The Top 5 Essential Construction KPIs For Business Success

Posted on 21st June 2017 in KPIs

Written by Freya Hughes

Running a construction business means a lot of work to keep employees well-trained, safe and engaged in their jobs. With such a large volume of risk factors, with projects and workers alike, coupled with substantial upfront capital requirements, it is important to have a grip on these core construction KPIs. In this guide we look at the Top 5 Essential Construction KPIs you need for Business Success.

You cannot run a business without metrics. They should form the foundations of your business and, just like any good building project, you should have construction industry Key Performance Indicators (KPIs) for every department…or perhaps “department floor” in this instance. 

Visit our KPI Library – the place to find industry specific metrics so you can invest your time in measuring what matters

1. Construction KPI: Staff training

It may be tempting to opt for cheaper labour. In the construction industry there are such a lot of things that could go wrong, so having skilled people working for you will make a difference. It may be tempting to opt for cheaper labour but please, resist the temptation. The savings will be short lived.

Choose to invest either in skilled workers or in training. Having a mixture of workers will allow staff with less experience learn from those with good training, but take care here as efficiency will decrease. The best practice for this is to get each new member of staff you undergo a level of basic training and then for them to specialise. Many companies invest a lot of time and money into training, which is a great thing to do as employees will feel valued. You’d also save money in the long run as a valued employee will likely stick with you for a longer stretch of time.

2.Construction KPI: Average revenue per hour worked

Time is money, as they say. Managing your staff’s time effectively equates to profitability. Measuring this KPI will give you a solid idea of how much each hour of the working day is worth to your business. You will be able to identify the most profitable jobs that are offered to you, therefore working smarter rather than harder. If you can win jobs which don’t take much time, yet you can still charge a high amount, you’ll be seeing a positive result. If you’re getting held back by a larger job which won’t bring in as much, you should be looking to change the way you analyse project opportunities.

You should also be looking at whether the hours worked are adding up. Are your staff taking too long to complete a job? There are many questions to be asking yourself with this metric. Learn to calculate your revenue per hour worked here.

Health and Safety is important in the Construction Industry

3.Construction KPI: Health and safety accident/incident rate

Minimising your accident rate is one of the most important things you should do. If you are experiencing worryingly bad health and safety results, you must look inwards and see if you’re training your staff properly. If your team do seem to keep having accidents, look at the environment they’re in, the tools they’re using and see if there is anything that can be improved. This is a KPI which would benefit from being calculated weekly, not just monthly and also in comparison to other projects etc. Calculate your accident incident rate here.

4. Construction KPI: Time and cost rate

Ideally, this rate will be low. Keeping track of this KPI will allow you to better predict the length of time and how much cost will occur for the next job(s), therefore allowing you to put together more accurate quotes for clients. This will impact your customer service rating, and either help you obtain more clients – or lose jobs to competitors.

If this is a high rate, there need to be changes made to your business. Are your managers/foremen helping get the team motivated? Is finishing the job to a high quality a concern for your workers? A great way of keeping up with this metric is to hold frequent meetings with those who work for you, expressing the importance of efficiency. Get this data into a forecast so you’ll be able to show your team how efficiency can equate to more revenue, and with more revenue, there might be an option for team bonuses or pay rises.

5. Construction KPI: Amount of waste per job

Working with so many different materials will inevitably cause some waste. It’s your job to control how much there is. A high level indicates that due care was not taken during the job completion. This will be costing you both time and money as you’d have to order more materials and wait for their arrival.

Be it an issue with staff, or a machine not working to its optimum, identify the source of the problem. If you aren’t using all of the materials you’re ordering, you’re making a loss. Can you order less? Is it you doing the ordering? If not, why is the person doing the orders not getting it right? Find the root of the issue and act accordingly.

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