Blog

18thMay
Managing project costs with metrics

Metrics provide a powerful way of measuring the performance and health of your project. They can be categorized according to seven criteria: safety, time, cost, resources, scope, quality, and actions. Examples are the average waiting time, installed quantities or cost overrun. A wide range of metrics could be defined for every project. 

The basic process to follow for each of these metrics is:

  • Establishing critical processes and requirements
  • Identifying specific, quantifiable outputs of work
  • Establishing targets against which results can be scored

Metrics should encourage improvement, effectiveness and appropriate levels of project control, and help you to spot possible risks and productivity losses before they happen. Compare metrics against an expected baseline that is either according to the planned progress or the industry standard. This benchmarking can be done on a project level, but also on a larger scale to determine how and why your business is successful. It is a continuous process in which organizations continually seek to improve their practices.

Challenges

One of the biggest challenges for metric benchmarking is the variety of metric definitions used among companies or divisions. Definitions may change over time within the same organization due to changes in leadership and priorities. The most useful comparisons can be made when metric definitions are shared between business units and do not change over time so improvements can be verified.

In order to calibrate and benchmark project data, it is advised to set up an in-house benchmarking tool, to have a project history and benchmarking solution fit for your needs. Benchmarking can be executed by comparing the different ratios and characteristic values after the projects. To be able to compare projects, it is critical to adjust for scope changes, different locations or market conditions. A well-trained cost engineer should be able to help you out.

Make sure you choose a tool that gives a quick and easy way to access your company's historical data to establish benchmarking studies. This should be able to generate averages, as well as ranges of normalized costs for each element of a given project, adjusted for location and time. 

Most important elements of benchmarking

To conclude, here is an overview of the elements you should have in place to start your in-depth benchmarking:

  • Respond to new business opportunities with solid data based on your history 
  • Provide management with information on project performance for decision making 
  • Reduce risks by performing 'sanity checks' (benchmarking) 
  • Provide enterprise-wide access to historical data through centralized storage of historical projects to standardize benchmarking
  • By having an in-house benchmarking tool, you will be able to analyze your projects against each other, independent from external companies

About Cleopatra Benchmarking 

Cleopatra Benchmark is a blueprint to take your project cost management back from the clutter that comes together with complex technical projects.

Tracking the performance of your projects, Cleopatra Benchmark serves as ‘corporate memory’ for high-level decision making. With Cleopatra, you can extract metrics from executed and running projects, discover trends in key cost drivers and ratios, compare the performance of projects and common assets and improve the accuracy and reliability of the future cost estimates.

If you'd like to talk to an expert about our software Cleopatra Enterprise, please request a demo now.