KPIs and Benchmarking
We can say that a project, in basic terms, is a task to be undertaken for a given period of time and to be completed using such limited resources as money (1). However, a project is always aimed at achieving specific goal at the end. A project can be in the form of either social intervention such as community work or in the form of construction (1). This is why the issue of project management is the most important concept for any project in ensuring its success.
The Time Taken to Complete a Project
The time that a project takes is one of the key measures of its performance (2). Before a project starts, there are specifications on the amount of time it takes. It is further structured according to phases or various stages of a project whereby each stage is assigned a specific time period. The way of its usage for measuring the performance of the project manager is that the whole project or its part within the project cycle takes more time to complete a particular task. In the case if the projected time is exceeded before the start of the project, it shows failure on the part of management. This delay in project completion could be caused by factors like managers assigning too few workforces. A good example in a construction project may include untimely delivery of raw materials to the project or even general lapse of the manager whereby he/she is often not even present at the project site. This may cause reluctance among workers if there is no motivation from their leader. All these factors lead to delays in project completion that indicates its poor management.
On the other hand, if a project or its separate phase is completed before the estimated time, it will indicate excellent performance (3). In most cases, using standard time as a performance indicator is determined by the complexity of its undertaken activities and the number of project phases that depend on its size. If a project has two or more concurrent interdependent activities, it will take longer for a construction or manufacturing project than a sales project for a new brand of a product.
Importance of Time as an Indicator
The time spent for a project would be the organization’s most important key performance indicator. This is because every project time becomes the first concept of consideration, and any not centred on a fixed time period project is not likely to reach the expected goals. Moreover, business operations are structured in terms of financial years (4), and for the organization to incorporate a project, it must fall within its financial year for reporting purposes. Therefore, having time constraints for a project creates an opportunity for actionable steps in case the optimal time is not reached. If time taken by a particular stage of a project exceeds the estimated period, proper adjustments are supposed to be incorporated in the subsequent levels of the project (5) such as increased number of workforce to speed up the project implementation in order to overcome previous delays and complete the project in time.
Cost of the Project
These are the expenses incurred in implementing a project (1). Every project comes with a budget that is determined by the availability of the resources for supporting its execution, and this is where the concept of project expenditure comes in. The cost of a project is another aspect that can be used in measuring the success of the project management. However, getting the data about the costs of a project depends on several factors such as the type of resources required for the project and their availability, and the current status of labour market which determines the labour rates and requirements (e.g. work permits and licenses)(6). Apart from these common variables of calculating costs which forms part of both fixed and variable costs, the management also considers factors like skills of labour force determining their productivity. This is calculated using various cost accounting tools.
In order to use the cost of a project as a measure of managerial performance, the standard cost of a project is estimated using real costs of previous similar projects (Standard project) (7). Afterwards the expenditure of a current project is compared to that of the earlier projects. If the cost overlaps standard cost estimation, it indicates poor managerial performance. This could be caused by factors like poor procurement strategies whereby the management do not perform clear analysis of the available suppliers of required resources such as raw materials or labour force in case it is outsourced. Also, there can be several project design changes caused by poor planning from the very start of a project. Besides, it can be reflected in the form of the price for raw materials fluctuating now and then. This situation causes unexpected increases in the project cost. A good manager must ensure that he conducts a one-time acquisition of the required resources in order to avoid the effect of inflation upon project (4). All these factors indicate the issues that could have caused failure of the management if the addressed the gap between actual costs and estimated costs is bridged.
On the other hand, if actual project cost is lower or equal to the projected one, it indicates an advantage for the project manager. This is an indicator that the available resources are being utilized in agreement with the budget. This is a good sign of great managerial performance. It is achieved when the manager is always up to date with current trends in industry, has all the necessary information regarding being a successful manager, and makes continuous follow-up on project implementation and resource market trends.
Importance of Cost as an Indicator
The focus of any business transaction is to maximize profits and minimize costs (4). Therefore, the concept of cost while doing business is a basic factor for business success, and it is then applied to any project that an organization intends to start. The cost would be the second most important key indicator of performance. In economic terms, management involves the allocation of limited resources in order to achieve specific goal (8). If this is exercised in a project, it shows that good management leads it. Budget forms core part of any project, and, therefore, following it up throughout the project life cycle based on the cost at various stages provide a picture of the current project status. It also helps the manager to assess possible future difficulties in sticking to budget limits or looking for some extra fundingif needed at the final stages (3). All these future uncertainties will manage to be handled prior to their occurrence, and proper alternative strategies will be adopted to ensure the success of the project.
Quality of the End Product
This is where attention is paid to the quality or the value of the final products or outcomes8. For example, if the company wants to reduce the number of defective products by using an improved system of manufacturing, it is worth mentioning the fact that quality of the final product has improved. If there were seven defective products in every twenty of them before adopting new system, the company is now producing two defective products out of the twenty after its implementation. The project quality is not evaluated in numerical terms. Instead, it is rather the appeal that the product creates in the eyes of the stakeholders (8). It is best used to measure performance of the service delivery projects where one compares customer satisfaction before and after service delivery system upgrade. For example, a bank can launch mobile banking as an alternative to regular banking.
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We may evaluate the quality of mobile banking service by comparing the time spent on completing the transaction on mobile platform to the time spent on depositing money over the counter. If new project is not managed well, a lot of problems will emerge. It may be connected with the security of the system or delays due to poor server connection. All these issues will end up in creating a lot of complaints from customers which means low-quality service. The mentioned situations are the examples of how quality measurement is exercised depending on the project type being implemented by an organization and how they help in improving service delivery of the entire business process.
Importance of Quality as an Indicator
In all current technological advancements, the concept of improved quality and efficiency forms the sole basis. Therefore, the management becomes paramount. This proves why assessing the quality of a project is one of the major indicators of managerial performance. Thus, in every project, the continuous quality assessment during the project implementation period is paramount in terms of meeting the expectations about project. A good illustration is in a project of construction business or residential premises where the manager decides to purchase low-quality cement in an attempt to save some money. This affects the durability of the building or even its ability to withstand heavy rainfall or a small earthquake. The result means that the wrong managerial decision made at the resource acquisition stage will affect the whole project or may lead to building collapse altogether.
How the Indicators Are Used in Management
These measures are used as a part of management to ensure that all the specifications of a project are adhered to, and any deviation from them can be identified and solved at the right time. They also act as communicative tools between managers and stakeholders (7). The measures show the status of a project at any given time and show if the project is heading in the right business direction. They are also used by management in motivating employees in order to make sure that all of them are moving in the same direction of improving business performance that attracts both customers and investors (1).
For business success and sustainability in industry, any business at some point would be in time with launching a project for business expansion or efficiency improvement. To ensure a positive impact of any project, incorporating these key performance indicators is something an organization cannot afford to leave out (4). This forms part of management policy within organization. These performance indicators are vital in ensuring that affordability, quality efficiency, and timeliness is upheld in all project undertaking. As a result, all projects that are subjected to these performance indicators yield desired results after their completion. The facts illustrated above indicate huge importance of management in any project.