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8 KPIs you will need when running a construction

5 min read
10.09.2020

8 KPIs you will need when running a construction

Managing a construction business means paying attention to the factors which affect the growth and efficiency of the company. This includes employee safety, financial risks with regard to orders, project execution deadlines, availability of necessary equipment, working conditions, etc. Being able to keep all of those components in control is highly important for the business.

In this article, we have brought together 8 key indicators which you can use to track all the above-mentioned factors. These metrics are universal and they will be useful for top management when evaluating the effectiveness of construction projects.

  1. Waste per job

    Construction workers deal with a large number of different materials. The availability of resources in such big volumes at the construction site leads to some losses. The management’s task, in this case, is to control these losses. If the consumption of materials has gone beyond the project plan, the waste per job KPI will help solve this issue. Tracking the work of personnel and the equipment for possible repairs with this indicator will give an understanding of what might be the cause of excessive expenditure of construction resources.

    If tracking the KPI closely, monitoring the personnel and equipment, the indicator will give an understanding of what causes the excessive expenditure of construction resources.

  2. Labor cost over the project timeline

    If the project does not fit into the deadline and it has to be completed off-schedule, additional costs are likely to incur. A key performance indicator for wages for overtime labor will be useful not only for current projects, where there is already such a risk but also for planning future projects better. The main issues that can be addressed by tracking the labor cost over the project timeline are the optimization of budgets and forecasting labor demand for the project. Analysis of the situation will allow management to decide how much to increase the price of the project for the client and whether it is necessary to expand the team or not.

  3. Number of defects

    This key performance indicator is important for measuring the total number of defects at the time of the delivery. After tracking this metric it will be easier to measure the extent of the damages. It will also be easier to understand the overall picture of safety during construction. Thus, the management will develop an see the quality of the project, which will help keep the construction budget and schedule under control.

  4. Construction time

    The construction time is about the duration of the whole project considering the time mentioned in the contract. Accordingly, the construction time can be defined as the period from the start of construction to the actual delivery of the project. If there were changes made during the project, the time spent on those changes should be subtracted from the total construction time, since the client will most likely be charged an additional cost for those. To ensure the accuracy of the calculations, those should be recorded and measured in calendar days or working hours spent.

    To calculate the KPI, there are 3 factors that need to be considered: the starting date of construction, the actual delivery date, and the time extension agreed with the client or caused by external circumstances.

  5. Percentage of unapproved changes

    Making changes in the order is likely to affect the schedule and cost of the project. In this case, you need to prepare and notify the client in advance. This is necessary to minimize financial risk. This KPI represents the total cost of unapproved requests for changes to the project. A frequent threat to construction companies in this situation is to face rapidly growing costs.

  6. Percentage of equipment downtime

    Equipment downtime includes both scheduled and unplanned downtime for maintenance and configuration. Since the equipment is one of the main resources in construction projects, it is especially important to control the unplanned downtime, as it affects all other processes.

    The scheduled downtime may include preventative maintenance. For this matter management should follow the trends in unplanned downtime and optimize the usage of the equipment so that construction workers have the opportunity to start the project using other equipment that is available at the time. If the employee productivity is under control, but the percentage of equipment downtime is still too high, it might be worth thinking about upgrading the equipment. This will help optimize performance in the long run.

  7. Percentage of labor downtime

    This key performance indicator applies not only to the team but also to the management of the project. First of all, it is worth assessing the productivity of management and calculating how much time they spend on dealing with internal and external tasks. After assessing your own time, you can start revising the team’s downtime and distribute the workload accordingly.

  8. Number of accidents

    The best KPI results for the number of accidents should be zero, i.e. no incidents. The indicator is measured in percentages and refers to the overall safety of everyone involved in the construction project. Here it is important to take into account the actual number of accidents, as well as the days when employees are unable to work due to the circumstances. With this performance indicator, you can forecast the overall performance, recalculate the budget in case of potential risks. Also, the results will help you see whether there is a need for holding additional security training.

It is important to understand that measuring the above listed 8 key performance indicators affect not only the profits of construction companies but what is more substantial, they help improve project productivity. Tracking costs, quality of project performance, productivity, staff, and equipment will provide an understanding of how to provide the client with a quality outcome. KPIs will also be useful for internal matters such as optimization of finances, the schedule, and the team, as well as preventing risks associated with these factors.

After the process of tracking universal metrics becomes a habit, it will be possible to add additional indicators to the dashboard, based on the specifics of business processes.

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