Construction Performance Measurement

Michael Dickinson, Project Manager, Centre for Construction Innovation, University of Salford kpi@ccinw.com CCI, CUBE Building Manchester Monday 26th November 2012

Agenda
Introduction
What are the Construction Industry KPIs? Why they are important? How they can be used benchmarking and continuous improvement?

Workshop Example KPIs on major construction programmes

Performance Measurement Tools

Introduction CCI
Centre for Construction Innovation

University of Salford Award Winning Enterprise Centre

Scotland North East Northern Ireland North West

Not-for-profit organisation

Yorkshire & the Humber East Midlands

Constructing Excellence in the North West

Working to integrate industry, policy and research

West Midlands

East of England

Wales London

South East South West

CCI Performance Measurement Clients

CCI work with Government, Clients and Industry to drive innovation and improve the value created for society by the construction sector Client users include: London Construction Programme. North West Construction Hub, Environment Agency, Ministry of Justice, Fusion21, BAE, Capita, Rolls Royce, Tesco
Contractor users include: UKCG, ISG, Kier, Laing ORourke, Lend Lease, Mansell, Miller Group, Seddon Group, Wates, Willmott Dixon Consultant users include: Atkins, Davis Langdon, Sweett, Mott Macdonald, EC Harris...

What are KPIs?

What are KPIs?

A measure critical for success KPIs measure the quantifiable performance of an activity that is critical to the success of an organisation

Example KPI: Client Satisfaction

Question: How satisfied was the client with the service we provided, using a 1-10 scale:

Totally Dissatisfied 1 2 3 4

Neither satisfied nor dissatisfied 5 6 7 8

Totally Satisfied 9 10

7 out of 10 = 70%

Performance Measurement in Construction

Construction Industry KPIs first published in 1999 and every year since... The Industry KPIs provide standard ways to measure performance Lets you compare and benchmark performance against the rest of the industry Drive actions for continuous improvement Key differentiator in the industry helping firms to win work Supporting clients to achieve value for money

Construction KPI Examples

ECONOMIC Predictability Cost project Predictability Cost design Predictability Cost construction Predictability Time project Predictability Time design Predictability Time construction Variance Cost Project Variance Cost Design Profitability Productivity Client Satisfaction Product Client Satisfaction Service Health and Safety Defects SOCIAL Apprenticeship weeks Employee Satisfaction Equality and Diversity Investors in People Pay Qualifications and Skills Safety > 10m turnover Safety All Companies Sickness and Absence Staff Turnover Training Travel to Work Time Working Hours ENVIRONMENTAL Area of Created/Retained Habitat Commercial Vehicle Movements Energy Use (Designed) - Product Energy Use - Process Energy Use Housing - SAP Rating ENV - Product Perf Mains Water Use (Designed) Impact on Biodiversity - Process Impact on Biodiversity - Product Impact on Environment - Process Impact on Environment - Product Mains Water Use - Process Waste - Construction Process Waste - Percentage waste to landfill Waste from site - Construction Waste from Site Demolition

New measures like: SMEs, Fair payment, Apprenticeships, Low Carbon

Why are they important?

Drivers for KPIs

KPIs provide evidence of performance as: A diagnostic tool through the life of the project A communication tool, improving communication internally, with supply chain partners, with the client and potential clients A post project review tool use to capture learning A benchmarking tool - evidence of how you compare to industry practice and industry leaders A continuous improvement tool to identify actions for improvement and to achieve best practice A strategic business review tool - a business development opportunity to differentiate from competitors ...And they can also be crucial to Winning work Most public tenders require demonstration of capability with KPIs i.e. hard gates/ soft gates, Framework Agreements can use KPIs for the allocation of projects

Performance Measurement Future...

The theme of performance management has been taken forward to implementation by one of the joint Government/Industry Task Groups. A process for measurement of supplier performance, including Supplier Alignment Agreements, has been piloted and will be rolled out (initially) with the top 5 strategic suppliers. The aim is to baseline performance, agree progress against that baseline and drive continuous improvement. Proposal to the Government Construction Board includes the mandatory reporting of certain KPIs by strategic suppliers.

How do we use KPIs?

Benchmarking Performance
Benchmarking: Continuously comparing your performance against others, then using lessons from the best to make improvements.
How do we compare? Why are our results different? Who is better? Why are they better? Do we need to improve? By how much? What target should we set? How should we do it? What actions should we take when?

Client Satisfaction Example KPI

Question: How satisfied was the client with the service we provided, using a 1-10 scale:

Totally Dissatisfied 1 2 3 4

Neither satisfied nor dissatisfied 5 6 7 8

Totally Satisfied 9 10

7 out of 10 = 70%

Calculating KPIs - Benchmarking

Performance against each KPI is compared against graphs showing industry norms

A benchmark score of 30% indicates that your performance is equal to that of 30% of the industry. 70% of the industry are scoring better

Benchmarking Example
Use as a reference point
Once you have completed your benchmarking you should ask yourself the following questions: Why are our results different? Do we need to improve? By how much? What target should we set? How should we do it?

What should we do with the information?

Measurement and benchmarking is wasteful It does not appear in buildings it does not add value It is only valuable if you something with what you find out Value is generated by doing things better because of the information you gather

Performance measurement process

KPIs themselves are only the starting point It is not just about measuring, but also analysing results, taking action and improving Value comes from using the information to make decisions

Workshop

What and why are we measuring?

Prioritised list of measures... maximum of 7
In the full-time students workshop on 26th November 2012, we split into 2 groups (clients and contractors and generated the following....

Client 1. Safety 2. Cost 3. Time 4. Quality 5. Environmental Sustain 6. Social 7. Supply Chain Satisfaction

Contractor 1. Client Satisfaction 2. Health & Safety 3. Sustainability 4. Supply Chain Satisfaction 5. Previous Experience 6. Employee Satisfaction 7.

How are we measuring?

How are we measuring?
How are we going to collect the data? Who has the data?

How are we analysing?

What will be benchmark against?

How are we reporting?

How will we present the data? To Whom?

How will we take action?

What do we do if the data is high or low? What types of action can we take? What timeframes do we need to act in? How can we see the impact of what we have done?

Example KPIs

Dept of Health ProCure21+ KPIs

Predictability Time (%) Predictability Cost (%)

Safety (% achieving zero accident incident rate)

Defects at handover Client Satisfaction Service

Example of Performance Measurement Use:

P21+ Framework Year on Year Performance Figures

http://www.procure21plus.nhs.uk/performance/

Environment Agency KPIs

Cost predictability (%) Time predictability (%) Time (Time from Form A to Construction Start) Reuse of materials (%) Waste to landfill (%) Accident Frequency Rate Pollution Incidents (Category 1, 2 / Category 3 & near misses Houses Protected (OM2) BAP Habitat Creation (hectares) Efficiency Savings (M / % of capital programme)

Ministry of Justice KPIs

Client Satisfaction - Product Client Satisfaction - Service (Main Contractor) Client Satisfaction - Value for Money Client Satisfaction - Quality of O & M Manual Client Satisfaction - Quality Plan Defects Safety AIR Project Waste Construction Process Energy Use (Designed) Product Area of Created/Retained Habitat Impact on Biodiversity Process Mains Water Use Process Impact on Environment (Process & Product)

North West Construction Hub Regional Framework KPIs

Predictability Cost Exc Client Changes Construct Predictability Time Excl Client Changes Const Predictability Time Excl Client Changes Design Client Satisfaction - Product Client Satisfaction - Service Contractor Satisfaction Supply Chain Satisfaction Fair Payment - Main Contractor Local Labour Apprenticeship weeks per 100000 project value Waste Diverted from Landfill tonnes 100k Waste from site - Construction Process only Carbon per 100000 project turnover - site level

London Construction Programme KPIs

Consultants Fee percentage Commit to Construct Consultants Fee percentage Available for Use Client Satisfaction with Service of Consultant (National KPI) Client Satisfaction with Service of Contractor (National KPI) Client Satisfaction with the Product (National KPI) Defects (National KPI) Predictability of Time Construction (National KPI) Predictability of Cost Construction (National KPI) Project Health and Safety (National KPI) Apprenticeship weeks over 1,000,000 or as applicable Predictability of Local Labour Area of LA plus 45 mins Local companies/suppliers SME Engagement SME Spend Considerate Constructors Waste To Landfill Percentage [over 250k] (National KPI) Carbon per 100000 project turnover [over 1m] (National KPI) /m2 Commit to Construct /m2 Available to Use

Performance Measurement Tools

Performance Measurement Tools

Performance Measurement Tools: KPI Zone KPI Engine Carbon Calculator Health and Safety System

www.kpiengine.com

Consistent KPI Definitions

National Dataset
Benchmark Score

The KPI Engine

www.kpiengine.com

Measure and manage company and project level performance Benchmark performance against industry dataset and benchmark clubs Use the KPIs to drive continuous improvement

Example KPI Project Framework North West Construction Hub

consistent KPIs shows impact drives continuous improvement

KPI Engine Reporting

The Carbon Calculator

UKCG Health and Safety System

H&S Reporting