8 tools for successful project monitoring

Table of contents

1. Why is project monitoring important?
2. What do I have to monitor?
3. What tools and metrics should I use for project monitoring?
   • 1. Progress: How much is still to be done?
   • 2. Status: Where are the issues?
   • 3. Milestone trend analysis: Can we meet deadline XY?
   • 4. Schedule variance: Will the project be finished on time?
   • 5. Schedule performance index: How much more time do we need for the project?
   • 6. Cost variance: Are we on budget?
   • 7. Cost performance index: what additional costs do we get for the project?
   • 8. Contribution margin: Is the project profitable for us?
4. Systematic solution for your project monitoring

Why is project monitoring important?

Project monitoring, or project controlling, is the ongoing monitoring of your projects. Even the best projects never run exactly according to plan. Therefore, it is important to permanently compare the actual state with the target state. Only then can you recognize deviations in time and take countermeasures.

What do I have to monitor?

A saying by Peter Drucker says: “What gets measured gets done”. Although this statement is simplistic, it hits the nail on the head. In project management, it is particularly important to take this rule to heart, because it highlights three key points:

Make concrete targets: Very central to project monitoring is to first be clear about what goals you want to achieve with the project. Record these goals in concrete terms. Specifications such as “rapid completion” or “a satisfied customer” are of little help. It is better to formulate the goal as concretely as possible, e.g. “Completion by … at the latest”.

Collect the right key figures: To determine whether you are achieving your project goals, you need a benchmark that tells you the current state of affairs. This metric should be easy to collect and allow you to either make a direct comparison of target and actuals or an estimate for the future.

Prioritize your requirements: Just because you can measure something doesn’t automatically mean you should. With too many metrics, you create unnecessary bureaucracy and lose sight of the big picture. Be guided by your project goals and measure only important requirements.

What tools and metrics should I use for project monitoring?

Most project goals lie within the “Magic Triangle”. This refers to three variables that typically make up the success of a project. Specifically, they are:

• Time: Can I complete the project on time? That is, within the time frame I have estimated for the project.
• Cost: Is the cost of the project within the range I have calculated for it?
• Performance: Does the result of the project meet the requirements I have set for the project in terms of quality and scope?

Does your project monitoring also revolve around these questions? Then the following 5 tools and metrics will help you measure your project success.

1. Progress: How much is still to be done?

Project progress is a percentage that indicates what portion of the work you have already completed in a project. It is calculated based on the information provided by your project team. Completed tasks have a progress of 100%, work packages that have not yet been started have a progress of 0%. Progress can also be specified for tasks that are currently being processed, e.g. 50%.

Based on the progress of the individual work packages, you can derive the progress of your subprojects and the overall project. To do this, simply add up the progress of all the work packages in each sub-project and divide by the number of work packages.

If your project consists of several subprojects, you can add up the progress of the subprojects and divide it by the number of subprojects. In order to be able to draw meaningful conclusions, work projects and subprojects should each be approximately the same size, because the method treats all work packages the same and does not differentiate between small and large tasks.

A spreadsheet program such as Excel can help you with the calculation. It is even more convenient with project management software such as projectfacts. In it, employees can directly enter their current progress, and the system automatically does the calculation for you.

The project progress is particularly meaningful if you compare it with another key figure, e.g. the time already elapsed or the budget used up. The Earned Value (EV) is used for this purpose:

2. Status: Where are the issues?

Progress and status provide you with an initial overview of the state of your project. Both metrics are as simple as they are meaningful. Although they are related, they mean two different things. While progress is a percentage, status is more or less a keyword that indicates the current state of a task, e.g. “open”, “on hold” or “completed”.

The status thus provides valuable additional information about why a task is not yet complete. In software tools for project monitoring, statuses can usually be freely selected and combined into workflows. Employees can view the current status of a task (e.g., “open”) and set it to a predefined next status (e.g., “in progress”).

Statuses can also be assigned a color. This way you set up a kind of traffic light system to monitor the work. Irregularities such as missing material or a waiting approval then draw attention to themselves with a signal color.

Such a traffic light system can be implemented with spreadsheet tools such as Excel. However, a special software solution such as projectfacts is simpler and easier to maintain. In it, you define project statuses freely according to your wishes and, in the case of large projects, can filter specifically for the statuses that are relevant to you.

3. Milestone trend analysis: Can we meet deadline XY?

Milestones are particularly important for project success. They mark important events for the company or prerequisites for the further course of the project. They often have far-reaching consequences for the company itself and possibly also for other project partners. Therefore, the question is obvious whether a certain milestone date can probably be met.

In Milestone Trend Analysis (MTA), you create a grid in which the milestone dates are plotted on the vertical axis and the analysis dates are plotted on the horizontal axis. On the far left, you mark the dates by which the milestones should be reached according to your planning. For each new analysis time, you re-estimate when the milestones are expected to be reached based on the current progress of the project.

This results in a progress line for each milestone. If the line always stays at the same level, the project is progressing as planned. If the line rises, it means that your milestones are moving further and further into the future. The project is therefore behind schedule. If the dates jump up and down alternately, there is no systematic delay yet, but it is also uncertain whether the deadline can be met.

4. Schedule variance: Will the project be finished on time?

Whether a project will be completed on time is probably one of the most common questions in project management. Many large projects show that even professionals struggle with this question. To ensure that your projects don’t suffer the same fate, we present below two key figures that you can use to quickly identify and even anticipate schedule deviations.

One method of detecting schedule delays makes use of budget planning. This involves comparing the current earned value (EV) with the planned costs (PC) estimated for the work already completed. Schedule Variance (SV) is calculated as follows:

If the planned cost is greater than the earned value, it indicates that the project is behind schedule. In the opposite case, the project is even ahead of schedule.

5. Schedule performance index: How much more time do we need for the project?

A related metric to schedule deviation is Schedule Performance Index (SPI). It uses the same values, but is calculated slightly differently than schedule deviation.

The special thing about the schedule performance index is that it gives you an indication of how much your project is delayed. For example, if you get an SPI of 0.8, that means an expected delay of (100/0.8)-100% = 25%. So you should allow a quarter more time for your project than originally estimated. Of course, it is easier to let a project monitoring software do the calculation for you than to do it manually.

6. Cost variance: Are we on budget?

Also for the budget some key figures help you to evaluate your project. The simplest form is also here the target/actual comparison. The Cost Variance (CV) is obtained by subtracting the actual cost (AC) from the earned value (EV).

If the result is negative, the actual costs are greater than the current earned value. The project is therefore above budget. A positive result indicates that the costs are within the set limits.

7. Cost performance index: what additional costs do we get for the project?

Similar to project time, you can use the earned value and actual costs to estimate whether the budget is sufficient for the project overall. If you divide both values, you get the Cost Performance Index (CPI).

For example, if you have calculated a cost performance index of 0.75, the budget will probably not be met. If the costs continue to develop as before, additional costs of (100/0.75)-100% = 33% will be incurred. The project will therefore be one-third more expensive as things stand.

8. Contribution margin: Is the project profitable for us?

The contribution margin is an absolutely central business parameter. However, especially in projects it is often treated stepmotherly, because tracking all revenues and costs is time-consuming – at least if you try to do it with pen and paper (or Excel). Project monitoring software like projectfacts relieves you of much of the work.

Labor costs: Decisive for labor costs is the time your team invests in a project. With projectfacts project time tracking, all your project members can track working hours on those tasks you have worked on. For billing, the software automatically accesses the appropriate internal hourly rate. Surcharges for night and weekend work are also automatically taken into account.

Material costs: This generally refers to costs incurred by third-party suppliers, often for materials, but possibly also for personnel or expertise. You can track the related invoices digitally with projectfacts by photographing them or dragging and dropping them into the system.

Project revenues: The project revenues are usually the easiest to determine, because they are usually based on the order value of the customer. In projectfacts the order is directly linked to the project.

Costs and revenues are automatically summarized in projectfacts and the contribution margin is calculated. From this you can see whether your project has been economically worthwhile. In addition, you also receive a variety of other information and options for analysis, for example …

• Which work packages cause particularly high costs?
• With which project tasks is your team most busy?
• In which project phase do the largest target/actual deviations occur?
• And much more.