The implementation of KPIs
Developed by Shri Tejas Vedula
Contents |
Abstract
Key Performance Indicators or KPIs are critical indicators that aid in tracking the progress of a project, program or portfolio. Firstly, the article intends to cover the explanation and intended development and use of KPIs in the existing literature i.e. The PMBOK, The standard for project management and Prince2. Secondly, the article focuses on the design and practical application of KPIs in order to control and monitor project decisions and actions. Furthermore, the article will emphasize on the challenges faced by modern day managers in relation to deriving meaning from the plethora of the available key performance indicators.
A brief history of the application of KPIs
KPIs were used by the Wei dynasty rulers in China to rate the performance of the members of the royal family [1].
KPIs as seen in standard
The PMBOK presents the potential use of KPIs under the umbrella of Project Integration Management. KPIs are represented as an aspect of project management information system which are in turn presented as tools and techniques to direct and manage project work[2]. The primary uses of it also lie in project governance where monitoring performance is key. They can also be used in assessing the project's performance in comparison to the plan at the control point in the project life cycle.
PRINCE2 defines the use of KPIs as a measure of success. It is defined as a measure of performance that denotes how successful an organisation is in progressing towards its organisational objectives. It recommends the KPIs to be designed keeping balance in background. The balance should be achieved between qualitative and quantitative measure, project inputs and outputs and leading and lagging indicators which allow managers to track project progress during and after the completion of events[3].
Designing the KPIs
PRINCE2 suggests that the KPIs should be meeting the "acceptance criteria" and quality expectations which are defined in project product description while also satisfying the project tolerances such as time, cost, scope etc. which are defined in the project initiation documentation. The quality criteria particularly pertains to the KPI being SMART i.e. Specific, Measurable, Achievable, Relevant and Time-Bound.
