Like any business, it’s important to track performance in commercial construction. This is ultimately how to determine if the business is running successfully or not.
When tracking the success of a business, owners often focus on the financials. While this is an obvious and important consideration, it should not be your only consideration. There are other factors to consider, like KPIs.
Below we take a look at the measurable KPIs essential to the construction industry.
What Are Key Performance Indicators?
Key Performance Indicators (KPIs) are a set of quantifiable measurements used to determine the overall success of a construction company.
These measurements are used and considered over and above the financials of the construction company. They give a deeper overview of the company’s overall and long-term performance.
Here Are 7 Important Construction KPI’s
While there are several other measurable KPIs essential to the successful performance of a construction company, below we look at 7 of the most important. Prioritizing certain KPIs is a far better approach than applying a broad approach.
1. Quality
First and foremost, it’s important to have a thorough understanding of the quality of projects and products. By doing so, the company is not losing unnecessary money as a result of project delays due to faulty materials or bad workmanship.
By keeping a close eye on quality control, contractors can stay on schedule and budget. To ensure the highest quality builds, contractors need to track the following KPIs:
- Poor workmanship defects
- Product defects
- Monitoring the build through site inspections
- Monitoring the cost of changes and reworking
- Customer satisfaction
2. Safety
Injured workers can set a project back significantly. This has a negative effect overall on the financial performance and the delivery of a project. Plus, issues with safety on-site and recurring accidents mean that contractors can expect to pay more on insurance premiums.
The more safety issues that occur, the more of a risk the company becomes and this has financial implications. So, it’s important to carefully watch and work on the company’s safety rating. This minor attention to detail will do wonders for the performance of a construction company.
Important KPIs relating to safety include:
- Safety issues and how frequently they occur
- Meetings to address issues around safety on site
- The number of accidents per project
3. Performance
The performance of the construction team and projects is essential to measuring the productivity of a commercial construction company. By taking a close look at where the team spends most of its time and efforts, contractors can structure a build accordingly.
They may find that certain projects in the build require more manpower and tools than others and that the extra work is wasted in one area of the build.
So, the KPIs to consider when it comes to performance are:
- Waste and recycling
- Downtime of equipment
- Labor downtime
- The average revenue per hour
4. Employee Satisfaction
The success of any company depends on the satisfaction of its employees and the commercial construction industry is no different.
Workers who feel fulfilled and satisfied in their work will always perform better. As a result, the completion of builds is faster with fewer errors.
Plus, having a constant turnover of employees is a major expense to a company. Hiring, training, and onboarding costs are high and have a negative impact on the company financially.
So, it’s important to regularly measure the development and satisfaction of employees.
To ensure employee retention, contractors take note of the following measurable KPIs:
- The turnover rate
- Successful and complete training by employees.
- The job satisfaction of workers
5. Buyout Process
Once a general contractor wins a project bid, the subcontractor buys out the work. The time between the general contractor winning the work and the subcontractor buying the work is an important KPI.
It’s essential that this process is monitored to assess time frames as well as potential issues. The time frames are important as the longer the period between these two events could indicate potential problems in the industry.
6. Subcontractor Inventory
Another important KPI to measure efficiency and productivity is subcontractor inventory. The commercial construction industry is significantly affected by the economy.
As a result, many subcontractors buy their material in bulk to use for future jobs in case of supply chain issues or price increases. However, unused inventory has financial consequences. So, it’s important to measure the buying patterns of subcontractors as a predictive KPI.
7. Defects
Lastly, it is essential to assess the number of defects in the overall build and the supplies. Continuously buying from suppliers with faulty supplies can be a drain on the finances of a project. It can also lead to huge delays and even legal action.
Conclusion
Measuring the performance and productivity of a commercial construction company is essential to the overall success of the build and the long-term success of the company itself.
By monitoring the above measurable KPIs, commercial construction companies can identify which areas they need to improve so that they can boost company performance over time.