Overcoming impact from COVID-19
In our businesses requires reviewing and adjusting 2020 goals under “new normal” circumstances. Times are changing and so must our business metrics. In other words, Key Performance Indicators (“KPIs”) should be revisited and reset.
Key Performance Indicators (“KPIs”)
KPIs are designed to be measurable, clear, and non-intimidating tools to track progress towards essential business objectives. Consequently, it is important to set aside time to reset objectives and targets defining success in this “new normal”. KPIs should not be imported or copied from similar businesses because each business client and supply chain is different, and priorities may have changed along those crucial pathways. Further, when revisiting KPIs, internal resources such as personnel, cash flow, projects number must be factored into reevaluation.
Because KPIs are a form of communication within an organization, they should be an easy and common language for team to obtain data and to understand critical milestones for business success. It is important to keep in mind that not all KPIs necessarily apply to the entire organization. Some may focus on overall performance, while others focus on specifics like sales, projects, and/or marketing strategies. Always define which KPIs are relevant for which team when and reviewing your KPIs.
KPIs should be constructed so that they are relatively simply to track and easy to understand and update from top to bottom. To ensure understanding, leaders should create an atmosphere that regularly allows for all team members to provide KPI feedback and to feel empowered to propose possible solutions for any defined problem or goal. When tracking systems are up to date, the entire team is aware of successes and potential roadblocks as soon as possible so that appropriate adjustments may be made across the board. The sooner that any roadblock is identified by the entire team, the easier it is to fix with direct buy in from the team. More than ever, COVID-19 has taught us that “time is money”, and changes to goals and processes must occur quickly and via a process that the whole business understands and owns.
To set KPIs, the knowledge areas of PMBok can be used, or if preferred, common business aspects (such as Time, Cost, Client Satisfaction, Quality, Safety, and Stakeholder Satisfaction (investors and employees) can be used. Examples of KPIs that help track success in the Design and Construction industries are:
a. Time predictability – construction (client change orders)
• Time predictability – construction (project leader change orders)
• Time predictability – design
a. Cost predictability – design and construction cost to rectify defects
• Labor cost – actual versus baseline
• Labor cost over project timeline
• Profit margin – actual versus baseline profit margin over project timeline
• Profit predictability – project
3. Client (satisfaction)
a. Client perception vs. contractor perception
b. Client satisfaction with service
c. Client satisfaction with the product
d. Repeat business
In time and with continued practice, setting KPIs will be clear and maintaining them will become easy. Through an honest and routine analysis of business realities, input and buy in from business team members, and transparent communication of goals and challenges, the pathways to business success become more visible. With the time afforded during COVID-19 to reassess, what better opportunity to begin reviewing and redefining business metrics on a frequent basis? The road to recovery can improve all of us and our businesses, moving forward.