Key Performance Indicators Critical to Construction Success

Bryant Black

Director, Workforce Development
Greater Houston Partnership

Company success depends on consistently tracking progress, like monitoring annual revenue, project backlog, cash flow, and other items that indicate your company’s health. But we need to work on using these pieces of data to differentiate our company from all the others around us.

Finding the unique things your company does that allow you to succeed or the things holding you back in your growth plan is critical to creating longevity and financial success for your organization. That’s why tracking the key performance indicators construction stakeholders need to be aware of is essential.

What is a Key Performance Indicator in Construction?

KPIs are defined by Investopedia as the set of quantifiable measurements used to gauge a company’s overall long-term performance. Think of these as the metrics used to measure whether your company can do the job you have been tasked with accomplishing.

They must demonstrate how you will perform long-term and what makes you a safer bet for investors, contractors, and owners. Additionally, having the data that tracking performance provides allows your company to identify and pivot as needed to progress forward.

Targeting two major elements can drive your organization to the top and set you apart as a leader in your trade.

  1. Job Performance
  2. Workforce Management

Construction KPIs: Job PerformanceBeing a top-tier construction company does not just happen without a plan. Building a long-term set of goals and visions should include setting out to measure the success of your job performance. Defining, measuring, and then refining your performance in the following areas is critical:

  • Quality
  • Safety
  • Productivity

1. Quality

Quality can be measured in a few different ways. At a minimum, it should include what type of defects or rework is being seen, how much time defects and rework require from the workforce, and the total cost of defects and rework.
For each trade, general contractor, and owner, the specific details that will be tracked may be different. Still, the KPIs should include a detailed look at the following elements:

  • The defect of product.
  • The defect of workmanship.
  • The impact to schedule adherence and materials and labor costs.

These indicators can predict issues with suppliers, training of employees, and problems with schedules that make future projects more successful.

2. Safety

When addressing safety performance, oftentimes, we get caught up in the numbers surrounding lost time incidents, workers’ compensation claims, and root cause analysis. While that data is relevant and critical, it is not the only item to include in your metrics to differentiate your company as among the safest.

Safety experts agree that a safety program that measures participation and leadership, hazard identification and control, training, and continuous improvement is vital.

Participation and LeadershipThe only way to have a truly effective safety program is to have full participation that starts with senior leadership and extends throughout the company. Building a safety culture starts with creating a program that everyone will be required to participate in and manage – both personally and organizationally.

Hazard Identification and ControlEnsuring your safety program is built around hazard identification, control, and elimination is critical for its success. Measuring how well this is done on the job site can impact your ability to provide a safer work environment for everyone on the job site even beyond those in your teams.

Training and Continuous ImprovementLike all skills, safety must be taught, assessed, and constantly refined. When looking at the success of your safety program and defining KPIs, ensuring that safety education is integrated into trade skills training and continuously evaluated for improvement is critical. A company that fails to connect safety and trade skills will suffer long-term with more accidents and higher costs.

3. Productivity

Traditionally, we see productivity measured by the output of our employees. For example, how many linear feet of concrete was laid or gypsum was hung?

But a more meaningful indicator of long-term success and bottom-line impact is the measure of time spent not on the job-specific tasks both for your employees and your equipment. For example, a rented crane that is not used for two weeks but also not returned, or a worker who spends two hours over the course of the day riding the elevator getting material to the correct locations.

The bottom line of your revenue is more impacted by what your equipment and people don’t get to do than what they do in many situations. Tracking productivity can be a significant differentiator for companies.

Construction KPIs: Engaged EmployeesAcknowledging that your workforce significantly impacts company performance is critical. Knowing what to measure regarding this resource gives you an edge over the competition to proactively identify issues with the crew.

Quickly identifying and addressing how you hire, train, reward, and retain employees is a lever that triggers cascading benefits throughout the organization.
Understanding what metrics to watch and which responses to take with reference to employee performance will drive long-term project performance. According to Oracle, a workforce planning and management system should include metrics like:

  • Cost to Recruit or Time to Fill Vacancies
  • Cost of Training
  • Absenteeism and Turnover
  • Revenue per employee
  • Total Cost of the Workforce

Leveraging an HRIS (Human Resource Information System) can make it much simpler to gather, analyze, and respond to data related to the human element of your company.

Work With C3 to Use the Data EffectivelyThere is so much data to capture concerning your company’s performance in the market and on the jobsite. Ensuring that you continue beyond the simple indications of success, like revenue and cash flow, will lead to a more robust outlook.

Consider us a resource if you need support setting up and defining KPIs. Giving you the upper hand with workforce and performance is part of the C3 program, and your participation with us makes us all better.

Being an Accredited Employer is the first step to optimizing the performance of your workforce and company, helping create a sustainable future for everyone.

Contact us today to discuss key performance indicators construction stakeholders need to implement, monitor, and analyze.

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