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Analysis of Key Performance Indicator (KPI) Effectiveness through Variance Analysis as A Performance Monitoring Tool in Nickel Mining Company at PT XXX

Sep 2026 · American Journal of Economic and Management Business (AJEMB) · Vol 5, pp. 1437-1449 · 0 citations · 23 references

Abstract

The nickel mining industry operates as an integrated system in which downstream performance depends heavily on the effectiveness of upstream activities. PT XXX, a laterite nickel mining company, has implemented Key Performance Indicators (KPIs) across production, exploration, sales, finance, occupational safety and health, and environmental dimensions since 2023. However, KPI evaluations have primarily focused on the numerical achievement of individual targets without systematically assessing overall operational performance. This study aimed to evaluate operational performance based on KPI achievement through variance analysis between targets and actual performance during the 2023–2025 period. A quantitative descriptive method with an evaluative approach was applied to 35 KPIs, consisting of 6 lagging indicators and 29 leading indicators across six operational dimensions. Achievement rates were calculated by accounting for performance direction, namely higher-is-better and lower-is-better indicators, and were capped at 100% to prevent overachievement in one indicator from offsetting underachievement in another. The results were then aggregated into variance scores (SVs) at both dimensional and overall levels. The analysis produced an aggregate SV of 92.85%, with Finance (99.86%) and Occupational Safety and Health (97.53%) achieving the highest scores, followed by Production (94.99%), Sales (94.52%), Exploration (88.39%), and Environment (81.81%). Although overall performance was relatively high, notable gaps remained in overburden removal (83.48%), exploration drilling (80.00%), low-grade ore (LGO) shipping (76.27%), recontouring (74.52%), and topsoil distribution (73.13%). These findings indicated that although final operational outcomes were generally strong, several upstream readiness activities still required tighter control. The study concluded that KPI evaluation should extend beyond aggregate performance scores to include detailed assessment of leading indicators, thereby enabling more precise identification of operational improvement priorities and strengthening the company’s performance-monitoring system.

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