Essential Construction KPIs to Improve Profits and Productivity

essential construction kpis

Why construction teams should be tracking way more than financials

How do you measure project success? For many of us, it’s easy to see financials as a leading indicator of performance. Is it over or under budget? And by how much? As owners and project executives usually are looking at high-level metrics, it’s easy for teams to get driven purely by the money. In fact, 43% of construction firms prioritise immediate financial goals over organisational resilience. Nevertheless, there are a number of other essential construction KPIs that can signify if a project is on track and provide more actionable insights into what changes need to be made.

Using budget as your primary indicator of performance is a lot like calculating the calories of a cake to assess its healthiness after it’s been baked. While it might be an interesting fact to know for your own interest and perhaps dietary concerns, it’s a little too late to make any changes needed to alter the outcome. On the other hand, if you were to measure and adjust the ingredients during the baking process, you could tweak results for a more desirable outcome (should healthy desserts be your thing).

Clearly, pure financials should not be the main indicator of performance. So, why are they constantly the primary focus of project scrutiny? Other critical measurements need to be taken into account to track constructions progress and productivity – the primary factors that are going to get teams that wanted success. Below, let’s discuss the importance of construction KPIs and critical metrics your company should be measuring to affect profits and productivity.

Construction KPIs: A Breakdown

Tracking and carefully interpreting an array of key performance indicators (KPIs) helps a construction company build long-term resilience while also meeting short-term financial goals. But just in case you need a refresher on the purpose KPIs serves, here is how the Construction Financial Management Association (CFMA) defines them.

CFMA describes KPIs as being vital signs that show whether 'your business is functioning according to plan'. It explains that the 'key' part of the acronym indicates prioritised metrics.

The 'performance' aspect of the acronym refers to ways in which your company operates or behaves. Likening a construction business to an auto engine, CFMA stresses that engine analysis is based on more than miles per gallon. Similarly, although basic construction project metrics concern costs and time, profit isn’t the only performance issue to measure.

As to the 'I', CFMA notes that indicators usually are quantitative data, such as numbers or percentages, that present a quick picture of a condition and its 'favourable or non-favourable status'.

Check in on Your KPIs

Before all else, it’s vital to understand where your company currently stands when it comes to KPIs. Enter the Workflow Benchmarking Tool. This free tool allows you to see how you stack up against the top construction companies. In a few minutes, you can get an overview of your blind spots and identify processes that can help improve the way you record and use information to formulate a construction quality management plan with KPIs.

Ready to take the free assessment?

Measure Now

The essential construction KPIs your projects need

Although your company may measure many details of a project, effective performance analysis requires prioritising a limited number of key categories of concern for tracking overall project success and company health. These would be both financial and non-financial matters that can be quantified.

Here are types of data these KPIs might scrutinise:

Safety

A safer site incurs less risk and long-term costs. If issues do occur, they could set your project back both in time and money. Beyond that, safety incidents can mean higher insurance payments. Therefore, knowing and understanding your safety rating is key to reducing your costs and keeping your staff productive. Important construction safety KPIs include:

  • Safety/incident rate
  • Number of safety meetings/communications
  • Number of accidents per supplier

Quality

Having a better understanding of the total quality of your projects will help reduce changes and rework. Therefore, keeping a thumb on quality metrics is a surefire way to keep on budget and schedule. The following construction KPIs will help your team maintain a high level of quality:

  • Number of defects
  • Number of defects due to workmanship
  • Time to rectify defects
  • Number of site inspections conducted
  • Ratio of the number of inspection passed to total number of inspection
  • Total cost of rework
  • Customer satisfaction
  • Internal customer satisfaction

Performance

Performance metrics can provide a project’s productivity. By measuring and understanding just how time and efforts are being spent, teams can adjust and allocate additional resources or tools to the areas that need them the most to reach project goals. Here are a few KPIs related to construction performance:

  • Waste/recycling per job
  • Average revenue per hour worked
  • Percentage of equipment downtime
  • Percentage of labour downtime

Employees

While tracking your employees’ performance is crucial for a successful project, measuring their development and satisfaction are also critical for success. Staff who are invested in and happy will be able to work more efficiently for the long-term and contribute more to the bottom line. Not to mention, employee turnover is a major expense and reducing this cost can save teams enormously. The following construction KPIs are vital to employee retention:

  • Worker satisfaction
  • Training completion percentage rate
  • Turnover rate

A Note on Predictive KPIs

The issue of using KPIs as predictive measures is one raised by CFMA, which asserts that performance management should be more than a 'rearview mirror' process of analysing productivity based on historical financials. It suggests a number of ways that KPIs can provide a glimpse into future productivity.

For example, instead of simply viewing financial performance based on past and current projects, CFMA suggests measuring tender development and setting expectations based on actions such as: (1) pending tenders; (2) scheduling and completion of business development meetings; and (3) active proposals.

A 'subcontractor inventory' is another predictive performance indicator that CFMA recommends. It would be aimed at avoiding tying up cash in the over-purchase of construction materials. CFMA states that a KPI could be designed to predict buildups in unneeded inventory by comparing monthly spending for materials with what already exists.

As to safety, it notes that aside from past figures concerning accident rates or 'high number of days without lost work', a KPI could predict performance based on quantification of planned events such as 'the number of safety meetings, communications, notifications or awards that recognise someone doing something safe'.

Construction Dive magazine also discusses the issue of using KPIs predictively through an analysis of 'lagging vs leading indicators'. The magazine points to 'cash flow and receivables' as 'backward-looking' or lagging financial indicators.

Leading indicators would be data showing the ongoing progress of a project in such a way that the information can lead to remediation of procedures or work before the construction schedule is badly affected.

Talking about KPI analysis of company data – whether rear-view or forward-looking – the magazine states, 'Measurements help bring standardisation and repeatability to processes on a jobsite'. So, the quantification of KPIs helps construction companies more accurately predict costs and schedules for future projects.

Learn more: Getting Started with Predictive Analytics in Construction

Implementation and Evaluation

As already noted, successful implementation of construction KPIs requires prioritisation of top concerns and selection of appropriate technological support. Other important demands include:

  • Standardising reporting and measurement
  • Gaining support by involving key players
  • Incentivising participation
  • Measuring progress
  • Evaluating the impact and making adaptations

Standardising reporting and measurement

To get started implementing and evaluating construction KPIs, standards need to be set to ensure accurate input and use of the information. Standardising construction measurements and processes is easier than ever these days due to digital transformation of our industry. This change encompasses cloud technologies that improve workflow by allowing real-time sharing of files from office to field and back again.

What makes this immediate communication more powerful is the use of standardised workflow processes made possible by standardising the construction planning software used within a company. Problems occur between the jobsite and front office when the general contractor, field team, designers and project managers use varying kinds of software.

In a Construction and Technology Report, JB Knowledge noted that 30% of companies they surveyed reported problems due to not being able to integrate the many applications they use. However, construction companies can achieve integration, track KPI data and standardise the life cycle of projects by standardising their own use of software. It helps to select a construction productivity product that is as easy for workers on jobsites to use as for managers in the home office.

In fact, learning how to use construction software is a goal that fits well into a KPI for staff development. Companies can tie incentives to adaptation and reward employee teams for top performance. Staff buy-in also increases when employees who’ve become adept with the software become teachers for those who are new to it.

Gaining Support

For adoption of KPIs to work, companies need to encourage all employees to understand and participate in the processes these performance tools encompass. To improve the speed and smoothness of implementation, it helps to provide up-front training for influential key staff – such as the general contractor and other field managers – who are willing to repeatedly demonstrate how and why KPIs are important.

At the same time, these leaders need excellent software support, including virtual and on-site consulting. Everyone needs a hierarchy of support and the knowledge of whom to go to for help.

Incentivising Participation

You might think that participation incentives in any industry would primarily be based on financially rewarding employees. However, a process of mentorship is one of the best motivators available. Key players train up other employees to become trainers themselves. This builds confidence and self-esteem. This principle of a cascade of empowerment works across a multitude of industries. As Inc. magazine indicates, when employers in any business provide effective training, they’re treating staff 'in a way that will make them want to stick around'.

Other popular incentives may involve awards and celebrations for meeting or surpassing KPIs. However, these incentives must be clearly connected to expected outcomes and be announced at the outset of implementation.

Measuring Progress

Another opportunity for gaining buy-in from key employees is to assign key staff responsible for tracking and sharing measurement data company-wide. However, first provide training about how the company’s performance software measures and evaluates progress whether about money matters, quality or employee satisfaction.

Evaluating and Adapting

Be prepared for an ongoing team effort to improve KPIs so they will be as beneficial, relevant and up to date as possible. This means you need to build in time for discussion and adaptation including digital change.

Digital transformation is also an ongoing process. This means both KPIs and new technology you embrace should be viewed from the same perspective. Neither can become static because that won’t improve productivity, profits or company health.

Go Beyond Financials With New Construction KPIs

While keeping a watchful eye on financials is essential, adding new construction KPIs that relate to safety, quality, performance and staff are key to understanding your project’s full story. In time, this will allow for better control of costs and schedule and increase your company’s bottom line.

Grace Ellis

As Manager of Content Marketing Strategy at Autodesk and Editor in Chief of the Digital Builder Blog, Grace has nearly 15 years of experience creating world-class content for technology firms. She has been working within the construction technology space for the last 6+ years and is passionate about empowering industry professionals with cutting-edge tools and leading strategies that improve the quality of their jobs and lives.
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We use NMPI Display to deploy digital advertising on sites supported by NMPI Display. Ads are based on both NMPI Display data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that NMPI Display has collected from you. We use the data that we provide to NMPI Display to better customize your digital advertising experience and present you with more relevant ads. NMPI Display Privacy Policy
VK
We use VK to deploy digital advertising on sites supported by VK. Ads are based on both VK data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that VK has collected from you. We use the data that we provide to VK to better customize your digital advertising experience and present you with more relevant ads. VK Privacy Policy
Adobe Target
We use Adobe Target to test new features on our sites and customize your experience of these features. To do this, we collect behavioral data while you’re on our sites. This data may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, your IP address or device ID, your Autodesk ID, and others. You may experience a different version of our sites based on feature testing, or view personalized content based on your visitor attributes. Adobe Target Privacy Policy
Google Analytics (Advertising)
We use Google Analytics (Advertising) to deploy digital advertising on sites supported by Google Analytics (Advertising). Ads are based on both Google Analytics (Advertising) data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that Google Analytics (Advertising) has collected from you. We use the data that we provide to Google Analytics (Advertising) to better customize your digital advertising experience and present you with more relevant ads. Google Analytics (Advertising) Privacy Policy
Trendkite
We use Trendkite to deploy digital advertising on sites supported by Trendkite. Ads are based on both Trendkite data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that Trendkite has collected from you. We use the data that we provide to Trendkite to better customize your digital advertising experience and present you with more relevant ads. Trendkite Privacy Policy
Hotjar
We use Hotjar to deploy digital advertising on sites supported by Hotjar. Ads are based on both Hotjar data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that Hotjar has collected from you. We use the data that we provide to Hotjar to better customize your digital advertising experience and present you with more relevant ads. Hotjar Privacy Policy
6 Sense
We use 6 Sense to deploy digital advertising on sites supported by 6 Sense. Ads are based on both 6 Sense data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that 6 Sense has collected from you. We use the data that we provide to 6 Sense to better customize your digital advertising experience and present you with more relevant ads. 6 Sense Privacy Policy
Terminus
We use Terminus to deploy digital advertising on sites supported by Terminus. Ads are based on both Terminus data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that Terminus has collected from you. We use the data that we provide to Terminus to better customize your digital advertising experience and present you with more relevant ads. Terminus Privacy Policy
StackAdapt
We use StackAdapt to deploy digital advertising on sites supported by StackAdapt. Ads are based on both StackAdapt data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that StackAdapt has collected from you. We use the data that we provide to StackAdapt to better customize your digital advertising experience and present you with more relevant ads. StackAdapt Privacy Policy
The Trade Desk
We use The Trade Desk to deploy digital advertising on sites supported by The Trade Desk. Ads are based on both The Trade Desk data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that The Trade Desk has collected from you. We use the data that we provide to The Trade Desk to better customize your digital advertising experience and present you with more relevant ads. The Trade Desk Privacy Policy
RollWorks
We use RollWorks to deploy digital advertising on sites supported by RollWorks. Ads are based on both RollWorks data and behavioral data that we collect while you’re on our sites. The data we collect may include pages you’ve visited, trials you’ve initiated, videos you’ve played, purchases you’ve made, and your IP address or device ID. This information may be combined with data that RollWorks has collected from you. We use the data that we provide to RollWorks to better customize your digital advertising experience and present you with more relevant ads. RollWorks Privacy Policy

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