BUS-091-Key Performance Indicators - Lesson Script.docx

**Key Performance Indicators.** Key Performance Indicators are your most important quantifiable measures of progress towards your intended outcome. We link KPIs to the achievement of your business, portfolio, program, or project objectives. KPIs help us focus on delivering the operational or strate...

**Key Performance Indicators.** Key Performance Indicators are your most important quantifiable measures of progress towards your intended outcome. We link KPIs to the achievement of your business, portfolio, program, or project objectives. KPIs help us focus on delivering the operational or strategic requirements for our business. Peter Drucker\'s quote reminds us that what gets measured gets managed. if we measure our performance in a domain, we are likely to manage our performance in that domain and therefore more likely to get the results that we want. performance indicators provide targets to work towards. they can help engage and energize project teams. They can be statements of what we want, or they can stand in for the things that we want. They can measure things that we believe are closely related to things that we want to achieve, but that are harder to measure. This type of indicator is a proxy indicator. KPIs can be leading or lagging indicators. Leading indicators measure of the progress towards achieving what we want to achieve, whereas lagging indicators give us information about how successful we have been after we have completed the work. So, what are the characteristics that make for good KPIs, good key performance indicators? Well, there are six main ones. Firstly, they provide objective evidence of progress towards achieving our desired outcome. Objective in the sense that when we measure the performance against the KPI, we get a reliable number that is not subject to opinion or preference or prejudice of one or more individuals. Secondly, good KPIs measure the right things to inform better decision making. Thirdly, good KPIs have to link directly to the organization\'s strategic imperatives. We have to craft a set of KPIs that closely mirrors our organizational priorities. Fourth, KPIs need to allow us to track how performance changes over time, so that we can understand the trends in our performance. Is our performance improving? Is it decreasing? Or are we staying at a level? The fifth requirement for good KPIs is they have to track things that matter to us. These include things like timeliness efficiency. Effectiveness quality, governance compliance, team behaviors performance, resource utilization, economics financial performance. And overall project performance. The final criterion for good KPIs is they need to be SMARTEST Significant, Measurable. if you are wondering why the S is not specific, if something is measurable, it has to be specific. Significant, Measurable, Achievable, Relevant, Trackable, Ethical, Supported, and Time bound. how do you create good KPIs? ask the right questions. What are your desired outcomes? why do you want these outcomes? How can you influence each outcome who will be responsible How can you measure progress when will you review that progress? How will you know when you have achieved your outcome? Who needs to know about and understand your KPIs? what is the process and cycle for reviewing which KPIs you work to? Some companies, notably Tesla, for example, take the KPI process to extreme. They articulate the one metric that matters in a large organization, the use of KPIs to measure progress, and highlight issues is important. as project managers, we can adopt the KPI process, not only as part of the wraparound to drive projects, but also as a mechanism to drive and improve performance