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Performance

Performance

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Published by: otherside on May 26, 2008
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06/14/2009

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4
PERFORMANCE MEASURES
Objective
Strategic, performance measurement-based management sys-tems allow an organization to align its business activitities toits strategy, and to monitor performance toward strategic goalsover time.How does an enterprise (agency, busi-ness) know how well it’s doing? As the vagaries of the stock market haveshown us, there is more to a compa-ny’s performance than just its finan-cials. High-performing enterprisesactively identify “key performanceindicators,” and measure theirprogress against established target values for those indicators, as a way of measuring their effectiveness. Thisis performance management, and thekey indicators are the PerformanceMeasures (or metrics) of the enter-prise.Performance management is used totrack an organization’s progressagainst its strategic plan and specificperformance goals. While Per-formance Measures may be applied toindividual projects to ensure thatdeadlines are met and costs are con-trolled, etc., it is essential for theProject Manager to understand howthe project itself supports the organi-zation’s strategy, and how the project will impact or influence the organiza-tion’s key Performance Measures.This chapter identifies key perform-ance measurement terms and con-cepts to orient the Project Manager tothis important aspect of organization-al performance.
51
Definitions
Performance Measures should identify the population tobe measured, the method of the measurement, and thedata source and time period for the measurement. Eachmeasure should also be:
G
objective
G
easy to understand
G
controllable by minimizing outside influences
G
 timely 
G
accurate
G
cost-effective
G
useful
G
motivating
G
 trackable
Performance Measures
are quantitative or qualitative ways to characterize and define performance. They pro- vide a tool for organizations to manage progress towardsachieving predetermined goals, defining key indicators of organizational performance and Customer satisfaction.
Performance Measurement
is the process of assessing the progress made (actual) towards achieving the prede- termined performance goals (baseline). Measurement ismanaged using output measures and outcome measures.
Output measures
are calculations of recorded activity or effort expressed quantitatively or qualitatively.
Outcome measures
are an assessment of the resultsof a program compared to its intended purpose.
 
Purpose
The concept of Performance Measures may be new to many Performing Organizations. If Performance Measures do notexist in an organization, a Project Manager may want to devel-op a system to prove the effectiveness of his own project. In sodoing, the Project Manager might also contribute to processimprovements within the organization.Project Managers should consider the following to ensure thatprojects align with the Performing Organization’s mission andstrategy:
N
Does the agency have a mission and strategic plan?
N
Is it clearly articulated?
N
Does the organization understand how its activitiescontribute to mission success?
N
Does understanding of the mission extend vertically throughout the organization?
N
 Are the measures of success focused (at least in part) onoutcomes?
N
 Are the measures related to the mission and goals asreflected in the strategic plan?
N
 Are the performance data reliable?
N
 Are appropriate measures reported to individuals atdifferent levels of the organization, and to externalstakeholders?
N
 Are Performance Measures used to influence and/or informresource allocation decisions?
N
Is there any relationship between organizational perform-ance and individual or group incentives to contribute toorganizational performance?In some organizations, projects are selected because they willenhance operational performance. For example, a project may be intended to reduce cycle time, improve time to market, orincrease Customer satisfaction. The Project Manager mustunderstand how and to what extent the performance of his/herproject is expected to improve organizational performance, andhow the project’s effect will be measured.
52 
Section II:4 
Performance Measures 
NYS Project Management Guidebook 
 
Section II:4 
Performance Measures 
53 
NYS Project Management Guidebook 
4.1
 THE BALANCED SCORECARD
There are many different measurement frameworks, includingthe balanced scorecard, activity based costing, competitivebenchmarking, and shareholder value added. Each of these pro- vides a unique and different lens through which to view anorganization’s performance.Most frameworks tend to be one-dimensional in perspective.For example, benchmarking tends to involve taking a largely external perspective, often comparing performance with that of competitors or other best of breed practitioners or businessprocesses. This kind of activity is frequently pursued as anexercise to generate ideas for or obtain commitment to short-term improvement initiatives rather than to design a formalizedperformance measurement system. However, the balancedscorecard is a measurement framework which integrates mul-tiple perspectives.The balanced scorecard integrates four sets of measurements,complementing traditional financial measures with those driv-ing future performance. An organization using this frameworkis encouraged to develop metrics that facilitate collection andanalysis of information from the following perspectives:
I
Financial
I
Customer
I
Learning and Growth
I
Internal Business ProcessesImplementation of a balanced scorecard presents an opportu-nity for a Performing Organization to look at its existing pro-grams, services, and processes. Are the right services beingprovided to the Customers? (Are we doing the right things?) Are the processes implemented now the most efficient and cost
Remember, performance measurements provide a mechanism for the organization to manage its financial and non-financial performance. Accountability is increasedand enhanced, ensuring that projects support the organizational strategy, and that better serv-ices and greater satisfaction are provided to the Customer. Performance that is measured andreported will improve.

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