Friday 4 February 2022

How a project manager can define key project metrics



"RM and the customer are running in different directions." How much pain there is in this phrase, because it means that the team is wasting resources. But this can be avoided.

He has more than 10 years of experience in project and portfolio management in international companies. Pavel has worked on large-scale projects with a budget of up to $ 150 million, and at Laba he teaches the course "Project Management 2.0".

Pavel told us how to identify key success metrics and prepare a financial report on the project.

What are the success metrics?

Universal for the RM - timing, budget and coverage. But dwelling on them is a big mistake. Key metrics should be those that assess compliance with the customer's goals. They need to be identified in the early stages of the project, because implementation depends on them. When RM understands what is important and valuable to the client, he will make appropriate decisions.

For example, in IT, specific metrics are divided into two types:

those that show the profitability of the implemented solution
those that show to what extent this solution is popular and how much it is possible to retain the audience
There are metrics that relate not only to IT, but also to other areas, including banks and telecom.

ARPU (Average Revenue Per User) – the average check per user or per client. This is an important indicator, because when the customer plans to implement some functionality, he counts on certain revenues.

It is also considered to be Paying Users, because there can be users of only the free part of the functionality. This metric shows the viability of the product and is equal to the number of paying users per period. A wake-up call can be a situation if most of the income is brought by only a few users. The loss of each of them can make the project unprofitable.

LTV (lifetime value) is the estimated net income from all customer interactions with the product for the entire time of its use. Determines the appropriateness of the product.

There are metrics that help to understand how much the project manages to motivate the audience to stay:

Retention rate is the ability of a company to retain its consumers for a certain time.

Churn rate (the indicator of departed users) is the percentage of users who refused to use the proposed service in the future.

For example, the KPI of a particular project for a large system business can be a reduction in the Churn rate by only 1.5%, which is very significant for the company's financial performance.

How to identify metrics in the IT sphere: an example
Let's say you took a project to create an application for calling a taxi. Here you will definitely have two types of users: passengers and drivers. The program should meet their needs, and the metrics should take into account the goals for each of the categories of users.

Therefore, you can focus on such a set of metrics:

  • implementation period (permissible deviations from the baseline)
  • budget fulfillment (allowable deviations)


  • Revenue is the total revenue from the service.
  • ARPU passengers to understand how much each user brings on average.
  • Paying Users to see what percentage of users resort to paid activities.
  • Lifetime value (LTV) will show the income from the client for the time of using the application. Indirectly, this parameter determines the maximum cost of attracting new users.
  • CAC (Customer Acquisition Cost) – the cost of attracting one user. It is necessary to compare with LTV: 1/1 (or lower) - you need to urgently do something, otherwise the company will go bankrupt, 2/1 - already not bad, 3/1 (and above) - you can invest more in attracting new users and the project is able to afford it.

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Active Base / Retention:

MAU-P (Monthly Active Users-Passengers) — number of active users-passengers. Can be analyzed for different periods (day / week / 3 months).
MAU-D (Monthly Active Users-Drivers) — number of active users-drivers. If critically reduced, there will be no one to carry people.
Churn rate – Passengers – how many passengers stopped using the application. The growth of this indicator suggests that it is necessary to change the price, functionality, design, communications, etc.
Churn rate – Drivers – how many drivers stopped using the application. The growth of this indicator signals that it is necessary to revise the terms of the partnership.

Average trip evaluation is an artificial metric for a specific example. It shows how well drivers comply with the rules of customer service (driving on traffic rules, cleanliness of cars, mask, serviceability of seat belts).
It is equally important to measure NPS (Net Promoter Score). It tells you how much people are willing to recommend your app to their friends. Customer loyalty depends on NPS. This includes the comfort of using our application, and the "price - quality" ratio.

What will happen if the PM does not record the results
Having formulated project goals using KPIs and metrics, the project manager (PM) must coordinate them with key stakeholders and the customer. It is important to do this at the start of the project, before the team begins to spend resources. Without a common understanding, RM and the customer will run in different directions.

As practice shows, if the RM does not record the results of the project, then stakeholders and the client will do it subjectively. So it's better to lead this story so as not to jeopardize the career of the project manager and the whole team.

All the processes of project management are live. They do not take place in a vacuum, but in an organization with a certain organizational structure and interactions between people. If these processes are not adjusted, then there will be no development. The Final Report (FO) is just a way to identify problems and offer solutions.

Problems faced by project manager

Why record the results of the project: the top 3 factors
#1. Retrospective and Reflection. For RM, this is an opportunity to figure out what it is doing wrong and how to work more efficiently.

#2. Accumulation of experience of the organization. The project manager should be able not to start from scratch, but to use the achievements of the previous RM of the company. This is the global goal of the final report on the project.

#3. Fixation of the results of a particular project, so that it is not possible to interpret them in different ways.

How to Create an Effective Final Report

In the FO, be sure to record what was planned and what happened in the end. De facto FO is a retrospective (or post-mortem analysis - it works on the principle of
"autopsy will show"), in which we describe:

planned and actual implementation period

  • causes of time shifts. Important: if the project was conducted correctly, then any shift in the implementation period should have been fixed by a request for change. The Republic of Moldova does not make such decisions - it can only prepare everything, offer options for further actions, but the sponsor has the last word.
  • expense report (how much you planned and how much you spent in the end)
  • risks (it is necessary to indicate which countermeasures were effective and which were not). It is also important to note the risks that have not been identified but have occurred in the process. Assists all subsequent RM in working with other projects
  • team (what skills and experience we got, what turnover, whether there were problems with hiring)

Recommended reading:

experience in procurement (which contractors were involved and how they were worked with)
communication experience (how much the customer and the team could effectively interact)

RM's reflection on his work

Here are 4 key questions that RM should answer after the end of the project:

  1.  What would he do differently?
  2.  What would he stop doing?
  3.  What would he do more?
  4. What would he do less?

Musthave-tools for RM

From my experience in telecom and banking, very flexible reporting allows you to build a Power BI product from Microsoft. To obtain financial metrics, it is first necessary to work with the accounting department, what data and from which reports are needed.

To make a FO easy, it is important to conduct the project correctly from the very beginning. After all, in addition to the reflection of the Republic of Moldova on the work done, the FO includes the history of transformations collected in one document. If something changed during the project (deadlines, budget), such moments should be recorded.

All this data should be kept at hand by the project manager in the form of a simple table in Excel with the following information:

  • date of approval of the change
  • description and reasons why it was necessary to enter it
  • project implementation time/budget before the change
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project implementation time/budget as a result of the change

who agreed on the change

  • a file with the minutes of the meeting where the decision was made, or a confirmation letter or a link to a document in the electronic document management system. Any method accepted in the organization to fix agreements is suitable here.
  • It will be difficult for a project manager to explain why the project was delayed, the budget was exceeded, only part of the functionality was made, and there were no requests for change.

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