5 Steps to Defining Project KPI’s

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When attempting to define project indicators it is not an easy process. Projects will always have key indicators or measurements. However, with some projects, there is a real need to investigate and get a full and good understanding of these measurements. Projects and the sponsor get a great benefit from determining them. When determining key performance indicators, it is often quoted:

‘When you can measure what you are speaking about and express it in numbers, you know something about it’.

Or a common saying is ….

‘You cannot manage what you cannot measure’.

These two often-quoted statements demonstrate why measurement is important. Yet it is surprising that organisations and projects find the area of measurement so difficult to manage.

Reviewing the performance of an project is also an important step when formulating the direction of the organisation strategic activities. It is important to know where the strengths and weaknesses of the project lie, what the project has contributed to the business and what it is likely to contributed to the business going forward. The main reasons it is needed are:

  • To ensure customer requirements have been met
  • To be able to set sensible business benefits and comply with them
  • To provide standards for establishing comparisons
  • To provide visibility and a “scoreboard” for people to monitor their own performance level
  • To highlight quality problems and determine areas for priority attention
  • To provide feedback for driving the improvement effort

It is also important to understand the impact of Key Performance Indicators on improvements in business performance, on sustaining current performance and reducing any possible decline in performance. These are two often-quoted statements that demonstrate why measurement is important.

A good performance measurement framework will focus on the business and measure the right things. Performance measures must be:

  • Meaningful, unambiguous and widely understood
  • Owned and managed by the teams within the organisation / project
  • Based on a high level of data integrity
  • Such that data collection is embedded within the normal procedures
  • Able to drive improvement
  • Linked to critical goals and key drivers of the organisation

The strategic objectives of the project are converted into desired standards of performance, metrics are developed to compare the desired performance with the actual achieved standards, gaps are identified, and improvement actions initiated. These steps are continuously implemented and reviewed:

  • Step 1: – Establish key business goals
  • Step 2: – Establish metrics and understand how to measure them
  • Step 3: – Understand performance
  • Step 4: – Initiate the project and monitor the improvements / performance
  • Step 5: – Implement and review as the project is delivered.

Project often associate KPIs with quantification and numbers. The perceived objective is to provide the project and business with an objective, uniform and rigorous picture of reality. However, this seems to work in some areas better than in others. Some projects find it easy to quantify things like money earned or saved, customer transactions in a day, number of services used and these projects can count incoming complaints or number of service visits.

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