4 ways to approach project performance measurement in business
November 16, 2021at4:00 PM
Project performance measurement is one of the most important considerations when formulating strategies to tackle today’s business challenges. This process often requires a more nuanced approach since projects have start and endpoints. So when we’re measuring the performance of a project, we’re primarily looking at its impact at a point in time, or over a fixed period.
First things first, define the project goals
Before the project even begins, the goals must be clearly defined. This ensures that you have a benchmark for what good performance means and what conditions must be met to achieve success.
In business, we can say a project is successful based on a number of parameters — if it resulted in more sales; if it was completed on time; if it increased efficiencies, and so on. But if we didn't define the project goals from the beginning, then we won't have a clear idea of what success looks like.
4 ways to measure project performance
1. Direct Impact
The reason you embarked on the project is to positively impact an aspect of your business. So at the end of the project, simply check to see if it achieved that impact. For example, let’s say you wanted to achieve more sales in business, so you embarked on a project to revamp your sales process. If after completing the project, your business starts bringing in more sales, then you can safely conclude that the project performance was good.
In order to measure direct impact, you’ll need to record the status of the business at the project start point and then compare it to the status at the project endpoint. The size of the impact will determine the success rate of the project.
2. Return on investment and financial impact
We can’t really tag a project as successful if the cost of executing it is significantly higher than the value of its impact. By comparing the benefits of the project against the implementation costs, we can calculate a return on investment. A low or negative ROI is an indicator that the project may not have performed as expected.
Another possible measurement standard you can use is the financial impact — how much costs were saved or how much income was generated? If substantial and the project still managed to deliver an outstanding direct impact at completion, then it’s a good performance.
3. On-time and On-budget
Was the project completed on time? Was it completed on or under budget? These are usually the first signs that the project performed well. It’s important to keep an eye on costs and time frames at regular milestones throughout the project. This way, you can make any necessary adjustments before ending the project.
Keep in mind, however, that this measurement approach only makes sense if you stay true to the goals that you set at the start of the project. If you change the goals mid-way through the project, the time and budget will be impacted.
4. Stakeholder Support and Engagement
One of the most important components of project performance is how the stakeholders and company executives perceive its value. Strong stakeholder support is an indication that the project is performing as expected.
That being said, a more direct measurement would be the amount of stakeholder participation in the project. If they’re actively engaged and providing positive feedback at every milestone, then you know the project is on the right path and is performing well.
NFA Consulting can help improve your business’s project performance
NFA Consulting is the country’s leading strategic planning and growth consulting company. Our consultation services are aimed at helping organizations discover their core strengths, identify risk areas, and boost productivity across the board. We can help streamline your business’s project performance measurement standards, so you have a more accurate view of what your team is doing right, as well as possible areas that may need improvement.
NFA consulting has worked with government agencies and various organizations across different industries to ensure the success of their programs. Schedule your consultation with our team to get started today. You can also visit our office at 1500 District Ave. Burlington, MA01803 US.