5 foundational KPIs every PM should track

5 KPIs every PM should track - and why

June 17, 2025

Read time: 6 minutes Words: 880

Welcome to the 85 new subscribers! This month, we're continuing our deep dive into the FOS framework—a new way we're introducing to help project and operations leaders rethink how they track performance.

FOS stands for:

  • Foundational metrics: Financial health & viability

  • Operational metrics: Efficiency & effectiveness

  • Strategic metrics: Innovation & long-term value

In this issue, we’re focusing on the foundational layer—the core financial KPIs that help you understand if a project is truly viable and sustainable.

To add a real-world lens, we spoke with project management expert Kyle Nitchen about what he believes are the most important KPIs to measure financial health in a modern project environment. Plus: 

  • Financial KPIs every PM & finance professional should master

  • Measuring project failure 

  • A project ops newsletter we are LOVING!

Foundational metrics and KPIs track cost, value, and performance to ensure projects stay on course.

But before we dive in, have you taken your FOS self-check assessment? It’s a quick way to see which areas of the FOS framework are overrepresented, underused, or missing entirely in your current tracking setup.

Let's dive in!

📊  1. Cost performance index (CPI)

Formula:
CPI = Earned Value (EV) / Actual Cost (AC)

Why it matters:

  • Helps in evaluating whether the project can be completed within the approved budget

  • Helps identify cost overruns before they escalate

  • Keeps teams focused on working efficiently within budget constraints

  • Ties financials to actual project progress (not just spend)

How it helps:
Supports better forecasting and strengthens financial accountability at the project level.

Expert insight:

CPI and burn rate are two of the core KPIs I track on every project. They’re more than just numbers; they’re my early warning system… I intentionally limit my metrics to 5–15 to avoid information overload. When you're leading a $50M+ healthcare project, staying ahead of potential issues is critical, and these indicators help me spot problems before they escalate into crises.

Kyle Nitchen


🔥 2. Burn rate against budget

Formula:
Burn Rate = Actual Spend / Time Elapsed
Compare this against the budgeted rate for the same period.

Why it matters:

  • Shows how fast you’re consuming your project budget

  • Highlights potential overruns before they hit

  • Ties the effort and cost back to the schedule

How it helps:
Enables mid-project corrections and supports better cash flow and resourcing decisions.

💸 3. Budget variance

Formula:
Budget Variance = Actual Cost – Planned Budget

Why it matters:

  • Acts as an early warning system for financial misalignment

  • Reveals scope creep or inefficiencies in spending

  • Keeps stakeholders aligned on cost expectations

How it helps:
Improves budgeting accuracy and builds credibility with finance teams.

💧 4. Liquidity ratio

Formula:
Liquidity Ratio = Current Assets / Current Liabilities

Why it matters:

  • Measures a project's or organization’s short-term financial stability

  • Indicates whether you can meet financial obligations as they arise

  • Helps assess risk exposure in tight cash flow situations

How it helps:
Keeps leadership informed about the project’s financial breathing room, especially useful in multi-project portfolios or in volatile markets.

Expert insight:

When tracking financial metrics, the key question is: are we funding the project, or is the project funding itself?

Kyle Nitchen

💼 5. Cost to complete (CTC)

Formula:
CTC = Estimate at Completion (EAC) – Actual Cost (AC)

Why it matters:

  • Tells you how much more money is needed to finish the project

  • Helps teams and stakeholders evaluate if continued investment is justified

  • Prevents surprises in the later stages of project delivery

How it helps:
CTC improves forecasting accuracy and supports funding decisions by breaking down remaining spend in real terms, not just total estimates.

Expert insight:

I use a cost-to-complete forecast to track both overspending and potential savings—it keeps the financial picture real as the project evolves … We update our Project Scorecard every Friday and review it on Mondays. That weekly rhythm gives us a clear view of trends before they become problems. Real-time tracking turns you from a historian of what happened into a leader of what’s next.

Kyle Nitchen

In the next issue, we’ll dive into the second layer of the FOS framework: operational metrics. These track how efficiently your project is running and answer the question: Is this project operating smoothly?

What to expect:

  • Key metrics like cycle time, resource utilization, and throughput

  • Simple formulas to calculate and apply them

  • Insights from a new expert with hands-on experience in both business operations and project management

This month’s can't-miss resources:

🖌From the web - Financial KPIs that every PM and finance professional should master (with a free Excel formula spreadsheet)
Paul Barnhurst

💌 Newsletter recommendation - What to do when a bottleneck is a person
The Ops8 Growth Insider

🎙Podcast vault - The CHAOS Report: Measuring project failure
Project Management Happy Hour

🗣 Discussions from Reddit - If you were starting out as a PM  in 2025, what would you do differently?

🗓Conference -International Project Management Conference @25-27 July, Toronto,Canada

Thank you for reading! See you next month

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