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
T y pes of Sampling Risks A guarantee that every defective item in a lot would be found cannot be stated by neither sampling nor 100% inspection, 100% inspection has the risk

Do you think Acorn’s solution was good? Why or why not?

I nventory management: This refers to the method in which tangible resources and materials are handled by businesses in order to make sure resources are readily available f

Question 1: Using the "Matrix" system of authority and responsibilities, describe the various organisational systems which may be applied to the management of projects. Disc

Bidding is a process in which you  quote money in exchange of goods or services through an auction. They are two types of auctions: open auction and silent auction. In an open auc

Project management Process According to PMBoK, project management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed

MPMM is a body of project management content, wrapped in an easy, simple to use software tool. This tool contains such core features as a Navigation Panel, Display Panel, Page Summ

How must be the downward communication from the superior to the subordinate? There formal communication in between subordinate and superior, here the superior sends directions

What is meant by the term ‘benefits realisation’ and why is this significant? Benefits realisation: Benefits realisation is the post-project operation of, and the procedur

Advantages of Rules In addition to the general societal advantage of rules referred to above, the organization and its employees can derive the following benefits from the inst