Tying Your Project Metrics to your Strategic Business Drivers

Strategy and Execution. Pick up any business magazine or book and that's about all you'll be reading about it seems. Company XYZ is a top performer because they not only come up with great ideas (innovation / strategy), but then they can make it happen (execution). I recently read two books about Strategy and Execution, "Clever" by Rob Goffee and Gareth Jones and "Making Ideas Happen: Overcoming the Obstacles between Vision and Reality" by Scott Belsky. Even the cover story of my July-August 2010 Havard Business Review is about Strategy and Execution, "The Effective Organization: Turn Great Strategy into Great Results". Project Managers are all about execution, but how do our projects align with our company or organization's business strategy? Do we even know? Or care? We should. Sure, we spend time planning, defining scope and requirements, then putting together a team, but the majority of our time we spend actual doing things, aka executing. Plan the work. Work the plan. Do the projects that we spend time executing align with our core business strategies? If not, we shouldn't be doing them.

And not only should the projects that we are managing be aligned with our organization's strategic objectives, but so should the measurements that we track and use to manage them. I'm often asked by PM's or during the course of implementing an EPM (Enterprise Project Management) system what metrics should they be using. Most talk about Earned Value, Burn rate, Budget vs Actual and the like. And while these are all good and provide valuable information about how a project is peforming, I typically ask a question instead of giving a specific answer, at least right away.

What are your organization's core strategic drivers or objectives?

This is usually met with silence. Let's take Earned Value. Earned Value is a set of measurements that combine scope, schedule and cost into a set of integrated and hopefully objective metrics. Originated during the 1960s by the United States DOD to manage and provide insight into government projects, it has gained in popularity in the commercial space in recent years. I like it because of its high accuracy in predicting how a project is going to run (for cost and schedule) within the first 20% of work on the project. But it is a reactive, corrective action metric and it only covers part of what you should be managing as a project manager.

Take the following list of Project Management Knowledge areas as outlined in PMI's PMBOK (Project Management Book of Knowledge):

  • Project Management Integration
  • Project Scope Management
  • Project Time Management
  • Project Cost Management
  • Project Quality Management
  • Project HR Management
  • Project Communication Management
  • Project Risk Management
  • Project Procurement Management

Only the three areas that are highlighted in bold are covered by Earned Value. What about the rest of the areas? Couldn't quality of the deliverables of your project effect its completion or the stakeholders satisfaction? Having to go back and rework parts that were delivered certainly could effect your project's timeline in a negative way. What about not having enough or the right team members to do the work on your project? Do they have the tools or training they need to do tasks they've been assigned? Or not getting timely delivery of materials to create those parts, could that negatively impact your project? What values in Earned Value do you use to measure these areas? The short answer is there aren't any.

Tracking costs and delivering on schedule might be part of your organization's strategic objectives, typically under Customer Satisfaction or decreasing cost to market, but they are only part of the picture. And if they aren't part of your organizations core strategic objectives, why are you putting so much emphasis on them by tracking them? I know, I know. It's almost considered heresy to suggest not tracking costs and schedule for projects, especially in today's economic climate, but I'm a "why" kind of gal.

I like Earned Value. I really do. In fact, I use it for almost every project that I manage. In my next post, I'll be talking about what you should and could be measuring in addition with Earned Value to get a better picture of how your project is executing.

Hint: It involves a little thing called the Balanced Scorecard.