Getting Benched: Why We Need Key Performance Indicators in Construction Now
There’s a saying: “What gets measured gets done.”
With that in mind, it’s no wonder most industries, from food safety to air travel to auto manufacturing, invest heavily in creating metrics to measure the activities of their business. However, not all metrics are created equal. The most successful data-centric, metric-driven companies are diving deeper, identifying Key Performance Indicators critical to successful outcomes. For most industries, determining the KPIs that drive profitability isn’t a herculean task. Why is it such a challenge for construction?
The answer is quite simple: the classic tools of the trade aren’t suited for the job. The nature of construction has prevented the accelerated tech adoption we see in other industries. Traditionally, the jobsite is not a friendly place for technology.
Mobile Technology is the Solution
The construction industry is increasingly on board and now is capturing the critical data needed to establish KPIs. The challenge now is how to analyze the data, as it isn’t always clear which metric to focus on or what to shoot for.
For most digitally-savvy companies — and even entire industries — benchmarks are plentiful and provide the critical context needed to analyze measurements. Essentially, benchmarks are useful tools for making better sense of the world. For example, as a contractor or subcontractor, do you really know how your average number of safety issues per project compares to your competitors?
A benchmark helps indicate if this number is high or low. The construction industry has a benchmark for safety issues called the Experience Modifier Rate. Before hiring a general contractor, an owner can examine the EMRs of the various companies putting in a bid and decide who to hire.
Now, thanks to the ongoing digital transformation and the ability to collect troves of data from various parts of the project lifecycle, should the industry move beyond just the EMR?
Is Everyone Speaking the Same Language?
If the first step towards establishing benchmarks is data collection, the next step is data standardization. Dr. Jit Kee Chin, Executive Vice President and Chief Data Officer at Suffolk, has spent her career studying data.
According to Jit Kee, “the challenge in construction has been that the systems – and the data in the different systems – are not interoperable. That makes it very difficult to cross-compare things.”
Jit Kee notes the other aspect around data standardization and quality has to do with the fact that the construction industry hasn’t settled on standards and performance, nor are companies eager to share their data with the industry.
In the same way other industries have, over time, come together to define acceptable metrics, so, too, should construction.
A recent study of KPIs for construction – performed by Dodge Data & Analytics and commissioned by Autodesk identified seven main process categories where companies should be collecting data and seeing how their performance stacks up.
Companies collecting data in these areas — including but not limited to, capturing errors and omissions discovered in documents; collecting and documents change orders; usage of technology for quality and close out — and companies can learn from this and grow from project to project. For example, how many RFIs are acceptable before they become an excessive drag on project performance? How many RFIs do peer companies have on projects of a similar type and size? If productivity turns out to be one of the key factors that drives schedule, then what factors can companies effectively zero in on to really measure productivity?
Reaching agreements around the terms used in KPI categories – what officially counts as an “inspection technology,” or a “labor productivity factor?” – will clarify what data needs to be collected to provide meaningful answers and offer the ability to create universal benchmarks across the construction industry.
Companies may one day be able to put that data to good use when meeting a client and bidding on their next project. Having an RFP list out “average number of change orders per project” or “average number of construction documentation errors” provides owners with better information on which to base their decisions, while providing contractors with a valuable selling point.
The Road Ahead Is Paved with Data
Some construction companies are well on their way to digitizing their processes and working with their data, while others are just getting started. But all companies, regardless of where they are on this spectrum, should pay attention to classifying and structuring their data moving forward around a commonly agreed terminology.
For both owners and general contractors, the benefits are too compelling to ignore: an exciting new data-driven era of digitally-enhanced construction is arriving!
Jim Lynch is vice president and general manager of Autodesk Construction Solutions, where he leads Autodesk’s efforts to create and deliver products and services which provide the foundation for a digital construction workflow. In his more than 20-year tenure with Autodesk, Jim has held a variety of leadership roles.