Setting up for success: KPIs for construction teams

Goals are powerful – and a key part to running a successful construction company. They provide a clear focus, keep construction employees motivated and set targets for everyone to work toward together.

But what does good goal setting look like?

Creating the most valuable construction goals for your business includes stakeholder buy-ins from owners, down to the mid-management and field workers. That’s because change management that can reverberate across the entire organization involves a unified vision and shared purpose.

Get to the why first with your OKRs, then build the how’s with KPIs around it.

Why set OKRs and KPIs?

For starters, OKRs stand for objectives and key results, while key performance indicators (KPIs) show the success metrics and targets you need to track. Measuring KPIs without a clear business goal framework is like a shot in the dark. Getting lax with performance management can work for the time being, but at some point, your misaligned goals will catch up and worse, undercut your bottom line.

De-risking starts with covering your bases on the financial, operational and management levels. Often, financial KPIs give you a holistic view, but you need granular levels of detail to understand how your construction business stacks up against your competitors, industry and market as a whole.

“If your KPI is to measure how much time is lost to RFIs, you can now measure this lost time against the time that would be saved if machine learning-generated documents reduced the errors that cause RFIs by as much as 80%,” says Eitan Tsarfati, CEO & co-founder at SWAPP, an AI-driven optimized planning platform.

“A construction company that expects 80% less RFIs on a project can estimate that fewer hours are needed to manage this aspect of the project. An estimate of fewer management hours, of course, means the ability to bid more competitively.”

Solve construction efficiency leaks. Prove concrete results. Win more business.

How to set construction KPIs

The best goals should be S.M.A.R.T. ones. What does this mean exactly? Here’s a breakdown of this method:

• Specific – What exactly will be accomplished? And how?
• Measurable – What does success look like? What data will measure the goal? Include specific numbers.
• Achievable – Is the goal realistic and achievable?
• Relevant – Why is the result important to your business?
• Time bound – When do you want to accomplish this goal?

However, there’s no one-size-fits-all approach when you choose which essential construction KPIs align with your growth strategies. For example, benchmarks are different for residential builders compared to retail builders.

How do their construction KPIs differ? Home builders often go for a design-build or integrated project delivery method, while commercial contractors tender their packages using the traditional design-bid-build model.

The challenges they face differ, too.

Comparing apples to oranges often puts your construction firm in a blind spot, and it’s certainly a position you have to look out for if you want to set up your KPIs for success.

Executing KPIs with construction technology

Enter construction technology. In the current era, data saturation is already prevalent. Mobile apps, BIM models, digital twins and other construction tech – it’s easy for information overload to take over.

And when teams choose the tools first before setting the strategic direction, more chaos ensues. Investments flop. Digital transformation is altogether scrapped. Zero buy-ins. Financials err on the negative.

Now, how do you make sense of these large construction datasets to predict favorable outcomes? We go back to square one with data mining.

Tap into the integrations

For KPIs to work, construction management platforms can be paired with business intelligence tools and partner integrations to get the most value when you de-silo workflows.

“The schedule does not alone explain the reasons for a delay to the start or finish of any particular activity. Delays occur because of late material deliveries, a discovery of a design drawing error, less availability of skilled field labor, safety situations, a change order or many other possible reasons,” Tsarfati said.

Integrations and custom reporting services turn pieces of data into true key performance indicators useful for future decision-making. Data collected can help managers and leadership predict if their projects will stay on schedule and mitigate potential risks and delays likely to arise as the project progresses.

Stay lean or scale up?

Pandemic aside, how can construction KPIs and input metrics lower down costs for external factors such as labor shortages, supply chain problems and inflation?

Staying lean is no question, albeit temporarily. To stay on course, control what you can. If your construction KPIs back up the data that you’ve built enough runway to weather through the storm, stay lean or scale up as you must.

Supply chain problems and labor shortages can make costs go haywire on demand, but construction project managers can stay in control if they can allocate their resources efficiently with an upskilled workforce and digitized tools. This can reduce rework and change orders, saving time and money in the long run. 

It takes inspirational leadership from higher-ups to push field workers into translating this vision to reality. Bottom-up or top-down, KPIs differ for each stage needing their own suitable team champions.

Construction KPIs on the job site

Once you deploy your crew on site, you’ve got another set of operational KPIs to deal with. How do all of these lagging and leading indicators add up to your day-to-day project completion ratio? Consider some KPIs:

• Schedule and cost variance: Are you hitting your milestones on the work breakdown schedule, considering estimated versus actual budget and timeline?

• Safety incident rates: What’s your lost time injury rate compared to OSHA’s industry average rate? Lower frequency rates result in credibility, less employee turnover and decreased insurance premiums.

• Percentage of labor downtime: Can you gauge your productivity level and get a number close to 0 (downtime hours/total hours), meaning your field staff works 100% all the time?

Field KPIs that track and predict these factors can provide insights to take on more projects, manage procurement and increase hiring as needed. “Having the staff available to manage a project is one of the most important determinants of business volume or target revenues,” Tsarfati shares.

“This may seem simple, but a company that has a backlog of many projects and a limited number of project managers and field superintendents needs to know if projects (1) are starting and completing as planned, (2) encountering delayed start times because of design document or permitting issues (3) and are adding staff considering the labor productivity and safety metrics.”

5-point plan: Repeat for scalability

In conclusion, here are five steps to put KPIs into action for your business:

1. Know your numbers in real-time data sync and invest in cloud technologies with real-time data sync from field to office.
2. Get buy-ins from each stakeholder, and deploy the OKR roadmap with key teams initially.
3. Incentivize participation and align rewards with the employees’ morale.
4. Track, measure and analyze feedback from employees.
5. Evaluate the impact of historical data, and pivot KPIs accordingly.

Are your construction teams right on track with your goals and hitting KPIs? Schedule a demo today and see how you can leverage Buildertrend construction software to dig into your data and reach your business goals.

This is the type of tech that can take your residential construction business further, faster.