Stop Shunning Subjective Performance Measures
Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected]. Andy's new book Risk Management for Project Driven Organizations is now available.
Measuring projects has been around for as long as there have been projects. And arguments about how projects should be measured have been around for just about the same amount of time. It can legitimately be difficult: How do you know whether a new version of a product is generating more revenue than the old version would have? How do you determine success without waiting for several quarters to see revenue flow or profitability?
Sometimes the success or failure of projects is obvious, but often it’s not—and that’s why many organizations still struggle with benefits realization. They spend a lot of money on projects that they expect to benefit the business, but they’re never absolutely sure whether those benefits have occurred.
In recent years, that has led to the rise in the use of proxy measures in a number of organizations. These are measures that are different from, but related to, the objectives that are trying to be achieved. They can be used as early indicators of performance.
As a simple example, if the success of a project to develop a new customer-facing solution is going to be measured in terms of profitability of that solution, then unit sales might be used as a proxy. It’s not the same, and the relationship isn’t linear—you aren’t likely to double profitability if you double unit sales.
Unit sales are also…
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It's the old gag: people that pay for things never complain. It's the guy you give something to that you can't please. - Will Rogers |
