A Key Performance Indicator (KPI) is one of your most important quantifiable measures of progress toward your intended outcome. We link KPIs to the achievement of business, portfolio, program, or project objectives.
Therefore, KPIs help to focus your work on delivering the strategic or operational improvements you need. Peter Drucker’s famous quote reminds us that:
‘What gets measured gets managed.’
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Key Performance Indicators
Performance indicators provide us with targets to work towards. As a result, they can be a powerful way to focus and energize our teams.
They can be either statements of what we want, or they can stand in for the outcomes we actually want but cannot measure easily. These are Proxy Indicators.
KPIs can also be either leading or lagging indicators
- Leading Indicators give us a measure that reliably predicts future outcomes
- Lagging Indicators give us a measure, after the event, of how successful we have been.
What Makes a Good KPI?
Good KPIs:
- Provide objective evidence of progress towards achieving a desired outcome
- Measure the right things to help inform better decision-making.
- Linked directly to strategic imperatives
- Allow us to assess how performance changes over time
- Track the things that matter to us, such as:
- Timeliness and efficiency,
- Effectiveness and quality,
- Governance and compliance,
- Team member behaviors and performance
- Resource utilization
- Economics and financial performance
- Overall project performance
- Are defined in a way that is Significant, Measurable, Achievable, Relevant, Trackable, Ethical, Supported, and Time-bound
Defining Your Key Performance Indicators
So, here are the questions you need to ask, to define your KPIs
- What are your desired outcomes?
- Why do we want this outcome?
- How can you influence each outcome?
- Who is responsible for the business outcome?
- How can you measure progress?
- When will you review progress towards the outcome?
- How will you know you’ve achieved your outcome?
- Who needs to know about and understand your KPIs?
- What is the cycle for reviewing and updating the KPIs you work to?
Some companies (Tesla is a notable example) take KPIs to the limit. Therefore, they have a single ‘one metric that matters’.
Recommended Videos
Carefully curated video recommendations, that answer the question, ‘What is/are…
- Project Goal?
- Project Objectives?
- OKRs?
- The Iron Triangle?
- Agile Triangle – Value, Quality, and Constraints
- Project Outcomes?
- Project Benefits?
What Kit does a Project Manager Need?
I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own.
Check out the Kit a Project Manager needs
Note that the links are affiliated.
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