Key performance indicators (KPIs) are motivating. They are impactful. They are, dare we say it, exciting.
That is, they are if they drive meaningful change.
According to an MIT Sloan Management Review study, 6 in 10 managers say improving KPIs is essential for effective decision-making. In the world of project management, decision-markers must embed smart KPIs into processes to drive performance.
It’s not just about delivering projects on-time and within budget; it’s about using metrics in a way that revitalizes your strategy and workflows, drives better results, and improves executive reporting and decisions.
In this article, you will learn how to build better KPI frameworks, understand what high-performing PMOs measure, and make KPIs more actionable and culturally adoptable. You will also discover how PMOs are currently embedding KPIs into culture and strategy, not just reporting, and explore a practical framework for building momentum with metrics.
Here’s how to make metrics matter.
KPI Pain Points and Challenges
When devising and using strategic project management KPIs, PMOs and their organizations may run into certain issues and challenges.
For example, you may consistently track metrics and activities, but you don’t know if you are tracking the right things. It might feel like reporting for reporting’s sake, not a holistic strategy.
Maybe leadership isn’t even using the reports you produce. Perhaps you are creating actionable project KPIs, but they are inconsistent across teams and don’t drive behavior. There is a lack of consolidation in tools and consistency. And ultimately, there is no shared understanding of what success looks like.
Addressing these challenges is the first step in driving better project portfolio performance.
How Can KPIs Become Tools for Strategic Decision-Making Rather than Compliance?
Are your projects delivering value?
KPIs are there to determine whether or not that’s the case. Beyond value, they allow you to examine your entire PMO strategy and effectiveness.
Making KPIs central to your strategy allows you to:
Mitigate Risks
Anticipate and manage risks before they escalate. Discover potential challenges prior to even getting started, thanks to actionable project KPIs. You will ensure small problems don’t become big issues.
Create Accountability
Facilitate transparency. Ensure everyone knows their roles and responsibilities. Be accountable to team members, stakeholders, and executives, but also, foster collaboration and alignment on project goals. Get everyone involved and accountable for project success.
Make Data-Driven Decisions
KPIs give you concrete objectives to track. You must also use data to make better, more informed decisions. Rather than operating on intuition, you will have real evidence at your disposal. This leads to greater accuracy and better outcomes.
Justify Your Decisions.
Prove the PMO’s relevance to greater business goals. Examine how project management processes and practices influence the larger organization. Focus on real value, not just on-time and on-budget delivery and compliance.
What Are the Maturity Stages of KPI Adoption in PMOs?
Reconceptualizing or introducing KPIs into your organization changes the culture, not just the processes. That takes time. And inevitably, organizations are going to be at different stages. Knowing how to mature your KPIs over time is as important as knowing where to start.
Initial/Basic
This is the earliest phase, as organizations begin to move away from tracking individual projects and focus on optimizing across all projects. KPIs, if in place at all, are not well-managed and focus on lagging indicators.. Data collection practices aren’t consistent, and you aren’t necessarily tracking the right KPIs.
Developing
In this phase, you are beginning the process of KPI adoption. You are establishing a foundation for best practices and introducing a framework. Data is still largely based on what happened and has yet to become predictive. Practices are somewhat standardized and repeatable.
Established
KPIs are well defined. They correspond to your organization’s strategy and goals. You have processes in place for tracking progress and realizing success, and you have tools and practices for collecting data. And that data is now reliable enough to be used for preliminary leading predictions and KPIs.Implementing a system for tracking and reporting at this stage is critical to ongoing KPI evolution.
Well-Established
KPIs are proactively managed and evolved. You are consistently monitoring them in most processes and projects and sharing that data with key parties. You’re evaluating data and using metrics to inform future decisions. That means you are achieving greater efficiency and seeing incremental effects across the organization.
Optimized
KPIs are strategy-aligned. You are fully utilizing them to improve project performance, and they are embedded into your culture. You are focused on long-term success, and you have established processes for improvement in the future. Your project portfolio data is incorporated into company-wide reporting and strategy.
How to Integrate KPIs into PMO Workflows
How can PMOs integrate KPIs into workflows and day-to-day operations? Here’s how to best leverage decision-making metrics in your practices and processes.
Start with organizational goals.
Work closely with stakeholders to evaluate overall goals. This will allow you to create PMO KPIs that align with strategic objectives and matter not just to discrete projects but overarching purposes and missions.
Utilize a SMART framework.
The SMART framework, which stands for Specific, Measurable, Achievable, Relevant, and Time-bound, is a useful way to ensure that your KPIs will serve your organization’s interests and are realistically capable of helping you meet your objectives.
In other words, your KPIs must be well-aligned with your organizational goals. They should be concrete and actionable, as well as supported by data.
Make them clear and specific, avoiding vague language. For example, if a KPI is related to consumer engagement, don’t just say “Increase user engagement.” Instead, say, “Increase CTR by X% and time on page by Y%.”
Track the right KPIs.
Establish KPIs that answer your most important questions, and link them to your strategy. Tailor both quantitative and qualitative KPIs to organization and project type. For example, you might track resource utilization rate or return on investment (ROI).
Use both leading and lagging KPIs. Leading KPIs are predictive, considering and anticipating activities that impact future performance. Lagging KPIs are historical, assessing past performance to determine whether activities or entire projects have been successful.
Use the right software.
You need a platform that helps you proactively manage the entire project lifecycle and report on the key indicators that drive greater value on every project. For example, Prism PPM facilitates KPI reporting and allows you to track goals, resources, roles, and results, both at a project and portfolio level.
Continually review your KPIs.
Ensure your KPIs are continuing to provide insights and driving. You will inevitably need to adjust and refine as circumstances change. As you do, work with your teams and stakeholders to eliminate KPIs that are no longer relevant to your strategy.
The Role of Cultural Change and Executive Alignment
What is the role of cultural change and executive alignment in making metrics matter?
PMOs have long struggled to demonstrate their value to the larger organization. But as projects have become more complex, requiring specialized skill sets and delivering larger potential impact to an organization, the opportunity to demonstrate the power of the project portfolio has arisen.
KPIs help PMOs show their central role in creating business value, and proving this impact involves a shift in culture. PMOs must spearhead this effort, but executives need to be open to change, too.
To persuade stakeholders and align their efforts with business priorities, PMOs should establish KPIs with stakeholder input and in conjunction with established delivery processes. These metrics should be clear and meaningful and connect to larger objectives.
Utilizing KPIs strategically can help educate stakeholders and team members about the value of the entire PMO. With visibility into project metrics, project collaborators outside of the PMO see the value they bring to each project. Through data, they have concrete evidence to support their efforts.
The Future of KPI Design
What is the future of KPI design in an AI-driven, hybrid-methodology world? Thirty-four percent of managers are already using AI to create KPIs, according to the MIT report. Of those that do, 9 in 10 believe AI has improved their KPIs.
Increasingly, teams will leverage predictive analytics to anticipate project and portfolio outcomes. Data is already important, and it will prove more and more essential to designing actionable KPIs and fueling activities.
Overall, technology will play a critical role in creating and tracking KPIs, facilitating real-time monitoring, customization, and integration with project management systems. Businesses will need to leverage these and other tools to stay cutting-edge and be competitive in shifting market conditions.
Conclusion
Strategic project management KPIs can have a real influence on your project portfolio performance—and your entire organization.
Ready to turn metrics into momentum? Book a 30-minute consult or a 60-minute demo today.