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.
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.
Wrike Gantt chart (Retrieved from https://blog.capterra.com/criteria-for-measuring-project-success/#1)
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.
Example of Schedule Gantt Chart (Retrieved from https://www.projectmanager.com/blog/5-ways-to-measure-project-success)
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.
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.
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.
- 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.
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.