As a construction management leader, what tools do you use to measure success?
Often, it’s comfortable and practical to use financials as the best gauge. Was the project over or under budget? What was the margin on the latest sale or the ROI on that principal investment?
In terms of high-level metrics, owners and C-suite teams alike often focus primarily on dollar signs. 43% of construction firms are more concerned with meeting short-term financial goals than building long-term operational excellence.
While money is essential, it’s far from the only project metric worth noting. Today, we’re sharing five crucial Key Performance Indicators (KPIs for construction) that building industry executives should analyze to determine if a task is on track or if additional improvements are required.
It’s worth recognizing that many of the national homebuilders and building product leaders already have reliable means of measuring the critical metrics mentioned below. That said, executives, vice presidents of construction, project managers, and superintendents with local and regional builders and building materials companies may find these KPIs a great way to start tracking smarter today.
1. Safety Metrics
There’s a reason why five of the top 25 most dangerous jobs in the U.S. include some form of construction work.
Residential construction is an industry replete with physical risks and liabilities. As such, it’s critical to measure how safe a job site is. Not only do more reliable sites incur less risk, but they also result in a more economical project.
Any time an accident or safety issue occurs, it can cost a significant amount of time and money to regain the momentum your team once had. Moreover, safety problems can also result in higher insurance premiums for your firm.
To this end, it’s critical to know and understand how safely your team is performing. Specific safety-centric KPIs to analyze include:
- Your overall safety/incident rating
- The number of accidents per contractor
- The total number of safety meetings and communications
2. Bid and Take-Off Performance
Is your bidding process currently on track, or are there areas in which you could improve? Making the right adjustments in this department can directly affect your bottom line. It’s essential to see clearly how your purchasing and estimating teams are trying to earn more work and whether or not those efforts are paying off in the right way.
A few of bidding-specific KPIs to analyze include:
- Upcoming bids currently under development
- The number of RFIs and RFQs submitted
- The number of business development meetings held and scheduled.
- Number of active leads and prospects and associated probability of winning work
- Number of issues and mistakes found in bid documents
Research shows that 54% of construction executives currently track the errors, omissions, and constructibility issues present within their bid sets. Then, 66% use that data to mitigate the risk of the same problems occurring on future projects.
3. Team Performance
Want to know how productive a project is? Track hard data on your team’s performance.
As a residential construction executive, you must understand just how your team members are spending their time and effort. This way, you can discern whether or not you need to allocate additional resources to the job or take some away to gain efficiencies and meet project goals.
Performance-specific KPIs for construction to analyze include:
- The amount of waste (and recycling) generated per job
- The average project revenue per hour worked.
- Percentage of employee downtime
- Percentage of equipment downtime
4. Work Quality
None of your team members want to waste time on rework. That’s why the old saying holds: It is better to get it right the first time.
Are your projects top quality? Or, are they half-hearted efforts that will likely result in timely and costly issues down the road?
To answer these questions, stay on budget, and stick to your timeline, you’ll need to keep a close eye on quality metrics.
Quality-specific KPIs for construction include:
- Number of total project defects
- Number of workmanship-related defects
- The time required to reverse defects
- The ratio of the number of inspections passed to the total number of inquiries
- The total cost of all rework efforts
- Customer satisfaction reports and ratings
5. Employee Satisfaction
Employees who feel supported and encouraged to grow in their craft will undoubtedly return this support through improved and invigorated performance. If they’re invested in their work and happy on the clock, their efficiency and contributions can’t help but grow. You’ll also see employee turnover rates drop when team loyalty improves.
That said, do you have the infrastructure and programs in place to provide this kind of work environment? If not, it’s time to make employee development and retention a priority.
Along the way, satisfaction-specific KPIs for construction to track include:
- Overall employee satisfaction rates
- Employee turnover rates
- Employee training completion rates
Ace These Construction Executive KPIs
As a successful residential construction executive, you’ve learned to look at the big picture. You can see a finished house before it breaks ground or when it’s merely at its foundation.
It’s important to adopt that same long-term perspective when looking at your previous, current, and future projects. While the financial aspect is important, so too are the quality, safety, and satisfaction rates of any given job.
With these actionable insights in hand, you can make better-informed business decisions moving forward and cement your reputation as the best in the business. As you grow your career and build your team, we’d love to partner with you.
Schedule a consultation to learn how MatchBuilt can help your construction company find the skilled, experienced employees you need to ace each of these KPIs, every time.
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