Project Success Measurement: A Guide to Key Performance Indicators

This report provides a detailed overview of how to measure project success using five key criteria: scope, schedule, quality, budget, and customer satisfaction. It explains the importance of consistently measuring project success to address flaws and improve future performance. The report outlines how to monitor project scope by collaborating with stakeholders and using tools like Gantt charts. It discusses the challenges of maintaining project schedules and introduces the Schedule Variance (SV) formula. Quality is defined beyond meeting objectives, encompassing customer acceptance and continuous improvement, with the Cost of Quality (COQ) formula provided. Budget measurement involves tracking direct and indirect costs, with formulas like Gross Profit Margin, Earned Value (EV), Actual Cost (AC), Cost Variance (CV), and Cost Performance Index (CPI) detailed. Finally, the report emphasizes the importance of customer satisfaction, suggesting methods like surveys and the use of Customer Satisfaction Index (CSI) and Net Promoter Score (NPS) to gather feedback and improve project outcomes. Desklib provides a platform for students to access similar solved assignments and study tools.

5 Ways to Measure Project Success & What
Metrics to Use
Written by John Strange - MBA, PMP
Measuring the success of a project and defining the suitable metrics in implementing this is
crucial in any project performed by an organization.
Some may find project success as a trivial matter to look into and only evaluate it one time
whenever there is a formal meeting related to performance appraisal. This is not a good thing.
Performance success measurement could even be done informally. That aside, it is also
suggested to constantly measure the success so that any small flaw could be addressed
immediately. You may also consider measuring success even when the project is still ongoing.
Measuring the success of a project benefits in terms of further boosting the performance in the
future. Doing this will help to detect any flaws or lacking that could be improved on. This will
sustain the longevity as well as ensuring the success of said projects if the organizations intend to
repeat the project execution in the future. Failure could be prevented if measuring success is
done efficiently.
Project success could be defined according to numerous factors. In this article, the author will
explain five criteria that are commonly used in measuring success along with the metrics for
every criterion. The five criteria are scope, schedule, quality, budget, and customer satisfaction.
Now, let’s have a look at each of the criteria mentioned.
1. Scope
Scope refers to how the project meets the expectations and goals established for the project. Does
the result brought by the project after a certain period achieve the intended performance or
objectives aligned in the framework? Does it abide by the budget allocated?
In most cases, the scope is the primary metric but it may comprise of other indicators that are
more narrowed down.
Some project does not provide a complete scope at the beginning of the project. In this case, you
may omit scope from the performance success indicators. Bear in mind that a larger project’s
scope requires a large budget as well. If you intend to increase the scope, be sure to increase the
budget too. This situation, known as scope creep, might be a challenge to one company if not
handled well.
There are several ways in monitoring the scope of a project. You may collaborate with
stakeholders in tracking project scope. You may start by determining all the requirements set for

the project. Next, chunks the requirements into several specific deliverables. These deliverables
are then noted with the key resources and the necessary tasks to complete it. After that stage has
been completed, outline the timeframe for each task. Last but not least, it is advised to also state
the critical path of that project.
After all these necessary processes have been accomplished, it is time to map out your scope in a
presentation. You may opt to use charts when visualizing the project, such as the Gantt chart. It
will display either your project’s requirements are on track with the allocated budget and time.
Gantt chart is one of the effective tools preferred by most companies due to its concise and
presentable data.
2. Schedule
As the name suggests, the schedule is related to the arranged time-related criteria of the project
when it is in planning or when executed. When planning a project, determine the timeframe or
milestones expected for the project. Define what are the expected objectives that need to be met
within a certain period of time. It is not only about the final delivery date but also the important
dates along the developing process. This schedule could be segregated into long-term or short-
term depending on the nature of the project.
Keeping to the initial schedule is challenging. Even experienced project managers cannot deny
that there were numerous times where they have to constantly adapt the schedule due to time
constraints in achieving the goals. It is challenging but not impossible. If you diligently evaluate
your progress, using the original timeline until the end is a possible task.
Keep your project schedule updated frequently. The suggested period is weekly but is subject to
other options depending on your project needs. This measurement could be followed with a more
formal schedule evaluation which is commonly done annually in company meetings.
The simplest way to track your schedule is by presenting it in a visual report. The Gantt chart is
an example. Doing this, you may compare if the current status of your project is aligned with the
intended milestones set in the initial schedule. As simple as it sounds, it gives you the bigger
picture of your current pace. A visual presentation is also pleasing to the eyes that may include
all significant information you need at the moment.
Schedule Variance
Schedule variance is a commonly used metric in measuring success. It is to find out what is the
difference between the scheduled tasks with the completed one. The units are monetary.
The formula is as follow:
Schedule Variance (SV) = Budgeted Cost of Work Performed – Budgeted Cost of Work
Scheduled

If the SV is in positive form, then you are ahead of the schedule. If the answer is in negative
form, that means the schedule is falling behind. It is time to quicken the pace a bit. Zero SV
indicates that you are right on schedule.
3. Quality
One of the most important things to determine how good the product is quality. Sometimes,
meeting the objectives is not sufficient enough in gaining a secure spot in the market. It is also
recommended and fundamental to exceed ones’ expectations. Quality is relatively ambiguous
compared to other criteria. Regardless, it is a notable aspect of a product or project.
Quality assurance is one of the most sought criteria in evaluating a project or product. From this,
it is obvious that quality could be one of the criteria in measuring a project’s success. A quality
review should be done rigorously to avoid any unwanted problems from arising.
As mentioned earlier, quality is ambiguous. It is safe to say that it does not stand alone. There are
many branches that could be related to project quality. Quality could be defined by the number
of features matching the requirements. Another aspect of quality could be looked at the
customers’ acceptance of the project. That aside, it may also be evaluated by the constant
improvement done on the said project.
Besides the factors influencing the quality of the project, it is fundamental to jot down the cost of
the quality of the mentioned project.
The formula of cost of quality (COQ) is written below:
Cost of Quality = Cost of Good Quality + Cost of Poor Quality
This formula could be further specified as follows:
Cost of Quality (COQ) = Prevention Costs + Appraisal Costs + Internal Failure Costs +
External Failure Costs
Utilizing this formula helps companies to differentiate the costs used for good or poor-quality
output. This will provide a clearer appraisal of the product and further improvisations to lower
the costs could be addressed properly. Doing this would be advantageous if your company strive
to survive in the business world for a long time.
4. Budget
During the planning stage of a product or project, one of the points that should be clearly written
is the budget specified for the project. The budget could be one of the indicators in determining
the success of a project. Success in delivering a project without exceeding the budget could be
considered as one of the biggest accomplishments in any company.

In measuring a project’s success under the budget criterion, several aspects could be paid
attention to. This includes direct and indirect costs, fixed and variable costs, manpower,
resources, tools, and any other things that may influence the expenses of your project.
When measuring budget, always provide two different columns; planned and actual. This may
effectively ease the comparison process. A clear and visible data presentation may avoid any
unnecessary off-track expenditure which will negatively influence your project.
a. Gross Profit Margin
This refers to how much the project contribute profits to the business. The larger the margin
measured, the higher the profit gained from the product.
Gross Profit Margin = (Total Profit – Total Costs)/100
 Earned Value
Earned value (EV) compares the value of completed work with the allocated budget.
Earned Value (EV) = % of Completed Work / Budget at Completion (BAC)
 Actual Cost
Using this formula will provide an accurate count on how much expenses are used on a project.
Actual Cost (AC) = Total Costs per Time Period × Time Period
 Cost Variance
This is one of the most important formulas that ought to be applied by every business company.
The formula will provide the difference between the planned budget with the actual costs used
within a specific period. If the cost is in negative form, it means that the project has exceeded the
intended budget. Positive CV, on the contrary, means that you are on track.
Cost Variance (CV) = Budgeted Cost of Work – Actual Cost of Work
 Cost Performance
This formula is the metric for cost efficiency.
Cost Performance Index (CPI) = Earned Value / Actual Costs
5. Customer Satisfaction
Last but not least, the most visible criteria to evaluate project success is customer satisfaction.
Once the project has been conducted, you may want to ask for feedback from your clients or

customer. Not only the clients, but it is also likewise important to find out stakeholders’
satisfaction.
Sometimes, while the production team successfully manages to produce a product as closely as
possible to the initial plan, that does not mean that the product is what customers are looking for.
Even if your product seems perfect at a glance, there are still the risks of customers switching to
other providers. Some may even stop using your service altogether. The customers’ satisfaction
does not solely revolve around the project, but the whole processes in delivering the product to
the customers.
Finding out clients’ or customers’ opinions regarding the project or service helps a lot in
pinpointing what are the aspects that could be improved. This could help in providing the best
experience for the clients. It could ensure the longevity of dependence towards the said product,
hence sustaining high demands from the clients.
In most cases, this criterion is the most subjective indicator. It is quite difficult to be presented
statistically. You may choose to gain feedback in the forms of rating from 1-10, or even gaining
insights subjectively. Deeper insights gained helps a lot in improving your project. Most of the
time, the company resorts to building its customer satisfaction metric depending on the project
they are working on. Determine the suitable variables that are highly related to the project. For
instance, the survey results, clients’ revenue, repeat or lost clients, complaints, customer service,
and so forth. The easiest platform to evaluate customer satisfaction is by providing a survey right
after they receive your service. Include a mixture of rating format as well as open-ended
responses. There is countless survey generator that you may use freely on the internet in case
your business does not want to build your survey platform.
Customer Satisfaction Index (CSI) is one of the most known systems in evaluating customer
satisfaction. Some other systems, like Net Promoter Score (NPS), may even provide the
probability of a customer recommending the product used. NPS could be calculated in any
application or tool. You may want to start utilizing these systems.
Even if your company exclusively provides your metric, there is a suggested formula in
measuring this aspect. It may provide clearer and presentable data to compare the level of
satisfaction according to the variables that you have outlined.
The formulas are as follows:
Customer Satisfaction Score = (Total Survey Point Score / Total Questions) × 100
Net Promoter Score = % Promoters – % Detractors
A more comprehensive and elaborated NPS measurement could be found in the net, depending
on the tools you are using to measure it.
Conclusion

There are some other that could be looked into when measuring project success. You may find
numerous references in the net on this information. The factors are usually accompanied by the
appropriate metrics that could be used to evaluate the project’s success.
This stage should be followed with the documentation of the success criteria. Doing this will
provide necessary information regarding the project as future references or whenever your
company intends to improve the management of the said project.