Selection and the implementation of the right KPIs


Key performance indicators are factors that make it easy for a project manager to measure the performance and effectiveness of a team in carrying out a certain project. The KPI measures how effectively a project activity is performing in comparison to the agreed strategic objectives. The most commonly used KPI is profit. If the organization’s sales and returns on investment are doing well, then profit is being made (Jahangirian, Taylor, Young & Robinson, 2017). However, profit is not the only KPI.

Team dynamics are forces that influence the way a team behaves and performs. Project team dynamics are made up of the team’s work, the team personalities, the team working relationships, and the environment. Team dynamics improve team performance and individual member performance. Positive project team dynamics build trust amongst the members of a team.

KPIs can either be Sales KPIs, Financial KPIs, Customer KPIs, Operational KPIs, or Marketing KPIs.The examples of KPIs in a manufacturing/production industry include asset utilization, capacity utilization, customer complaints, faults detected, customer satisfaction, maintenance cost, and manufacturing/production cost, among other examples (Zhu, Johnson, Mejvik, Varisco & Schiraldi, 2017). Production volume measures the quantities produced, measures the production downtime which provides analysis and optimization of your maintenance, the production costs which monitors cost of production, defect density which tracks the damages on items, return on assets which monitors profits, unit costs which monitors the costs and maintenance costs which gives the costs of the equipment, and it’s maintenance (Zhu, Johnson, Mejvik, Varisco & Schiraldi, 2017).

Selection and the implementation of the right KPIs

An effective KPI should help a team in providing a guide towards the strategic project goals. A KPI should be crucial in achieving the main goal, should be communicated throughout the organization, should be quantifiable, well defined, and be applicable to Line of Business, LOB (Kaganski, Majak, Karjust & Toompalu, 2017). A good KPI should offer a comparison that will measure the performance over time and should track personnel performance, behaviors, project performance, and its effectiveness and efficiency.

Selecting the right KPI requires researching, understanding the KPIs, and determining the KPI targets in terms of goals (Kaganski, Majak, Karjust & Toompalu, 2017). Choosing the right key performance indicator helps you save on the time for the project, money, and resources.The performance indicators one chooses should be important and clear to the goal set. The KPI should increase performance and impacts the team.

First, determine the end goal of what you are aiming to achieve. After determining the goal, create the KPIs. These questions help in choosing the right indicator that provides the information needed. The third step to choosing and implementing the KPI is to identify the existing data.  Existing data helps in setting a realistic target. Collect data on industry trends and competitors. Take time to determine which metrics benefits your company. Furthermore, determine how often you will need to measure each KPI (Kaganski, Majak, Karjust &Toompalu, 2017). This ensures the successful tracking of the information. Set short and long term goals and then make sure the employee or manager is assessing the KPI, collecting, interpreting data, and presenting it. Finally, share KPIs with the stakeholders and the company. This way, all members can work towards the main objective.SMART principles can also be used for determining the appropriate indicator. SMART stands for specific, measurable, attainable, relevant, and time-bound.

Changing Project team behavior using KPI’s

Positive Effect Behaviour

KPIs provide performance visibility. This is the keeping of metrics visible to each and every team member, and as a result, the performance by an individual in a team is known.  Furthermore, KPI allows for performance evaluation. The actual data helps in bringing out the difference in working hard and just being busy.The behavior of an individual is adjusted to perform towards the measuring methods. KPIs give the team an ability to make informed decisions quickly while observing the facts (Hedvicakova & Kral, 2019). In addition, it gives one an overview of the project’s progress towards the goals. This way, adjustments can be made if need be.

Negative Effect Behaviour

KPI can lead to a decrease in quality. The project team mainly focuses on getting the final result, thus forgetting to focus on quality production(Hedvicakova & Kral, 2019). This way, the quality of the project team can be affected negatively.The setting of financial goals is another negative effect as it can lead to metrics having more weight rather than the productivity of the task.KPIs can be disadvantageous for attaining long term goals as they are usually useful for achieving short term goals as compared to the long term objectives.

The level of creativity by the team tends to decrease as the goals mostly focus on the results. The team rather focuses on the methods to help them in completing the tasks quickly than to focus on innovative ways.The KPIs majors mostly on showing the level of progress, thus making it difficult to track the work quality and, as a result, interferes with the loyalty between the client and the organization.

KPIs improving projects’ performance on time, cost and quality

The production cost in the manufacturing sector, for instance, monitors the amount of money to be used in the production of different items. It gives specifics on how much each component costs and how much for the finished product (Ogunde, Joshua, Amusan & Akuete, 2017). Tracking down the production costs using the right KPI enables you to know how the production cost changes. Furthermore, it helps a project manager to stay within the target price set, and as a result, profit is made. The unit costs evaluate the total costs used in the production of a component. This cost includes the variable costs and fixed costs. The unit costs can also show the costs used in warehousing, labor, and materials.Monitoring these costs helps in analyzing the change and in managing the project under the set target of unit costs. This leads to a profitable product. To decrease the unit costs, the production process that can be optimized are identified.

Maintenance costs evaluate the cost of equipment production. Maintenance prevents the assets from withering (Ogunde, Joshua, Amusan & Akuete, 2017). Measuring the maintenance costs helps in knowing which equipmentneeds more attention than others and what preventative measures should be implemented to optimize future maintenance. This way, money is saved and invested elsewhere.

Production downtime occurs as a result of maintenance, lunch breaks, or shifts. Reducing downtimes reduces losses. Monitoring downtimes also helps you in improving the processes and in evaluating the effectiveness of a machine, thus improving profitability. Planning on downtime not only helps with the maintenance but also helps in preventing machines and in ensuring inventory doesn’t run out of stocks unexpectedly.On-time deliveries keep the customers happy and ensure that the schedule is observed by the employees. On-time deliveries usually help if working with perishable goods.Good training hours improve on efficiency, lowers turnover, and impacts positively on product quality. Tracking training hours makes the employees be ahead of the curve.

Quality is most important in the tracking process. Products produced should live according to an organization’s standards. Percentage defect is one of the quality KPI that needs to be tracked. Percentage defect gives the percentage of the products with faults that come out in the production line. Defects are common in a production line but should be reduced to less than 5%. Many defects mean the production process needs to be rectified. This way, quality products would be produced. First pass yield tracks the output of successful products with no defects on their first pass. The first pass yield indicates that the process is properly set.  Rework is another quality KPI that gives a project manager a hint that there is a problem with the process, and the product produced needs to be reworked on. Reworking consumes the time and resources in the production. A project manager should aim at zero fail audits by optimizing the process accordingly (Ogunde, Joshua, Amusan & Akuete, 2017). Failed audits mean the product can’t be purchased and, as a result, waste of resources and time. The quality of a product satisfies the customers.

KPIs improving performance high-level management communication

Effective communication is necessary for a project.Performance management is a factor that involves measuring progress, reporting, and managing progress with the goal of improving performance. Performance management enables the organization to be ahead of the business competitors. Performance management includes corporate performance management (CPM), which focuses on how the organization performs and the people’s performance management (PPM), which focuses on how people are managed within an organization. It aims to ensure that people’s performance adds value to the goals of the organization. Reporting the progress is done through effective communication.To achieve high-level management communication, communication should be clear, concrete, correct, concise, complete, coherent, and courteous.

Activity KPIs help a manager evaluate the process of how he is producing and sharing messages to the team. The communication strategy should enable the manager to work towards achieving the goal (Forcada, Serrat, Rodriguez & Bortolini, 2017). Reach KPIshelps the project manager in knowing the size of the project team and whether the instructions reach everyone.  In addition, engagement KPIs measures how the project manager engageswith the team through communication, whereasimpact metrics measures what a project manager is trying to achieve. It measures on the behavior and attitudes.








Forcada, N., Serrat, C., Rodríguez, S., and Bortolini, R., 2017. Communication key performance indicators for selecting construction project bidders. Journal of Management in Engineering33(6), p.04017033.

Hedvičáková, M., and Král, M., 2019. Benefits of KPIs for industry sector evaluation: the case study from the Czech Republic. Economics and Management, p.153-159

Jahangirian, M., Taylor, S.J., Young, T., and Robinson, S., 2017. Key performance indicators for successful simulation projects. Journal of the Operational Research Society68(7), pp.747-765.

Kaganski, S., Majak, J., Karjust, K., and Toompalu, S., 2017. Implementation of key performance indicators selection model as part of the Enterprise Analysis Model. Procedia CIRP63, pp.283-288.

Ogunde, A., Joshua, O., Amusan, L.M., and Akuete, E., 2017. PROJECT MANAGEMENT A PANACEA TO IMPROVING THE PERFORMANCE OF CONSTRUCTION PROJEC. International Journal of Civil Engineering and Technology (IJCIET)8(9), pp.1234-1242.

Zhu, L., Johnsson, C., Mejvik, J., Varisco, M., and Schiraldi, M., 2017, December. Key performance indicators for manufacturing operations management in the process industry. In 2017 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM) (pp. 969-973). IEEE.

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