Inspectioneering Journal

Key Performance Indicators – Understanding is Key

By Greg Alvarado, Chief Editor at Inspectioneering, and Michael O. Nichols, Fixed Equipment Reliability Specialist at Marathon Petroleum Company. This article appears in the November/December 2014 issue of Inspectioneering Journal.

Key Performance Indicators or KPIs are important for businesses to track measurable progress, or a lack thereof, as compared to pre-defined goals or benchmarks. For those of us in the inspection, fixed equipment reliability world, the same holds true. Often the efficacy of our inspection programs is measured against such goals.

Just to set the stage, let’s review the definition to make sure we are on the same page. Why? Because if we are to use and/or compare KPIs, it is important that the context is clearly understood as part of the basis for their creation. For instance, if we are trying to say something about the efficacy of our inspection program and we are tracking pipe leaks, it will be important to know the reason for the leak in order to use the KPI to improve our inspection program performance. For example:

  1. Pipe leaks due to wall thinning from internal corrosion.
  2. Pipe leaks due to CUI (corrosion under insulation).
  3. Pipe leaks due to mechanical damage.
  4. Pipe leaks due to improper gasket selection.
  5. Pipe leaks due to improper gasket installation/bolt-up procedures.
  6. Etc.

I think you get the picture. So try this definition on for size:

Wikipedia definition:

“A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization, a department within an organization or of a particular activity in which it engages. Often success is simply the repeated, periodic achievement of some levels of operational goal (e.g. zero defects, 10/10 customer satisfaction, etc.), and sometimes success is defined in terms of making progress toward strategic goals. Accordingly, choosing the right KPIs relies upon a good understanding of what is important to the organization. 'What is important' often depends on the department measuring the performance - e.g. the KPIs useful to finance will really differ from the KPIs assigned to sales. Since there is a need to understand well what is important (to an organization), various techniques to assess the present state of the business, and its key activities, are associated with the selection of performance indicators. These assessments often lead to the identification of potential improvements, so performance indicators are routinely associated with 'performance improvement' initiatives. A very common way to choose KPIs is to apply a management framework such as the balanced scorecard.”

Context and Understanding

So context is important. One department’s reason for tracking piping leaks for example, might be different than another’s. Of course, if I am an inspector, I don’t want to get “dinged” for a leak when it was caused by a change in operating conditions that were not foreseen (of course a robust IOW, or integrity operating window, program should indicate a need for adjusting the inspection strategy to avoid that leak. We’ll get into IOW KPIs in a minute.) nor was anyone informed about the change in advance.

KPIs are a difficult subject to write about, particularly in the context of plant reliability or mechanical integrity, and mostly because it is difficult to keep things relevant in one discipline, let alone all the other reliability (and maintenance) disciplines. 

This content is available to registered users and subscribers

Register today to unlock this article for free.

Create your free account and get access to:

  • Unlock one premium article of your choosing per month
  • Exclusive online content, videos, and downloads
  • Insightful and actionable webinars
Interested in unlimited access? VIEW OUR SUBSCRIPTION OPTIONS

Current subscribers and registered users can log in now.

Comments and Discussion

Posted by Edward Clark on December 10, 2014
The article is an excellent discussion of KPI's... Log in or register to read the rest of this comment.

Posted by Andy Gysbers on December 31, 2014
Good discussion. With regard to leading... Log in or register to read the rest of this comment.

Add a Comment

Please log in or register to participate in comments and discussions.

Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Training Solutions

Improve your skills in key mechanical integrity subjects.

Case Studies

Learn from the experience of others in the industry.


Inspectioneering's index of mechanical integrity topics – built by you.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.


Read short articles and insights authored by industry experts.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.


Downloadable eBooks, Asset Intelligence Reports, checklists, white papers, and more.

Videos & Webinars

Watch educational and informative videos directly related to your profession.


Commonly used asset integrity management and inspection acronyms.