Key Performance Indicators for the Construction Industry

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Key Performance Indicators for the Construction Industry

Key Performance Indicators (KPIs) are the most common benchmarking experience that construction companies and their clients will have encountered. A KPI is the measure of a process that is critical to the success of an organization. Many organizations use KPIs. There are a number of performance measures that define the success of a project or organization. The KPIs are essentially the evidence that culture change and process improvement are actually leading to positive change in terms of better performing projects and organizations. The responsibility of managing growth and economic challenges requires leadership in construction companies to devise a disciplined business strategy. This strategy must efficiently address potential opportunities and problems as they arise by providing reliable, timely information to support management decision-making. Monitoring KPIs should be a part of your disciplined business strategy. Many clients, especially within the public sector are seeking to work with companies that demonstrate a commitment to continuous improvement. Often the implementations of robust KPI systems are seen as a requirement for companies to win work. From the client perspective, KPIs provide a useful way to demonstrate wider project requirements, beyond time and cost issues. The Purpose of the KPIs

Clients of the construction industry want their projects delivered: - on time
- on budget
- free from defects
- efficiently
- right first time
- safely
- by profitable companies
Regular clients expect continuous improvement from their construction team to achieve year-on-year: - reductions in project costs
- reductions in project times
The purpose of the KPIs is to enable measurement of project and organizational performance throughout the construction industry. This information can then be used for benchmarking purposes, and will be a key component of any organization’s move towards achieving best practice. Clients, for instance, assess the suitability of potential suppliers for a project, by asking them to provide information about how they perform against a range of indicators. Some information will also be available through the industry’s benchmarking initiatives, so clients can see how potential suppliers compare with the rest of the industry in a number of different areas. Construction companies will be able to benchmark their performance to enable them to identify strengths and weaknesses, and assess their ability to improve over time. When considered together, KPIs help to identify potential strengths that allow firms to capitalize on opportunities available during strong demand, and potential problems that may be detrimental to their businesses. However, dated KPIs will only be able to provide historical information that can be largely inconsequential for present assessment or, worse still, inaccurate or incongruent information that is misleading to decision-makers. Disparate or interfaced software systems from different manufacturers may require firms to undertake laborious data manipulation to compile KPIs, and data transfer between different software systems could result in mistakes and inaccurate KPI calculations. The actual process of calculating a KPI is relatively simple, although there are some practical issues that may need to be addressed in implementing a workable system making it a difficult task. The actual calculating of the KPIs is a relatively easy task. However, there are several issues that need to be considered when putting a system in place. Issues such as getting staff involved, storing the data and building the process into the project can make the process difficult. Why are KPIs being introduced into the company? It is important to understand what the drivers are for putting a system in place, as ultimately any system must meet the requirements. Whether a KPI system is in place as a requirement for winning work, a drive...
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