Empowering Project Teams for Success: Unlock Success with KPIs

Earned Value is referenced in our guide on KPIs. For a simple way to introduce and use Earned Value, check out our Practical and Easy Guide to Earned Value.

Schedule Performance Index (SPI)

The SPI measures the team’s ability to adhere to the project schedule. It is calculated by dividing the earned value (EV) by the planned value (PV). An SPI greater than 1 indicates that the team is ahead of schedule, while an SPI less than 1 signifies delays.

Example:

• Assume the planned value (PV) is $100,000 and the earned value (EV) is $120,000.
• SPI = EV / PV = $120,000 / $100,000 = 1.2
• Interpretation: The team is ahead of schedule, achieving 20% more progress than planned, based on the SPI value of 1.2.

Cost Performance Index (CPI)

The CPI assesses the team’s ability to manage project costs. It is calculated by dividing the earned value (EV) by the actual cost (AC). A CPI greater than 1 indicates cost savings, while a CPI less than 1 suggests cost overruns. Calculate the Earned Value (EV): Multiply the percentage of completed work by the budgeted cost of work scheduled (BCWS). Calculate the Actual Cost (AC): Determine the total actual cost incurred.

Example:

• Assume the earned value (EV) is $90,000, and the actual cost (AC) is $95,000.
• CPI = EV / AC = $90,000 / $95,000 = 0.95
• Interpretation: The team is experiencing a slight cost overrun, with costs 5% higher than the earned value, based on the CPI value of 0.95.

Variance at Completion (VAC)

VAC estimates the difference between the budgeted cost at completion (BAC) and the estimated cost at completion (EAC). It helps determine if the project is likely to be under or over budget. To calculate the Estimated Cost at Completion (EAC): Sum up the actual costs incurred to date with the estimated cost for remaining work.

Example:

• Assume the BAC is $500,000, and the EAC is $510,000.
  VAC = EAC – BAC = $510,000 – $500,000 = -$10,000
• Interpretation: The project is expected to exceed the budget by $10,000, as indicated by the negative VAC value of -$10,000.

Stakeholder Satisfaction

Stakeholder satisfaction measures the level of satisfaction among project stakeholders, including clients, team members, and sponsors. It can be assessed through surveys, feedback, or ratings provided by stakeholders. Monitor Feedback and Communication: Regularly communicate with stakeholders to address their concerns and ensure their satisfaction.

Example:

• Assume stakeholders provided an average satisfaction rating of 4.5 out of 5
• Interpretation: The team received an average stakeholder satisfaction rating of 4.5 out of 5, indicating a high level of stakeholder contentment.

Change Request Approval Rate

Change request approval rate evaluates the team’s ability to manage changes effectively. It measures the percentage of change requests approved out of the total number of change requests submitted. Record the Total Change Requests Submitted. Track the Approved Change Requests.

Example:

• Assume 100 change requests were submitted, and 80 were approved.
  Change Request Approval Rate = (80 / 100) x 100 = 80%
• Interpretation: The team successfully approved 80% of the change requests, indicating efficient change management processes.

To evaluate the performance of a project management team in line with industry standards, it is crucial to consider the KPIs recommended by PMI®. By utilizing KPIs such as Schedule Performance Index (SPI), Cost Performance Index (CPI), Variance at Completion (VAC), Stakeholder Satisfaction, and Change Request Approval Rate, organizations can gain valuable insights into their team’s performance. These KPIs provide a framework for measuring project schedule adherence, cost management, stakeholder satisfaction, and change control effectiveness. By leveraging these indicators, project managers can make informed decisions, identify areas for improvement, and ensure successful project outcomes.