Top 7 Key Performance Indicators in the Construction Industry

October 14, 2019 Command Alkon

Key Performance Indicators (KPIs) are used by companies to measure and grade the performance of certain operations, partners, customers, managers, and more business practices in an effort to meet strategic and operational goals. Additionally, companies rate KPIs to ensure continuous improvement, leading to better bottom-line profits, happier customers, and improved productivity.

What KPIs should your construction business use to gauge and measure performance?

Dodge Data and Analytics surveyed trade contractors and professionals to identify the top KPIs for improving performance. These included the following:

  1. Documentation – Businesses need to compare issues within bids, quotes and other documents within past projects to continually improve operations and to mitigate risk. Many construction industry businesses have access to data within their supply chains, but few capture the data and do anything with it. Per the Dodge study, while 54% of respondents capture error omissions and construction issues from construction documentation, only 47% “compare errors, omissions, and constructability issues in construction documents to past projects.”
  2. Request for Information (RFI) – Over 73% of respondents log RFIs and responses on over half of their projects and only 30% use that information to compare past projects in order to reduce risks. By closely collaborating with engineers on an RFI, it has been found that fewer change orders occur once the project starts. The survey results mention, “Using historical data to identify the root cause of the RFI and measuring time to receive a response can help contractors see where the potential breakdowns in communication are occurring between teams, aiding them in implementing more efficient practices on future projects.”
  3. Change Orders – measuring turnaround time, root cause evaluation, and change order impact on the job schedule. By capturing this information, companies gain a deeper understanding of the issues impacting their project delivery process.
  4. Schedules – frequency of updating schedules and other related activities and outcomes, including information of how frequently project timelines slip. Schedule changes must be captured in a timely manner; with wireless and mobile devices, managers can alert jobsite personnel in real-time of changes. Telematics devices in trucks can alert dispatch if they are going to be late delivering materials; managers can then find alternative suppliers or divert another truck with the right materials.
  5. Safety and Inspections – The survey shows that 53% of large general contractors are using software to manage safety and inspections. By managing documentation of inspections and safety checks, companies can provide historical references if needed.
  6. Labor Productivity – Contractors see problems with the coordination and communication between project team members and issues with the quality of contract documents as the key contributors to decreased labor productivity. Allowing all project stakeholders to connect, communicate, and collaborate over a collaborative network ensure projects are well coordinated and everyone is on the same page.
  7. Quality and Close-Out – According to the survey, 70% of contractors use software to manage punch list activities on 25% of their projects. Keeping track of what needs to be done on the close-out means items get done on-time and within budget.

Focusing on these seven KPIs confirms that improvements in project performance will occur. Use the metrics from the seven KPIs to identify areas of improvement and begin to establish best practices that keep your business continually improving.

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