Key performance indicators of success of business or project, Project Management

Key performance indicators

The key to success of a business is dependant on superior management information. Consequently while monitoring profitability and cash flows, a business also need to maintain its Key Performance Indicators (KPI) under a rigid check.

Key Performance Indicators are experimental measurements that reflect the critical success factors of an organisation. Based on earlier agreed measures, they disclose a high-level snapshot of the organisation. They differ depending on the kind of organisation they characterise; for instance a business may have a KPI as the annual sales volume, while KPIs of a social service organisation may have to do more with the number of people helped out. Furthermore, colleges may have number of students graduating per year, as one of their KPIs.

Thus before any Key Performance Indicators is chosen, it is important  to recognise what the organisation's goal is, which are in turn dependent upon its mission and its stakeholders. Subsequently, KPI perform as a measure of progress towards these goals. Whatever they may be, they must be significant to the success of the organisation.

The use of Key Performance Indicators provides business executives with a sophisticated, real-time scrutiny of the progress of a company. This may consist of mixture of reports, spreadsheets and charts. They may be sales statistics (global or regional), trends over time, supply chain information or any other long-term consideration which may be necessary in gauging the health of the organisation.

For a Key Performance Indicator to be of any value there must be a way to accurately define and measure it. This is so because a KPI may meet the criteria of reflecting the organisational goal, which may for instance pertain to being the most popular company. However, since a company's popularity can not be measured or compared to others, KPI cannot be defined this way.

Considerations concerning how a Key Performance Indicator is to be measured should also be established in advance. The definitions of how the indicator is to be calculated can be different for organisation. It is defined by the organisation - it could be the measurement in terms of profits that they like to earn or it could a measure of the units that they sell (if it's a product) or could be the customers that they service (if it is a service). Moreover, it is crucial that the organisation then sticks to these definitions from year to year in order to permit for annual comparisons.

Key performance indicators may also be used for all types and in all areas of project management: IT (information technology), construction, engineering, risk management, supply chain, safety, quality, manufacturing, financial management, sales and so on.

After the Key Performance Indicator has been defined and a way to gauge it has also been determined, a clear target has to be set which should be explicable to everyone. The target should also be exact so that every individual can take actions towards accomplishing it.

It is pointless to say that to achieve a particular target point of Key Performance Indicator for a company; every department has to work in synergy towards it. For this reason, all the units of an organisation need to define their respective KPIs which  should in turn work towards accomplishing the overall KPIs of the organisation.

It is significant that after Key Performance Indicators and their relative components have been identified, they should be used as a performance management tool. Best means to represent variance (from the target levels) should be defined, ultimately making sure that everyone in the organisation is focused towards meeting target levels of the Key Performance Indicators.

Posted Date: 9/29/2012 1:40:06 AM | Location : United States







Related Discussions:- Key performance indicators of success of business or project, Assignment Help, Ask Question on Key performance indicators of success of business or project, Get Answer, Expert's Help, Key performance indicators of success of business or project Discussions

Write discussion on Key performance indicators of success of business or project
Your posts are moderated
Related Questions
Question 1: Hospitality management is an area of constant evolution, renovation, changes in trends and fashion. According to you how could proper planning and design help in

Problem 1: Describe the importance of Employee Relations Management in an organisation. Describe employee relations management Importance of employee relations managem

Question 1: (a) Outline some of the management principles that Project Managers need to adopt while managing a project team. (b) Resistance to change is inevitable, and th

Question 1: "HRM is regarded by some personnel managers as old wine in new bottles". (Armstrong, 1987). Discuss. Question 2: "The contribution of HR function is insig

Develop a work breakdown structure. 3. Make a list of the specific activities that need to be done between now and the wedding day. 4. For each activity, identify the person (Tony,

ISO 9001 is the most difficult of the three standards to be chosen for certification , because it includes all the the twently elements. This comprehensive certification i

QUESTION a) The purpose of project management is to achieve successful project completion with the resources available. Regardless of the method that is used to handle a projec

When JF persuaded a leading retail supermarket chain to trial her 'home-made' chocolate dessert range she could not have anticipated how well it would sell. Now a year on she has f

The steps to create a run chart are: 1.   Identify the process to be observed: Ensure that the process involves some kind of repeatable activity in which results remain consis

Quantitative Layout Analysis - Travel Chart A basic tool that is primarily used to analyze the material handling cost or in certain cases number of moves in a process layout i