Every construction business wants to succeed, but even those who want to get ahead can often struggle to measure their performance. How can you tell whether or not you’re operating and scaling your construction projects successfully? And what metrics should you focus on to measure success?
The construction business is both competitive and risky. For contractors, managing risk means making sure they don’t waste time or money. But measuring success isn’t always simple. If you want to improve your operations, then you need to start by defining key performance indicators (KPIs).
KPIs are essential tools for improving your company’s performance. By setting clear goals and focusing on specific numbers, you’ll be able to measure how well you’re doing.
In this blog post, we will discuss some key performance indicators (KPIs) that construction teams should target in order to set themselves up for success. We will also provide some recommendations for the best construction project management software and tools that can help teams achieve their KPIs.
What are construction KPIs, and why do they matter?
Construction project KPIs are an effective, measurable, and scalable way for construction teams to measure their performance, inspect their progress, and make necessary adjustments. Construction KPIs are also important because they help construction managers understand the health of the construction project.
Construction KPIs can be broken down into two categories:
- Project-based KPIs: These include the number of days it takes for a construction project to be completed, the total cost, or how many workers were employed.
- Process-based KPIs: These include how much time is spent on site, how many hours an employee works per day, or how much time is taken for inspection.
Construction KPIs are used by management to track progress against goals and help to identify potential problems that could lead to delays or cost overruns. Construction site managers use these KPIs to make sure that the project is running on time and within budget.
Construction KPIs that will give your team a competitive advantage
There are many KPIs that can be used to measure the performance of a construction project, but the most common ones are these:
The main objective of these construction KPIs is to provide a clear and concise picture of the progress and status of a construction project. This allows all stakeholders to have a shared understanding of where the project is at, what still needs to be done, and what bottlenecks may exist. Having this level of visibility into the construction process is vital for ensuring the successful completion of the project.
Construction KPIs are the key performance indicators that measure the efficiency and effectiveness of a construction project. Construction KPIs should not be looked at in isolation, as this could lead to overlooking important factors that impact the overall project performance. Instead, it is crucial to view construction KPIs in terms of the company’s or project’s objectives and goals. By doing so, you can get a holistic understanding of how different aspects of the construction process influence one another and identify potential areas for improvement.
How can construction companies implement a successful KPI strategy?
The first step for establishing KPIs is to define them. How do you want to be measured? What is the goal? Do you want to build a certain number of homes per month, per year? Do you want to finish on time and within budget parameters? What are your contingencies and how will they be utilized? These questions will help you decide what measurements you need to create. For example, if you have a goal of finishing projects on time and within budget, then you might use a metric of “percentage complete” or “completion percentage.” If you’re building houses, a metric like “average cost of labor” would make sense.
Next, pick a unit for measuring your measurements. For example, if “percentage complete/cost” is part of your goal, then you could choose to use a metric like “$ per completed home” or “% completed/budget.” To get started, try using percentages instead of dollars. Start small and expand your scope when you feel comfortable.
Once you know how you want to measure yourself, now you need to collect data. Start with your goals. Which ones matter most to you? Which ones don’t? Is it important that you meet deadlines or just finish projects? What about being on a budget or target by a certain amount? Do you want to focus on quality or quantity? Here are a few examples of types of KPIs you can consider:
1. Percentage complete
This measurement shows whether your team is completing jobs and projects on time and within budget. If you have a defined deadline, then you can record whether or not you met the deadline. Otherwise, you can simply note whether or not you finished on time and within budget without a date attached. Use this metric if you’re focused on meeting your goals.
2. Average cost per completed job
This measurement, which you can calculate by dividing the total cost of materials by the number of completed projects, shows whether your team was able to complete the project efficiently. It also allows you to see how many resources were used in comparison to other similar projects.
3. Quality vs Quantity
In many instances, it makes sense to prioritize quality over quantity. Quality-based KPI focuses on the quality of work performed by the team while Quantity-based KPI focuses on how much work is done.
Finally, once you’ve developed your metrics, you need to set targets for yourself. A good rule of thumb is to aim to improve by 1 percent each week. Don’t worry if you miss your target the first couple of times, just keep working until you hit your desired result. Your KPIs are here to track your progress, so don’t stop collecting data!
Conclusion: Why you need to pay attention to your KPIs if you want your construction project to succeed
Every day brings new challenges for companies in the construction industry, and this makes it very difficult for managers to keep up with everything that needs to be done. Fortunately, there are plenty of ways to help your company stay on top of its game while still making the most of its resources.
The most effective way to manage a construction team is to engage them and get them involved in the process. A simple yet effective way to do this is to set up and use construction project management software that will help you monitor your team’s progress daily. This will ensure that they are working towards the same goals and staying focused on the most important tasks at hand.
Prioritizing and monitoring these construction KPIs will also help you establish a project management plan and adapt it to the changing conditions, while still staying within budget and on schedule.
Want to find out how PlanRadar can help streamline your construction project management, provide detailed project scheduling and generate real-time reporting that helps your team stay on track? Book a free product demo or contact us to get started.