KPI stands for Key Performance Indicators in English. Also known as Key Performance Indicators (KPIs), they are widely used in project monitoring and are used to measure the performance of your projects.
What is an indicator? This is information that helps you assess a situation and make an appropriate decision. An indicator must be realistic, measurable and defined over time.
There are key performance indicators for each department of a company because their objectives and tasks are different. KPIs are therefore available for marketing, finance, sales, project management, etc. The value of an indicator is very often represented by a graph (curve) in order to see its evolution over time. The representation of all the indicators chosen is summarized in a table containing:
- The name of each indicator
- The objective defined at the beginning of the project
- The actual value of the indicator
If the indicator is green, everything is fine, you will have to continue the actions in progress in order to maintain this good result.
If the indicator is red, then you must take the necessary corrective action.
If the indicator is orange, it should be monitored.
It is important to choose your KPIs in order to be able to quickly identify gaps and risks of deviations from the objective, as well as the effectiveness of the improvement measures initiated. It also allows for effective communication with the different actors involved in the project.
Choosing Key Performance Indicators
To properly select your KPIs, here’s what you need to know:
- Each indicator is associated with a specific objective.
- An indicator necessarily implies a decision.
- An indicator is never mute.
- A relevant indicator should be simple.
- You must choose your own indicators.
Remember that KPIs have, in some way, a financial impact on the project. If the indicator is green, then everything goes as planned. There will be no additional costs or financial losses. On the other hand, if the indicator is red, the corrective measures that are necessary will generate additional expenses. You lose money.
KPI helps you better manage your projects. To do this, you can set at least one KPI for each of your goals. There are 4 categories in which to classify your KPIs:
Delays: Ensure that your project will be completed on time.
Budget: Have you exceeded the budget allocated to the project or are you still in the nails?
Quality: Is the progress of the project satisfactory?
Efficiency: Do you manage your project effectively? Is time and money appropriately used?
The KPIs must be chosen jointly by the project leader and his / her team before starting the project.
KPI of Deadlines
- Difference in Duration
This indicator measures whether a task takes longer than originally planned.
- It is obtained by calculating (actual duration – initial duration) / initial duration.
You can apply this flag to the duration of a task or phase, but also to the total duration of the project.
- Time difference
This KPI shows you whether your project is early or late on budget or the time originally planned.
- Calculation: budget or time originally planned – budget or time currently used
If the result is negative, it means that you have been able to accomplish more than you expected, leaving you with a larger budget to spend on the remaining tasks.
- Exceedance rate
This indicator gives you a percentage of time or money overrun for a given task or for the entire project.
- Calculation: (overruns / costs or expected durations) x 100
To be more efficient and meet deadlines, learn how to better manage your time with these 7 mistakes to avoid.
Cost of Key Performance Indicators
- Project Cost Difference
Using this indicator, you measure whether the actual cost of the project is different from the original cost.
This gives: (actual cost – estimated cost) / estimated cost
- Current cost of the project
This KPI tells you how much money you have already spent on the project. You do not need a formula to calculate it. Simply add up all project expenses to date.
This indicator calculates the productivity of the human resources working on the project.
This KPI is calculated with the unit of measure day-man which corresponds to the work of a person during a day. For example, if a project requires 20 man-days, it means the work of a man for 20 days, or the work of 20 men for one day, but 10 men for 2 days or 5 men for 4 days, right now.
- The calculation: number of man-days devoted x% of completion of the task
The result obtained is compared to the number of man-days that was expected to reach this same percentage of task achievement. This tells you if you are early, late or on schedule.
- Percentage of tasks Performed
To get a quick overview of your project’s performance, create a KPI that gives you the percentage of tasks performed.
- Planned Hours of Work vs. Current Situation
This KPI tells you the number of hours of work planned for the project compared to the actual time spent. You can use this indicator at different times and on different phases of the project.
If the amount of time spent far exceeds what was expected, it is time to re-evaluate the planned time for the entire project.
To Sum up
Setting up KPI allows you to judge the progress of your project, to quickly identify the deviations from your objectives and to take the necessary measures.
This list is not exhaustive, there are others, and you can also create your own indicators. There is no need to use all the indicators that exist. Choose from 5 to 10 that you and your team understand and master. Proper use of your KPIs is the key to the success of your project.