The 7 Best KPIs For the Construction Industry
In this article, we’ll give you a high level overview of 5 KPI dashboards specifically designed for construction.
To keep an eye on the health of your construction business and construction projects, you need to track and analyze data through Key Performance Indicators, or KPIs. A KPI is “a measurable value that demonstrates how effectively a company is achieving key business objectives.”With KPIs, you get high-level data visualizations that show how well your business and projects are doing, in quantifiable, measurable terms.
Numbers and facts don’t lie. And by tracking KPIs, you see exactly how you’re progressing toward your business objectives on a regular basis — and where you need to devote more time, attention, and resources. Then, by creating a balanced scorecard, you can track the activities and actions you need to take to address the issues raised by KPIs.
In the past, many companies relied on KPI reports. However, these documents use a fixed set of data points that can’t be manipulated in real time. Instead, more construction companies are now using KPI dashboard software and marketing dashboards, which provide data visualizations that deliver up-to-date, critical insight into the health of their businesses at a glance.
You can build a dashboard to track KPIs using software such as Microsoft Excel, Power BI, and Tableau.
However, cloud-based Enterprise Resource Planning (ERP) tools, such as Acumatica Construction Edition, puts all your accounting, project management, and CRM data at your fingertips — on any device — with real-time access, activity recording, and more.
Recently, Dodge Data & Analytics surveyed over 200 contractors and specialty/trade contractors. They came up with the seven best KPIs for measuring overall performance in construction:
1. Problems discovered in construction documents, including errors, omissions, and constructability issues. Dodge’s research determined that it can take a good deal of time and money to capture this information, but once companies get past these initial obstacles, it becomes standard practice.
2. Logging Requests for Information (RFIs) and responses, analyzing and evaluating risk impact. RFIs help projects run more efficiently with fewer issues, but they can be time-consuming and costly to adopt. However, the benefits far outweigh the hassles when it comes to project success.
3. Collecting and documenting change orders, including turnaround, root causes, and schedule impact. This is especially valuable for assessing the performance of specialty trade contractors, which can, in turn, help contractors select the best ones for future projects.
4. Updating the project schedule, including frequency/lag time and impact of slippages. Dodge concluded that for many contractors, schedule slippage remains a huge source of overtime and second-shift costs. Scheduling information is critical to understanding the status of each project: This includes tracking the work that has been completed as well as the work that remains.
5. Safety and inspections, including incident rates and number of meetings around safety improvements. If a site is safe, it reduces long-term costs and project delays, while boosting productivity. Building an effective KPI dashboard to manage safety and inspections can improve this process.
6. Labor productivity, including erosion factors and percentage of prefab. Poor schedule management — along with spotty coordination and communication between project team members and stakeholders — contributes to decreased productivity. Connecting key people to the information they need is critical.
7. Quality/close-out, including punch list and problems getting off the job. Dodge found that 68% of general contractors had issues wrapping up their jobs at least 25% of the time, which greatly affects profitability.
Despite the advantages of adopting and using KPIs and dashboards, the Dodge study found that only around 50% of companies are applying them to over half of their projects. In addition, smaller construction forms were more likely to capture data than larger companies.
Building a KPI dashboard and connecting to data sources can not only improve productivity and profits; it also can predict costs and schedules. It also allows you to make proactive — not reactive — decisions, to give your construction business a competitive advantage.
Given the narrow margins that most construction firms operate on, KPI dashboards can make all the difference when it comes to meeting — and surpassing — your business goals and objectives.