Article #6 of 20
Last week’s project measurement article examined the importance of identifying critical success factors (CSFs), which is the first step of Darby Consulting’s Performance Improvement Framework (PIF) for implementing performance measurement initiatives (see illustration below).
This week’s article explores the second step of PIF: selecting KPI (and KRI) objectives.
KPI objectives answers the question “what will we do to improve project performance and efficiency?” KPI objectives also help to ensure that selected measures will be well balanced and not focused on just one objective.
Well balanced measurement initiatives frequently take into consideration four to six KPI objectives. Below are four objectives that are routinely used by Darby Consulting’s clients:
- Financial – focused on whether project outcomes are meeting business expectations; common measures include NPV, IRR, payback period, operating margins, revenue growth, asset utilization, earned value metrics, etc.
- Process – concerned with internal processes and whether teams are efficient and achieving performance expectations; common measures include those that cover governance, processes, management reports, etc.
- Execution – focused on whether projects are delivering on schedule, quality, reliability and safety targets; common measures include earned value metrics, safety, milestones met, schedule variance, etc.
- Customer – concerned with meeting customer and stakeholder expectations (staff can be included as well); common measures include customer satisfaction ratings, company image and reputation, etc.
Some organizations include two additional objectives, such as staff and environment/community, due to their projects’ scope and complexity.
Below is an illustration of Darby’s four common KPI objectives, including items that are measured under each objective.
While financial is a common objective of measurement initiatives, it is important to mention that true key performance indicators (KPIs) are not financial. Financial metrics do not indicate performance, but rather state the results of a project. Financial is included as an objective because it is a common objective of key reporting indicators (KRIs). Click here for more information on KRIs and KPIs.
Next week’s article will cover selecting KPI (and KRI) metrics that tie to the critical success factors and incorporate KPI objectives.
How Can Darby Help?
So what are your metric challenges? Does your project team or organization have identified metrics and associated actions? Is your team spending too much time gathering data for metrics that no one reviews? Darby Consulting has partnered with many Fortune 500 companies to plan and execute measurement initiatives that support a ‘continuous improving’ culture by not only focusing on reporting key results, but also identifying and measuring key performance indicators that lead to improved portfolio and project performance.
About Darby Consulting
Darby Consulting is a leading North American project and change management consulting firm providing project and program management consulting, project support and change readiness services. We serve organizations across multiple industries and provide experienced, certified project and change management professionals who can quickly and efficiently deploy processes, tools, templates and technologies to meet any project challenge.