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Not all projects will have a KPI. Don't force one in just to have one.
Projects that should have a KPI defined in it will provide value. The stakeholders should sign-off on the objectives of the KPI's defined. The team should be serious to meet the objectives of the KPI's. When you achieve the goals of the KPI's you have validated the improvement made in the project.
As for completing a project on time the KPI's can be an indicator that the project will finish behind schedule if you cannot meet the objectives of the KPI's causing extra time to address the issues that prevent the achievement in meeting the KPI objectives.
Place your KPI's where you would place a project milestone. What good is a milestone if you have not truly validated the work up to that point with a KPI.
No the KPI alone is not the best measure of anything great. It's the metrics within the KPI if appropriate for the scenario you are measuring that makes it a good measure. When someone says "I have KPI's so I'm all good." that is when you need to take a closer look. These KPI's must be specifically tied to the success criteria of the project, or with the specific KPI's as mandated by management or the organization. I've seen some really silly KPI's that sound good, but mean nothing; nothing to the project that is, but maybe some obscure HR requirement for example.
AGREE, Sante & Drake. NOW, i want a real test of making KPI with my employees/staff in a monthly basis se o let's see the result soon. Am planing to roll it out sometime June this year. Hoping for the best.
Remember to not overlook the importance of human KPI's. Projects are run by people, and unhappy people does not a good project make ;-)
KPI anywhere are good indicators, it doesn't represent everything. Many factors are not mesure by KPIs.
Some great responses already.
I would echo Sante's point stating that the KPI must be tied to the success criteria of the project. If each criterion follows the SMART principle, then KPIs represent the "Measurable" segment of that acronym.
KPIs are important to give direction to the project team. This could be a drawback if the project team focuses rigidly on the KPIs and nothing else.
KPIs (and project success criteria) are all amenable to change. A major drawback is that these factors are not reviewed and revised when needed - often resulting in scenarios where projects end with irrelevant success criteria.
Also, KPIs which - by themselves - do not follow the SMART principle are of no help whatsoever. A simple statement that "The deliverables will have good quality" is not a KPI. A KPI would specify the tolerance rates of defects, the fit within normal deviations, and the time and cost of quality.
In short, KPIs are powerful weapons in the PM arsenal if wielded properly. If misused, then like unprotected dynamite, the have the power to blow a project up.
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