Last edited 06 Jun 2017

Key performance indicators KPI

Key performance indicators can be used to:

Monitor costs.
Track progress.
Assess client satisfaction.
Identify strengths & weaknesses.
Compare performance across and between projects.
Assess specific areas of a project such as sustainability, safety, waste management etc.

It is important that key performance indicators are identified in tender documentation and that the regular provision of the information required to assess key performance indicators is a requirement of the contract. This may require the provision of sub-contractor information where performance on specific packages is to be monitored.

Key performance indicators may be of particular importance where the contract stipulates that the contractor will be rewarded or penalised based on their performance relative to certain indicators.

Examples of key performance indicators that can be used on construction projects include:

Cost vs budget. The budgeted cost of work that has actually been performed in carrying out a scheduled task during a specific time period
Project progress relative to milestones.
Number of complaints.
Number of incidents / accidents.
The number of working hours spent on different aspects of the works.
The use of materials (for example the amount of concrete poured).
The number of defects.
The amount of waste generated and the amount of recycling.
The number of variations.

Key performance indicators are also a means to help with the rapid comprehension of the current financial position. Key performance indicators summarise the comparison of figures against the budgeted values and also industry benchmarks that are published from the result of inter-firm comparison reports.

KPI's to track profitability may include:

Turnover by director /partner.
Turnover by fee earner.
Profit by director/partner.
Profit by fee earner.

Only genuinely important performance indicators should be monitored so that it does not simply become a time consuming paper exercise.

Key performance indicators can also be used more broadly as part of a bench-marking exercise to assess the performance of one project relative to another, to assess businesses compared to others within the industry and to assess the performance of the industry as a whole relative to the rest of the economy.