Management of Construction Firm Performance Using Benchmarking

In today’s highly competitive construction industry, there is a critical need for managers to continuously improve their firm’s efficiency and effectiveness. More specifically, managers need to know which performance measures are most critical in determining their firm’s overall success. Benchmarking, when done properly, can accurately identify both successful companies and the underlying reasons for their success. However, rigorous benchmarking within the construction industry still remains an embryonic field. This paper analyzes and critiques both the performance measures and metrics used traditionally in the construction industry and the benchmarking models developed to date for the industry. Based on the results of this analysis, benchmarking models using data envelope analysis are proposed that offer significant improvements over current models. The proposed models measure construction firm performance on a company-wide basis, foster trade-off analyses among various performance metrics, and tie the resources expended by construction firms to how well those firms perform overall. The models also provide managers guidance in determining how specific company resources can be reallocated to improve overall company performance.     

Benchmarking Initiatives in the Construction Industry: Lessons Learned and Improvement Opportunities

Benchmarking is a systematic process of measuring and comparing an organization’s performance against that of other similar organizations in key business activities. The lessons learned from other companies can be used to establish improvement targets and to promote changes in the organization. The benchmarking process can create a fertile ground for ideas, but only in a receptive environment; companies that share good practices and compare their performance against others benefit most. Recently, industry groups in several different countries have initiated benchmarking programs focused mainly on construction performance measures. This paper describes the scope of these initiatives and discusses the lessons learned and improvement opportunities that were identified in their design and implementation. This investigation is focused on four initiatives, carried out in Brazil, Chile, the United Kingdom, and the United States. This paper concludes by recommending some further directions on this research topic.     

Identification of Key Performance Indicators for Measuring the Performance of Value Management Studies in Construction

Value management (VM) is widely regarded as a useful tool for management to meet the challenges, such as limited resources and tight schedules arising in the construction industry. A rigorous measurement on the performance of VM studies is likely to improve the implementation of the VM methodology and enhance the confidence of clients about their investment in VM. The identification of key performance indicators (KPIs) is an essential first step in developing a proper performance measurement framework. This paper aims to identify the KPIs for measuring the performance of VM studies in construction. Delegates of international VM conferences hosted by SAVE International and Hong Kong Institute of Value Management during the period 2005 to 2007 were used as the target group for a questionnaire survey. The survey results identified 18 KPIs out of 47 potential performance indicators. They are divided into three groups: predicting indicators, process-related indicators, and outcome-related indicators, according to their characteristics. Three principal components were identified by using factor analysis of the KPIs, which reveals the interrelationship among the KPIs. Details on how to implement these KPIs, such as data providers, weightings, and scoring methods, are also presented.     

Scorecard Approach to Benchmarking Organizational Safety Culture in Construction

This paper promotes adopting the balanced scorecard tool to benchmark organizational safety culture in construction. It argues that this tool has the potential to provide a medium to translate the organization’s safety policy into a clear set of goals across four perspectives: management, operational, customer, and learning. These goals are then further translated into a system of performance measures that could effectively communicate a powerful strategic focus on safety to the entire organization. Four perspectives have been developed to represent all stakeholders, thereby ensuring that a holistic view of safety is used for strategic reflection and implementation. The paper argues that by selecting and evaluating the appropriate measures, in each perspective, requirements can be identified, and actions to the identified goals can be aligned and facilitated. The proposed balanced scorecard approach should therefore enable construction organizations to pursue incremental safety performance improvements. Work-in-progress is briefly reported to give insight into the potential applicability of this approach.     

Developing a Performance Index for Relationship-Based Construction Projects in Australia: Delphi Study

Over the past decade, an increasing trend of client organizations has been observed to adopt relationship-based approaches to run their building and construction projects internationally. Since there are numerous benefits of adopting relationship-based projects in construction, it is important to conduct research in the area of key performance indicators (KPIs) because it can help set a benchmark for measuring the performance of relationship-based projects. Nevertheless, few, if any, comprehensive and systematic research studies in this area have been conducted. This paper reports an empirical study which applies the Delphi survey technique to formulate a model to assess the success of relationship-based construction projects in Australia. Four rounds of Delphi survey questionnaires were conducted with 22 construction experts in Australia. The Delphi survey selected eight KPIs to evaluate the success of relationship-based projects in Australia. These KPIs included: (1) client’s satisfaction; (2) cost performance; (3) quality performance; (4) time performance; (5) effective communications; (6) safety performance; (7) trust and respect; and (8) innovation and improvement. A statistically significant consensus on the eight selected KPIs was also obtained from the Delphi experts. A formula for calculating a performance index for relationship-based projects in Australia has been finally derived. Construction senior executives and project managers can use the index to measure, monitor, and improve the performance of their individual relationship-based projects. It also broadens the existing body of knowledge of both academics and practitioners in the construction industry because the research method could be replicated in other geographical locations to create similar indices for international comparisons, thus assisting in the understanding of managing relationship-based projects across different countries.     

Key Performance Indicators for Strategic Healthcare Facilities Maintenance

The salient phases in a facility’s service life that are most decisive for the effectiveness of its facilities management (FM) are the preliminary design, construction, and maintenance. The effectiveness of facilities is vastly affected by decisions pertaining to the strategy of the organization that owns or uses the facilities. The goal of this study was to develop key performance indicators (KPIs) for strategic FM that will provide a conclusive approach towards the facility’s service life conditions. Parameters were developed by means of field surveys and statistical analyses, and were validated by means of case studies. The research resulted in a series of 11 KPIs for strategic healthcare FM, which can be classified into four categories: development, organization and management, performance, and maintenance efficiency parameters. The study proposes age and occupancy coefficients as essential parameters for the assessment of large healthcare facilities needs, as an effective measure for long term facility maintenance planning, and for measuring FM effectiveness. The paper stresses that strategic healthcare facilities management must integrate quantitative performance, manpower, and maintenance indicators.     

Benchmarking Framework to Measure Extent of ICT Adoption for Building Project Management

This paper discusses a component of the research study conducted to provide construction organizations with a generic benchmarking framework to assess their extent of information communication technology (ICT) adoption for building project management processes. It defines benchmarking and discusses objectives of the required benchmarking framework and development of the framework. The study focused on ICT adoption by small and medium enterprises (SMEs) in the construction industry and with respect to SMEs it is important to understand processes, their indicators, and measures in the local context. Structure of the suggested benchmarking framework has been derived after extensive literature survey and a questionnaire survey conducted in the Indian construction industry. The suggested benchmarking process is an iterative process divided into four stages. It can be implemented at organization and industry levels for rating the construction organizations for ICT adoption and performance measurement. The framework has a generic structure and can be generalized and applied for other countries with due considerations.     

Management’s Perception of Key Performance Indicators for Construction

There is a great need in the construction industry for identifying a set of common indicators to be used by construction executive and project managers in measuring construction performance at the project level. The focus of this research was to collect management perceptions of the key performance indicators currently utilized in the construction industry. Both quantitative performance indicators and qualitative performance indicators are represented. A literature search was used to generate the initial set of perceived key performance indicators, which were administered to the construction industry via a survey. A statistical analysis of the collected survey responses provided information for the identification of a common set of perceived Key Performance Indicators (KPIs) by construction sector, management level, and experience level. Correlations were performed for both the quantitative and qualitative indicators to determine which type of indicator is used most extensively. Basic statistical analyses and frequency distributions provided evidence in support of some of the hypotheses of the research. The results of the survey data analysis support the hypothesis that KPIs vary according to management’s perspective. Further analysis displayed a substantial difference between construction executive and project management’s perceptions. However, six indicators were reported as being most useful by every segment of the construction industry involved in this study. The correlation between quantitative indicators and qualitative indicators proved to be inconclusive.     

Predicting and Evaluating Construction Trades Foremen Performance: Fuzzy Logic Approach

This paper illustrates a fuzzy logic model for use in predicting and evaluating the performance of construction trades foremen. The model assists in measuring the effectiveness of a foreman, monitoring improvements in effectiveness over time, and identifying areas where a foreman requires training or mentoring to improve his/her performance. This paper also discusses the factors that affect the performance of a foreman in each area of responsibility. The structure of the model and the use of fuzzy logic are described. The model is validated using data collected from an actual construction company, illustrating its high level of linguistic accuracy. This model is relevant to researchers and makes a contribution to performance evaluation by developing a methodology for evaluating and predicting the performance of construction trades foremen. The model provides a complete approach for handling uncertainty inherent in performance evaluation by using fuzzy logic. The use of fuzzy logic in the model allows users to express themselves linguistically and to make assessments that are subjective in nature. It is relevant to construction industry practitioners since it provides them with a useful technique for evaluating the performance of foremen and identifying the factors that affect their performance on a daily basis. Last, the model offers the advantage of benchmarking foreman performance, allowing organizations to develop plans to improve the performance of their foremen over time.     

Performance Measurement of Training in Engineering Organizations

This work introduces a new training program performance assessment methodology for engineering organizations that is based upon needs assessment, types of training, and training effectiveness measures. The methodology checks whether predefined objectives of a company are identified through a needs assessment. Effectiveness is judged on whether the types of training and coursework content are formulated to fulfill the needs assessment objectives, whether the coursework is available to the proper employees, whether the courses are attended and understood by the employees, and whether the coursework content is utilized in the work place to meet the needs assessment objectives of the company. A case study of three training programs conducted within a public sector engineering organization is included to demonstrate the methodology and evaluate both the three programs and the methodology effectiveness. Conclusions suggest improvements to future training programs for the public sector engineering organization, as well as describe potential enhancements to the effectiveness measures of the methodology that can be recognized through further study of existing training programs.     

Moderating Effect of Organizational Learning Type on Performance Improvement

It has been advocated that information available from a performance measurement system (PMS) is an invaluable source of knowledge for contracting organizations. As such, it has been suggested that performance improvement can be achieved if contracting organizations can capitalize on the learning opportunities accorded from feedback derived from a PMS. Literature on learning also suggests that organizations display three types of learning: (1) single loop, double loop and Deutero. This paper reports a study that aims to (1) empirically test the positive effect derived performance feedback on performance; and (2) identify the extent to which the learning types have significant impact on performance improvement. Data on performance, performance feedback available, and responses were collected through a questionnaire survey. Pearson correlation and multiple moderated regression were used to accomplish research objectives (1) and (2), respectively, as mentioned. The findings suggested that there is a significant correlation between performance improvement and feedback from a PMS. It was found that all three forms of organizational learning can contribute to performance improvement and are not mutually exclusive. Nonetheless, double-loop learning practices that addresses the root causes of underperformance were found to be more versatile in facilitating improvement in efficiency and effectiveness.     

Determination of Key Performance Indicators with Enterprise Resource Planning Systems in Engineering Construction Firms

The study focuses on developing a unified approach to define information specificities for key performance indicators (KPIs). Borrowing from the time-system theory, the paper defines different types of KPI and identifies that a KPI has two dimensions—knowledge specificity and time specificity. Different approaches are presented to analyze knowledge and time sensitivities. This paper addresses a key question related to enterprise resource planning (ERP) systems applications in the engineering construction industry: what are the areas of business processes within the engineering construction industry where ERP cannot be used to collect KPIs related to business processes? The writers review empirical and specialized processes within the construction industry to identify business processes not covered by existing ERP systems. A survey focused on qualitative aspects of ERP systems implementation in engineering construction firms was conducted among ERP-enablers in the construction industry and provided a basis for the presented case study. Data collected are from major engineering and construction firms in the United States and therefore the results are relevant for researchers and industry practitioners concerned with application of enterprise management systems in the respective firms.     

Knowledge Management to Learning Organization Connection

The changes in the engineering-construction industry of the 21st century require organizations to take a more active role in developing knowledge management and learning organization initiatives. The need to both retain knowledge within the organization and focus on continuous human resource development throughout all levels of the organization is becoming a primary challenge throughout the industry. This paper addresses this challenge by focusing on the question of the link between knowledge management and learning organizations, and how to transform an organization from a focus on knowledge management to a focus on developing a learning culture. Based on a series of studies by the writers into the characteristics of both knowledge management and learning organizations, this paper outlines models of each of these concepts and introduces a bridge that details the level of knowledge management implementation that must be in place prior to an organization having the capacity to move to a learning focus. Additionally, the case studies conducted during the current study provide a basis for presenting potentially unsuccessful paths that may be selected by organizations during the implementation of a knowledge management to learning organization transition.     

Construction Business Competitiveness and Global Benchmarking

The focus of this paper is on developing “quality” and sustainable construction businesses capable of riding market shifts and growing both nationally and internationally. Knowledge of current management tools and techniques will no doubt prove useful in the quest for transforming a nonperforming business. However, no long lasting effect can be expected unless attention is paid to the fundamental principles and practices that govern organizational behavior, including the views an organization has of its customers, competitors, and itself. Commercial performance of organizations has increasingly become not only dependent on resource efficiency, but also on retooling and aggressive new business development initiatives as well as reduction in base production and operational costs. The human factors and mental models that people have within any given organization profoundly affect the success or failure of that organization. In this paper a critical review of the current concepts and techniques influencing construction organizations is offered with a focus on people and organizational improvements. A set of critical success factors is then distilled, followed by a systematic process of applying the same to achieve success.     

Coaching at the top: Assisting a chief executive and his team.

Coaching at the executive level of organizations most often includes a blend of individual, team, and organizational interventions. As psychologists, traditions lead us to rely heavily on our unique expertise in individual assessment and treatment in working for organizational change. To explore the limits of this tradition, this case study reports on an action research experiment in which strategy-driven group-level interventions were used exclusively to drive both individual and team change. It is proposed that the definition of coaching be expanded to include actions taken to enable a team to be self-correcting and self-learning without direct counseling from the coach. The article reviews the step-by-step process that enabled the executive team to self-design the new global organization in alignment with their strategy. Attention is drawn to the organizational assessment and feedback processes used at multiple points in the engagement. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Benchmarking, Benchaction, and Benchlearning: Rework Mitigation in Projects

The Australian government has issued several calls to improve the performance of the construction industry. A lack of available benchmark metrics has made it difficult, if not impossible, for organizations to identify areas to target for process improvement. A significant factor that has been found to contribute to poor organizational and project performance is rework. Using the results of a questionnaire survey, the paper presents and discusses a series of benchmark metrics for the causes and costs of rework for 161 construction projects. A generic framework for benchmarking rework at the interfaces of a project’s life cycle is proposed, and unstructured interviews are used to subject the proposed framework to validation by industry practitioners.     

Organizing Large Projects: How Managers Decide

Now tools will help managers design organization structures for large engineering and construction projects. An improved understanding of how managers decide in structuring project organizations is necessary to develop these tools and to assist managers in the systematic design of organizations tailored to meet project goals under unique situations. This paper reports a portion of results from research conducted to determine current practices in project organization design. The conclusion that adaptation dominates this process leads to several implications for industry professionals and researchers wishing to improve project performance. Recognizing the role of adaptation in current practices of organizational structuring will allow managers to avoid inertia and systematically design organizations. Researchers can assist by expanding variables in organization theory to better capture project situation and structure and by developing new tools to assist in systematic organization design.     

Model for Predicting Financial Performance of Development and Construction Corporations

Performance forecasting is central to aligning an organization’s operations with its strategic direction. Despite the panoply of approaches to performance predictions, relatively few published studies address model development of financial performance predictions for the construction industry. By analyzing the preceding relationship between financial and economic variables and financial performance, this paper proposes an innovative approach to predicting firm financial performance. First, hypothesis tests using data for 42 development and construction corporations listed in the construction sector of the Taiwan Stock Exchange between 1997 Q1 and 2006 Q4 uncover useful relationships between financial performance and financial and economic variables. Second, based on these relationships, a three-stage mathematical modeling procedure is used for cross-sectional model estimation, which is subsequently refined to create firm-specific financial performance-forecasting models for four sample firms. The out-of-sample forecasting accuracy is evaluated using mean absolute percentage error (MAPE). The results show that the cross-sectional model explains 78.9% of the variation in the cross-sectional performance data, and the MAPE values in the forecasting models range from 9.54 to 19.69%.     

Leader–member exchange and affective organizational commitment: The contribution of supervisor's organizational embodiment.

In order to account for wide variation in the relationship between leader–member exchange and employees' affective organizational commitment, we propose a concept termed supervisor's organizational embodiment (SOE), which involves the extent to which employees identify their supervisor with the organization. With samples of 251 social service employees in the United States (Study 1) and 346 employees in multiple Portuguese organizations (Study 2), we found that as SOE increased, the association between leader–member exchange and affective organizational commitment became greater. This interaction carried through to in-role and extra-role performance. With regard to antecedents, we found in Study 1 that supervisor's self-reported identification with the organization increased supervisor's expression of positive statements about the organization, which in turn increased subordinates' SOE. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Factors Affecting the Success of a Construction Project

Different researchers have tried to determine the factors for a successful project for a long time. Lists of variables have been abounded in the literature, however, no general agreement can be made. The aim of this paper is to develop a conceptual framework on critical success factors (CSFs). Seven major journals in the construction field are chosen to review the previous works on project success. Five major groups of independent variables, namely project-related factors, project procedures, project management actions, human-related factors, and external environment are identified as crucial to project success. Further study on the key performance indicators (KPIs) is needed to identify the causal relationships between CSFs and KPIs. The causal relationships, once identified, will be a useful piece of information to implement a project successfully.