Measure what matters, and look beyond the "Iron Triangle" in Project Management
How do you measure project management success?
A recent report from the Project Management Institute (PMI) finds that the Top 10 Percent of 230 project management offices (PMOs) fully align key performance indicators (KPIs) with their organization’s strategic goals.
This approach prioritizes communication and transparency around projects with company executives and are more likely to have invested in technology that facilitates measurement and reporting.
Boost Midwest helps organizations like yours with strategic planning in project management that focuses on an organization’s overall goals through capturing and analyzing the KPIs that best reflect strategic plans, especially during times of growth and change.
“The KPIs you choose for your business will be unique to your business niche and goals,” Boost Midwest President and CEO Marie Stacks said. “Ask yourself, why does this KPI matter and what does it measure?”
Frequently, the result is that the PMO widens its focus from the iron triangle metrics of scope, schedule and cost, where project managers balance the tradeoffs within these three constraints for a successful project.
The danger today of measuring project success on the iron triangle methodology is that projects are often red flagged as a poor return on investment — which affects future projects and the company as a whole.
“Measurement is key to demonstrating the impact and value of projects,” the PMI report confirms. “Measurement provides project visibility and delivers the data to strengthen the future business case for a program or project management office (PMO).”
This is why the PMI’s Top 10 Percent of PMOs emphasize outcome-based benefits, like operational efficiencies or customer satisfaction. Both are components of operational strategic plans but often not seen as measurable KPIs from a PMO perspective.
Beyond the Iron Triangle
While the iron triangle of scope, schedule and cost is easy to quantify and track, it doesn’t provide a robust evidence base for the wider impacts of projects on operational strategy, the PMI report notes, finding:
“The Top 10 Percent organizations are more likely to be aligning key performance indicators (KPIs) to wider organizational strategy, communicating the impacts of projects, and making the most effort to improve the line of sight for the C-suite (and engage them in the PMO).”
These organizations are innovative when it comes to measurement, using more metrics and technology, and “communicating the impacts of projects and aligning KPIs to wider organizational strategy.”
The survey of 4,069 project professionals found they used an average of 7.1 metrics for projects, with four of these usually tied to the iron triangle. That leaves only three additional KPIs to illustrate the project’s success.
“To amplify the impact of projects, and by extension the PMO, additional measures such as societal or environmental impact or return on investment must be the headline act,” PMI’s analysis showed. “Being on time, in scope and on budget are the basics; they do not evidence the real change in outcomes that projects can provide.”
Changing your PMO’s approach to measuring project performance, then, means adding output KPIs to the input metrics — adherence to schedule, budget and scope and quality of work —you use to evaluate success.
Top Output KPIs to Measure
Including output metrics in evaluating projects adds crucial data to measure overall project performance. But the frequency of measurement is important and can challenge PMOs, which first need to consistently monitor output KPIs throughout the project lifecycle and communicate project milestones and impacts to organizational leadership.
Each of these output metrics will include KPIs that match the project and the organization's strategic goals:
Risk management indicators.
Alignment to organizational strategy and KPIs.
To determine the right KPIs for output metrics, many organizations find an outside source like Boost Midwest can provide an objective review and analysis that’s free of any biases that obstruct internal reviews. Measuring output performance often means:
Involving the right stakeholders — PMI’s research showed only 63% of organizations with a PMO actually engage the PMO in the development of success metrics, and only 39% engage the C-suite.
Using technology — to help capture more metrics that lie outside the iron triangle.
Conducting annual surveys — to learn how satisfied project managers and key stakeholders in the PMO community with different PMO areas like onboarding and communication.
Collaborating with the PMO — to ensure the measures being developed align with the organizations’ strategic vision.
Reviewing the PMO roadmap —to enable the PMO to define how success will be measured based on the prioritized improvements and actions for the next period.
Determining the best methodology to measure an organization’s performance — and how to best utilize those metrics — is a cornerstone of Boost Midwest approach to operations.
Book a free consultation to learn how our team can help.