Building Performance: KPIs used in the Construction Industry
The construction industry, which is one of the most dynamic fields, is an important contributor to the country’s economy and also an enabler for its allied branches, like the production of steel, cement and chemicals. The construction projects’ specificity and the wide number of partners involved in the value chain, such as contractors and designers, increase the complexity of performance measurement in this specific area.
Construction companies use Key Performance Indicators (KPIs) to assure the achievement of their strategic objectives, both financial and non-financial, for each project undertaken. While many writers consider that cost, time and quality are fundamental criteria for measuring construction projects’ success, others suggest that success is something more complex.
The UK Department of the Environment, Transport and the Regions, for instance, considers that beyond the cost, time and quality indicators, client satisfaction, client changes, and health and safety performance are also important to maintain the business competitive.
Some examples of KPIs that can be used in the construction industry are listed below, clustered in the areas they address:
- $ Cost of rework – to measure the total costs due to rework (i.e. work incorrectly implemented the first time);
- $ Labor costs – to measure the sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by the employer;
- % Time predictability for construction – to measure the change between the actual construction time at construction Available for Use (point C) and the estimated construction time at Commit to Construct (point B), as a percentage of the estimated construction time at Commit to Construct (point B). The Available for Use refers to the point at which the project is available for substantial occupancy or us;
- % Design projects completed early or on time – to measure the percentage of urban design projects completed early or on time, out of the total design projects started;
- # Quality issues found in constructions ready for use – to measure the number of construction quality issues found while at the “available for use” stage (i.e. the point at which the construction is available for substantial occupancy or use);
- # Defects – to measure the total number of defects at the time of handover, caused by the condition of the facility.
Other KPIs related to client satisfaction, adapted from the UK Department of the Environment, Transport and the Regions report are: % Clients satisfaction for construction products and % Client satisfaction with construction services. Regarding the health and safety area, the department monitors # Fatalities, % Non-fatal accidents, and # Lost time accidents.
Once KPIs are properly identified and implemented, they will allow construction companies to determine how closely their results meet the objectives established.The most important advantages of using KPIs are related to improved quality, reduced costs – as KPIs are useful in tracking labor and material costs, and ensuring better outcomes in the future by identifying strengths and weaknesses in the construction processes and address them with successful initiatives implementation.
For more KPIs related to construction industry, the section “Construction Buildings” from smartkpis.com, can be accessed.
Tags: Construction industry performance, Construction KPIs, Performance Measurement