Labor - Execution Efficiency ⭐

The Execution Efficiency (EE) is a KPI that tells you whether your team is on track to be in budget of not. In other words, whether the team will meet its Margin Objective. 

It compares how much you would have spent of the Execution Budget (EB) based on your current Execution Rate (%EX) to what you a have spent to date.

Project teams should manage their project to achieve and Execution Efficiency 100% or above.

Because it is a percentage, you can instantly assess the financial health of a project, regardless of the Margin Objective.

It is the main KPI that allows you to trigger adjustments of strategy and/or objectives (client approach, margin, scope, ...).

Interpretation

EE < 100% - The team will spent more money than expected and the margin generated will be lower than the objective. EE = 100% - The team will spent as much as expected. EE > 100% - The team will spent less money than expected and the margin generated will be above the objective.

Examples

Let's consider a project that has a Labor budget (LB) of $1,000 and a Margin Objective (MO) of 40%. The resulting Execution Budget (EB) is:

Let's consider the following scenarios.

Scenario 1 Scenario 2 Scenario 3 spent $200 $150 $400 remaining $300 $550 $190 Execution Rate (%EX) Execution Efficiency (EE)