Measuring performance is challenging in the construction industry because each project is unique—taking into account the design, schedule, site and team—and the process is continually impacted by dynamic factors—including labor, materials, changes and weather. As a result, many traditional key performance indicators (KPI) are based on information that is already out-of-date when it reaches management for decision making and too late to identify and avert problems and keep things on track.
New Research on Process-Based KPIs
A soon-to-be-released study by Autodesk suggests that by committing to certain project management processes, contractors can reduce risk, mitigate downstream problems and improve performance. For the study, more than 200 U.S. general contractors (GC) and specialty trade contractors (trades) reported how frequently they engage in six categories of these “process KPIs.”
1. Problems Discovered in Construction Documents/RFIs. This includes comparing to past projects, alerting management quickly to potential risk issues and triggering immediate risk management activities.
- While 59 percent say they log RFIs most of the time, only 25 percent frequently record errors, omissions and/or constructability issues found in bid set documents. And just one-third formally compare either document problems or RFIs to their past projects, which would enable predictability that can head things off with the project team before problems occur.
- Few frequently alert senior management to potential risks or initiate specific risk reduction activities because of discovered document problems or issues raised in RFIs. “If you see something, say something” should be the rule.
2. Change Orders. This includes turnaround time, root cause evaluation and schedule impact.
- While virtually everyone (96 percent) documents change orders some of the time, only about half (47 percent) report doing it frequently (on at least three fourths of their projects).
- About half (46 percent) routinely capture root causes of change orders, but fewer (39 percent) frequently evaluate the schedule impact of change orders or frequently track start, finish and turnaround times (27 percent)—both of which can improve effective change order management.
3. Schedule. This includes the types used, frequency and lag time of updating and impact of slippages.
- Schedule slippage can be toxic. Most GCs (66 percent) bear added costs from overtime/second shift on at least a quarter of their projects and half report having to extend the end date frequently.
- Almost half (44 percent) of the GCs frequently use a short-term look-ahead and an overall schedule, but only 30 percent update their schedule weekly and a surprisingly high percentage (37 percent) only do it monthly or less. Also, the lag between when an update need is first identified and when the update is actually made is more than five days for most (54 percent) GCs, with only 13 percent acting within two days. Out-of-date information does not support timely decision making.
4. Safety/Inspections. This includes leveraging technology to improve efficiency.
- Using software to manage safety and/or inspections during construction is a recent trend but is taking hold quickly. Nearly 70 percent of GCs report using it on at least 25 percent of their projects and 40 percent say it’s used on more than three quarters of their work.
- Two-thirds of the users say it provides high or very value, so the adoption trend is likely to continue.
5. Productivity/Prefabrication. This includes erosion factors and improving productivity through prefabrication.
- More than half of all contractors identify problems with coordination, communication, quality of construction documents and schedule management as top productivity killers. Interestingly, more trades (68 percent) report major negative impact from poor schedule management than GCs (53 percent), highlighting its importance to their resource management.
- More than 70 percent of trades say prefabrication at least moderately improves labor productivity and one-third (31 percent) prefabricate at least a quarter of their work. Design that does not lend itself to prefabrication is cited as the top obstacle to doing more of it. While clearly important, only 17 percent of trades evaluate and compare the percentage of prefabrication on a current project to similar previous projects. This seems like a key trend indicator to maximize its benefit.
6. Quality/Close-out. This includes technology, accelerated punch listing and problems getting off the job.
- Nearly 70 percent of GCs use technology to manage punch list/close-out activities on at least 25 percent of their projects. Among those, 75 percent rate its value as high or very high.
- The emerging trend of punch list-as-you-go is reported by 72 percent of GCs on at least a quarter of their projects and most (82 percent) rate its value as high or very high.
- Trouble completing work (i.e. getting off the job) affects 69 percent of GCs on at least 25 percent of their projects. Nearly 60 percent say it has a high or very high negative impact. So, focusing on cleanly exiting projects will improve performance.
These relatively simple and straightforward process-based metrics can help construction companies to stay on top of and continually improve their project performance. Although the Autodesk study finds that current adoption is still relatively low for many of these best practices, the companies reporting frequent use assign a high value to them, confirming their contribution.
