risks at the portfolio level and develop mitigation strategies that address them before they become critical issues. Regular updates to these plans ensure they remain effective as project conditions and external environments change.

Benefits of Project Portfolio Management

• Enhanced Decision-Making: Clear overview of all projects allows for better prioritization and resource allocation.
• Improved Resource Utilization: Efficient allocation according to strategic priorities reduces waste and increases project success rates.
• Increased Strategic Flexibility: Regular portfolio reviews enable quick adaptation to changes in strategy or market conditions.
• Greater Visibility and Control: Higher level of insight into project performance and resource allocation.

Challenges in Project Portfolio Management

• Complex Coordination: Managing multiple projects requires robust communication and coordination efforts.
• Aligning Diverse Objectives: Balancing varying project goals with overarching business strategies is challenging.
• Adapting to Change: The dynamic nature of business necessitates frequent adjustments in project prioritization and resource allocation.

Project Portfolio Management is critical for organizations that aim to execute strategically aligned projects effectively. By adhering to established best practices in PPM, businesses can ensure that they implement projects correctly and undertake suitable projects. This strategic approach significantly enhances the ability to achieve desired outcomes and thrive in competitive markets.

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The 10 Project Portfolio Management KPI To Adopt

Dec 22, 2018 | Portfolio Management | 0 |

Metrics are convenient and easy to use. They measure and estimate cost, project duration, and ensure that the projects are where they are supposed to be but it doesn’t guarantee that it will solve all your problems. These metrics are meant to assist managers and their teams to gain a chance of the project success or an expected ROI benefit. Everything still lies in human resources. Project portfolio management KPI are helpful methods or tools in ensuring that projects are aligned to the business objectives or that they provide value or return once the delivery is finished.

There are some metrics that serve as signal lights on a project’s status. These are called Key Performance Indicators or KPI  and though they don’t magically fix blunders, they provide companies factors, assessment, and data that will help them achieve their objectives.

Project portfolio management KPI are not equal—they can work on one organization, but not on the other. Before you adopt a certain KPI, you need to understand the overall aspect, objective, and structure of your organization. It also means the methodologies or plans on how to achieve your objectives as well as the people that need to be involved in the action that will affect the KPI. This is more like a soul-searching phase for both your organization and future KPI.

The KPI Matching

As stated above, the KPI must adhere or align to the business objective of the company. In order to do that, you need to keep in mind of the following factors to successfully match your KPI to your business objective.

• The objective must be Specific . A vague objective will not trigger a KPI.
• The progress must be Measurable . If you can’t measure it, then you are far in reaching your goal than you think.
• The goal should be Attainable , realistic, and logical. Weigh the pros and cons and determine if such goal or idea is too absurd to be logical.
• The KPI must be Relevant to the goal of the organization.
• Keep in mind the Time-frame when achieving the goal at hand.

Now that you have the basic understanding of KPI, it’s time to introduce you the ten project portfolio management KPIs that make up not only the project portfolio but project management office (PMO) as well. The following metrics below are divided based on their classification: operational efficiency, execution, business value delivered and strategic alignment .

1 – Operational Efficiency KPI

This project portfolio management KPI metric measures both the resources utilization and team performance, as well as other similar factors involved in a project operation.

Resource Allocation

The metric under the operational efficiency category entails the percentage of duration spent on a single resource or a group of resources, as well as tasks spent on those resources. Resource productivity is measured where in turn is evaluated and reviewed by the manager in charge of a project.

Project Effort

This is the time devoted working on the project. This is solely focused on the project alone, unlike resource allocation that focuses on resources.

Project Churn

Project churn measures the projects that are on stand-by or forfeited over the projects given in a certain amount of time. This project portfolio management KPI also conveys several changes in a project and how it will adjust and keep up with these changes, as well as eliminating excessive projects that can disrupt the balance of the number of projects that are operating in a portfolio. Such incident is due to poor planning which then results to churn.

2 – Execution KPI

This focuses on project implementation and its impact once it is deployed for assessment. The following metrics that fall under project portfolio management KPI category determines if the following projects are successful or not and the involved cost accumulated during the project operation.

Project Success Rate

This project portfolio management KPI applies to project failure as well. The projects rate of success of failure is measured in varied factors such as time, budget, and fulfilling requirements through proper result delivery. This is based on stakeholder satisfaction after the delivery has been done.

Budget Variance

The following costs included in the planning stage of the project are estimated accurately through this project portfolio management KPI metric. But take note that this is more of an assumption than a fact—cost is still not safe from overshooting, so estimations are still needed. The following process is computed or estimated via budgeted task cost, actual task cost, and earned value. These costs must be under the watchful eye of the manager at all times.

3 – Business Value Delivered KPI

From the word itself, business value metrics are used for measuring the expected value of a certain project. This is basically the mother of all performance metrics since projects rely on return value in order to fully determine if they are successful or not.

Customer Satisfaction

A healthy project means greater satisfaction from the clients. Yes, there is a project portfolio management KPI metric that measures customer satisfaction and this is through both client and stakeholder feedback after the project is delivered.

Business Value Realized

This will come up when the following projects are properly selected and implemented at the proper time interval. The estimated benefits can be easily computed from the date of the project’s delivery and measurements are done through revenue added, cost savings, and a raised customer satisfaction.

4 – Strategic Alignment KPI

This comprises of projects that are parallel to an organization’s objectives and target and unit investment.

Percentage of Projects Aligned with Objectives

This one is pretty much self-explanatory: the following project portfolio management KPI metric aims to measure the percent of the existing projects with the business objective of a company.

Investment Class Targets

The purpose of this project portfolio management KPI is to estimate the investment made in a project through the following components: run, grow and transform.

Business Unit Investment Targets

Each existing business unit is measured by setting the targets for effort and cost. Once these investments are spent, it will be assessed against the two factors. Investment class and business investment are entirely different from one another; the former focuses on the project’s transition while the latter focuses its attention on the spent investments.

Conclusion:

There are more project portfolio management KPIs to choose from; it is still based on what you want to measure. In this case, the metrics mentioned in this article aim to measure the ongoing performance of projects and/or whether they are properly aligned with the company’s business objective. At the end of the day, it is still up to the current status of both your projects and organization and their respective needs. Tread lightly when resorting to project portfolio management metrics—always practice KPI matching before jumping to the wagon so as to prevent problems in the future.

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Management Square

Management Square is a service provider company specializing in Strategy Execution, Business Transformation, and Portfolio, Program and Project Management. Our mission is to create high quality trainings through professional excellence, and to provide a consultancy of choice through extensive learning experiences.

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14 Project Management Metrics & KPIs You Need to Track

There’s more to project management than just ensuring that the project is completed on time. As a project manager, you are also responsible for optimizing the use of resources to ensure the project is done better, faster, and at minimal cost .

To do this, you need to track project metrics and key performance indicators (KPIs) to give you an accurate idea of how all aspects of the project are going, and uncover ways to improve the project.

With dozens of metrics and KPIs that you can track, however, things can quickly get confusing. Which metrics should you focus on? How do you choose the right metrics for a specific project?

This guide will provide you with answers to these questions and help you determine the project management metrics and KPIs you need to track.

Why Use Project Management Metrics?

Keeping track of project management metrics provides you with relevant and accurate information about a project , which in turn helps you make better decisions. Some of the benefits of using project management metrics include…

1. Metrics Are A Proof Of Value

Measuring project management metrics can help provide proof of the value of a project or team . For instance, if metrics show that a team has consistently delivered all its projects on time, and within budget, then these metrics are a proof of the value of this team.

2. Metrics Allow Improvement

You cannot improve what you do not measure. Keeping track of metrics allows you to measure current performance and use it as a baseline for future improvement .

For instance, if you want to improve client satisfaction on projects, you have to start by measuring the current satisfaction levels. Armed with this information, you can then come up with strategies to improve the satisfaction score.

After implementing the strategies, you’ll then need to measure again to determine whether the strategies actually helped improve the satisfaction score.

How To Choose The Right Metrics To Track

Keeping track of project metrics is important, but you need to make sure you’re tracking the right metrics. What’s more, the right metrics will differ from one project to another. So, how do you figure out which metrics you need to track?

1. Think About Your Goals

To determine which metrics you need to track, you have to first think about what goals you want to achieve from the data.

For instance, if your aim is to reduce the time spent on projects, you should focus on metrics related to time, project scheduling and productivity. Sure, tracking metrics related to cost might be great, but these metrics won’t help you achieve your goal in this case.

2. Choose Metrics That Are Simple And Accurately Measurable

The harder it is for you to measure and understand a metric, the less likely the metric is to help you. In addition, when choosing a metric to track, you want to make sure that the metric can be measured with a high degree of accuracy.

Let’s say, for instance, you are trying to measure how satisfied clients are with your services. Asking your clients to rate your services as poor, fair, good, or excellent can be used as a metric to measure client satisfaction, but it is not very accurate.

Such a metric is subjective, since what one client considers to be fair might be excellent for another client, and therefore, this metric cannot be measured accurately.

What you need to do instead, is to come up with an objective metric that you can accurately measure repeatedly. In this case, for instance, you can use a tool such as Net Promoter Score (NPS) to accurately measure your customers’ satisfaction with your service.

Critical Project Management Metrics To Track

If you’re just getting started with tracking project management metrics, below are 14 metrics that will help you improve your performance in projects.

1. Planned Value

Planned value, sometimes known as Budgeted Cost of Work Scheduled (BCWS) refers to the approved budget for completing various phases of a project .

Planned value is calculated by multiplying the project budget with the expected completion of a project at a certain point in time.

Let’s say, for instance, you have a project scheduled to take 5 months, with a budget of $100,000.

At the one-month mark, the planned value of the project is $20,000 (1/5 x $100,000). At the two-month mark, the planned value of the project will be $40,000 (2/5 x $100,000).

It’s good to keep in mind that planned value is calculated before a project has started, and does not translate to the actual cost of the project.

By itself, planned value is not very important. However, it helps project managers to determine the performance of a project by acting as a baseline for comparing with other project management metrics .

2. Earned Value

Planned value is a good way of estimating the value of a project at different stages, but once the project is underway, it doesn’t provide a way of tracking performance. This is where earned value comes in.

Also known as Budgeted Cost of Work Performed (BCWP), earned value looks at the actual value of a project based on work that has already been done, rather than the scheduled work .

Earned value is calculated by multiplying the percentage of work that has been completed at a certain point in time with the budgeted value.

For instance, if the project is scheduled to take 5 months on a $100,000 budget, but by the third month, only 40% of the project has been completed, then the earned value of the project would be $40,000.

Since the planned value at this stage of the project was $60,000, this is an indicator that the project is behind schedule.

3. Actual Cost

Actual cost refers to the total amount of money spent on a project up to a certain point in time. This metric is sometimes referred to as Actual Cost of Work Performed (ACWP).

To calculate actual cost, you only need to add up all the costs spent on the project so far. However, actual cost only tracks expenses on project work that has already been done. Many of the best project management tools and software in the market will calculate actual cost for you in a few clicks.

By itself, actual cost doesn’t provide much information, but it can be combined with other project management metrics to give you a better view of how a project is performing.

4. Schedule Variance

Schedule variance is a metric that is used to determine whether a project is ahead of schedule, or whether it is lagging behind . Schedule variance is calculated by finding the difference between earned value and planned value.

To explain this, let’s go back to our project with a budget of $100,000, and scheduled to be completed in 5 months. By month three, however, only 40% of the project has been completed.

In this case, the planned value for month three is $60,000 (3/5 x $100,000), but the earned value is $40,000 (40% x $100,000). Therefore, the schedule variance would be $40,000 – $60,000 = -$20,000.

If schedule variance is a positive number, it means that the project is ahead of schedule. Where schedule variance is a negative number, it means that the project is lagging behind.

If earned value and planned value are equal (meaning schedule variance is zero), this means that the project is going according to plan.

5. Cost Variance

This metric is used to evaluate the financial performance of a project by comparing the amount spent on a project at a particular point in time with the budgeted amount . In other words, it tells you whether a project is within or over budget.

Cost variance is calculated by finding the difference between earned value and actual cost.

Let’s say, for instance, that we have a project with a budget of $20,000 and a 4-week timeline.

By week 2, 75% of the project has been completed. This means that the earned value at week 2 is $15,000 (75% x $20,000). However, the total amount spent on the project is $12,000.

In this case, the cost variance of the project $15,000 – $12,000 = $3,000. This means that the project is operating under budget.

A negative cost variance means that the project is running above budget. If the earned value and the actual cost are equal, this shows that the project is operating right on budget.

6. Schedule Performance Index

Just like the schedule variance, schedule performance index (SPI) tells you whether a project is running within schedule, or whether it is taking longer than expected. The key difference, however, is that schedule performance index is expressed as a ratio, rather than absolute figure .

Schedule performance index is calculated by dividing earned value with planned value.

Let’s say, for example, a project has a 5-month timeline and a $25,000 budget. At month 4, only 60% of the project has been completed. This means that the planned value is $20,000 (4/5 x $25,000), while the earned value is $15,000 (60% x 25,000).

In this case, the schedule performance index would be:

$15,000 / $25,000 = 0.6

This is an indicator that the project is lagging behind. An SPI ratio greater than 1 indicates that the project is ahead of schedule, while an SPI ratio of less than 1 shows that the project is lagging behind. If the SPI ratio is equal to one, the project is moving exactly as planned.

7. Cost Performance Index

Cost performance index (CPI) is similar to cost variance in that it tells you how the project is performing in relation to its budget. Just like schedule performance index, however, cost performance index is expressed as a ratio , instead of an absolute figure.

Cost performance index is calculated by dividing earned value with the actual cost incurred during the project.

Let’s assume, for instance, that a project has a $25,000 budget and needs to be completed in 5 months. At month 4, the project is 60% complete, putting the earned value at $15,000 (60% x $25,000). However, the project has already spent $20,000.

In this case, the cost performance index would be:

$15,000/$20,000 = 0.75

This is an indicator that the project is running above budget. A CPI ratio of above 1 means that the project is operating under budget, while a CPI ratio below 1 means that the project is operating above budget .

8. Utilization Rate

When managing a project, it’s important to keep track of the productivity of your available resources. Utilization rate is one of the metrics that can help you do this.

Utilization rate measures the rate at which your resources are being utilized, against their total available time . This metric is calculated by dividing the total hours a resource has worked by the resource’s total hours. Utilization rate is expressed as a percentage.

For instance, if you have an employee who was available for 1,500 hours over the course of a project, but the employee only worked for 1,200 hours, then their utilization rate would be:

1,200/1,500 x 100 = 80%

It’s good to keep in mind that utilization rate looks at the total time a resource spends working on a project, whether that work is billable or not.

For instance, if you are working on a project to design a website , your resources’ utilization rate will include all the hours actually spent on building the website, as well as the hours spent on non-billable work such as meetings, administrative work, and so on.

9. Realization Rate

Just like utilization rate, realization rate tells you the percentage of time a resource spends on work compared to their available hours. However, realization rate specifically looks at the time spent on billable work, that is, work that brings revenue into the business.

For instance, let’s say a designer spends 30 hours coming up with website designs for a client, and 10 hours training other staff members, attending meetings, and so on.

In this case, the designer’s billable time is 30 hours, since the time spent on meetings and training cannot be charged to the client.

Realization rate is calculated by dividing a resource’s total time spent on billable work by their total billable hours, then multiplying the result by 100 to make it a percentage.

If a resource has 120 available hours, of which 100 hours are billable, and the resource then spends 80 hours on billable work and 10 hours on non-billable work, their realization rate would be:

80/100 x 100 = 80%

Realization rate helps project managers to determine whether they are utilizing their resources profitably.

10. Project Gross Profit Margin

Project gross profit margin is an important metric that helps determine the profitability and cost effectiveness of a project. This metric specifically looks at the amount of profit generated by each dollar of revenue gained from a project.

Project gross profit margin is calculated by dividing profit by the revenue generated by a project. Profit is the difference between revenue and cost of goods sold (COGS), which denotes all project expenses. Project gross profit margin is expressed as a percentage.

Project gross profit margin is a more effective way of evaluating how good a project is at generating profits compared to just looking at the gross profit.

For instance, if project A brings in $10,000 in profits from $200,000 in revenue (5% gross profit margin), while project B brings in profits of $2,000 from a revenue of $8,000 (25% gross profit margin), it means that project B is more profitable than project A.

In other words, every dollar earned from project A generates just 5 cents in profit, while every dollar earned from project B generates 25 cents in profit.

11. Customer Retention And Loyalty

Acquiring a new customer is 5-25X more expensive than retaining an existing customer, so it is important for project managers to measure and track their customer retention and loyalty rates.

Customer retention and loyalty tracks the number of project clients who re-order your services after the first project.

The easiest way to measure customer retention and loyalty is to use repurchase ratio, which is calculated by dividing the number of clients who re-order a similar project by the number of one-time clients.

12. Net Promoter Score

Net Promoter Score is an important metric that measures customer loyalty and satisfaction. It does this by asking customers to rate, on a scale of 1 – 10, how likely they are to recommend your services to their friends or colleagues.

Customers who give a rating of 9 – 10 are classified as promoters. They are greatly satisfied with your services and will gladly refer others to your business.

Those who give a rating of 7 – 8 are classified as passives. They are satisfied with your services, but not enthusiastic enough to refer others to you.

Customers who give a rating of 6 or below are classified as detractors. This group of customers is unhappy with your services, and might even spread negative word-of-mouth about your services.

To calculate your Net Promoter Score, find the percentage of respondents who are detractors and subtract it from the percentage of respondents who are promoters. A high Net Promoter Score means that the majority of your clients are happy with your services.

13. Employee Satisfaction Score

This metric tells you how satisfied and motivated your employees are. Measuring employee satisfaction and motivation is important since it has an impact on how productive your employees are, which in turn affects the success of your projects.

Employee satisfaction score is determined by asking your employees a series of questions about their workplace experience, which they have to rate on a 0 – 10 scale.

The score is then calculated by dividing the total points by the total number of questions, and then multiplying the result by 100 to make it a percentage. A higher score corresponds with higher employee satisfaction.

14. Project ROI

The project return on investment (ROI) metric looks at the financial value gained from the project against the amount of money invested into the project. Project ROI is calculated by dividing the net benefit earned from the project by the project cost.

It’s good to note that some of the benefits realized from a project are not always financial in nature. For instance, implementing a project could lead to benefits like faster production. To accurately calculate the net benefit, you have to assign a dollar value to such benefits.

How To Track Project Metrics Effectively

Tracking project metrics can sometimes turn out to be a lot of work. Depending on the number of metrics you are tracking, as well as the nature of these metrics, you might find yourself having to collect a lot of data, which can be hectic when you are also in charge of managing the project.

A better way to effectively track project metrics is to use project management software. Project management software allows you to automate the process of collecting project data, which you can then use to calculate your metrics.

Some project management software and tools even go a step ahead and track some of these project metrics for you as the project progresses.

Below, let’s take a look at some of the best project management software you can use to effectively track project metrics.

1. Monday.com

Best solution for visualizing project metrics and kpis.

Monday.com is one of the best and most powerful project management tools on the market today, and is a great option for keeping track of project metrics in a highly visual manner.

Monday.com comes with an advanced reporting dashboard that allows you to keep track of multiple project metrics and KPIs, including…

• Resource utilization and realization rate
• Nnet promoter score (NPS),
• Actual cost
• Completed tasks
• Missed milestones.

Best For Collaboration And Seamless Project Metrics Tracking

ClickUp is a reliable and user-friendly project management platform that combines excellent collaboration features with robust project tracking features .

ClickUp comes with a KPI dashboard that provides you with a central place for tracking your project metrics and KPIs. With ClickUp, you can keep track of metrics like project ROI, actual cost, profit margin, employee satisfaction, net promoter score, and so on.

3. Teamwork

Best project management platform for beginners.

If you’re just getting started with project management software and are looking for a solution that is simple to use , Teamwork is your best bet.

Teamwork allows you to easily create dashboards from where you can track metrics like task count, resource utilization and realization rates, project budgets, actual cost, cost and schedule variance, and many more.

Best Solution For Those Looking For Enterprise Level Features

Wrike is a robust workflow management tool and project management platform that simplifies the process of managing a project and gives you complete visibility of project data, making it easy to track project metrics.

Wrike comes with an Analytics tab that gives you an overview of important project metrics, including task duration, tracked time, complete and missed milestones, completed tasks, project budget, actual cost, and resource utilization.

Best Solution For Small And Medium Enterprises

Scoro is an end-to-end work management software that gives you access to powerful project reporting and team collaboration tools.

With Scoro, you can track billable and non-billable hours, budgets, gross profit margins, actual cost, schedule and cost variance, planned and earned value, and so on.

You only need to select the metrics you want to track and Scoro will give you an easy-to-read report showing your selected metrics.

Best Project Management Platform For Issue Tracking

Celoxis is a versatile project management software that gives you access to enterprise-class features while remaining relatively easy to use.

Celoxis comes with dynamic dashboards that can be customized to keep track of multiple project metrics and KPIs , including budget spend, planned versus earned value, profitability, billable and non-billable hours, and project ROI.

Best Tips On Project Metrics And KPIs

Below are six tips and best practices that will help you take full advantage of project metrics to improve project performance.

1. Always Be Selective With Your Metrics And KPIs

There are several dozen metrics and KPIs that you can track during the lifetime of a project.

Just because these metrics exist, however, this doesn’t mean that you have to track them all. You’ll only end up wasting your time tracking metrics that do not help you.

What you need to do, instead, is to identify the metrics that are most relevant for you, and then focus on tracking these metrics only. In addition, make sure that you have the tools and resources to accurately track these metrics.

2. Go For Metrics That Are Simple To Track

Keeping track of project management metrics and KPIs is important and beneficial, but it should not come ahead of the actual work that needs to be done. If you have to spend more time tracking project metrics than on work that actually moves the project ahead, it’s time to reconsider that metric.

Ideally, you should choose project metrics that can be measured easily, and where possible, the data gathering should be automated.

For instance, instead of having to manually track the time your employees spend at work, you can use task management software to automatically keep track of how much time they spend on each task.

3. Have A Baseline And Targets

While keeping track of project metrics is important, many of the metrics are not very useful by themselves.

Let’s say, for instance, you have determined that the earned value of a project that is halfway complete is $50,000. Is this earned value good or bad?

To tell whether your metrics are good or bad, you need to compare them to a baseline or a target.

For instance, if the planned value of a project was $60,000 at the halfway mark, but the earned value at 50% completion is $50,000, comparing the two tells you that the project is lagging behind. However, without using planned value as a baseline, the earned value metric would not tell you anything useful.

When selecting your project metrics and KPIs, therefore, you should always have a baseline or target that you’ll compare the metrics against . The baselines and targets will help you make sense of the metrics you are tracking.

4. Always Have A Contingency Plan For Handling Troubled Projects

One of the benefits of tracking project metrics is that it allows you to identify potential issues and risks long before they become threats to the success of the project. However, being aware of potential issues is only half of the equation.

For the insights gleaned from these metrics to be useful, you have to put in place a plan on how to prevent the issues from jeopardizing the project , and if the project is already veering off the track, how to bring it back on course.

5. Ensure Proper Documentation

If you want to accurately keep track of project metrics and KPIs, you have to maintain proper project documentation.

Let’s say, for instance, you want to calculate the earned value of a project. If you don’t have proper records of all project costs spent on the project up to that point, it would be impossible to accurately calculate the earned value.

Proper documentation applies to all aspects of the project, from spending and time tracking to scheduled and completed tasks and even decisions made. Basically, everything that happens within the project needs to be recorded.

6. Always Have A Project Debrief

A lot of project managers keep track of project metrics while a project is underway, but once the project is complete, they do not have a look at the final project metrics. Failure to have a final project debrief can rob you of insights that could help improve the performance of future projects.

To avoid this, it’s always advisable to have a project debrief after completing a project. Look at things like the project cost versus the budgeted cost, resource utilization and productivity over the course of the project, whether the project met its specifications, and so on.

Doing this will provide you with beneficial data points that will help you make better decisions to ensure improved performance on future projects.

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Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

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How to Use Project Portfolio Metrics to Deliver Business Value

By: Grace Windsor | Published on: Jan 10, 2022 | Categories: Portfolio Management | 0 comments

Project portfolio management helps organizations to work on the right projects at the right time, improve decision-making, and deliver better business value.

Free video demo:  Portfolio Reporting with BrightWork for SharePoint On-Premises 

A successful project portfolio is measurable, supported by clear alignment with strategic goals and regular reporting.

It’s also important to periodically review the overall status of the portfolio against agreed objectives and external business factors to identify any changes.

Let’s take a look at each of these components, starting with strategy.

Project Portfolio Management and Business Strategy

As defined by Porter:

Strategy is “ a process of analysis which is designed to achieve the competitive advantage of an organization over another in the long term ”.

Strategy should reflect the organization’s purpose , informing company structure and ways of working.  Porter identified three types of strategy – cost leadership, differentiation, or focus – and recommended organizations pursue one strategy type to achieve optimal results.

Realizing a strategy depends on comprehensive implementation plans, which reflect internal capabilities and resources, and external opportunities and threats.

Projects are core to the delivery of the agreed strategy. However, projects can only yield the desired results when the strategy is defined and aligned with project portfolios.

Ideally, organizations should define their strategy before creating a project portfolio to reach these goals.

There is a circular link between strategy and project portfolios. Strategy informs the portfolio, which impacts on approved projects. In turn, these projects deliver the desired solutions and innovations.

Without the ‘big’ picture, it’s too easy to waste time and resources on the wrong projects or to assume all projects are equal and deserve the same support.

Linking strategy and portfolios helps senior management make informed decisions , end underperforming projects, and improve business performance.

Additionally, teams who are familiar with the strategy and the business value of a project are more likely to deliver the desired result.

Finally, aligning strategy and project portfolios creates the optimal culture for success.

Senior management should encourage everyone to focus on key strategic objectives. This will help portfolio managers to determine what projects to execute and when, and where to deploy the right resources.

Once your strategy and project portfolio are aligned, the next step is to measure the effectiveness of this relationship with metrics.

Project Portfolio Management Metrics

A metric refers to a measurement of something. In a project management context, this includes estimated project costs, risks, and project duration.

Project performance is tracked overtime against the agreed metric, helping teams to make decisions and manage risks as work progresses.

PPM metrics should be visible, measurable, understood by management, and reveal the value delivered by the overall portfolio.

Metrics are also a common language for project teams and stakeholders throughout the organization, improving collaboration and communication.

When selecting metrics, use the SMART framework to successfully match measurements with your goals:

• M easurable
• A ttainable

Here are some six commonly used metrics to consider using.

1. Strategic Alignment

Areas to examine  include the number of ongoing projects aligned to one strategic objective, time to market for a new solution, and the number of completed projects within the portfolio.

2. Timeliness

Use this metric to identify how many projects were completed on time, and how many adjustments were made to schedules by project teams.

Understanding these trends is especially important if your business strategy is based on quick product releases or a ‘first-mover’ advantage.

A popular financial metric is budget variance, the difference between proposed and actual costs.

You should also review how much time was needed to develop the budget and how frequently the budget was revised during project execution.

To help determine business value, gather customer satisfaction rates using surveys.

Once the solution is launched, track customer complaints and feedback to gauge if the project delivered as expected.

5. Effectiveness

Collate both the number of recorded errors and rework on various projects as these affect the schedule, budget, and overall business value.

6. Business Value

Typically, this is measured as Return on Investment (ROI). It is also useful to compare the final cost of completing the project against the cost of not completing the project. Other measurements also include customer satisfaction surveys and the volume of customer complaints following a new product launch.

Metrics, data sources, and reporting tools will vary between organizations. Depending on your current requirements, and portfolio processes, it may be best to start with just a few metrics to track and understand the health of your portfolio before introducing more metrics over time. If you are unsure where to start, check with your project management office or consult with senior management.

Tracking Portfolio Metrics with SharePoint

Deciding which metrics to track presents certain challenges; selecting how to track metrics is another!

Using a collaborative tool such as BrightWork, which offers configurable metric tiles, scorecards, and dashboards, create a single source of project truth.

Real-time dashboards provide visibility and insight for senior management, informing key business decisions such as resource allocation.

Reviewing Your Project Portfolio

From time to time,  review the health of your portfolio to check if any projects need to be stopped or re-prioritized. Businesses must adapt to customer demands and new opportunities so it is essential to take a flexible approach to your portfolio.

The frequency and duration of the review will depend on local needs. A review can take place when a major project ends, when reallocating resources to new projects, or as part of annual business planning.

You can examine the entire portfolio or pick a few projects to rank against part of your business strategy, for example, focusing on high-value or high-risk projects only.

Using agreed goals and metrics, the review may also be divided into strategic (overall portfolio results) and tactical (health and performance of individual projects) considerations.

Here are some questions to help you get started.

• How will current projects support organizational business strategy?
• Does the portfolio balance short, medium, and long-term business needs and opportunities?
• Are ongoing projects sequenced correctly to deliver business value and optimize resources?
• How many projects are at risk? Are these projects inter-dependent? What actions are needed to address this issue?
• Do approved projects match current/future customer needs and new strategic objectives?
• Are the right resources available when needed?
• What is the estimated v actual ROI of the portfolio?

Portfolio Reporting with BrightWork and SharePoint 

If you’d like to see how BrightWork delivers cross-project reporting for SharePoint On-Premises (server editions of SharePoint 2019, 2016, 2013), take a look at our free video demo .

In just 20 minutes, you’ll see how BrightWork will help you to:

• Manage Projects with flexible templates, automated reporting, and collaborative team sites.
• Control Portfolios  with project request management, real-time portfolio dashboards, and resource allocation.
• Leverage SharePoint  with secure, scalable deployment in your existing environment. 

Editor’s Note: This post was originally published in September 2017 and has been updated for freshness, accuracy, and comprehensiveness

Image credit 

Grace Windsor

Grace is a content creator within the marketing team at BrightWork. She loves creating actionable content in different formats to help others achieve more project success. Grace spent far too long at university studying English literature, which instilled a life-long love of learning and upskilling. In her free time, she enjoys a challenging session at the gym, tucking into a good book, and walking the beautiful Galway coastline with her dog.

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8 Essential Metrics to Measure Project Success

How to get quantitative results on how your projects are performing? This is where project metrics come into play. But what are the essential project metrics that you should use? And how can you choose the right metrics for your project?

In this blog post, we will answer these questions and show you how Creately can help you create and monitor your project metrics.

What are Project Metrics?

Project metrics are quantitative measures that help you track, monitor and evaluate various aspects of your project. They help you assess the quality, efficiency, effectiveness and impact of your project activities and outcomes. Project metrics are essential for project management because they:

• Provide objective data and feedback on your project progress and performance
• Help you identify and address issues, risks and opportunities in your project
• Enable you to communicate clearly and transparently with your stakeholders and team members
• Support you in making informed decisions and taking corrective actions
• Demonstrate the value and impact of your project to your clients and sponsors

8 Essential Project Metrics in Project Management

There are many types of project metrics that you can use, depending on the nature, scope and goals of your project. However, some of the most common and important project metrics are:

1. Schedule Variance (SV)

This metric shows how much your project is ahead or behind schedule. It is calculated by subtracting the planned value (PV) from the earned value (EV) of your project. A positive SV means that your project is ahead of schedule, while a negative SV means that your project is behind schedule.

2. Cost Variance (CV)

This metric shows how much your project is over or under budget. It is calculated by subtracting the actual cost (AC) from the earned value (EV) of your project. A positive CV means that your project is under budget, while a negative CV means that your project is over budget.

3. Schedule Performance Index (SPI)

This metric shows how efficiently your project is using time. It is calculated by dividing the earned value (EV) by the planned value (PV) of your project. An SPI of 1 means that your project is on schedule, while an SPI greater than 1 means that your project is ahead of schedule, and an SPI less than 1 means that your project is behind schedule.

4. Cost Performance Index (CPI)

This metric shows how efficiently your project is using resources. It is calculated by dividing the earned value (EV) by the actual cost (AC) of your project. A CPI of 1 means that your project is on budget, while a CPI greater than 1 means that your project is under budget, and a CPI less than 1 means that your project is over budget.

5. Quality Metrics

These metrics show how well your project meets the quality standards and expectations of your stakeholders. They can include measures such as defect rate, customer satisfaction, rework rate, error rate, etc.

6. Scope Metrics

These metrics show how well your project delivers the agreed scope and requirements of your stakeholders. They can include measures such as scope creep, scope change , requirement volatility, etc.

7. Risk Metrics

These metrics show how well your project identifies, analyzes and manages potential risks that can affect your project. They can include measures such as risk exposure, risk impact, risk probability, risk response, etc.

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8. Stakeholder Metrics

These metrics show how well your project engages and satisfies the needs and expectations of your stakeholders. They can include measures such as stakeholder satisfaction, stakeholder involvement, stakeholder feedback, etc.

Benefits of Using Metrics in Project Management

Using metrics in project management can bring many benefits to you and your organization, such as:

• Improving the quality and efficiency of your projects by measuring and monitoring the progress, performance, and outcomes of your project activities and deliverables.
• Enhancing the communication and collaboration among your team members and stakeholders by providing clear and consistent information and feedback on the project status, issues, risks, and achievements.
• Increasing the accountability and transparency of your projects by establishing and tracking the roles, responsibilities, and expectations of each project participant and stakeholder.
• Boosting the confidence and trust of your clients and sponsors by demonstrating the value and impact of your projects and delivering on your promises and commitments.
• Supporting the continuous improvement and learning of your projects by identifying and analyzing the strengths, weaknesses, opportunities, and threats of your project processes and results.

How to Choose Metrics in Project Management

Choosing the right metrics for your project can be challenging, as there are many factors to consider, such as:

• Purpose and objectives of your project
• Expectations and requirements of your stakeholders
• Characteristics and constraints of your project
• Availability and reliability of data sources
• Feasibility and cost-effectiveness of data collection and analysis

To help you choose the right metrics for your project, you can follow these steps:

Define the goals and objectives of your project: What are you trying to achieve? What are the desired outcomes and benefits of your project? How will you measure success?

Identify the key performance indicators (KPIs) that align with your goals and objectives: What are the critical factors that indicate progress and performance of your project? How do they relate to your goals and objectives? How will you track and monitor them?

Select the metrics that measure the KPIs: What are the specific, measurable, achievable, relevant and time-bound (SMART) metrics that quantify the KPIs? How do they reflect the quality, efficiency, effectiveness and impact of your project? How will you collect and calculate them?

Define the baseline, target and threshold values for each metric: What are the current, expected and acceptable values for each metric? How do they compare to the industry standards, benchmarks or best practices? How will you set and communicate them to your stakeholders?

Establish the data collection methods, frequency and sources for each metric: How will you gather, store and validate the data for each metric? How often will you collect and update the data? Where will you get the data from? Who will be responsible for collecting and reporting the data?

Analyze and report the data using appropriate tools and techniques: How will you process, visualize and interpret the data for each metric? What are the tools and techniques that suit your needs and preferences? How will you present and share the data with your stakeholders?

Review and adjust the metrics as needed: How will you evaluate and improve the metrics over time? How will you incorporate feedback and lessons learned from your stakeholders? How will you adapt to changing circumstances and expectations?

How Creately Helps to Create and Monitor Project Metrics

Here’s how you can use Creately to run and manage projects more efficiently and effectively.

• Brainstorm ideas with your team and prioritize them with visual frameworks such as mind maps, affinity diagrams, SWOT analysis, etc. You can also use templates and shapes to create diagrams faster and easier.
• Track efforts and estimates and link everything to OKRs (Objectives and Key Results) to align your project goals with the organization’s vision and strategy. You can also monitor progress and performance with dashboards and reports.
• Run agile projects with Kanban boards that help you visualize your workflow, manage tasks, collaborate with team members, and deliver value to customers. You can also customize your boards with columns, swimlanes, filters, labels, and more.
• Link important documents and attachments in the notes panel and embed spreadsheets and edit right within the app to streamline your project communication and documentation.
• Share your project management workspaces across the organization for real-time feedback with @mentions and in line comment threads. You can also control access permissions, set roles and responsibilities, and invite external stakeholders to view or edit your workspaces.

Click here to learn more about using Creately for project management.

Project metrics are essential for project management, as they help you measure and improve the performance and success of your projects. By using the 8 essential project metrics we discussed in this blog post, you can track, monitor and evaluate various aspects of your project, such as schedule, cost, quality, scope, risk and stakeholder satisfaction. You can also use Creately to create and monitor your project metrics easily and effectively.

We hope you found this blog post useful and informative. If you have any questions or feedback, please let us know in the comments below.

FAQs About Project Management Metrics

To ensure the accuracy and validity of your project metrics, you should:

• Use reliable and relevant data sources
• Use consistent and standardized data collection methods
• Use appropriate and robust data analysis techniques
• Validate and verify your data and results
• Cross-check your data and results with other sources

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

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Hansani has a background in journalism and marketing communications. She loves reading and writing about tech innovations. She enjoys writing poetry, travelling and photography.

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Top Project Metrics You Need to Track

To ensure that your project is meeting scheduling and budget milestones, you need to have project metrics to measure your progress and performance. Project metrics are essential to delivering a project on time and within its budget.

But what are project metrics? Why are they so important to a project? We’ll answer those questions and show you some examples of common project metrics. Then we’ll explain what a project metrics dashboard is and why it’s one of the essential project management software features.

What Are Project Metrics?

Project metrics are data pulled from the performance of the project. They are data sets, formulas and calculations that provide measurements to chart progress, success and much more. Project managers use project metrics to compare their actual effort against their plan so they know if they’re on schedule and keeping to their budget.

They can also be used to keep project stakeholders informed, though they’re usually only interested in two project metrics: time and cost. Project metrics are also tools that help organizations find, reduce and alleviate risks as well as inform effective strategic development, continuous improvement and even employee and customer sentiment.

Project management software makes gathering and calculating project metrics easier. ProjectManager is award-winning project management software that has real-time dashboards that automatically gather six types of project metrics and display them in easy-to-read graphs and charts. Unlike other project management software, our live dashboard doesn’t take forever to set up. All you have to do is toggle over for a high-level overview of the project. It’s ready with real-time data for more insightful decisions whenever you are. Get started with ProjectManager today for free.

Why Are Project Metrics Important?

Project metrics are important for project management. Without them, you’re driving blind, with no way to accurately measure if you’re keeping to your schedule and budget. They’re used to define a project’s health, progress and performance.

All projects hit bumps in the road, but project metrics help you get back on track faster. That’s because you know you’ve gone off the road quicker and can reallocate resources as needed to get back on track faster.

There would be no way to know if you’re meeting project goals without project metrics until the very end of the project. At that point, it’s too late. Metrics improve performance which will positively impact an organization’s bottom line.

Organizations can see the return on investment (ROI) of their projects. They can use project metrics as the data that drives their decision-making process . That leads to better prediction of future outcomes and allows organizations to adjust their business strategies to stay competitive.

Project Management Metrics Examples

So what are some examples of project metrics? There are many, but we’ll define some of the more common ones that are tracked when managing a project. Use these project metrics to keep track of your project and make sure you deliver it successfully, on time and within budget.

1. Net Profit Margin

The net profit margin is the measurement of an organization’s net earnings after the expenses have been accounted for, including its interest and tax payments. In terms of measuring a project’s profitability , the net profit margin is a useful project metric for keeping track of the budget against the actual spending at that point in the project.

2. Gross Profit Margin

The term gross profit margin is a financial project metric that project managers use to assess the project’s financial health. To get the gross profit margin, subtract the direct expenses or cost of goods sold (COGS) from net sales, which is the gross revenues minus returns, allowances and discounts. That number is divided by net revenues, then multiplied by 100 percent. The project with the higher gross margin is more profitable because it generates more profits and incurs fewer costs .

3. Return on Investment (ROI)

The return on investment is used to determine if the project is going to be worth the time and effort necessary to deliver it. It basically calculates the amount of money that has to be spent and the amount of money or benefits that will result from a successful delivery of the project. ROI is expressed as a percentage and is calculated by dividing an investment’s net profit (or loss) by its initial cost or outlay.

3. Cost Variance (CV)

The project metric cost variance is used to evaluate the financial performance of your project. It does this by determining the difference between the budgeted cost of work performed (BCWP) and the actual cost of work performed (ACWP). In other words, by comparing the current costs of the project to where the budget says you should be at this point in the project. If the two figures are the same, then you’re on the right track. However, if you’re spending more than you’ve budgeted for at that point in the project, then you have to adjust either the project scope or schedule to get back on track.

4. Schedule Variance (SV)

Just as cost variance tracks the financial performance of the project, schedule variance is used to figure out how much a project is ahead of schedule or behind schedule. It does this by measuring the actual progress of the project and comparing that to the expected progress, according to the project schedule. As with cost variance, if the project is behind schedule, then the scope or budget of the project has to be adjusted.

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5. Cost Performance Index (CPI)

To measure the cost efficiency and financial effectiveness of a project, project managers use the cost performance index. To calculate this, the formula is earned value (EV) / actual cost (AC) = cost performance index (CPI). The cost performance index ratio with a value higher than 1 indicated that the project is performing well in terms of its budget.

6. Earned Value (EV)

Earned value is used to measure and monitor how much work has been done on a project in comparison to the project plan . You can use it to see if you’re on, behind or ahead of your project schedule. To calculate the earned value, multiply the percentage complete by the total project budget. To get more from your earned value project metric, use it with the cost and schedule variance project metrics.

7. Planned Value (PV)

According to the Project Management Institute (PMI), planned value in project metrics is “the authorized, time-phased budget assigned to accomplish the scheduled work.” That means, it’s putting the project cost over the time baseline at any point in the schedule. Project managers can use this project metric to identify deviations from the project plan and mitigate issues faster. To calculate this, find the percent of the project completed (planned) multiplied by the budget at completion (BAC).

8. Actual Cost (AC)

When you’re talking about actual cost in a project, you mean the true total and final costs accrued in the project. It’s made up of such costs as direct labor hours, direct costs and indirect costs. Actual costs should be itemized throughout the project, not just at completion.

What Is a Project Metrics Dashboard?

There are many project metrics, each with its own equation to calculate. That takes time that most project managers don’t have. Project management software often comes with a project metrics dashboard, which is a high-level view of the project, offering a glance at valuable data.

Many project metric dashboards deliver real-time data, which helps project managers by giving them the current status of their project as opposed to a snapshot from the past. This leads to responding quickly to issues as they arise and helps project managers make more informed decisions.

Some project metric dashboards require a user to set them up before they can get an overview of the project, while others automatically gather project metrics and share that data instantly. Either way, the project metrics dashboard is an essential project management tool for project managers to effectively measure the triple constraint of scope, costs and time.

How ProjectManager Helps Track Project Management Metrics

ProjectManager is award-winning project management software with real-time dashboards that track project metrics. Our live dashboard doesn’t require any time-consuming setup as with lightweight project management tools. It features six project metrics: health, tasks, progress, time, cost and workload. There are many more features that help you plan, manage and track your projects in real time, but for now, let’s look at how to plan a project to track project metrics and what tools can give you more detail than the dashboard when you need that deep dive.

Plan on Robust Gantt Charts

Before you can track project metrics, you have to have a plan. Our powerful Gantt charts help you organize your tasks, link all four types of dependencies and even filter for the critical path. But most importantly, once the schedule has been created you can set a baseline. This captures your project plan and allows our software to automatically calculate project metrics such as cost and schedule variance. Now you can make sure you’re meeting milestones and not overspending.

Get Deeper Into the Data With Customized Reports

When you need more information than you can get from the high-level dashboard, toggle over to the report section of our tool. Then you can quickly generate reports on project status, or portfolio status if you’re managing multiple projects, as well as reports on variance, tasks and more. All reports can be filtered to show only the data you’re interested in. Then they can be shared in a variety of formats to keep stakeholders informed.

Beyond tracking projects, our tool has multiple project views that allow you to work how you want. From the visual workflow of kanban boards to task lists, calendars and more, cross-functional teams can collaborate because all project views are updated together in real time. We also have task management, risk management and resource management features to help control your project and deliver it on time and within its budget.

ProjectManager is online project management software that connects teams whether they’re working in the office, at the job site or anywhere in between. They can share files, comment at the task level and more. Join teams at companies such as Avis, Nestle and Siemens who use our software to deliver successful projects. Get started with ProjectManager today for free.

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Treynor Ratio

Sharpe ratio.

• Jensen's Alpha

The Bottom Line

• Portfolio Management

Measuring a Portfolio's Performance

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

The Treynor , Sharpe, and Jensen ratios combine risk and return performance into a single value to measure portfolio performance. Historically, many investors mistakenly based the success of their portfolios on returns alone. Few investors considered the risk involved in achieving those returns.

But which is best? Should you use more than one or all three? Learn more about these measurements and how to use them to evaluate portfolios.

Key Takeaways

• Portfolio performance measures are a key factor in the investment decision.
• There are three popular performance measurement tools that assist with portfolio evaluations—the Treynor, Sharpe, and Jensen ratios.
• Portfolio returns are only part of the story—without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture.

Jack L. Treynor was the first to provide investors with a composite measure of portfolio performance that also included risk. Treynor's objective was to find a performance measure that could apply to all investors regardless of their personal risk preferences. Treynor suggested that there were really two components of risk: the risk produced by fluctuations in the stock market and the risk arising from the fluctuations of individual securities .

Treynor introduced the concept of the security market line , which defines the relationship between portfolio returns and market rates of returns whereby the slope of the line measures the relative volatility between the portfolio and the market (as represented by beta ). The beta coefficient is the volatility measure of a stock portfolio to the market itself. The greater the line's slope, the better the risk-return tradeoff.

The Treynor measure, also known as the reward-to- volatility ratio , is defined as:

Treynor Measure = P R − R F R β where: P R = portfolio return R F R = risk-free rate β = beta \begin{aligned} &\text{Treynor Measure} = \frac{PR - RFR}{\beta}\\ &\textbf{where:}\\ &PR=\text{portfolio return}\\ &RFR=\text{risk-free rate}\\ &\beta=\text{beta}\\ \end{aligned} ​ Treynor Measure = β PR − RFR ​ where: PR = portfolio return RFR = risk-free rate β = beta ​

The numerator identifies excess returns (also called risk premium ), and the denominator corresponds to the portfolio's sensitivity to the overall market's movements (also called the portfolio's risk). The resulting value represents the portfolio's return per unit of risk .

To illustrate, suppose that the 10-year annual return for the S&P 500 (market portfolio) is 10% while the average annual return on Treasury bills (a good proxy for the risk-free rate ) is 5%. As a reminder, a beta of one means the portfolio moves in concert with the overall market. Less than one means it is less volatile, and a beta of more than one means it is more volatile. Assume the evaluation is of three distinct portfolio managers with the following 10-year results:

The Treynor value for each is as follows:

The higher the Treynor measure, the better the portfolio. If the portfolio manager (or portfolio) is evaluated on performance alone, manager C seems to have yielded the best results (a 15% return). However, when considering the risks that each manager took to attain their respective returns, Manager B demonstrated a better outcome. In this case, all three managers performed better than the aggregate market.

Because this measure only uses systematic risk , it assumes that the investor already has an adequately diversified portfolio and, therefore, unsystematic risk (also known as diversifiable risk) is not considered. As a result, this performance measure is most applicable to investors who hold diversified portfolios.

The Sharpe ratio is almost identical to the Treynor measure, except that the risk measure is the standard deviation of the portfolio instead of considering only the systematic risk as represented by beta. Conceived by Bill Sharpe, this measure closely follows his work on the capital asset pricing model (CAPM) and, by extension, uses total risk to compare portfolios to the capital market line .

The Sharpe ratio is defined as:

Sharpe ratio = P R − R F R S D where: P R = portfolio return R F R = risk-free rate S D = standard deviation \begin{aligned} &\text{Sharpe ratio} = \frac{PR - RFR}{SD}\\ &\textbf{where:}\\ &PR=\text{portfolio return}\\ &RFR=\text{risk-free rate}\\ &SD=\text{standard deviation}\\ \end{aligned} ​ Sharpe ratio = S D PR − RFR ​ where: PR = portfolio return RFR = risk-free rate S D = standard deviation ​

So, assuming that the S&P 500 had a standard deviation of 18% over a 10-year period, a return of 10%, and the risk-free rate of 5%, we can determine the Sharpe ratios for the following portfolio managers:

Again, we find that the best portfolio is not necessarily the portfolio with the highest return. Instead, a superior portfolio has the superior risk-adjusted return or, in this case, the fund headed by manager X.

Unlike the Treynor measure, the Sharpe ratio evaluates the portfolio manager on the basis of both the rate of return and diversification (it considers total portfolio risk as measured by the standard deviation in its denominator). Therefore, the Sharpe ratio is more appropriate for well-diversified portfolios because it more accurately takes into account the risks of the portfolio.

Jensen's Alpha

Similar to the previous performance measures discussed, the Jensen measure is calculated using the CAPM. Named after its creator, Michael C. Jensen, the Jensen ratio calculates the excess return that a portfolio generates over its expected return . This measure of return is also known as alpha .

The Jensen ratio measures how much of the portfolio's rate of return is attributable to the manager's ability to deliver above-average returns, adjusted for market risk . The higher the ratio, the better the risk-adjusted returns. A portfolio with a consistently positive excess return will have a positive alpha, while a portfolio with a consistently negative excess return will have a negative alpha.

The formula is broken down as follows:

Jenson’s alpha = P R − C A P M where: P R = portfolio return C A P M = risk-free rate + β ( return of market risk-free rate of return ) \begin{aligned} &\text{Jenson's alpha} = PR - CAPM \\ &\textbf{where:}\\ &PR=\text{portfolio return}\\ &CAPM=\text{risk-free rate} + \beta(\text{return of market risk-free rate of return})\\ \end{aligned} ​ Jenson’s alpha = PR − C A PM where: PR = portfolio return C A PM = risk-free rate + β ( return of market risk-free rate of return ) ​

If we assume a risk-free rate of 5% and a market return of 10%, what is the alpha for the following funds?

We calculate the portfolio's expected return (CAPM):

We calculate the portfolio's alpha by subtracting the expected return of the portfolio from the actual return :

Which manager did the best? Manager E did best because although Manager F had the same annual return, it was expected that Manager E would yield a lower return because the portfolio's beta was significantly lower than that of portfolio F.

Both the rate of return and risk for securities (or portfolios) will vary by time period. The Jensen measure requires the use of a different risk-free rate of return for each time interval. To evaluate the performance of a fund manager for a five-year period using annual intervals would also require examining the fund's annual returns minus the risk-free return for each year and relating it to the annual return on the market portfolio minus the same risk-free rate.

Conversely, the Treynor and Sharpe ratios examine average returns for the total period under consideration for all variables in the formula (the portfolio, market, and risk-free asset ). Similar to the Treynor measure, however, Jensen's alpha calculates risk premiums in terms of beta (systematic, undiversifiable risk) and, therefore, assumes the portfolio is already adequately diversified. As a result, this ratio is best applied to an investment such as a mutual fund .

How Do You Measure the Performance of a Portfolio?

There are several ways to measure a portfolio's performance. Some of the most popular methods are the Sharpe, Jensen, and Treynor ratios.

What Determines Portfolio Performance?

The best performance indicator measures a portfolio's returns against a benchmark and the risks. You can use only returns as a performance indicator, but this limits your view because risk is not considered.

What Is the Portfolio Performance?

Portfolio performance measures give you information about how effective your investments are .

Portfolio performance measures are a key factor in the investment decision. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns , an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded decisions.

Michael C. Jensen. " The Performance of Mutual Funds in the Period 1945-1964 ."

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Xpm: the future of portfolio management in a diverse work environment.

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Founder, Head of SPM Innovation and AI at Projectum , a global technology leader modernizing how companies connect strategies to execution.

In today's rapidly evolving business landscape, the diversity of work—from projects and programs to epics and initiatives—is not only common; it's a given.

This diversity brings a richness of innovation and adaptability to organizations but also introduces complexity in management. Traditional project portfolio management (PPM), strategic portfolio management (SPM), scaled agile (SAFe), product portfolio management and hybrid program management all offer frameworks to manage the complexity.

However, the varied nature of work needs a more inclusive, flexible approach. Enter xPM, a new concept designed to encompass any type of work, with a start and end date involving multiple people, under the portfolio management umbrella.

The Essence Of xPM

xPM is not just a new method, but it's also a paradigm shift in how we view and manage work within organizations. It is any work (x) that involves multiple team members and has defined timelines, managed with rigorous discipline and strategic oversight of portfolio management (PM).

This innovative framework aims to unify various work forms under a single, cohesive strategy, focusing on core PM aspects like demand management, ability planning, financial tracking, benefits realization and KPI reporting. In doing so, xPM transcends traditional categorizations to offer a universally adaptable approach.

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A 3-point cheat sheet for creating romantic chemistry—by a psychologist, goldman sachs issues astonishing bitcoin and ethereum etf prediction after price turning point, why xpm matters now more than ever.

The call for xPM arises from a fundamental shift in organizational dynamics. No longer can companies afford to silo their efforts into distinct categories without losing sight of the bigger picture. xPM addresses this by providing a flexible, comprehensive framework that adapts to various work forms, ensuring alignment with the organization’s strategic goals.

Its importance is magnified in today’s environment, where adaptability and strategic alignment are not just beneficial but essential for survival and growth.

Let's take a look at six of the core components of xPM:

1. Linking Initiatives To Strategy

xPM links all work forms to strategic components like business drivers or OKRs. This ensures every initiative aligns with the organization’s goals, providing a direct line of sight from individual contributions to strategic outcomes. This strategic connection allows organizations to prioritize initiatives based on their strategic impact.

2. Financial And Benefits Tracking

xPM manages financials and tracks business benefits, aligning these metrics with strategic objectives. Through unified reporting and KPIs, xPM assesses each initiative’s financial health and strategic contribution.

3. Unified Reporting Using KPIs

xPM uses standardized KPIs for unified reporting, measuring and communicating diverse work performance. This approach enables stakeholders to gauge initiatives’ progress and impact, fostering transparency and informed decision-making.

4. Change Management

xPM incorporates effective change management, recognizing the human element in transitioning to new work forms. Using methodologies like PROSCI, xPM assesses the impact of change, supports individuals through the transition and ensures changes are adopted and sustained.

5. Risk Management

Risk management within xPM covers individual business cases and cross-initiative dependencies. This dual focus identifies, assesses and mitigates risks at every level. By incorporating risk management, xPM proactively addresses potential issues before they impact strategic objectives.

6. Demand And Capacity Management

xPM offers a bird’s eye view of demand across all work types, ensuring optimal resource allocation, balancing current needs with future growth opportunities.

7. Enterprise Roadmaps

xPM should connect key deliverables from various planning and task management tools. It should also ensure that critical cross-work dependencies are created and tracked automatically.

Implementing xPM In Organizations

Implementing xPM requires a strategic shift, not just in tools and processes, but in mindset, too. It demands organizational alignment from the top down, with a sharp vision that transcends traditional work categories.

Adaptability, scalability, and technology play key roles in this transition. AI and other technological advancements offer powerful tools for predictive analytics, automated reporting and real-time decision support, enhancing the xPM framework's efficacy.

Overcoming Challenges With xPM

Resistance to change is a natural obstacle in the path to xPM adoption. Organizations entrenched in traditional PM methodologies may find the transition daunting. However, the benefits of a unified, flexible management approach—capable of adapting to the diverse nature of modern work—far outweigh the initial hurdles.

Complexity management, another potential challenge, can be addressed through phased implementation and ongoing training, ensuring that teams are equipped to leverage the xPM framework effectively.

Tools And Flexibility In xPM

Embracing xPM’s potential requires selecting tools and platforms that support flexibility and integration, catering to each initiative’s unique needs while aligning with the portfolio. The variety of execution tools today, from traditional project management software to agile platforms, necessitates an xPM solution that can interface seamlessly with these systems.

The focus should be on platforms offering flexibility, like low-code platforms known for adaptability and extensive integrations. These platforms allow efficient data streaming from various work management tools into the central xPM tool, providing a unified view of all initiatives.

Choosing the most flexible platform for xPM is a strategic decision that enhances an organization’s portfolio management agility and effectiveness. By prioritizing tools that facilitate easy integration and provide comprehensive oversight of diverse work types, organizations can ensure their xPM framework supports their strategic ambitions.

As we adopt xPM, the focus should be on leveraging the right technological tools. The success of xPM depends on our ability to integrate and manage various work forms seamlessly, driven by strategic alignment and enabled by adaptable, integration-friendly platforms. Thus, xPM is not just a concept; it's a practical pathway to strategic clarity, operational flexibility and competitive advantage.

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