7 Crucial Metrics Used In Project Management

Managing a project is a lot like running a business. You have to keep an eye on costs and revenue so that you can make informed decisions about how to manage your time, money, and resources. To do this, you should understand which metrics are most important in project management.

What are metrics in project management?

Metrics are a way to measure how well you are doing on your project. They can be used to help you make decisions and they can also be used to measure the success of your project. In order to understand metrics, first we need to understand what they aren't:

• Metrics aren't goals
• Metrics aren't targets

Metrics are simply ways of measuring the performance of a process or system. Let's take an example from my personal life: I have a goal to keep my yard tidy. I could watch things like the grass length or weeds growing in flower beds. These metrics would help me know when it's time for mowing, pruning, and mulching so that everything stays healthy and looking good!

How do you choose metrics?

There are a few factors to consider when choosing metrics for your project management system. First, you need to make sure the metrics will help you measure progress and reach goals. This can be done by identifying what needs to be completed to reach your desired outcome, then choosing a method of measuring those things.

Second, the metrics should be able to help prevent problems before they occur by highlighting risks or issues that may come up during the course of the project.

Thirdly, any limitations on time or resources should be taken into account so as not to create unrealistic expectations that can lead to failure later on down the line if not properly addressed beforehand

1. Earned Value

Earned value is one of the most important metrics in project management. It's used to determine whether or not a project is on track and within budget, so it’s essential for any PM to understand how earned value works.

The basic idea behind earned value is that it measures the amount of work completed against time and money spent. Earned value can be calculated by dividing the sum total of planned cost by the sum total of actual cost (minus any change orders). This gives you a percentage which represents your progress as compared to your expectations at that stage in the project.

Earned Value (EV) = % of Completed Work x Budget at Completion (BAC)

2. Actual Cost

The actual cost is the total amount of money spent on a project. It can be used to compare against your budget and planned value. If, for example, your actual costs are higher than estimated, you would need to look into why that’s happening. This means looking at what has changed since you last updated your estimates and how those changes affect the cost of completing each task or phase of the project.

This information can also be useful when estimating future projects because it shows how much money was actually spent on a previous one (as opposed to how much was estimated). By looking at historical data like this and comparing it with what happened in similar situations, stakeholders can make more accurate predictions about potential outcomes in future projects—and adjust their expectations accordingly if necessary!

Actual Cost (AC) = Total Amount Spent (A simple one!)

3. Cost Variance

Cost variance is a metric that measures the difference between planned and actual costs. It's a measure of how well your project is tracking to its budget, and it's expressed in dollars. Calculating cost variance requires subtracting the actual costs from your planned costs. In other words, the formula would look like this:

Cost Variance (CV) = Earned Value (EV) - Actual Cost (AC)

4. Schedule Variance

The schedule variance is a measure of the difference between the planned and actual start and finish dates. It can be used to predict the project’s finish date, cost and cost variance.

Schedule Variance (SV) = Earned Value (EV) - Planned Value (PV)

5. Cost Performance Index

The Cost Performance Index (CPI) is a measure of efficiency that compares the earned value of work performed to actual cost. The CPI is calculated by dividing the earned value of work performed by the actual cost. It is used to determine if a project is on budget and if it should be continued, modified or terminated. If it is less than 1 then a project is under budget. If greater than 1 then over budget.

Cost Performance Index (CPI) = Earned Value (EV) / Actual Costs (AC)

6. Schedule Performance Index

One of the key components of project management is scheduling. It is essential for project managers to stay on top of their schedules and ensure that they are meeting their objectives. To that end, an important metric used in monitoring schedule performance is the Schedule Performance Index (SPI). The SPI measures how well a project's schedule is tracking against its baseline schedule, which can help you understand how much risk there might be with your overall project completion date or critical path items.

Schedule Performance Index (SPI) = Earned Value (EV) / Planned Value (PV)

7. Utilization Rate

The utilization rate is the percentage of time that a resource is actually working on a project. This figure can be used to determine how much work is being done by a resource and whether or not they are over- or underutilized.

For example, if you have three people working on a project who are supposed to spend 10 hours a week on it, and then find out that one of those people has been spending 8 hours per week on it while the other two have been spending 12, then your utilization rates will be 80% for one person and 120% for both others.

Utilization Rate = Hours Worked  / Total Available Hours

Conclusion

Metrics are a great way to measure your project’s progress and performance. If you keep track of these metrics, you can quickly identify any issues that may arise during the course of your project. This will help ensure that everything goes smoothly from start to finish!