Key performance indicators for portfolio management - Revision history

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	'''Guideline on how to define good KPIs''' <ref> [Sustainable KPIs ] https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/ </ref> <ref> [Customer centric KPIs ] https://blog.hubspot.com/service/customer-service-kpi </ref>		'''Guideline on how to define good KPIs''' <ref> [Sustainable KPIs ] https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/ </ref> <ref> [Customer centric KPIs ] https://blog.hubspot.com/service/customer-service-kpi </ref>
	<ref> [Financial and growth KPIs ] https://www.netsuite.com/portal/resource/articles/accounting/financial-kpis-metrics.shtml </ref>		<ref> [Financial and growth KPIs ] https://www.netsuite.com/portal/resource/articles/accounting/financial-kpis-metrics.shtml </ref>
	[[File:KPI theme.~~png~~\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]		[[File:KPI theme.jpeg\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]
	After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.		After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.

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	== Application ==		== Application ==
	'''Guideline on how to define good KPIs''' <ref> [Sustainable KPIs ] https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/ </ref>		'''Guideline on how to define good KPIs''' <ref> [Sustainable KPIs ] https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/ </ref> <ref> [Customer centric KPIs ] https://blog.hubspot.com/service/customer-service-kpi </ref>
			<ref> [Financial and growth KPIs ] https://www.netsuite.com/portal/resource/articles/accounting/financial-kpis-metrics.shtml </ref>
	[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]		[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]
	After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.		After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.

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	== Application ==		== Application ==
	'''Guideline on how to define good KPIs'''		'''Guideline on how to define good KPIs''' <ref> [Sustainable KPIs ] https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/ </ref>
	[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]		[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]
	After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.		After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.

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Limitations and conclusion

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	== Limitations and conclusion==		== Limitations and conclusion==
	The measure of KPIs in portfolio management depends on many factors and one cannot disregard the financial and business part of this. ~~Primary~~ financial and secondary KPIs ~~but also~~ non-financial KPIs that ~~are~~ more ~~focused~~ on ~~stakeholder and~~ customer satisfaction such as NPS or sustainability metrics like CO2 emissions. It is not a surprise that the metrics discussed in this article are also used in finance and not only in portfolio management, yet it goes to show how ~~the~~ essential ~~financial aspect of~~ portfolio management is. Often in large consultancy organizations, finance, and business doesn’t go together, as organizational policies and laws must be obeyed by finance. Thus, transparency and openness in financial reporting are key to achieving accuracy and quality in data <ref name="a3" />. ~~Driving these KPIs~~ and ~~the~~ measure of ~~them all requires~~ proper data structure and good validation. ~~The~~ portfolio manager ~~has~~ a central role ~~in the management~~ of the portfolio, ~~as the~~ information on delays, trends, and sensitive data ~~cannot be seen by anyone but the portfolio manager himself~~ <ref name="a3" />. ~~Portfolio management requires real-life data and must be assessed right away to avoid a negative effect on the overall performance of the portfolio.~~		The measure of KPIs in portfolio management depends on many factors and one cannot disregard the financial and business part of this. The KPIs selected may include primary financial and secondary KPIs, as well as non-financial KPIs that focus more on customer satisfaction, such as NPS or sustainability metrics like CO2 emissions. It is not a surprise that the metrics discussed in this article are also used in finance and not only in portfolio management, yet it goes to show how essential finance is to portfolio management. Often in large consultancy organizations, finance, and business doesn’t go together, as organizational policies and laws must be obeyed by finance. Thus, transparency and openness in financial reporting are key to achieving accuracy and quality in data <ref name="a3" />. For effective drive and measure of KPIs, it is crucial to have a proper data structure in place and ensure good validation of data. Portfolio management heavily relies on real-time data that must be assessed promptly to avoid negative impacts on the portfolio's overall performance. This is where the portfolio manager plays a central role, as they have a holistic overview of the portfolio, including information on delays, trends, and sensitive financial data <ref name="a3" />."


	Although structural reporting, controlling, and transparency of data do drive good portfolio management, it must not be all about numbers and data. Contextual issues about the data can lead to conflicts or unnecessary waste of time. In the example of the Work-in-progress being too high on a ~~program~~, the PM may see this and react, without any additional context of what has caused this or what impact this ~~will~~ have on the portfolio <ref name="a5" />. The issues of accuracy of data and contextual issues all boil down to limited information on the portfolio. KPIs might not give the whole picture of what is really going on in the ~~project/ program~~. For example, a portfolio manager may see that a project is on budget, but without additional information, it may not be clear whether the project is progressing according to plan or if other aspects of the project are causing problems. The selection and implementation of KPIs may be a challenge to an organization as they must be aligned with organizational objectives and that they provide meaningful information <ref name="a4" />. Primary and secondary KPIs must be specific and clearly defined to contribute to the overall goal and evaluating them is often also best practice. It’s important to highlight that a set of primary and secondary KPIs for an organization or portfolio cannot be copied ~~into~~ another ~~one~~. The use of the KPIs must be done in a sensible manner and must reflect the organizational strategies, goals, and objectives.		Although structural reporting, controlling, and transparency of data to drive good portfolio management is essential, it must not be all about numbers and data. Contextual issues about the data can lead to conflicts or unnecessary waste of time. In the example of the Work-in-progress (WIP) being too high on a specific project, the PM may see this and react, without any additional context of what has caused this or what impact this may have on the portfolio <ref name="a5" />. The issues of accuracy of data and contextual issues all boil down to limited information on the portfolio. KPIs might not give the whole picture of what is really going on in the portfolio. For example, a portfolio manager may see that a project is on budget, but without additional information, it may not be clear whether the project is progressing according to plan or if other aspects of the project are causing problems. The selection and implementation of KPIs may be a challenge to an organization as they must be aligned with organizational objectives and that they must provide meaningful information <ref name="a4" />. Primary and secondary KPIs must be specific and clearly defined to contribute to the overall goal and evaluating them is often also best practice. It’s important to highlight that a set of primary and secondary KPIs for an organization or portfolio cannot be copied to another portfolio. The use of the KPIs must be done in a sensible manner and must reflect the organizational strategies, goals, and objectives.

	== Annotated bibliography ==		== Annotated bibliography ==

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	The benefit of using primary and secondary KPIs in engineering consultancy for portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the time-plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths.		The benefit of using primary and secondary KPIs in engineering consultancy for portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the time-plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths. Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.


	Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.

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	Many challenges can be identified when it comes to portfolio management in engineering consultancy. Firms take on multiple projects across departments that specialize in different subjects. Some of these projects start next year and some are tender projects that are of high priority. A tender is defined as the invitation from a stakeholder to carry out and solve a problem for a project. It’s important to mention that tender projects are not projects won, but in the phase of bidding. Portfolio managers, evaluate and manage the performance of many departments (programs) and their projects as a whole <ref name=a3> [Controlling a Multibillion Project Portfolio - Milestones as Key Performance Indicator for Project Portfolio Management] https://www.sciencedirect.com/science/article/pii/S1877042816308771 </ref> <ref> [Tender in Finance] https://www.investopedia.com/terms/t/tender.asp </ref>. Thus, it becomes important to track the progress of each department and see if more resource allocation is needed. Within engineering consultancy and consultancy in general, projects vary in size but also in priority. The field is a fast-paced environment and many initiatives come and go. Therefore, it is important to balance the distribution of resources on ongoing projects but also within resources and FTEs (Full-time employees) available for mega projects. This is where KPIs come in. Primary KPIs are used to track the overall performance of the portfolio, whereas secondary KPIs are used to track individual project performance. Primary KPIs may include revenue, profit, and deviation between target and budget for each department, while secondary KPIs may include a measure of project completion time, resource utilization, and project cost.		Many challenges can be identified when it comes to portfolio management in engineering consultancy. Firms take on multiple projects across departments that specialize in different subjects. Some of these projects start next year and some are tender projects that are of high priority. A tender is defined as the invitation from a stakeholder to carry out and solve a problem for a project. It’s important to mention that tender projects are not projects won, but in the phase of bidding. Portfolio managers, evaluate and manage the performance of many departments (programs) and their projects as a whole <ref name=a3> [Controlling a Multibillion Project Portfolio - Milestones as Key Performance Indicator for Project Portfolio Management] https://www.sciencedirect.com/science/article/pii/S1877042816308771 </ref> <ref> [Tender in Finance] https://www.investopedia.com/terms/t/tender.asp </ref>. Thus, it becomes important to track the progress of each department and see if more resource allocation is needed. Within engineering consultancy and consultancy in general, projects vary in size but also in priority. The field is a fast-paced environment and many initiatives come and go. Therefore, it is important to balance the distribution of resources on ongoing projects but also within resources and FTEs (Full-time employees) available for mega projects. This is where KPIs come in. Primary KPIs are used to track the overall performance of the portfolio, whereas secondary KPIs are used to track individual project performance. Primary KPIs may include revenue, profit, and deviation between target and budget for each department, while secondary KPIs may include a measure of project completion time, resource utilization, and project cost.


	The benefit of using primary and secondary KPIs in engineering consultancy for portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the time-plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths.		The benefit of using primary and secondary KPIs in engineering consultancy for portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the time-plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths.


	Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.		Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.


	It's crucial to remember that KPIs should be carefully chosen and customized to the unique requirements of the company and its initiatives. Not all KPIs will be applicable or meaningful in every circumstance, and utilizing the incorrect KPIs may have unfavorable effects. KPIs should also be routinely checked to make sure they are still offering insightful data and are in line with the aims and objectives of the company <ref name="a4" /> <ref name=a5> [Important KPIs and Metrics for Portfolio management] https://projectric.com/blog/kpis-and-metrics-for-project-portfolio-management-ppm/ </ref>. While there is no one-size-fits-all approach to selecting KPIs for portfolio management, similarly there isn't a standardized way of reporting and ensuring consistency within the organization. As a result, the use of KPIs may evolve over time, and different KPIs may be explored. The status quo on KPIs, they are an essential tool for measuring and tracking portfolio performance <ref name="a5" /> <ref name="a3" />.		It's crucial to remember that KPIs should be carefully chosen and customized to the unique requirements of the company and its initiatives. Not all KPIs will be applicable or meaningful in every circumstance, and utilizing the incorrect KPIs may have unfavorable effects. KPIs should also be routinely checked to make sure they are still offering insightful data and are in line with the aims and objectives of the company <ref name="a4" /> <ref name=a5> [Important KPIs and Metrics for Portfolio management] https://projectric.com/blog/kpis-and-metrics-for-project-portfolio-management-ppm/ </ref>. While there is no one-size-fits-all approach to selecting KPIs for portfolio management, similarly there isn't a standardized way of reporting and ensuring consistency within the organization. As a result, the use of KPIs may evolve over time, and different KPIs may be explored. The status quo on KPIs, they are an essential tool for measuring and tracking portfolio performance <ref name="a5" /> <ref name="a3" />.

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Application

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	'''Application of KPIs in Engineering Consultancy'''		'''Application of KPIs in Engineering Consultancy'''

	Many challenges can be identified when it comes to portfolio management in engineering consultancy. Firms take on multiple projects across departments that specialize in different subjects. Some of these projects ~~can~~ start next ~~month~~ and some are tender projects. A tender is defined as the invitation from ~~the~~ stakeholder to carry out and solve a problem for a project. It’s important to mention that tender projects are not projects won but in the phase of bidding. Portfolio managers, evaluate and manage the performance of many departments (programs) and their projects as a whole <ref name=a3> [Controlling a Multibillion Project Portfolio - Milestones as Key Performance Indicator for Project Portfolio Management] https://www.sciencedirect.com/science/article/pii/S1877042816308771 </ref> <ref> [Tender in Finance] https://www.investopedia.com/terms/t/tender.asp </ref>. Thus, it becomes important to track the progress of each department and see if more resource allocation is needed. Within engineering consultancy and consultancy in general, projects vary in size but also in priority. The field is a fast-paced environment and many initiatives come and go. Therefore, it is important to balance the distribution of resources on ongoing projects but also ~~have~~ resources and FTEs (Full-time employees) available for mega projects. This is where KPIs come in. Primary KPIs are used to track the overall performance of the portfolio, whereas secondary KPIs are used to track individual project performance. Primary KPIs may include revenue, profit, and deviation between target and budget for each department, while secondary KPIs may include a measure of project completion time, resource utilization, and project cost.		Many challenges can be identified when it comes to portfolio management in engineering consultancy. Firms take on multiple projects across departments that specialize in different subjects. Some of these projects start next year and some are tender projects that are of high priority. A tender is defined as the invitation from a stakeholder to carry out and solve a problem for a project. It’s important to mention that tender projects are not projects won, but in the phase of bidding. Portfolio managers, evaluate and manage the performance of many departments (programs) and their projects as a whole <ref name=a3> [Controlling a Multibillion Project Portfolio - Milestones as Key Performance Indicator for Project Portfolio Management] https://www.sciencedirect.com/science/article/pii/S1877042816308771 </ref> <ref> [Tender in Finance] https://www.investopedia.com/terms/t/tender.asp </ref>. Thus, it becomes important to track the progress of each department and see if more resource allocation is needed. Within engineering consultancy and consultancy in general, projects vary in size but also in priority. The field is a fast-paced environment and many initiatives come and go. Therefore, it is important to balance the distribution of resources on ongoing projects but also within resources and FTEs (Full-time employees) available for mega projects. This is where KPIs come in. Primary KPIs are used to track the overall performance of the portfolio, whereas secondary KPIs are used to track individual project performance. Primary KPIs may include revenue, profit, and deviation between target and budget for each department, while secondary KPIs may include a measure of project completion time, resource utilization, and project cost.

	The benefit of using primary and secondary KPIs in engineering consultancy portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the ~~project~~ plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths.		The benefit of using primary and secondary KPIs in engineering consultancy for portfolio management is the ability to track progress. The measure of KPIs at a regular frequency is crucial in ensuring everything runs smoothly and according to the time-plan. By measuring the right KPIs at regular intervals, portfolio managers can identify trends and make strategic decisions to improve overall performance <ref name=a4> [The key performance indicators (KPIs) and their impact on overall organizational performance] https://link.springer.com/article/10.1007/s11135-013-9945-y </ref>. Through regular meetings with financial controllers and project managers, KPIs can be used to identify potential risks but also opportunities allowing firms to address the issues and capitalize on the strengths.

	Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.		Another important aspect of using KPIs in engineering consultancy is the ability to communicate progress and success to key stakeholders in the organization. Higher officials in the organization are often interested in measurable results and KPIs provide exactly a clear but also an objective way of demonstrating the value of the firm’s services. A balanced set of primary and secondary KPIs must cover financial, customer satisfaction, sustainability, and growth KPIs <ref name="a4" /> <ref name=a2> [Beyond the 'iron triangle': Stakeholder perception of key performance indicators (KPIs) for large-scale public sector development projects] https://www.sciencedirect.com/science/article/pii/S0263786309000623 </ref>. An example of primary KPIs is Turnover, EBIT margin, Accounts receivable (AR), Backlog, and EBIT. For secondary KPIs that could be WIP, Own production (OP), Project cost, contingency, and CO2 emissions.

	It's crucial to remember that KPIs should be carefully chosen and customized to the unique requirements of the company and its initiatives. Not all KPIs will be applicable or meaningful in every circumstance, and utilizing the incorrect KPIs may have unfavorable effects. KPIs should also be routinely checked to make sure they are still offering insightful data and are in line with the aims and objectives of the company <ref name="a4" /> <ref name=a5> [Important KPIs and Metrics for Portfolio management] https://projectric.com/blog/kpis-and-metrics-for-project-portfolio-management-ppm/ </ref>.		It's crucial to remember that KPIs should be carefully chosen and customized to the unique requirements of the company and its initiatives. Not all KPIs will be applicable or meaningful in every circumstance, and utilizing the incorrect KPIs may have unfavorable effects. KPIs should also be routinely checked to make sure they are still offering insightful data and are in line with the aims and objectives of the company <ref name="a4" /> <ref name=a5> [Important KPIs and Metrics for Portfolio management] https://projectric.com/blog/kpis-and-metrics-for-project-portfolio-management-ppm/ </ref>. While there is no one-size-fits-all approach to selecting KPIs for portfolio management, similarly there isn't a standardized way of reporting and ensuring consistency within the organization. As a result, the use of KPIs may evolve over time, and different KPIs may be explored. The status quo on KPIs, they are an essential tool for measuring and tracking portfolio performance <ref name="a5" /> <ref name="a3" />.

	While there is no one-size-fits-all approach to selecting KPIs for portfolio management if there is a standardized way of reporting and consistency within the organization, the use of KPIs ~~can change~~ and different KPIs may be explored. The status quo on KPIs ~~is that~~ they are an essential tool for measuring and tracking portfolio performance <ref name="a5" /> <ref name="a3" />~~. The status quo on KPIs is that they are an essential tool for measuring and tracking portfolio performance~~.

	== Limitations and conclusion==		== Limitations and conclusion==

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Application

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	'''Guideline on how to define good KPIs'''		'''Guideline on how to define good KPIs'''
	[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]		[[File:KPI theme.png\|right\|frame\|Figure 2: Four main themes that is used alongisde the guideline listed on the left to define good KPIs.]]
	After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define ~~them~~. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and ~~actually making~~ progress towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline, clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and data-driven decisions can be made.		After establishing the definition of KPIs in general and specifically in portfolio management, the next step is to define KPIs. But how can this be done effectively? Defining good KPIs is critical to ensure that the portfolio is measuring the right metrics and progress is made towards the set targets. The four buckets of KPIs that must be evaluated are the following: Financial Performance, Customer Satisfaction, Sustainability, and Growth. By following this guideline: clear KPIs can be set and tracked, portfolio managers and others in the hierarchy can be held accountable, and finally data-driven decisions can be made.

	#'''Define Portfolio Objectives:''' The selected KPIs must align with the overall business objectives. Thus, it is important to stay within the mission of the organization. Identify what needs to be achieved in terms of financial performance, customer satisfaction, sustainability, and growth.		#'''Define Portfolio Objectives:''' The selected KPIs must align with the overall business objectives. Thus, it is important to stay within the mission of the organization. Identify what needs to be achieved in terms of financial performance, customer satisfaction, sustainability, and growth.
	#'''Pick Out Key Metrics:''' Which KPIs will help measure the progress towards the set objectives? Start by identifying KPIs. These KPIs could be a combination of primary and secondary KPIs, as well as discrete or continuous measures. In the figure ~~above~~, a few KPIs from each theme can be identified and selected as an example.		#'''Pick Out Key Metrics:''' Which KPIs will help measure the progress towards the set objectives? Start by identifying KPIs. These KPIs could be a combination of primary and secondary KPIs, as well as discrete or continuous measures. In the figure 2 on the right, a few KPIs from each theme can be identified and selected as an example.
	#'''Set Realistic Targets:''' By selecting specific and measurable KPIs, the progress of the portfolio can be measured and areas for improvement can be identified~~, establishing a baseline~~. Historical data and industry benchmarks can be used to set realistic targets		#'''Set Realistic Targets:''' By selecting specific and measurable KPIs, the progress of the portfolio can be measured and areas for improvement can be identified. Historical data and industry benchmarks can be used to set realistic targets.
	#'''Assign Responsibilities:''' By assigning responsibilities for each KPI to a project manager or intermediate manager below the Portfolio manager, the specific individual is held accountable to meet the targets set in step 3. This will drive results and set accountability as a top priority.		#'''Assign Responsibilities:''' By assigning responsibilities for each KPI to a project manager or intermediate manager below the Portfolio manager, the specific individual is held accountable to meet the targets set in step 3. This will drive results and set accountability as a top priority.
	#'''Regulate and Monitor:''' KPIs are not a set-and-leave ~~metric~~. They must be continuously monitored and adjusted as needed, both internally within the organization and externally. Review progress towards the objectives to meet the strategy set by the organization.		#'''Regulate and Monitor:''' KPIs are not a set-and-leave thing. They must be continuously monitored and adjusted as needed, both internally within the organization and externally. Review progress towards the objectives to meet the strategy set by the organization.

	The above ~~guideline~~ serves as a step-by-step guide on how to define KPIs for a portfolio. Following this guideline ensures that KPIs are selected and evaluated based on the four major themes: Financial Performance, Customer Satisfaction, Sustainability, and Growth.		The guideline above serves as a step-by-step guide on how to define KPIs for a portfolio. Following this guideline ensures that KPIs are selected and evaluated based on the four major themes: Financial Performance, Customer Satisfaction, Sustainability, and Growth.

S194831: /* What is Key Performance Indicators (KPIs)? */

2023-05-07T19:02:52Z

What is Key Performance Indicators (KPIs)?

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	# Accounts receivable (AR): AR refers to the amount of money owed to the portfolio for the work done on a project/program that has been delivered but not yet paid. A high AR can be an indication of potential cash flow issues, and managing it effectively is essential for the financial health of a consultancy. Specifically, in consultancy (and depending on the payment structure), portfolios with high AR tend to have projects that are still active, since projects are paid off after project handover.		# Accounts receivable (AR): AR refers to the amount of money owed to the portfolio for the work done on a project/program that has been delivered but not yet paid. A high AR can be an indication of potential cash flow issues, and managing it effectively is essential for the financial health of a consultancy. Specifically, in consultancy (and depending on the payment structure), portfolios with high AR tend to have projects that are still active, since projects are paid off after project handover.
	# Backlog: The amount of work contracted (Won and signed), but either not started or not completed. This KPI provides insights into the demand for a consultancy's services and can help them plan their resources and capacity more effectively. By tracking backlog, a consultancy can ensure that it has a healthy pipeline of work and can manage its resources more efficiently <ref> [Backlog] https://www.investopedia.com/terms/b/backlog.asp </ref>.		# Backlog: The amount of work contracted (Won and signed), but either not started or not completed. This KPI provides insights into the demand for a consultancy's services and can help them plan their resources and capacity more effectively. By tracking backlog, a consultancy can ensure that it has a healthy pipeline of work and can manage its resources more efficiently <ref> [Backlog] https://www.investopedia.com/terms/b/backlog.asp </ref>.


	The above-mentioned KPIs are excellent for tracking a portfolio as they provide great governance over the health and progress of the portfolio. For instance, accounts receivable (AR) provides information on the balance of money due For instance, a firm that have delivered a service but not yet been paid by the customer <ref> [''Accounts recivable information ''] https://www.investopedia.com/terms/a/accountsreceivable.asp </ref>. Meanwhile, backlog provides the portfolio manager with knowledge of the number of projects/ programs won, but not yet started. This is extremely important as it provides insight to the portfolio manager on how much-expected revenue is yet to be realized. This information is also greatly beneficial to the portfolio manager as they can prioritize projects and schedule them in a manner that doesn’t overload their employees with stress or work overload. Furthermore, secondary KPIs used to track progress and health of a portfolio in the consultancy industry could be as follows:		The above-mentioned KPIs are excellent for tracking a portfolio as they provide great governance over the health and progress of the portfolio. For instance, accounts receivable (AR) provides information on the balance of money due For instance, a firm that have delivered a service but not yet been paid by the customer <ref> [''Accounts recivable information ''] https://www.investopedia.com/terms/a/accountsreceivable.asp </ref>. Meanwhile, backlog provides the portfolio manager with knowledge of the number of projects/ programs won, but not yet started. This is extremely important as it provides insight to the portfolio manager on how much-expected revenue is yet to be realized. This information is also greatly beneficial to the portfolio manager as they can prioritize projects and schedule them in a manner that doesn’t overload their employees with stress or work overload. Furthermore, secondary KPIs used to track progress and health of a portfolio in the consultancy industry could be as follows:
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	# Own Production (OP): This KPI measures the work done on projects or programs by a company using its resources. It is calculated by multiplying the hours spent by the base rate of each employee on the project. This KPI helps to measure the effectiveness of a portfolio's resource allocation and utilization of its internal operations. PMs monitor this specific KPI to identify the area of improvement and reduce cost.		# Own Production (OP): This KPI measures the work done on projects or programs by a company using its resources. It is calculated by multiplying the hours spent by the base rate of each employee on the project. This KPI helps to measure the effectiveness of a portfolio's resource allocation and utilization of its internal operations. PMs monitor this specific KPI to identify the area of improvement and reduce cost.
	# Contingency: The measure of the provision set aside to cover unforeseen risks that may impact a project's timeline, scope, or in the worst case the budget. Contingency serves as a safety net as it helps the PM to manage the risk and uncertainty associated with the portfolio. By having a contingency plan in place, a PM can better manage unexpected events, and reduce the impact on the overall budget of the portfolio <ref> [Contingency-based approach to firm performance in construction] https://ascelibrary.org/doi/abs/10.1061/(ASCE)CO.1943-7862.0000738 </ref>.		# Contingency: The measure of the provision set aside to cover unforeseen risks that may impact a project's timeline, scope, or in the worst case the budget. Contingency serves as a safety net as it helps the PM to manage the risk and uncertainty associated with the portfolio. By having a contingency plan in place, a PM can better manage unexpected events, and reduce the impact on the overall budget of the portfolio <ref> [Contingency-based approach to firm performance in construction] https://ascelibrary.org/doi/abs/10.1061/(ASCE)CO.1943-7862.0000738 </ref>.


	These secondary KPIs provide an indirect overview of the portfolio as they are not directly tied to primary KPIs such as turnover or EBIT. Work-in-Progress (WIP) provides portfolio managers with great insight into ongoing projects and helps manage the work done. This KPI is often used in parallel with Backlog to gain a holistic understanding of the production process and the demand for the portfolio. This information is used by the portfolio manager to forecast future revenue and cash flow while also identifying potential bottlenecks or capacity constraints, which can then be used to make informed decisions about resource allocation and planning. For example, if the portfolio manager notices that the backlog is low and the WIP is high, then a portfolio is running efficiently and there is an excess capacity of employees that could be reallocated to other ongoing projects in the portfolio. (Peterson Drake & Fabozzi, 2010, Chapter 13). <ref> [The basics of finance: An introduction to financial markets, business finance and portfolio management] http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4796/1/The%20Basics%20of%20Finance%20An%20Introduction%20to%20Financial%20Markets%2C%20Business%20Finance%2C%20and%20Portfolio%20Management.pdf </ref>		These secondary KPIs provide an indirect overview of the portfolio as they are not directly tied to primary KPIs such as turnover or EBIT. Work-in-Progress (WIP) provides portfolio managers with great insight into ongoing projects and helps manage the work done. This KPI is often used in parallel with Backlog to gain a holistic understanding of the production process and the demand for the portfolio. This information is used by the portfolio manager to forecast future revenue and cash flow while also identifying potential bottlenecks or capacity constraints, which can then be used to make informed decisions about resource allocation and planning. For example, if the portfolio manager notices that the backlog is low and the WIP is high, then a portfolio is running efficiently and there is an excess capacity of employees that could be reallocated to other ongoing projects in the portfolio. (Peterson Drake & Fabozzi, 2010, Chapter 13). <ref> [The basics of finance: An introduction to financial markets, business finance and portfolio management] http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4796/1/The%20Basics%20of%20Finance%20An%20Introduction%20to%20Financial%20Markets%2C%20Business%20Finance%2C%20and%20Portfolio%20Management.pdf </ref>

S194831 at 19:02, 7 May 2023

2023-05-07T19:02:23Z

← Older revision		Revision as of 19:02, 7 May 2023
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	# Backlog: The amount of work contracted (Won and signed), but either not started or not completed. This KPI provides insights into the demand for a consultancy's services and can help them plan their resources and capacity more effectively. By tracking backlog, a consultancy can ensure that it has a healthy pipeline of work and can manage its resources more efficiently <ref> [Backlog] https://www.investopedia.com/terms/b/backlog.asp </ref>.		# Backlog: The amount of work contracted (Won and signed), but either not started or not completed. This KPI provides insights into the demand for a consultancy's services and can help them plan their resources and capacity more effectively. By tracking backlog, a consultancy can ensure that it has a healthy pipeline of work and can manage its resources more efficiently <ref> [Backlog] https://www.investopedia.com/terms/b/backlog.asp </ref>.

	The above-mentioned KPIs are excellent for tracking a portfolio as they provide great governance over the health and progress of the portfolio. For instance, accounts receivable (AR) provides information on the balance of money due For instance, a firm that have delivered a service but not yet been paid by the customer <ref> [''Accounts recivable information ''] https://www.investopedia.com/terms/a/accountsreceivable.asp </ref>. Meanwhile, backlog provides the portfolio manager with knowledge of the number of projects/ programs won, but not yet started. This is extremely important as it provides insight to the portfolio manager on how much-expected revenue is yet to be realized. This information is also greatly beneficial to the portfolio manager as they can prioritize projects and schedule them in a manner that doesn’t overload their employees with stress or work overload.		The above-mentioned KPIs are excellent for tracking a portfolio as they provide great governance over the health and progress of the portfolio. For instance, accounts receivable (AR) provides information on the balance of money due For instance, a firm that have delivered a service but not yet been paid by the customer <ref> [''Accounts recivable information ''] https://www.investopedia.com/terms/a/accountsreceivable.asp </ref>. Meanwhile, backlog provides the portfolio manager with knowledge of the number of projects/ programs won, but not yet started. This is extremely important as it provides insight to the portfolio manager on how much-expected revenue is yet to be realized. This information is also greatly beneficial to the portfolio manager as they can prioritize projects and schedule them in a manner that doesn’t overload their employees with stress or work overload. Furthermore, secondary KPIs used to track progress and health of a portfolio in the consultancy industry could be as follows:
			# Work-in-Progress (WIP): The measure of partially completed work on projects/ programs. The following secondary KPI provides insight into the progress of the work and how much is yet to be completed. Tracking Work-in-progress ensures the status of the work and thus the Portfolio manager can identify potential delays or issues that may impact the timeline or the budget.<ref> [Managing work-in-progress (WIP) by Focusing on finishing] https://www.pmi.org/disciplined-agile/da-value-stream-consultant-resources/manage-work-in-process-wip </ref>

	Furthermore, ~~some~~ secondary KPIs used to track progress and health of a portfolio in the consultancy industry could be as follows:
	# Work-in-Progress (WIP): The measure of ~~the~~ partially completed work on projects/ programs. The following secondary KPI provides insight into the progress of the work and how much is yet to be completed. Tracking Work-in-progress ensures the status of the work and thus the Portfolio manager can identify potential delays or issues that may impact the timeline or~~/ and~~ the budget.<ref> [Managing work-in-progress (WIP) by Focusing on finishing] https://www.pmi.org/disciplined-agile/da-value-stream-consultant-resources/manage-work-in-process-wip </ref>
	# Own Production (OP): This KPI measures the work done on projects or programs by a company using its resources. It is calculated by multiplying the hours spent by the base rate of each employee on the project. This KPI helps to measure the effectiveness of a portfolio's resource allocation and utilization of its internal operations. PMs monitor this specific KPI to identify the area of improvement and reduce cost.		# Own Production (OP): This KPI measures the work done on projects or programs by a company using its resources. It is calculated by multiplying the hours spent by the base rate of each employee on the project. This KPI helps to measure the effectiveness of a portfolio's resource allocation and utilization of its internal operations. PMs monitor this specific KPI to identify the area of improvement and reduce cost.
	# Contingency: The measure of the provision set aside to cover unforeseen risks that may impact a project's timeline, scope, or in the worst case budget. Contingency serves as a safety net as it helps the PM to manage the risk and uncertainty associated with the portfolio. By having a contingency plan in place, a PM can better manage unexpected events, and reduce the impact on the overall budget of the portfolio <ref> [Contingency-based approach to firm performance in construction] https://ascelibrary.org/doi/abs/10.1061/(ASCE)CO.1943-7862.0000738 </ref>.		# Contingency: The measure of the provision set aside to cover unforeseen risks that may impact a project's timeline, scope, or in the worst case the budget. Contingency serves as a safety net as it helps the PM to manage the risk and uncertainty associated with the portfolio. By having a contingency plan in place, a PM can better manage unexpected events, and reduce the impact on the overall budget of the portfolio <ref> [Contingency-based approach to firm performance in construction] https://ascelibrary.org/doi/abs/10.1061/(ASCE)CO.1943-7862.0000738 </ref>.

	These secondary KPIs provide an indirect overview of the portfolio as they are not directly tied to primary KPIs such as turnover or EBIT. Work-in-Progress (WIP) provides portfolio managers with great insight into ongoing projects and helps manage the work done ~~on projects~~. This KPI is often used in parallel with Backlog to gain a holistic understanding of the production process and the demand for the ~~project/program~~. This information is used by the portfolio manager to forecast future revenue and cash flow ~~and identify~~ potential bottlenecks or capacity constraints, which can then be used to make informed decisions about resource allocation and planning. For example, if the portfolio manager notices that the backlog is low and the WIP is high, then a ~~project/program~~ is running efficiently and there is an excess capacity of employees that could be reallocated to other ongoing projects~~/programs~~ in the portfolio. (Peterson Drake & Fabozzi, 2010, Chapter 13). <ref> [The basics of finance: An introduction to financial markets, business finance and portfolio management] http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4796/1/The%20Basics%20of%20Finance%20An%20Introduction%20to%20Financial%20Markets%2C%20Business%20Finance%2C%20and%20Portfolio%20Management.pdf </ref>		These secondary KPIs provide an indirect overview of the portfolio as they are not directly tied to primary KPIs such as turnover or EBIT. Work-in-Progress (WIP) provides portfolio managers with great insight into ongoing projects and helps manage the work done. This KPI is often used in parallel with Backlog to gain a holistic understanding of the production process and the demand for the portfolio. This information is used by the portfolio manager to forecast future revenue and cash flow while also identifying potential bottlenecks or capacity constraints, which can then be used to make informed decisions about resource allocation and planning. For example, if the portfolio manager notices that the backlog is low and the WIP is high, then a portfolio is running efficiently and there is an excess capacity of employees that could be reallocated to other ongoing projects in the portfolio. (Peterson Drake & Fabozzi, 2010, Chapter 13). <ref> [The basics of finance: An introduction to financial markets, business finance and portfolio management] http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4796/1/The%20Basics%20of%20Finance%20An%20Introduction%20to%20Financial%20Markets%2C%20Business%20Finance%2C%20and%20Portfolio%20Management.pdf </ref>

	== Application ==		== Application ==