Developing Project/Contracting Key Performance Indicators and Management in a Project Environment

Development of a Project Balanced Scorecard Performance Measurement System

OBJECTIVE:

1. To outline Project Balanced Scorecard Performance Measurement Systems, and
2. To clearly define the process for developing a project "Balanced Scorecard" performance measurement tool, using customised project/contracting and business Key Performance Indicators.

Outline:

There are several key input variables that together form the controllable influence over project performance. The performance measurement system that is applied to the project team is one of these key input variables.

To achieve success consistently for all project objectives it is essential the project team performance measurement system drives performance towards meeting all project requirements. The most common performance measurement systems focus on short term financial and timing goals, while other project outcomes fall into the "nice to have" category. Many systems segregate financial and non-financial performance.

A balanced scorecard performance measurement system aligns the performance drivers with the desired outcomes while retaining flexibility, so the emphasis can be adjusted to compensate for individual and organisational diversity.

A balanced scorecard performance measurement system helps an organisation develop its culture to focus on how a project is delivered in addition to the end result. This focus is critical to build long term client relationships and sustained financial performance.

Developing and implementing a Project Balanced Scorecard:

• Meeting with the convenor and the executive to determine the needs and requirements for the development of the scorecard, and to sign a contractual agreement.
• Compile a Project Management Plan (PMP) for the initiative and have it endorsed.
• Review the organisation's Business Plan, Operational and Projects outcomes to establish internal and external stakeholders' requirements.
• Identify the project output variables for each of the stakeholder requirements.
• Confirm the organisation's project methodology addresses each of the output variables and identify a representative Key Performance Indicator (KPI) for each output variable.
• Identify a data source for each KPI and design a collection process if not already in existence.
• Design the balanced scorecard performance measurement tool.
• Measure actuals to determine current baseline performance.
• Normalise measures to a score range
• Collate and aggregate normalised measures.
• Select target KPI levels.
• Adjust scorecard weightings to drive performance to target KPI levels.
• Implement balanced scorecard performance measurement system.
• Analyse results and assign responsibility for actions.

Benefits and Outcomes:

• Stakeholders are consulted throughout all phases of the project.
• The scorecard allows managers to:
  • Synchronise strategic/business plans with project plans and control monitors;
  • Identify drivers requiring attention, through drill down analysis;
  • Synchronise project management with other management systems, eg finance, HR, marketing, service delivery, information systems, asset management, etc.
• Improved project team satisfaction as performance measurement is closely aligned with controllable variables.
• Improved procedural compliance to meet quality assurance accreditation requirements, i.e. less non-compliance.