Whether you’re part of an IT consultancy or work in-house, completing projects is a fundamental part of your job. Your client (or internal management) establishes a need that requires some technical development, and you accept responsibility for getting it done properly and on time. Sounds simple, but of course the devil is in the details and it can be easy to get off track, especially when it comes to managing the time and money.
If completing projects on time and on budget is a persistent challenge, then perhaps you need to review your usage of related analytics. There are several metrics you can check to stay on track, but you don’t want to spend too much time manually calculating them instead of focusing on the tasks at hand. Unfortunately, even the better project management tools don’t always present the right metrics in the right format because they look at only time or money, but not the interplay of both.
Choosing the proper performance indicators is essential, especially when you utilise a solution that can tie tasks and milestones to the financial side of the project. So you can manage the work in progress, bill for completed work, and focus on overdue items to clear them off your slate.
Taking these 10 key performance indicator (KPI) actions keep you on task and on budget during even the most complex projects:
1. Chart In-Progress But Not Billed Work
It’s important to have the financials of the project front-and-centre so everyone on the team can understand the final deadlines and the monetary implications of their actions. A “work-in-progress” metric is essential for illustrating work that has been finished and is billable, but is not yet on an invoice. This should be tracked as an asset for financial reasons (especially if the firm needs a line of credit), and provides project managers with a quick look at how close a project is nearing completion.
2. Manage The Retainer Balance
If your firm typically works off of retainer, then you need a metric showing a dynamic remaining retainer balance. It sounds simple, but if you have used up 80 percent of the retainer, and 50 percent of the work remains, then you’ve miscalculated the entire project. Principals, partners, and the accounting team all need to understand when to step in to a project discussion, and a misaligned retainer balance is one of their main red flags.
3. Detail Write-Ups & Write-Downs
In some cases your firm might bill the client a little more or less than the actual amount you worked as a way to manage the budget. Understanding the overall amount of write-up or write-down is an important metric because it reflects management’s ability to really understand the particulars of a project.
4. Know The Total Client Hours
Every project has a time budget, so you have to always know the total of logged billable time. Profitability shrinks drastically when you’ve over allocated time that you can’t bill.
5. Manage Utilisation Rates
Even if your firm operates on fixed-fee projects, you need to understand utilisation metrics to see if you’re working efficiently. How many billable versus non-billable hours is the team producing, and how will that impact your business if you transition away from fixed-fee pricing?
6. Check The Lingering Payments
IT consultancy managers need to be tough on getting paid. It’s not an unreasonable request to expect prompt and complete payment, so always check metrics that show the percentage and dollar values of bills that have been paid and ones that are still outstanding. Review how late the payments are, and take proactive actions to remedy the problem.
7. Know The All-Importance Of Profitability
By utilising a project management platform that ties together hours and payments, you can judge the firm’s true profitability on every project. And profit is—of course—the only metric that keeps the business going. Closely review project KPIs for every completed job and determine if that particular one is a model for future success or a cautionary tale of inefficiency and poor billing procedures.
8. Understand The Contract Analysis
Your team needs a metric that shows the spread between the contract amount, what the client has already spent, and the remaining balance. Managers who closely follow this metric can proactively judge if a project will exceed or fall below the contracted amount.
9. Analyse The Budget
Your budget analysis is a corollary to the contract review: It shows your budget limit and what portion of the budget has been used. If the project is over or under budget, then what did you do differently? Perhaps you avoided or limited use of third-party contractors or you experienced “scope creep” from the client and didn’t bill them for additional work.
10. Calculate The Earned Value
Another valuable metric for determining if a project is on track is “earned value.” Done correctly, this KPI will display the project plan, actual work completed, and the value of the completed work all together, with the math dividing the amount earned through actual work by the contracted amount. Knowing this metric is a very clear way to understand if the project is/will be a success, and if your firm should take on similarly structured work in the future.
If you want to access these KPIs quickly and easily, look for a sophisticated project management platform from a company with experience in time and expense tracking, accounting, and project management. You want automated metrics that take into account the multiple layers of a project, so you can complete your work on time, on budget, and as profitably as possible.