Understanding Your Construction Project Health Index

Calculating the health of a project, regardless of industry, helps ensure the job is worth doing and is done well. However, what about commercial construction projects specifically? Enter the construction project health index. Similar to a report card gauging a student’s progress during the school year, project health gauges how well a project is doing against set standards. 

What is Construction Project Health? 

According to indeed.com, project health is simply a project’s overall functionality and progress towards successful completion. Of course, this includes factors such as financial success, employee productivity, ability to meet deadlines, and budgeting, among other factors.

Construction project health is the same. For the same reason, it measures how effectively a project is advancing towards its set objectives. Thus, a project is healthy if it meets several key performance indicators. 

1. Timely delivery. 
2. Adherence to the budget. 
3. No disputes or claims. 
4. Meeting client expectations.
5. Satisfactory quality. 

When a project concludes, its health is often evaluated based on these standards. As The Project Management Institute (PMI) points out, questions like, “Will the project finish on time?” or “Will we stay within the budget?” are brought up often during the project lifecycle. To address these valid concerns, understanding your project’s health is crucial. 

Calculating Your Project Health Index with Schedule Data

Your Project Health Index effectively guides your focus and efforts. At SmartPM, we calculate Project Health using several metrics, but the three main ones are schedule quality, schedule performance index, and compression. To calculate it, you need to weigh different schedule metrics at different times. 

Schedule Quality

Schedule quality analysis is the foundation for diagnosing your project’s overall health. Once you establish a high-quality schedule, use it to assist with the following.

• Review where delays and recoveries have occurred. 
• Measure the impact of changes made to the planned schedule. 
• Consider whether or not the schedule is feasible. 

The DCMA 14-point assessment is a great place to start. It evaluates whether a schedule is well-built and whether it adheres to a set of best practices considered important to the success and manageability of a project. 

PRO TIP: projects range in size, scope, and complexity. Consider implementing a custom grading metric specific to the best practices unique to your organization’s requirements.

Regarding project health, schedule quality is most important at the beginning of a project. Developing a high-quality baseline schedule is critical for prioritizing your resources throughout the project. Therefore, at SmartPM, schedule quality is weighed more heavily during the first 25% of your project than the other metrics. 

Schedule Performance Index (SPI)

Schedule Performance Index (SPI) compares planned versus actual progress in a metric that describes if you are ahead, behind, or on schedule. Once calculated, your SPI tells you the following. 

• SPI = 1: The project is on schedule. 
• SPI > 1: The project is ahead of schedule. 
• SPI < 1: The project is behind schedule. 

For example, if your project is 50% complete today but, according to the schedule, you were supposed to be 75% complete, the SPI would be 0.66. As an SPI of 0.66 is less than one, you would know you are behind schedule. Armed with this knowledge, you can take action to get back on track or adjust your schedule to reflect more accurate durations based on historical performance. 

When calculating project health, this metric should be weighed more heavily midway through the project than at the end. This is because, inevitably, as the project is near its endpoint, the SPI should equal 1. 

Schedule Compression Index 

The Schedule Compression Index captures the amount of effort required to finish the project and compares it to the remaining work in the baseline. Be mindful: compression, often known as acceleration or trade stacking, can pose risks to your schedule. Without the necessary resources, your project might face delays.

• 0% to 14% is acceptable. 
• 15% to 25% is feasible but requires extra time, resources, or labor to complete on time. 
• Over 25% indicates the projected end date is at risk because of the required extra time, resources, and labor. 

Prioritize this metric in your project health index more towards the project’s end than its beginning. Compression arises when you use float, indicating a shortfall in the earned value. Despite this, compression indicates the end date is not relaxed. Sometimes, compression results from missing logic, meaning the schedule is prone to stacking when activities get pushed off. Or, compression results from critical path delays and changes to keep to an end date, where the schedule is overly stacked. Regardless, as projects get closer to the schedule’s supposed end date, the compression index tends to climb because the end date is not feasible. 

Analyzing and Interpreting Project Health Index Data

Once you have collected and analyzed data for your project’s health index, the next step is to interpret the findings and derive actionable insights. Here are some key considerations when analyzing project health index data:

1. Identify trends and patterns: 

Look for trends and patterns in the data to gain a deeper understanding of project performance. Are there recurring issues or bottlenecks? Are there certain tasks or phases that consistently face delays? Identifying these trends can help you focus on areas that need improvement.

2. Compare actual performance with targets: 

Compare the actual performance of your project with the predetermined targets. Are you on track to meet your goals? Are there any significant deviations from the plan? This analysis will help you identify areas where adjustments or corrective actions are required.

3. Identify areas of improvement: 

Look for areas of improvement. Is there a particular process or trade that consistently underperforms? Are there any resource constraints to address? By identifying these areas, you can develop strategies to optimize project performance.

4. Consider external factors: 

Take into account external factors that may impact project performance. These could include bad weather, supply chain disruptions, or inadequate resources. Considering these factors, you can make informed decisions and adapt your project strategy accordingly.

5. Communicate findings: 

Share the findings of your project health index analysis with key stakeholders. This will help align expectations, gain support for necessary schedule changes, and ensure effective collaboration throughout the project.

By analyzing and interpreting project health index data, you can gain valuable insights into project performance, identify areas of improvement, and take proactive measures to ensure project success.

Implementing Changes Based on Project Health Index Findings

The insights derived from your project’s health index are only valuable if acted upon. Once you have analyzed the data and identified areas of improvement, it’s essential to implement changes based on the findings. Here are some steps to follow.

1. Develop an action plan: 

Create a detailed action plan that outlines the specific changes and improvements needed in your project schedule. Prioritize the actions based on their impact and feasibility. Assign responsibilities to team members and set clear deadlines for implementation.

2. Communicate the schedule changes: 

Share the action plan with key stakeholders, including team members, executives, and clients. Then, clearly communicate the rationale behind the changes and the expected benefits. This will help gain support and ensure alignment of expectations.

3. Monitor progress:

Regularly monitor the progress of the implemented schedule changes. Collect new data and compare it with the previous project health assessment. This will help you evaluate the effectiveness of your schedule changes and make adjustments if necessary.

4. Continuously improve: 

Use your project health index as a continuous improvement tool. Regularly review and update the index based on new insights and changing project dynamics. By continuously improving, you can ensure that your projects stay on track and deliver optimal outcomes.

Implementing necessary schedule changes based on your project health index findings is crucial for driving project success. By taking proactive measures to address areas of improvement, you can optimize project performance, reduce risks, and maximize project outcomes.

Leveraging Data for Project Success

By leveraging advanced analytics, data visualization, and key performance indicators, a project health index helps you make informed decisions, identify risks and opportunities, and drive project success. It provides a holistic view of project performance, allowing you to optimize resource allocation, identify bottlenecks, and ensure project objectives align with organizational goals.

Don’t rely on guesswork or gut instincts – unlock the power of objective data with SmartPM’s automated project health index and take your projects to the next level. With our user-friendly interface, intuitive dashboard, and comprehensive set of components, SmartPM’s Project Health Index is a must-have tool for any project manager, analyst, or executive looking to drive project success through data-driven decision-making. If you’d like to see this analysis on your own project files, fill out the form below. We’d be happy to show you your project’s health index.