Part 1: KPIs for executive oversight

What should an executive monitor?

Executive oversight of projects can be challenging, especially for executives with little experience with projects. Many executives rise through the ranks of the operations side of the business, using Key Performance Indicators (KPIs) monitoring the expenses, rework rates, marketing costs, and revenues. Projects are an unusual investment on which the company embarks. There is no revenue to monitor, and marketing does not result directly in sales. So, what is an executive to monitor.

Anyone who has studied project management knows what is known as the iron triangle. It indicates that we monitor cost, schedule, and scope (or quality) in projects. In recent years, scope has started to be replaced by numerous factors to fit the many types of projects. They can include safety for construction work, and customer satisfaction for software development. The truth is every industry addresses different factors for their specific types of projects. Each factor leads to different KPIs.

It is important to identify the KPIs for executives based on their role in projects. Their role is not to execute the project, but to ensure it is being executed effectively. They are interested in making sure the company’s resources are used efficiently, and that the project begins to produce revenue on time. Knowledge of their role in projects helps them focus in on KPIs for executive oversight.

We can begin identifying KPIs by reviewing the iron triangle factors; cost, schedule, scope (quality, safety, risk, etc.). There are many measurements that have been created for each factor. Select the KPIs that have meaning to your company, industry, and project types. For example, there are many indicators for cost and schedule available from earned value management or other management techniques. Review the meaning of each indicator to select the ones that already fit within the company’s vernacular. Companies (and industries) have their own vocabulary for business, and keeping consistent with that business language will help to ensure understanding of the KPIs.

Another method of identifying appropriate KPIs is to review the company’s financial statements and operational KPIs. It is important to identify the efficient usage of company resources as identified in the expenses side of the balance sheet. Similarly, identifying the financial instruments used for supporting projects can provide insights into the appropriate KPIs for reporting projects to executives. It is also important to identify the expected revenues through economic measures. With this component, executives can ensure the expected value is being provided by the investment.

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