Development of Key Performance Indicators for the SDIP
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Date
2012
Authors
Amir Risheh
Sudqey Dwaikat
Majd Mousa
Yasmine Abu Hala
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Abstract
Key Performance Indicators (KPIs) is one important tool both for translating strategy into action and for monitoring progress at a strategic level. This has now been recognized widely in organizations and companies are in the process of designing and implementing KPIs in the form manageable to their employees. Key Performance indicators can be defined as a group of information collected at specified intervals to measure the performance of the system; it's collected from different sectors such as Education, Health, Economic, infrastructure Etc.(Fitz-Gibbon, 1990) KPI helps the organization define and measure progress towards organizational Goals or Key Results Areas (KRAs). Once an organization has set its Vision and analyzed its mission, identified all its stakeholders, and defined its goals, it needs a systematic way to measure the progress towards those Goals. KPIs are those measurements. KPI's represent a set of measures that is focusing on the sectors performance, these measures are the most critical for current and future success of the sectors.(Parmenter, 2007) KPIs are organized data collecting and collating, where the organization can monitor and evaluate their progress to drive for continuous improvements towards meeting their Objectives and fulfilling their KRAs. Indicators are defined as "individual or composite statistics that reflect important features of a system, such as education, health, or economy (DARLING-HAMMOND, 1992.)Also known as key success indicators (KSIs), key performance indicators (KPIs) help an organization define and measure progress toward organizational goals. Once an organization has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals. KPIs are those quantifiable measurements (REH).In other words, KPIs are high-level snapshots of an organization based on specific predefined variables (INFORMATIONBUILDERS, 2004-2-14). KPI's characteristic can be described by using SMART rule: 1. Specific (S): the KPI is clear and focused toward performance targets or a business purpose. 2. Measurable (M): the KPI can be expressed quantitatively. 3. Attainable (A): the targets are reasonable and achievable. 4. Realistic or Relevant (R): the KPI is directly pertinent to the work done on the project. 5. Time-Based (T): the KPI is measurable within a given time period. Indicators identifiable as possible candidates for KPIs can be categories as the following: 1. Quantitative indicators: This can be presented as a number. 2. Practical indicators: that interface with existing company processes. 3. Directional indicators: specifying whether an organization is getting better or not. 4. Actionable indicators: are sufficiently in an organization's control to effect change. 5. Financial indicators: used in performance measurement and when looking at an operating index. 1.2 Problem statement The idea of this project has been initiated by the problem of using nonstandard KPIs to diagnose the various sectors of a society or a locality, which leaded to different evaluations and outputs among consultants and experts when evaluating a specific sector in terms of strength and weakness points, what field or subsector is the most appropriate to invest in, and if it requires improvement indeed. Therefore, standardizing the indicators used to diagnose a sector will reflect, in return, the ability to continue improvement from where the last improvement process has ended, that is, a cumulative process. The adoption of a standard set of KPIs will create a methodology for consultants to follow and will solve the problems initiated by the variety in perspectives, points of view, evaluation, plans, and therefore, decisions and actions. Hence, standardizing the key performance indicators will pay off in terms of increasing the validity and reliability of the evaluation process, decrease the risk of scattered projects that are not subjected to a plan and making a wrong decision with its consequences, increasing the success probability, and saves money. Project Objective The main objective is to set Key Performance Indicators for the different developmental sectors covered by the SDIP manual. This effort will standardize the diagnostic approach, and will enable experts to use the same indicators at different localities. Through: 1. Investigating the development of Key Performance Indicators. 2. Examining whether the way in which KPIs are displayed, defined, and calculated might affect their perceived importance, understandability, relevance to the needs of the sectors and comparability. 3. Survey the current use being made of KPIs. 4. Test the effectiveness of other performance measurement systems and identify any gaps where KPIs have failed to address (measure) important performance dimensions. 5. Use KPIs to identify the trends of the sectors performance over time. 6. Test the effectiveness of the different performance measurement packages applied to the sectors, in different countries. 1.4 Project implementation Plan The criteria that used to set the list of KPIs for each of the selected sectors as follows: KPIs definition, including 1. Define KPIs. 2. Brainstorm on KPIs. 3. Develop data collection plan. 4. Create possible list of KPIs for the selected sectors via brainstorming on KPIs and previous studies. Monitoring and analyzing data, including. 1. Monitor KPI compliance. 2. Gather and analyze data. Improving components with experts and consultants in the field. Refining KPIs. To collect data uniformly, you will need to develop a data collection plan. The elements of the plan must be clearly and unambiguously defined. Data collection can involve a multitude of decisions by data collectors. When you prepare your data collection plan, you should try to eliminate as many subjective choices as possible by operationally defining the parameters needed to do the job correctly. Your data collectors will then have a standard operating procedure to use during their data collection activities. The following principle should be considered while selecting or defining indicators: An indicator must motivate the right behavior. A KPI must be measurable. A KPI must be affordable. The objective set for a KPI must be attainable. Factors affecting the indicator must be controllable by the service provider. A KPI must be meaningful to all the parties. Expected key project benefits: In the case that the suggested set of standard indicators are adopted by the municipal development and lending fund is achieved; a smooth and more trusted diagnostic or situation analysis for a certain populated area could be accomplished. As using the same standard set of indicators by the different consultants who are given the mission to analyze a certain area that is nominated to be a new project implementation decision. When ensuring that the same indicators are used by different consultants for different suggested municipality; a transparent and fare decisions will be taken to implement the right plan on the right area using the available resources. This will decrease the corruption issues that could happen in decision making process. Project development plan: In order to achieve the strategic goals of this study, a precise development plan was set. The expected level of the project is to reach to accessible, measurable and sustainable indicators for the sectors covered by the study. This could be achieved by implementing the detailed KPI creation process mentioned above on each sector, following the data colleting procedures and the mentioned methodologies as well was the paving way to accepted deliverables for the stud