Research into Construction Industry Performance
The Centre for Advanced Engineering (CAE) has, supported by Building Research, undertaken some research into how best to measure construction industry performance – so that there is some objective data on how well the industry is doing, and to allow companies involved in the construction industry to benchmark their performance against the overall industry results. The Centre produces a handbook (57- pages) and a wall-chart on the New Zealand Construction National Key Performance Indicators (KPIs) based upon the most recent data, which are available from the Centre at a cost of $30.00 per set (plus postage and GST).

The purpose of the KPIs
Worldwide, the annual publication of KPIs has been shown to stimulate a significant number of construction industry companies – and their suppliers – to critically assess their performance, and to take positive action to instil a culture of continuous improvement. In particular, research into construction industry performance has been undertaken for some time in the UK. Much of the New Zealand work has been based on those UK results giving us an international comparator.

For the first time, the New Zealand construction industry has been measured and the results made publicly available. It is intended that information gathering to underpin the KPI measures will be carried out on a yearly basis, to demonstrate the trend and to highlight opportunities for improvements in performance. With this in mind, we ask you to assist with the data collection. Given the potential value of the KPI project to the New Zealand building and construction industry we would recommend your contribution to the project by providing completed project data to the Centre.

The premise on which the KPIs are published is that clients of the construction industry want their projects delivered:

• On time
• Safely
• Free from defects
• On budget
• Efficiently by Profitable Companies

and regular clients expect continuous improvement from their construction team to achieve year-on-year:

• Reductions in project costs
• Reductions in project times

It is anticipated that working groups representing various parts of the construction industry will produce further KPIs which address people management and environmental issues. These, together with the above largely economic performance indicators, will begin to address the whole sustainability agenda.

KPIs can be used to establish a basic system of measurement for these critical issues, for benchmarking performance against the national levels of achievement, and for setting improvement targets.This has enabled a benchmark comparison to be made with the performance of the UK construction industry. It is hoped that in the future will see more countries adopting these KPIs to enable wider international benchmarking.

KPIs in use
KPIs provide a simple means of assessing performance against the range of performance currently being achieved in the NZ construction industry. The main ways that KPIs can be used in the industry are:

• To provide a measurement framework for partnering and framework contracts.
• To provide evidence of best value in public procurement.
• To provide measures other than price to support procurement decisions.
• As a marketing tool.
• To meet the requirements of ISO 9001 quality management systems.
• To provide a health check as part of a continuous improvement programme.

Benefits of using measurement
When used well, as part of a consistent improvement programme, KPIs can offer significant benefits to construction companies/builders and their clients, including:

• Benchmark against industry performance, use lessons learned from the best to make targeted improvements.
• The better players are able to demonstrate that they can differentiate on performance, not just price, developing a barrier to poorer performers in the market place.
• Benchmark against the industry and other client organisations whether they have a repeat portfolio of ongoing projects such as retail organisations, developers and local government, or clients with one-off projects.
• Choose the better performers using informed information.
• Build contracts around incentives based upon performance targets.

Evidence from “best practice” companies shows that performance measurement and benchmarking can yield real benefits to companies by shining a spotlight on their performance and showing where action is needed to improve. However to be of value, the measurement system needs to be founded on the correct principles.

How you can help
CAE asks you to assist with their data collection. This would not be an onerous task as it would simply require the completion of a Client Survey Questionnaire (4 pages) for the finished project.

This questionnaire is targeted at the client and is to be completed by them – with the benefit to the contractor being the opportunity to use the completed questionnaire as feedback and to see how his performance compares with the national levels of achievement, and for setting improvement targets.

The contractor is only be required to complete a Contractor Safety Questionnaire (1 page) for the most recent 12-month period.

A sample of the above Questionnaires can be downloaded as a pdf file (see link above).

Please contact Scott Caldwell (s.caldwell@cae.canterbury.ac.nz) if you are willing to provide data for the survey or fill out the online form (see link above).