Measure KPIs to Keep Projects on Track

By Steve Jones
Measuring performance is challenging in the construction industry because each project is
unique—taking into account the design, schedule, site and team—and the process is continually
impacted by dynamic factors—including labor, materials, changes and weather. As a result,
many traditional key performance indicators (KPI) are based on information that is already out-
of-date when it reaches management for decision making and too late to identify and avert
problems and keep things on track.

New Research on Process-Based KPIs

A recent study suggests that by committing to certain project management processes, contractors
can reduce risk, mitigate downstream problems and improve performance. For the study, more
than 200 U.S. general contractors (GC) and specialty trade contractors (trades) reported how
frequently they engage in six categories of these “process KPIs.”

1. Problems Discovered in Construction Documents/RFIs. This includes comparing to past

projects, alerting management quickly to potential risk issues and triggering immediate risk
management activities.

• While 59 percent say they log RFIs most of the time, only 25 percent frequently record errors,
omissions and/or constructability issues found in bid set documents. And just one-third formally
compare either document problems or RFIs to their past projects, which would enable
predictability that can head things off with the project team before problems occur.
• Few frequently alert senior management to potential risks or initiate specific risk reduction
activities because of discovered document problems or issues raised in RFIs. “If you see
something, say something” should be the rule.

2. Change Orders. This includes turnaround time, root cause evaluation and schedule impact.

• While virtually everyone (96 percent) documents change orders some of the time, only about half
(47 percent) report doing it frequently (on at least three fourths of their projects).
• About half (46 percent) routinely capture root causes of change orders, but fewer (39 percent)
frequently evaluate the schedule impact of change orders or frequently track start, finish and
turnaround times (27 percent)—both of which can improve effective change order management.

3. Schedule. This includes the types used, frequency and lag time of updating and impact of
slippages.

• Schedule slippage can be toxic. Most GCs (66 percent) bear added costs from overtime/second
shift on at least a quarter of their projects and half report having to extend the end date frequently.
• Almost half (44 percent) of the GCs frequently use a short-term look-ahead and an overall
schedule, but only 30 percent update their schedule weekly and a surprisingly high percentage (37
percent) only do it monthly or less. Also, the lag between when an update need is first identified
 and when the update is actually made is more than five days for most (54 percent) GCs, with only
13 percent acting within two days. Out-of-date information does not support timely decision
making.

4. Safety/Inspections. This includes leveraging technology to improve efficiency.

• Using software to manage safety and/or inspections during construction is a recent trend but is
taking hold quickly. Nearly 70 percent of GCs report using it on at least 25 percent of their
projects and 40 percent say it’s used on more than three quarters of their work.
• Two-thirds of the users say it provides high or very value, so the adoption trend is likely to
continue.

5. Productivity/Prefabrication. This includes erosion factors and improving productivity

through prefabrication.

• More than half of all contractors identify problems with coordination, communication, quality of
construction documents and schedule management as top productivity killers. Interestingly, more
trades (68 percent) report major negative impact from poor schedule management than GCs (53
percent), highlighting its importance to their resource management.
• More than 70 percent of trades say prefabrication at least moderately improves labor productivity
and one-third (31 percent) prefabricate at least a quarter of their work. Design that does not lend
itself to prefabrication is cited as the top obstacle to doing more of it. While clearly important,
only 17 percent of trades evaluate and compare the percentage of prefabrication on a current
project to similar previous projects. This seems like a key trend indicator to maximize its benefit.

6. Quality/Close-out. This includes technology, accelerated punch listing and problems getting
off the job.

• Nearly 70 percent of GCs use technology to manage punch list/close-out activities on at least 25
percent of their projects. Among those, 75 percent rate its value as high or very high.
• The emerging trend of punch list-as-you-go is reported by 72 percent of GCs on at least a quarter
of their projects and most (82 percent) rate its value as high or very high.
• Trouble completing work (i.e. getting off the job) affects 69 percent of GCs on at least 25 percent
of their projects. Nearly 60 percent say it has a high or very high negative impact. So, focusing on
cleanly exiting projects will improve performance.

These relatively simple and straightforward process-based metrics can help construction
companies to stay on top of and continually improve their project performance. Although the
study finds that current adoption is still relatively low for many of these best practices, the
companies reporting frequent use assign a high value to them, confirming their contribution.
Written by Steve Jones Dodge Data and Analytics

Steve Jones is Senior Director, Industry Insights Research for Dodge Data & Analytics. During his 45 years of experience in the

AEC industry, Steve has also been principal of a major architectural/engineering firm (Burt Hill, now merged with Stantec) and

VP of a global construction software company (Primavera Systems, now part of Oracle). He directs Dodge’s SmartMarket

Report series, which are widely cited as authoritative references on the emerging trends in the global construction industry.
Our construction team

Mike Karlins
Construction Practice Leader
Mike is an audit partner based in The Woodlands office and has
more than 30 years’ experience in audit services, agreed-upon
procedures, financial services, operational improvement and
mergers and acquisitions. He also has extensive experience in a
variety of financial reporting engagements for private companies in a
wide range of industries including construction, manufacturing, oil
field services and distribution. Mike serves as the Campaign
Treasurer for Brady for Congress and Brady Victory Fund . He is the
secretary/ treasurer for Construction Industry CPAs/ Consultants
Association (CICPAC) and a member of the tax and legislative
committee for Construction Financial Management Association
(CFMA). Mike has served has Chairman of the Board for both The
Woodlands Area Economic Development Partnership and The
Woodlands Area Chamber of Commerce. Mike is also a Certified
Public Accountant and earned a Bachelor of Science in Accounting
from the University of Illinois at Urbana-Champaign.

Lori Morales
Tax Partner
Lori is a tax partner in our Houston office and has nearly 20 years of
experience in public accounting. She works with companies in a variety of
industries including energy, manufacturing, real estate, construction, and
professional services. Lori’s primary focus is on helping family-owned,
middle-market companies navigate the intricacies of federal and state tax
compliance and assisting them with all manner of business tax consulting
from tax planning to ownership succession as well as business expansion,
mergers and acquisitions, and more. Prior to joining Calvetti Ferguson, Lori
worked with a renewable energy start-up company, assisting them with all
aspects of accounting, finance, and business development. She is a
Certified Public Accountant, member of CFMA, and earned her Bachelor of
Science in Accounting from the University of Missouri – St. Louis.

Ken Sibley
Tax Partner
Ken is the Partner in charge of the Dallas office of Calvetti Ferguson and
has more than 30 years in the public accounting industry. He is experienced
in audit, tax and consulting with clients in planning, internal control, fraud
prevention and litigation matters. Prior to joining Calvetti Ferguson, he was
the founding member of Sibley & Company, P.C., which merged into a
national firm in 2011. Ken is a Certified Public Accountant and earned a
Bachelor of Business Administration in Accounting from the University of
North Texas. He is also a member of CFMA, Certified Fraud Examiner, as
well as certified in Financial Forensics.

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Our construction team

Sarita Akin
Tax Senior Manager
Sarita is a tax senior manager and has more than 25 years of
experience in public accounting and industry. She has advised
clients in the oil and gas industry, family-owned businesses and the
individuals who own them, multi-state corporations and benefit
plans. Sarita’s expertise is in the preparation of individual,
partnership, fiduciary, estate and corporate tax returns. She is a
Certified Public Accountant and earned a Bachelor of Business
Administration in Accounting from the University of Texas at Austin.
Sarita is the sub-committee chairperson of the Finance Committee
for the San Antonio Livestock Exposition and Go Rodeo Roundup
and a member of CFMA.

Scott Contreras
Audit Manager
Scott is an audit manager and has nearly 10 years of experience in
public accounting. His clients operate in the oil and gas, construction
and retail, and manufacturing and distribution industries. He also has
extensive experience auditing employee benefit plans. Scott is a
Certified Public Accountant, member of CFMA, and earned a
Bachelor of Science in Mathematics and Accounting from Sam
Houston State University.

Kyle Kmiec
Tax Manager
Kyle is a manager in the tax practice and has over eight years of
experience in public accounting. His focus is on partnership,
corporate, real estate, and personal income taxation. Kyle is a
Certified Public Accountant, member of CFMA, and earned a Master
of Business Administration in Accounting from Midwestern State
University.