Financial and management software provider Eque2 recently hosted a round table discussion on Key Performance Indicators, asking if they’re really delivering improvements to the sector or simply building an illusion of good management.
Hosted by Wes Simmons, managing director at Eque2, the participants were David Warlow from Oxford-based contractor and Chartered Building Company Kingerlee, Kevin Breen of Mulholland Contracts, Malcolm Savage of GB Building Solutions and Allan Wilén, economics director at information provider Glenigan.
Putting measures in place to manage and track performance across a project is not only fundamental to ensuring it runs on time and to budget, but has knock-on effects for overall business performance and revenue, as well as employee and customer satisfaction.
In fact, annual research among construction clients, contractors, consultants and subcontractors by Glenigan reveals that, on average, clients had a markedly higher level of satisfaction on projects where commercial, social and environmental KPIs had been deployed to monitor performance. More than half of respondents also stated that more than 79% of their turnover was through repeat business.
Allan Wilen: correlation
Allan Wilén of Glenigan commented: “Our research shows a clear correlation between KPIs and an improvement in customer satisfaction. Repeat business is extremely important in our industry so it was particularly telling that over half of firms implementing KPIs reported that 79% of their business came from repeat clients.”
But the issue is not clear cut, and there appears to be two distinct schools of thought on the usefulness of KPIs. Kevin Breen of Mullholland Contracts argued: “There’s a strong case to be made that KPIs actually serve to create more work for employees and lead to micro-management because of the notoriously tight margins in construction.
“Too many KPIs on a project mean managers risk spending more time chasing to ensure margins are being met – in my experience giving a negative impact upon morale and, in turn, customer service. I don’t find KPIs around speed and performance helpful in motivating my staff to a better quality of work. In my business direct personal contact seems to work better.”
However, David Warlow at Kingerlee took an opposing view: “Above all else, KPIs are an invaluable driver of customer service and loyalty. Having a KPI strategy in place not only ensures a project is kept on track and that cost and resource is managed more effectively, but can give the client a wholly accurate view of any given project at any point, the value of which cannot be underestimated.
“I personally believe the secret to success lies with how KPIs are communicated. If any issues do arise on a project, trust and momentum can ultimately be maintained on the project through effectively and transparently communicating any issues, identifying the route of challenges and identifying a strategy to get the project back on track.”
Wes Simmons: software
The importance of communication is a notion that echoed throughout discussions. As Malcolm Savage of GB Building Solutions commented: “A critical success factor when it comes to KPIs is achieving organisational buy-in from the start. Employees do not want to feel a sudden onslaught of admin thrust upon them to aid micro management and KPIs should not feel like an added level of process – we as management need to make sure we are letting employees know their potential to deliver value.”
There’s general agreement that KPIs do have an important role to play – and in a low margin business like construction, firms cannot afford to ignore their potential. Yet clearly, individual businesses have a different interpretation of their worth. Wes Simmons argued that the question construction firms should ask themselves is not whether to use KPIs, but how they should be used and implemented.
Technology can be a key enabler on the successful implementation of KPIs. Malcolm Savage explained: “From my work in across several sectors, including higher education establishments, I have seen technology is the future for the construction industry, and is a vital asset to a business when it comes to the effective management of KPIs. Software can pull together project-critical information into one place so managers can accurately monitor KPIs, obtain rapid KPI updates and make any necessary changes in order to keep with a strategic business plan.”
With the mobile revolution fast being ushered in by the new generation of construction professionals, it’s easier than ever before for KPI data to be tracked in real time, revolutionising the efficacy of KPIs.
Wes Simmons agreed: “Mobile software is more efficient than ever, and it is only improving. Any software that can be accessed via a mobile device, and therefore on site, is a tremendous bonus in keeping data accurate. But ease of use remains vital to ensuring that all employees, regardless of age or technological ability, are able to utilise these tools.”
“The practicalities of enabling the mobile workforce through technology must be not be underestimated,” added Kevin Breen from Mullholland Contracts. “The benefits are all very well but the technology has to be efficient, work on site and be intuitive to use if it’s to really be of value.”
The discrepancies in the opinions aired are as much down to the execution of a KPI strategy rather than the principle itself, so organisations must think just as carefully about how they will implement their KPI strategy and communicate this to the business, as the KPIs themselves.
