The majority of construction project claims result from impacts and delays over time.
The Most Important Metrics Construction Executives Need to Track & Why
For construction executives overseeing multifaceted projects, tracking the right metrics is crucial for successful completion. The amount of the potential metrics, KPIs, and milestones to track a project’s success–and the range of software available to help generate this critical data–it’s hard to determine which parameters you need to focus on and which can be considered ancillary.
However, according to a report by Constructing Excellence, 43% of construction firms prioritize financial goals over other factors, such as organizational excellence or continuous improvement.
While a plethora of data can be considered crucial for effective project management, traditional cost-based KPIs (i.e., financials) are lagging indicators–which, as Construction Dive points out, tell the story about something that already happened but can’t be changed.
Luckily, there are other schedule analytical metrics, what we refer to as project control metrics, that provide leading indicators of project performance–meaning, they give teams enough time to react to potential issues before they cause a significant impact on cost.
Why the Schedule?
The schedule is the only element that predicts and precedes project issues. By detecting problems in the schedule, executives can focus on risk in real-time.
Many different project control metrics can be pulled from CPM schedules. The best part is project executives already have access to their project’s schedule files, as they are contractual requirements in almost every commercial construction project.
The following KPIs provide everything executives need to know and more. A recent article in Autodesk’s blog Digital Builder points out that leading KPIs give a comprehensive overview of projects, enabling companies to achieve long-term goals while meeting short-term financial objectives. Read on to see why tracking these metrics holds the key for executives to build with confidence.
Project Control Metrics for Executives
By keeping track of the following metrics, project executives can catch and mitigate risk while there is still room for improvement:
Schedule Quality Index™
Schedule quality refers to the feasibility of a project schedule. Tracking it gives a gauge of whether or not the schedule is well-constructed enough to manage a project and whether the critical path, near critical paths, and total float values are currently accurate. This data gives executives a better understanding of a project’s overall health and helps determine if additional resources or adjustments are needed for project success.
Schedule Performance Index (SPI)
The Schedule Performance Index (SPI) measures the time efficiency of construction projects by dividing the earned value by the planned value of work scheduled to be completed. If the actual progress made at any time is simultaneously less than the expected progress, the SPI is less than one.
For example, an SPI of 0.8 is equivalent to the project achieving 80% of its intended, planned progress at that point. The further this number goes below one, the worse the earned value/progress is.
Critical Path Delay vs. Future Recovery
Tracking critical path delay vs. future recovery analyzes the total critical path delay days suffered versus the amount of recovery built into the future plan. Tracking it enables users to know the team’s ability to progress the critical path versus the amount of risk embedded in the future schedule to overcome historic delays.
Schedule Compression Index™
Schedule compression is a method used to accelerate project completion without sacrificing project objectives. A project’s schedule compression index measures how much work remains over a period of time and how that compares to the baseline. As such, tracking the schedule compression index gives insight into risk, primarily when compression is being used to cut corners, sacrificing job quality.
Doing so ensures that any changes made to the schedule maintain the project’s intended quality and minimize any inherent risk. For example, a schedule compression index of 25% means that the contractor is required to do 25% more work in the remaining duration of the project than was originally planned in the baseline schedule. Knowing this, executives can check in to see if this is feasible, asking questions like, have additional resources been added?
Project Health Index™
The project health index is a synopsis of all of the metrics above. Its calculation is weighted differently over different periods as construction projects are dynamic. Some metrics are more important at various stages, like the beginning of the project, as opposed to the middle or end.
For instance, the SPI is more important midway through the project than at the beginning. Conversely, schedule quality is more important at the beginning of the project, while schedule compression is a bigger risk later.
By tracking the project health index, executives can better understand where their focus should be directed, i.e., what projects need their immediate attention; where to intervene; when to initiate meaningful conversations; and how to manage their time more effectively.
How to Track Project Control Metrics
Construction executives manage multiple projects simultaneously and are ultimately responsible for the overall success of their business. However, the average profit margin in the industry ranges from 3-7%. Low-profit margins combined with the high-risk nature of the industry present construction executives with an overwhelming amount of pressure to succeed.
Additionally, construction executives don’t have the time to manually calculate or find the calculations for schedule analytics across their entire organization. And quickly accessing the right project information can be quite a challenge in construction. An AGC report noted that infrastructure projects require an average of 130 million emails, 55 million documents, and 12 million workflows. Of that information, only 4.5% of it is used.
Sifting through project data is difficult, as is having an inbox with thousands of unread emails. Let’s face it. It’s hard to focus on what’s import and what can wait, especially when overseeing the overall operations, managing finances, and taking charge of the entire worksite.
To solve this challenge, having access to all your project’s schedule data in one place yields excellent results. This data should provide a consistent view of all active project data and be easy to navigate. A great example is utilizing PowerBI dashboards, which allow you to “create a single source of truth, uncover more powerful insights, and translate them into impact.”
Want to see all your schedule data in one place and drill down into the details? Test out the Executive Dashboard:
Having a bird’s-eye view of a company’s full range of projects at a program level enables executives to view all the relevant data they need, giving them a quick and comprehensive understanding of their project’s performance.
The Benefits of Dashboards
Visualizing every project’s schedule data in dashboards has endless benefits for executives. For instance, if looking at schedule quality across all projects, executives can drill that information down into location, region, project type, or any other parameter, advising areas of opportunity and risk intuitively.
A dashboard that provides visual graphics enables real oversight and the identification of patterns across different sectors, regions, etc., to inform better, more strategic decisions. By pulling schedule data into powerful dashboards, analytic engines instantly provide organization-wide data in one place, making it easy to navigate and providing a consistent view of leading project performance indicators.
With the ability to cut and slice data based on specific metrics, executives can quickly identify the vulnerable projects and what makes them vulnerable. Furthermore, overseeing all the business’s projects side-by-side and looking at the same metrics enables a better understanding of the overall picture of an entire organization and subsequent aspects of it.
The SmartPM Executive Dashboard
SmartPM’s Executive Dashboard gathers critical construction data across all company projects, generating a macro-view of the entire portfolio and enabling quick identification of areas of risk and opportunity. Previously, identifying problem areas across a whole portfolio would be nearly impossible as all this information hides in the meta-data.
Now, the ability to glean project control metrics across an entire portfolio provides a high-level, quick way to see the lay of the land via specific meta-tags. The benefit of filtering portfolio-wide data brings risky projects to light as soon as they happen or are about to happen.
Furthermore, SmartPM’s Artificial Intelligence (AI) and Machine Learning (ML) enhancements utilize historical data to highlight trends according to specific parameters. With digestible, categorical information comes the exposure of problem areas and low-hanging fruit. These advancements give executives the knowledge necessary to know where to focus their time and implement a strategy before projects head too far down the wrong path.
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