Many industries use benchmarks to measure success and efficiency. Key Performance Indicators (KPIs) are a common kind of benchmark many firms use to help gauge the performance of their employees as well as their own success at meeting operational goals. These metrics can also be applied in comparison with the competition in their given industry. In Manufacturing, for example, an industry similar to construction, KPIs are often used to optimize processes and set standards for comparison. However, KPIs for construction have traditionally been near impossible to gather and analyze.
Unlike manufacturing, the construction industry lacks a standard set of benchmarks to help owners and contractors define ‘success’ and the only way for potential customers to judge potential quality is word of mouth. Currently, the main data point that the industry uses to evaluate success for safety is EMR in construction (or, Experience Modification Rate). The EMR is a number used by insurance companies to gauge both past cost of injuries and future chances of risk. The lower the EMR of a given business, the lower their worker compensation insurance premiums will be.
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While the EMR reflects a certain kind of data, a specific measure of commitment, it doesn’t actually say anything about the quality of workmanship a company is likely to deliver. However, since it is the primary “standard” metric for evaluating contractors, they have an incentive to ensure they have a low EMR score. Most contractors and building firms invest resources to keep their numbers as low as possible. This has the ancillary benefit of keeping workers safer on the jobsite, but still doesn’t guarantee any degree of quality.
What if there were other stated benchmarks, industry standards, that contractors were encouraged to work towards? How would this impact productivity, price, and other factors of a project? That’s where KPIs come in.
In this example from the KPIs for Construction study, we look at the impact of managing jobsite safety with software
KPIs For Construction: How We Get There
One big roadblock preventing the industry from adopting standard KPIs is the lack of a central location to collect and analyze data. In the digital age, this roadblock shrinks considerably, but it isn’t the only one. Digital tools like smart devices and software geared specifically for document control and issue management are readily available but they have been slow to move into the construction industry. We’re on the cusp of of technological change, a seismic shift that will change the way everyone does business, but the wave has only begun to crest.
Many companies are using digital technology to manage different aspects of their construction projects, but the information generated from those tools isn’t getting used to identify patterns, which could give us the KPIs we need to start meeting, and then setting, new benchmarks.
While some companies are starting to aggregate data in a meaningful way, it’s still a bit of a manual process, and no one has been taking the broad view.
"[The construction industry] is on the cusp of of technological change, a seismic shift that will change the way everyone does business, but the wave has only begun to crest."
Looking Forward: What You Need to Know about KPIs for Construction
Autodesk, in an effort to build toward the future, partnered with Dodge Data and Analytics to survey more than 200 Contractors and Trade professionals, to try and understand, little by little, how contractors are currently operating around some common project processes that can potentially impact risk and performance.
The study revealed seven KPIs for construction that most companies agree are especially useful for interpreting overall performance, internally as well as industry-wide. The findings suggest that by adopting specific processes for project management, contracting firms and trades professionals alike can reduce risk and minimize downstream problems, thus improving performance.
In this example from the KPIs for Construction study, we uncover the obstacles keeping organizations from prefrabrication
Our summary of the report covers findings around the seven categories of project activities and highlights some striking statistical data that indicates opportunities for growth across the industry. While it’s not meant to be seen as the end-all-be-all, we can at least begin by measuring how contractors, from Trades to GCs to Construction Management companies, currently run their operations. With these first-run benchmarks, we have identified some specific areas where improvements can be made.
Whether you’re a global design/build firm, or a local independent contractor, the story these numbers tells is one you need to hear because they represent a new vision for measuring success.