What is Project Performance Management? A Complete Guide

Projects that start need to be tracked to ensure they remain compliant with business objectives, market needs, and stipulated baselines. All of this evaluation, monitoring, and control is what primarily formulates the important function of project performance management for a project manager. In this article, we aim to establish a foundational understanding of what performance management is in project management, what it encompasses, what is the modus operandi of it, how project managers achieve it, its goals, benefits, and more.

What Is Project Performance Management?

Project performance management is the process of keeping track and evaluating the viability and desirability of continuing projects as well as monitoring their efficiency and congruency to outlined organizational goals and objectives. The performance management process goes beyond just tracking tasks/activities and involves supervision of the overall project from initiation to completion. Components of performance management in this context would include managing budgets, schedules, resources, communications, procurements, etc., for a project while overlooking the organization's systems.

Performance management for a project is essentially applying processes and compliance in a project set up in addition to the ones already laid out at the organizational level. When evaluating performance management strategies to plan or strategize performance management in real-time, project managers need to account for several factors, such as:

1. Type of project in consideration
2. Team members involved in the project
3. Organization Processes, hierarchy, and governance model
4. Tailored requirements (from client/organization in certain cases)

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How Does Project Performance Management Benefit a Business?

In today’s VUCA environment in which projects are forced to operate, no project manager can undermine the importance of performance management in the project. This is due to several reasons, which may be noted as follows:  

• Ever-changing market conditions and consumer behaviors 
• Growing technology and marketable platforms 
• Cut-throat competition across industries
• Unique and more-challenging project risks
• Changes in hiring trends, ways of working

Due to one or more of the above factors, project managers need to keep an active track of performance management which is also a harbinger of other benefits such as: 

• Keeps an active check on project path to ensure it does stray away from organization changes
• Helps establish project change control is within acceptable thresholds
• Ensures effective allocation and management of resources in the project
• Gives room for adjustment in case of deviations with guidance to limit impacts 
• Strengthens the governance model of the organization
• Improvises communication and ways of working across project teams with a constant customer and objective focus
• Abets project manager performance
• Creates competitive culture among and within teams 
• Promotes measures for overall team performance and success
• Helps solidify project activities and link them to KPIs/goals
• Improves transparency in the team with measures for corrective action where necessary

Get certified with PMP corporate training courses and learn the bigger picture beyond project management - understand techniques for performance management and how to successfully transition projects from ideation, execution, and closure to benefit realization, all within a strong performance management set-up.

How Does Project Performance Management Work?

So now that you have understood what is performance management and what its benefits are, the next question you may have is how does it work or how project managers can establish the performance management framework in the organization? 

Getting started with performance management includes setting up a framework for the evaluation of project performance involving taking certain steps, viz:

• Creating a clear hierarchical structure across the organization
• Adding measures and criteria to the existing governance model (to avoid reinventing the wheel)
• Centralizing data and tracking of projects to form a single focal point
• Utilizing a commercial or indigenous software tool to create workflows for two-way communication
• Driving reporting uniformity and standardizing KPIs and metrics across the organization
• Creating dashboards and reports to track performance, variances, and risks
• Enabling stakeholder communication and satisfaction by providing self-service dashboards/reports

To summarize, creating a performance management process involves addressing all touchpoints in the Plan, Do, Check, Act (PDCA) cycle to create a feedback loop and strengthen the governance process to solidify both project performance management as well as organization performance management. 

While organizations may address it by different nomenclature, any performance management life cycle must have the five phases of planning, monitoring, learning, feedback, and rewarding to be complete and contribute to successful evaluations and results.

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Project Performance Management Goals

Project performance management is an important discipline that helps project managers stay current on the project's progress and also keep track of variations from what was planned or baseline to measure project success. Having a well-defined and structured project performance management plan helps outline goals that project managers aim to achieve with the implementation of the performance management strategies or goals outlined. Some of the common goals include:

• Brings awareness of the bigger picture in executing projects
• Bolsters portfolio efforts in linking project activities to overall organization goals
• Creating a culture of transparency and competition driven by results
• Defining measures for performance evaluation of individual members and teams
• Outlining measures for evaluating the completion of the project's goals and objectives  
• Driving engagement across the organization positively impacts success metrics and KPIs
• Reducing wastage, rework, and sunk costs which can be avoided

Stages of Project Performance Management

Project performance management involves creating a plan that bounds within the outlined governance model for the organization yet does not overlap with its performance management strategies. This involves undertaking a series of steps or stages viz:

Stage 1: Understanding the Business Case 

Understanding the project business case or business needs behind project selection is the first and foremost step that lays the foundation for the determination of a successful measurement criterion. This understanding and know-how also help in creating specific, measurable indicators of performance tailored to the needs of the project under the organization's standard operating procedures.

Stage 2: Define the Project Goals 

Having definitive project goals, which are in turn linked with overall organizational strategies and KPIs, helps maintain transparency and also justifies the viability and desirability of the project in the overall landscape. The presence of structured project goals helps ease governance, funding, communication, and workflows in the organization, thereby enabling proper performance evaluations and transparency.

Stage 3: Data Points Establishment for Result Measurement 

There can be multiple types of performance management systems that project, program, or portfolio managers can use to perform performance management across the organization, but none of them can be effective if not backed with objective data points. Establishing data points and defining objective criteria helps get rid of open-ended goals or statements and brings in the required dependencies as well as clarity on the means or measures to achieve the goals.

Stage 4: Settling Milestones, Deadlines, and Action Items 

Regular project reviews set up by way of milestones, deadlines, and open action item reviews not only help projects move forward appropriately but also ensure team members are motivated with smaller achievements to reach and meet larger goals or deadlines. Having clear entry and exit criteria for the projects at the operational level increases visibility and efficient tracking and helps avoid bottlenecks by addressing items as they happen rather than going backward or dwelling on them.

Stage 5: Mid-point Checkpoints 

Creating a culture of constantly reviewing project progress helps avoid surprises affecting project baselines or milestones, especially with so much uncertainty, socio-economic challenges, and technological and related risks in which projects operate. Checkpoints and regular reviews ensure nothing strays too far to result in a scope creep or raise new issues to the overall progress.

Stage 6: Final Report Assessment  

To be effective and economical, projects should start with an end in mind and this is the primary objective of measuring or managing project performance. The final report assessments being shared with leadership and stakeholders act as a formal closure communication for the project and move the project to the much-awaited benefit realization phase. This also covers the important piece of the puzzle for project performance management by evaluating what was planned vs what was completed and what's left to derive a logical conclusion on the project.

A Prince2 certification will help you understand all stages of performance management, how to successfully set up each stage, and collaborate on successful projects and initiatives.

How to Measure Project Performance Management?

Project performance management is an important discipline that seeks to help project and program managers run projects effectively. To be effective, it is important to evaluate performance management against one or more of the following criteria:

• Variance metrics - planned vs actual variances
• Portfolio metrics on project completions
• Return on Investment data
• Net Promoter score 
• Number of project escalations
• Resource allocation data

Whilst the list may not be exhaustive, it is important to gauge process efficiencies and effectiveness of performance management as a whole to ensure it orchestrates the project landscape of the organization towards the achievement of outlined goals, strategies, and objectives & deriving the resultant benefits.

Using Software to Execute Performance Management

Performance management is closely tied to the organization's governance model and, unless supported by a tool, is very tedious to accomplish as it involves having a bird's eye view of the way tasks are planned, executed, monitored, and closed. Managing these aspects without the support of a software tool is neither practically possible nor advisable, considering the criticality of this discipline. Utilizing or implementing performance management via a tool helps the organization by:

• Centralizing all information on projects,
• Ensuring transparency and linkage of strategies to projects and vice-versa,
• Aiding the downward flow of information, ensuring full communication,
• Supporting portfolio objectives and fulfillment of planned initiatives,
• Providing real-time data related to projects which helps monitor variances effectively,
• Allowing leadership to focus on optimizations and critical decision-making without worrying about the granularity of tracking items
• Providing calculations and reports over time to monitor progress,
• Ensuring more productive and engaging discussions across all levels

A few popular project performance management software are: 

• Microsoft Project
• JIRA
• Smartsheet
• Asana
• Wrike
• Monday.com

Many tools even provide ready-to-use performance management templates or even out-of-the-box performance management examples for organizations to merely update with basic data and start monitoring projects, tracking progress, and reporting performance statistics with advanced capabilities and configurations. Along with the tools and software for project performance management, going for KnowledgeHut courses related to Project Management will aid you in getting globally recognized accreditations.

Conclusion

Performance management keeps a check on what projects are fit for contributing to and enhancing organizational revenue as well as saving costs by ensuring the organization's valuable funding is not going towards projects which result in sunk costs or are not aligned with the strategic goals. To be effective, project management measures need to be tied to organization KPIs and the broader governance framework.

Performance management acts as the intermediary and adjudicating mechanism to ensure projects are selected cautiously, planned thoroughly, executed wisely and closed in time to yield the true benefit of carrying them out and contributing to higher leadership, customer, and stakeholder satisfaction.