The top project management metrics you should be measuring at your MSP
The management axiom – usually attributed to celebrated management theorist Peter Drucker – “What gets measured, gets managed” has become near gospel in business circles. But the cliché is not nearly as nuanced as the actual quote from Drucker. He went on to say, “even when it's pointless to measure and manage it, and even if it harms the purpose of the organization to do so.”
What gets measured,
He was trying to say that it’s important to think about what you measure before you do. Because the numbers you gather, once you have them in front of you, will influence your decisions. If you measure things you don’t want to be guided by, that data will likely lead you astray. Measure the right things, though, and they can help you steer your MSP toward growth and profitability.
Here are seven project management numbers we think you should measure.
1. Project actual vs. budget
Tracking how closely your project stays on budget is an essential measure of how well you are estimating costs when quoting and scoping projects Reality can be a hard teacher and if you are often exceeding your budget, this number will introduce you to that educator. This number is a guidepost to understanding how profitable your year will be. And it should inform forecasting and future budget decisions. Accessing this number often – as the project unfolds and on every project – can help you shift course to stay on budget.
2. Project margin
Track your project’s margin because this number tells your profitability and can inform quoting on future projects. Knowing this helps you determine how healthy this project is, financially. It’s an essential number to have when pricing services. You can surf to a lower margin to build the business and gain managed service contracts but aiming for a higher margin leads to better financial stability.
3. On time and complete (OT&C)
The On time and complete stat – affectionally called OR&C – tells you what percentage of projects your company completes on or before their deadline. This important measure can help you understand poor customer satisfaction numbers. If this number is low, you are not delivering services when you say you will. OT&C is also a nice hard number to use when measuring efficiency – especially if you track it over time. This number also affects the timeliness of revenue capture so it can predict income shortfalls.
4. Project/Professional Services revenue
Tracking overall project revenue – your profit on a project – helps you see when a project is worth it. It tells you how much your business takes to the bank after all your investments and costs have been accounted for. Once you have a solid understanding on your profit, you can push to grow your revenue. This number can help you determine and how highly you want to prioritize a project, if type of project is something you should take on again, and if it’s worth adding as a service to your catalog.
5. Project duration
Knowing how long a particular service takes from the time the customer signs on to the final delivery date is a must-have data point. If you often sell similar projects, this number is a handy ballpark for sales to have on hand to give customers a rough estimate. It can also help with resource planning and scheduling.
6. The number of projects managed by one PM
If you are staffing a project management office (PMO) or trying to build your business, it’s important to know how many projects one PM can handle. Overburdening your PMs will contribute to employee churn, mistakes, and burnout. This number can also be useful in employee reviews and for making hiring decisions.
7. The number of projects completed within a year
Knowing how many projects your MSP completes each year gives you a solid measure to use when planning or evaluating year-over-year growth. It can also be used to forecast revenues and help you recognize when your business is ramping up or slowing down.
Want to learn more project management best practices from our experts to help your MSP operate more efficiently? Attend our upcoming webinar on Structured Project Planning for MSPs. It happens on October 26th at 1PM - Register now!