A Key Performance Indicator (KPI) is one of your most important quantifiable indicators of progress toward your desired outcome. We link KPIs to the achievement of business, portfolio, program or project objectives.

Therefore, KPIs help focus your work on delivering the strategic or operational improvements you need. Peter Drucker's famous quote reminds us:
“What gets measured gets managed.”

Performance indicators give us goals to work towards.

They can either be statements about what we want, or they can represent the outcomes we actually want but cannot easily measure. These are proxy indicators.

KPIs can also be leading or lagging indicators
• Leading indicators give us a measure that predicts future results
• Lagging indicators give us a retrospective measure of how successful we were.

What makes a good KPI?
Good KPIs:
• Provide objective evidence of progress towards achieving a desired outcome
• Measure the right things to make better decisions.
• Directly linked to strategic requirements
• Enable us to assess how performance changes over time
• Follow the things that matter to us,
• Are defined in a way that is significant, measurable, achievable, relevant, trackable, ethical, supported and time-bound

The questions you need to ask to define your KPIs
• What are your desired results?
• Why do we want this result?
• How can you influence each outcome?
• Who is responsible for the business results?
• How can you measure progress?
• When will you review progress towards the outcome?
• How do you know you have achieved your goal?
• Who needs to know and understand your KPIs?
• In what cycle are the KPIs you work with reviewed and updated?

recommended videos
Carefully curated video recommendations for you:
What are project goals? https://youtu.be/OCgbfSsKo2M
What are OKRs? https://youtu.be/YRsuxPsDpLs
What is the Iron Triangle? Time, cost, quality, scope? https://youtu.be/JHSHOAfV-uw
What is the Agile Triangle – Value, Quality and Constraints https://youtu.be/QDExsKePcd0
What is a project goal? https://youtu.be/yVuJ5LrypZA
What are project outcomes? And how do they differ from results or objectives? https://youtu.be/rRKCxzNAbew
What are the project benefits? https://youtu.be/3w1khZbyJGk

A while ago I asked project managers in some forums what material things they needed for their work as project managers. The answers were great. I compiled their answers in a kit list.
https://kit.co/MikeClayton/what-a-project-manager-needs
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