Managing a construction project is no easy task. That’s true whether you’re remodeling your own home, flipping a house, or working on a larger multi-property project.
With so much going on, it’s often difficult to know whether things are on track. One way to be sure where you stand? Tracking productivity and progress through a series of metrics known as Key Performance Indicators, or KPIs for short.
These metrics help to determine how different contractors are performing, tracking everything from the overall budget of the project to the team morale of your crew. By actively tracking these metrics, you can make better decisions and ensure your project continues to move forwards toward on time, on budget completion.
What Are KPIs and Why Are They Important?
KPIs are used to track productivity and progress across practically every industry, and construction is no different. These metrics serve to track information that’s important to the overall success of a given project, producing rich insights that construction managers can use to boost efficiency.
KPIs tend to be numerical and objective, offering leaders a tangible read on how a particular element of a construction project is performing. The metrics to be used are typically agreed upon by all major stakeholders before a project is started.
It’s common to build KPIs into a project management software. This gives leaders access to a dashboard that summarizes all key metrics related to the project, enabling high-quality decision-making based on up-to-date information.
Tracking a selection of KPIs will have a huge impact on the success of any construction project. But the KPIs that you choose to manage your construction project depend entirely on the project itself. While there are some KPIs that can be used on almost every construction project, some are more situational.
Let’s take a look at some basic construction KPIs.
Basic Construction KPIs for Success
It’s important to use a series of different construction KPIs to ensure that your project is proceeding according to plan. Here are seven basic construction KPIs that should be tracked for success.
A focus on quality control is important for any construction project, ensuring that your buildings are completed to a high standard and that you don’t need to fix any issues further in the construction process.
Many construction organizations employ team members who are responsible for quality control, including architects and engineers. Here are some of the KPIs that these professionals track:
- Number of defects (both total defects and defects attributable to workmanship)
- Time to rectify defects
- The ratio of passed inspections to total inspections
- Customer satisfaction
Keeping your construction site safe is crucial to the long-term success of your project. As an employer, you’re responsible for making sure that your workers go home safe to their families every night. Besides, reducing the number of safety incidents keeps insurance premiums low and progress on track.
Here are the most important safety KPIs you should be tracking:
- Number of safety incidents
- The number of safety meetings or other safety communications shared with workers
- Number of accidents per supplier or subcontractor
Productivity & Performance
By tracking construction productivity and performance, you can understand how effectively your team is spending their time.
If you see productivity slowing, it could be the case that you need to recruit more workers to help your team out. At the same time, if you see productivity surging, it’s important to understand the reasons why so that you can replicate this productivity on future projects.
Common construction KPIs related to productivity and performance include:
- Wasted time percentage (for both equipment and labor)
- Average revenue per day or hour
- The amount of waste and/or recycling produced on the job
Construction Timelines & Cost
Ensuring your team hits your goals for construction timelines and cost is vital to your project being completed on time and on budget.
Tracking timelines helps make sure you don’t fall behind while monitoring the cost of your project is crucial to understand the levels of profit that you’re generating.
Here are some KPIs you should track to better understand construction timelines and costs:
- Progress toward project milestones
- Actual costs vs. forecasted costs
- Material usage and wastage ratios
In many areas, local laws require that you track the environmental impact of your project. Generally speaking, your goal should be for your project to have as little of an impact on the environment as possible.
Requirements differ from municipality to municipality and you should base your KPIs on these local standards. Common environmental impact KPIs include:
- Percentage of waste diverted to recycling
- Carbon emissions produced during the construction process
Many subcontractors will over-purchase the inventory that they require for projects. Some of this is required as a buffer for any mistakes or substandard materials, but it’s important to track inventory to ensure that you’re not left with an excess of electrical wire or drywall when the project ends.
Use this information to refine your building material estimates for next time.
Subcontractor inventory KPIs include:
- Percentage of unused inventory
- Cost of unused inventory
- The ratio of inventory used in construction to purchased inventory
Keeping your clients happy is key to any good business––not just a construction business. Often, the best way to track client satisfaction is the most simple. Just ask your clients if they’re happy with how the project is progressing.
Knowing that you satisfied your clients is key to a good outcome, but it isn’t the be-all and end-all: you still need to track your expenses and profitability too.
Keeping your employees motivated is key to a successful project. Happy, long-term employees that know how things work will perform more effectively than new employees who are still learning the ropes.
By tracking employee satisfaction and team morale, you can keep your team engaged and feeling appreciated. Key metrics to track include:
- Training completion percentage
- Employee turnover
- Employee satisfaction
KPIs for Construction Management Projects
In addition to the construction KPIs outlined above, it’s also important to track how effectively your team is managing construction projects. By monitoring these metrics, leaders can understand how to refine their approach to future projects and can better understand where projects are deviating from their forecasts.
If your project goes over your cost estimates, it’s crucial that you understand exactly where your spend was higher than forecast. This could be driven by a certain team or department, because of labor variance, or due to unexpected issues that came up during the construction process.
It’s often the case that some construction tasks took longer than expected, while others took less time than you planned for. Understanding where there was labor variance in a project helps you forecast labor requirements more precisely for future projects.
Percentage of Missed Goals
Ensuring that your construction project hits all major milestones on time is key to success. However, in reality, you might miss some milestones along the way. Identifying which goals were missed, and the reasons for the miss, will help you lower the percentage of missed goals on your next project.
Implementation and Measurement of KPIs
Unless the rest of your team is bought into your KPIs and actively uses them to help boost productivity and ensure positive results, the KPIs you choose will mean little. That’s why it’s equally important to focus on how you will implement these KPIs into your organizational workflows.
Here are four key stages to consider.
For your KPIs to be adopted across your organization, it’s important that you demonstrate to everyone why these KPIs will help them be more successful in their roles.
First, focus on garnering support from key leaders within your organization, such as general contractors and other leaders on the construction site. Offer these individuals in-depth training on how to use the software required to track KPIs. Armed with these skills, these leaders can influence others to start supporting your KPIs.
Incentivizing participation in using construction KPIs doesn’t just boil down to creating financial incentives for those that hit their KPIs, although those are important.
In addition to financial incentives, provide your team with mentorship and training opportunities. You might also consider recognizing employees that consistently beat their KPIs, fuelling a competitive spirit that ensures everyone is working towards the same goal.
With the digital tools available to construction companies today, there’s no excuse for not standardizing the reporting process for your KPIs.
Using cloud-based construction management software ensures that your team can access KPI reports no matter where they are – job site or office. This streamlines communication between leaders on site and those at head office, making for a more productive work environment.
Track Progress and Adapt
It’s important to measure KPIs over time to ensure that the strategies you’re putting in place are improving your team’s productivity and results. Use the insights generated by your KPIs to make changes to your workflows and processes and move toward a more efficient construction process.
Choosing the Right KPIs
Every project is unique and it’s important that you update your construction KPIs to reflect the needs of each project. Of course, some KPIs, like quality control and safety, are important for every single project. However, in the main, you should be reassessing new KPIs for every project you begin.
As you consider which KPIs are relevant, it’s worth taking time to reflect on the outcomes of your previous projects. Adopt KPIs that will ensure you replicate the successes and avoid the mistakes of previous projects.
You should also consider the unique demands of each project. The nature of the project, the budget, the location, and more can all have a bearing on the KPIs that you should use to measure success.
Adopting a well-defined set of construction KPIs that you can track throughout the construction process to measure productivity is key to success. With access to these insights, you’ll be able to keep your project on time and on budget.
But leveraging construction KPIs is far from the only way to optimize home building projects.
Cedreo is a home building and design software that construction professionals can use to create 2D and 3D floor plans complete with photorealistic renderings of their projects. Sign up for a free Cedreo account to discover how Cedreo can help your team boost productivity and achieve real results.