This document discusses key performance indicators (KPIs). It defines KPIs as quantifiable measures that are critical to an organization's success. KPIs are tied to an organization's strategy and help evaluate progress towards goals. The document outlines steps for selecting KPIs, including clarifying objectives, developing a list of potential indicators, assessing them based on criteria like meaningfulness and practicality, and selecting the best few indicators. It also discusses features of KPIs like being measurable, quantitative, and providing reliable data in a timely manner. Finally, the document notes that KPIs for projects differ and may track estimates, variances, milestones and issues.

1. Key Performance Indicators
(KPIs)
Presented by:
Arshad A Javed
FCA, CISA, CIA, CFE, CICA, CFAP, CAME,
DISA. B.Com

2. OVERVIEW
Key Performance Indicators (KPIs)
A performance indicator or key performance indicator (KPI) measures the quantifiable
performance of an activity that is critical to the success of an organization. It depends on the
objective of an organization hence, is different for each.
In other words, KPIs are the goals or targets set by an entity in their strategic plan and they
measure the quantifiable performance of an activity that is critical to the success of an
organization.
KPIs are typically tied to an organization's strategy using concepts or techniques such as the
Balanced Scorecard.
KPIs help to evaluate the progress of an organization towards its vision and long-term goals,
especially toward difficult to quantify knowledge-based goals.
A KPI is a key part of a measurable objective, which is made up of a direction, KPI, benchmark,
target, and time frame. For example:
"Decrease in number of lost luggage per 1000 passengers”
In this case, percentage decrease in lost luggage per 1000 pax is the KPI.

3. KPIs for ongoing business activities
KPIs are directly linked to the overall goals of the company and these are utilized to
track or measure actual performance against key success factors.
Key Performance
Indicators (KPIs)
Key Success
Factors (KSFs)
Business
Objectives Tracked by.Determine.

4. Selecting KPIs

5. Steps in Selecting Performance Indicators:
Clarify the
results
statements
STEP 1
Develop a
List of
Possible
Indicators
STEP 2
Assess Each
Possible
Indicator
STEP 3
Select the
"Best"
Performance
Indicators
STEP 4
Selecting appropriate and useful performance indicators is a fairly straightforward process, but
requires careful thought, iterative refining, collaboration, and consensus- building. Here are some
suggestions. Although presented as discrete steps, in practice some of these can be effectively
undertaken simultaneously.

6. Clarify the results statements
Good performance indicators start with good results statements that people can understand
and agree on. Carefully consider the result desired.
Avoid overly broad results statements. Sometimes objectives and results are so broadly stated it
is difficult to identify the right performance indicators. Instead, specify those aspects believed to
make the greatest difference to improved performance. For example, rather than using a broad
results statement like "improved capacity" of the company, clarify those aspects that program
activities emphasize. For example, improved personnel payment process, or improved
management skills.
Be clear about what type of change is implied. What is expected to change -- a situation, a
condition, the level of knowledge, an attitude, a behavior?
Identify more precisely the specific targets for change. Who or what are the specific targets for
the change?

7. Develop a List of Possible Indicators
There are usually many possible indicators for any desired outcome, but some are more
appropriate and useful than others. In selecting indicators, don't settle too quickly on the first
that come most conveniently or obviously to mind. A better approach is to start with a list of
alternatives, which can then be assessed against a set of selection criteria.
To create the initial list of possible indicators, tap the following sources:
• Internal brainstorming by the strategic objective team
• Consultations with experts in the substantive pro- gram area
• Experience of other operating units with similar indicators
The key to creating a useful initial list of performance indicators is to be inclusive. That is, view
the desired result in all its aspects and from all perspectives.

8. Assess Each Possible Indicator
Next, assess each possible indicator on the initial list. Use the six criteria given below under
“Features of KPIs” (refer slide 10 of this presentation)
When assessing and comparing possible indicators, it is helpful to use a matrix with the six
criteria arrayed across the top and the item indicators listed down the left side.
With a simple scoring scale, for example 1-5, rate each item indicator against each criterion.
These ratings will help give an overall sense of the indicator's relative merit, and help in the
selection process. However, apply this approach flexibly and with judgment, because all seven
criteria may not be equally important.

9. Select the "Best" Performance Indicators
The next step is to narrow the list to the final indicators that will be used in the performance
monitoring system. They should be the optimum set that meets the need for management-useful
information at a reasonable cost.
Be selective. Remember the costs associated with data collection and analysis. Limit the number
of indicators used to track each objective or result to a few (two or three). Select only those that
represent the most basic and important dimensions of our aims.

10. Features of KPIs for ongoing business activities:
(Six criteria for KPIs)
1. KPIs should be meaningful in that the fulfilment of their targets actively contributes to
organizational improvement.
2. A performance indicator should measure as closely as possible the result it is intended to measure.
3. It should expressed in quantitative terms, where possible. These may be in terms of
• A single value
• An upper limit
• A lower limit
• A range of values
• A percentage of a specific quantity/value
• A scheduled date by which a given task is to be completed, etc.
4. It should be both uni-dimensional and operationally precise. To be uni-dimensional means that it
measures only one phenomenon at a time.
5. An indicator is practical if data can be obtained in a timely way and at a reasonable cost.
Management require data that can be collected frequently enough to inform them of progress and
influence decisions.
6. Consider whether data of sufficiently reliable quality for confident decision-making can be obtained

11. KPIs for the Projects
The KPI procedure mentioned so far relates to KPIs for ongoing business activities.
However KPIs for projects are different.
By definition, “Projects are temporary in nature. They have definitive start dates and
end dates. They are distinct from ongoing work or business operations. They are not
every day business process.”
The following KPIs can be used to monitor the current status and progress of a project:
▪ Estimate To Complete (ETC)
▪ Cost Variance
▪ Schedule Variance
▪ Milestone Completed on time
▪ Milestone completed on budget
▪ Number of unresolved issues

12. Have questions?
Arshad Javed
arshad235@yahoo.com