Top 4 Resource Management KPIs: Project Management Metrics
by Martijn van der Hoeden on December 1, 2021
Leveraging project management metrics is a surefire way to check on your team’s efficiency. An excellent tool to make that happen is to use KPIs-- Key Performance Indicators-- for resource management.
Resource management is the process of identifying and deploying all the necessary resources to complete a project. Although not necessarily given priority by small startups at the outset, it’s actually one of the most important aspects of project management.
If efficiency is what you’re after, upgrading your resource management is a shrewd place to make it happen.
That’s because resource management will actually help you keep track of your efficiency, using KPIs as tangible benchmarks. Using KPI for resource management can help you:
- Complete your projects without going over budget.
- Keep your clients happy.
- Keep your revenue up.
In order to accurately measure your resource management performance, you need clear KPIs. Here are 4 of the most important KPIs to keep in mind for resource planning in project management.
Top 4 KPIs for Resource Management
1. Revenue per billable resource
Perhaps the most pivotal KPI for resource management is revenue per billable resource, or how much revenue you get per employee. To calculate revenue per billable resource, divide your total revenue / billable employees.
Revenue per billable resource = Total revenue / Billable employees
Measuring revenue per billable resource over time will help you identify how efficiently you’re using your resources. If you see a sustained dip in this KPI, that might suggest:
- You have highly skilled people with high hourly rates working on lower-value projects— that’s expensive and not very efficient.
- People are being assigned to projects they’re not the best fit for (i.e. it takes them far more hours to complete than it would take another team member).
A utilization dashboard can help you keep track of who is being overutilized and who is underutilized, so you can adjust and get more revenue per resource.
2. Resource cost variance
Resource cost variance is another important KPI to include in your project management metrics. This number equals the difference between your forecasted budget for resources and your actual budget. In other works, resource cost variance represents the difference between what you thought something would cost and what it actually ended up costing. It’s usually expressed as a percentage.
Resource cost variance % = (Earned Value - Actual Cost) / Earned Value
Clients are obviously much happier when you can stay at or under the proposed budget, so it’s vital to budget as accurately as possible. If your resource cost variance percentage goes up because you’re often over budget, you may need to reassess your budgeting process. Ask yourself what type of costs you frequently underestimate and how you can estimate more accurately.
3. Resource effort variance
Similar to resource cost variance, resource effort variance is the difference between the forecasted number of hours for a project and the actual hours worked on that project. This number is especially important for teams who bill by the hour. Clients will be very unhappy if you end up billing them way more than you estimated, especially if they’re blindsided by it.
Resource effort variance = (Actual effort – Planned effort) / Planned effort x 100
Keeping a close eye on resource effort variance throughout a project can help alert you ahead of time if things are getting off track; so you can adjust the client’s expectations and/or change approaches.
On the other hand, if you’re consistently overestimating how long tasks will take, you’re probably coming in under budget (which clients like), but you can run into other problems:
- You could be losing contracts because potential clients decide to go with another organization that gave a lower quote.
- You may not be giving team members enough work and thus compromising your efficiency.
4. Billable utilization rate
Finally, one of the top KPIs for resource management and project management at-large is billable utilization rate. The billable utilization rate is the percentage of time employees are working on billable work (i.e. client projects) that generates revenue as opposed to internal work (admin like logging hours, creating contracts, billing, internal meetings, etc.). You can calculate this number across the whole organization or per employee.
Billable utilization rate = (Billable hours / Total hours) x 100
Companies generally aim for 80% billable utilization rate overall. Employees’ billable utilization rates will vary depending on job description, as some roles necessitate more non-billable work than others.
Cutting back on internal work whenever possible can help keep billable utilization rate where it should be. While some non-billable activities will always be necessary, you can use PSA software to automate some of them (which reduces the amount of time employees spend on them. A few examples include easy time logging, contract templates, and automated invoicing.
Final point on KPIs for resource management
Resource management is an important part of project management, and you need to be able to measure and track resource management performance. By using the KPIs provided in this article for your project management metrics, you can get a better grip on:
- Knowing with what people and in what department(s) inefficiencies lie
- Where you’re doing well
- What you can improve on
Because the above KPIs are all about resource efficiency-- that is, how billable and productive your team members are-- it makes sense to automate and streamline repetitive processes as much as you can. PSA software with self-driving features can save you a lot on non-billable work, while helping you with resource management efficiency and visibility.
Be sure to get project management software with resource management capabilities that can connect with all the other moving parts of your projects.
HINT- PSOhub does just that! Sign up for PSOhub.