Leading Indicators and Lagging Indicators in Project Management

For the first time, in the PMBOK® Guide 7th edition, both leading and lagging indicators are introduced as Key Performance Indicators (KPI) for a project. Such indicators are applicable in all aspects of management – project, program, portfolio or risk management. It’s also applicable in Agile management.

Let’s understand them in simplest possible terms. The content of this article has been taken from RMP Live Lessons – Guaranteed Pass.

Indicators

I’ll define an indicator as follows:

“An indicator is something (a result, an event, a statistic) that indicates or signals.”

For example, if you are finding a number of bugs in your team’s deliverables, it indicates a quality problem. Based on it, you can take some actions such as having a more robust definition of done (DoD). 

Taking another example related to our personal lives, if you see a cloudy sky, it indicates that rain may happen next. Based on it, you may choose to take some actions such as taking an umbrella or searching for your raincoat.

The first result (high number of bugs) is a lagging indicator. This is because you came to know about it after the bugs occurred. But the second one is a leading indicator for rain. Because before the event occurred (rain), you came to the possibility of the event happening. 

Now that I’ve introduced two more terms – leading and lagging indicators – let’s understand them in detail. 

Leading Indicators

I’ll slightly change the definition provided by the Project Management Institute (PMI®) and will define it as:

“A leading indicator is a measurable data that helps to anticipate (predict) changes or trends in a project.”

Simply put, a leading indicator is about the future or it indicates the future. 

Some of the examples in management can be the followings:

• Lack of a risk management processes
• Stakeholders who are not available or engaged
• Poorly defined project success criteria
• Size of the project (quantifiable)
• Complexity of the project
• Number of items in progress after taken from the Backlog (quantifiable)

Considering the last example of too many in-progress items indicate a bottleneck in flow of work, or too complex work being taken-up. 

Lagging Indicators

Here too, PMI provides a good definition, but I'll modify a little:

“A lagging indicator is a measurable data that measures deliverables or events in a project.”

Simply put, a lagging indicator is about the past or it gives information about the past. 

Examples of lagging indicators can be:

• Number of deliverables completed (quantifiable)
• Schedule variance (quantifiable)
• Cost variance (quantifiable)
• Amount of resources consumed (quantifiable)

Taking the first example, one can say that if you are completing a good number of deliverables, then the project is progressing well. 

Next, I’m going to relate leading and lagging indicators with preventive and corrective actions, which you have to know as an aspiring PMP, PgMP, or RMP. 

Leading Indicators and Preventive Actions

As defined by PMI:

A preventive action is an intentional activity that ensures the future performance of the project work is aligned with the project management plan. 

For projects in an Agile environment, it'll be your product backlog with the product goal. In other words, the actions should be aligned with the product goal (or release goal or Sprint goal). 

Leading indicators can lead to preventive actions. With it, before the event or condition happens, you can take actions. For example, considering our second example of rain, before the rain event happens, you can take actions such as taking an umbrella.

Lagging Indicators and Corrective Actions

As per PMI: 

A corrective action is an intentional activity that realigns the performance of the project work with the project management plan. 

For projects executed with Agile frameworks, you will be taking actions that realigns with the product goal, release goal or Sprint goal.

Lagging indicators can result in corrective actions. For example, schedule variance is a lagging indicator. If very high variance, you can take actions with techniques such as fast tracking or crashing to improve. 

Comparison – Leading and Lagging Indicators

The comparision with both the differences and commanalities between leading and lagging indicators are shown in the table below.

Both these indicators are part of the Measurement Performance Domain (PD) of the PMBOK Guide, 7th edition. Because these indicators are primarily about measurement. The PMBOK guide prudently notes and I quote verbatim:

“In and of themselves, KPIs are simply measures that have no real use unless and until they are used. Discussing leading and lagging indicators and identifying areas for improvement, as appropriate, can have a positive impact on performance.” 

Indeed, measurements should be used. In my view, as a management professional and leader, you should measure (and use) both leading and lagging indicators. In fact, I'd say it's a best practice to use both in your projects.

References

[1] Project Management Body of Knowledge (PMBOK) Guide, 7th edition, by Project Management Institute

[2] RMP Live Lessons - Guaranteed Pass or Your Money Back, by Satya Narayan Dash 

[3] Article - PMBOK 7th Edition: Principles, Performance Domains and Artifacts – How Do They Plug and Play Together? (Part - 1)

[4] Article - PMBOK 7th Edition: Principles, Performance Domains and Artifacts – How Do They Plug and Play Together? (Part - 2)