What project management metrics are you tracking at your MSP? Make sure you get these in the mix.
Tracking metrics is a dicey business. Any KPIs you take the time to track will influence your decisions and offer insights into your people and team productivity. Tracking invaluable or incorrect metrics can give you a skewed view of reality or make you see the truth in the wrong light.
According to Bernard Marr, author of Key Performance Indicators (KPI): The 75 measures every manager needs to know, “A well-designed set of KPIs ought to provide the vital navigation instruments that give everyone an understanding of current levels of performance. However, in practice, these well-intended KPIs can turn toxic.” The trick, he says, is not to use KPIs as a target. Use them to build self-knowledge, to inform your decisions, and to see where you need to spend or cut back.
When it comes to managing projects at an MSP, tracking the right KPIs can help you see where you have unnecessary waste or misdirected resources. It can show you ways to direct your efforts more efficiently.
Here are some project management KPIs you should consider tracking.
1) Project margin
This should be the first goal and target you set to work towards. Knowing the average margins of your projects is one of the most important metrics, if not the most important. It tells you how efficiently you’re scoping and executing projects.
You need to be tracking your overall project margin to know how reality matches up with your estimates. This KPI can show you where you are under-scoping for work and which projects are high earners. Once you set your project margin, you can drill down to evaluate by type, billing method, and a number of different ways.
2) Planned vs. actual hours
Take a look at how well your planned hours matched up to the actual hours spent on a project. For example, you might learn, that you frequently estimated four hours for an engineer to do a particular task, but when you look at your planned versus actual hours, you see that the number of hours is much higher.
This mismatch creates frequent project delays that will snowball. It will also lead to pricing that is off the mark, impacting your margin KPI. Tracking this metric can help you tighten up your project templates so that your plans become more accurate over time.
3) Percentage of project-related revenue
This KPI isn’t necessarily specific to project management, but it is an important KPI for your project work and overall business. MSP leaders commonly believe that projects are a loss leader – a way to get new clients for the monthly recurring revenue. Do they need to be, though? Project work can be used to help grow your business and get new clients in the door.
According to some experts, you should shoot for 30 percent project related revenue. And about half of our customers tell us that this number hovers between 11 and 25%.
Knowing this number can help put project work in perspective. If projects represent a higher percentage of your revenue than you were assuming, you might need to allocate more resources to managing them. This way, your projects will run more efficiently and become a more reliable profit center. If the number of projects you're running is below this threshold, it might be time to check with customers who might need tech or security updates that you can offer as projects.
4) Average duration of projects
Do your projects drag on forever, always playing second fiddle to your urgent work? Knowing the average duration of your projects can help you see where you need to tighten up your processes, commit resources to project management, or focus management on project completion.
Knowing your average project duration will help you better understand your backlog, as well. Perhaps you are assuming you have a three-month backlog, but that number is, in fact, much longer. Knowing this can help you set expectations with customers, preventing you from offering to complete a project in three weeks when your average project duration tells you that three months is much more likely.
5) Projects past due
Do you deliver projects when you say you will? This is a good metric to measure because missed due dates directly impact customer satisfaction. Customers trust you to deliver projects on time so they can plan their own resources and schedules. If you often fall behind, your customers are probably not happy. Also, you can’t invoice for projects that aren’t completed, which affects your revenue goals.
Knowing your past due performance can help you see where you need to create a process or invest in project management tools and personnel. This KPI also gives you a more realistic idea of when you can complete projects in your backlog.
6) Percent time spent on project management
If an MSP is quoting and billing for project management time, the industry standard is to bill for an estimated 20% of the overall engineering hours.
It’s crucial to keep an eye on how much time your people spend on project management to determine if your team is billing near the estimated 20% mark. This number can help you see if you are losing out on potential profits. When you have an accurate percent of time spent on project management, you can scope and quote your projects correctly from the start.
7) Project resource time spent on specific tasks
Moovila recently fielded a survey of our customers. They told us that, by far, the most common project manager resource types were engineers who split their time between hands-on technical services and project management. They also told us that their project managers (aka engineers) spend significant time each week creating and updating project schedules.
Is that a smart use of technical resources in your firm?
Engineers are expensive. Updating schedules is something a coordinator – or a smart project management tool – can help with. If you notice your engineers spending a significant amount of time updating schedules and project plans, it might be time to update your project process or hire a project coordinator.
Moovila Perfect Project for MSPs offers easy, advanced analytics tools to simplify tracking important KPIs. Take a tour to see how it works.
