'Don't use KPIs as score cards' says industry board

by Graham Ridout



Don Ward, chief executive of the Construction Industry Board, has urged clients not to choose contractors or consultants on the basis of how they score on key performance indicators.

"Clients should be asking contractors and consultants: 'How are you using your KPIs to improve, not what were your scores'. It is not a smart move to use KPI scores as cut-offs when selecting contractors or consultants," Ward said.

Ward made the plea when revealing the results of the construction industry's KPIs last week. The KPIs were compiled from a number of sources with the Construction Clients Forum providing the feedback for clients' satisfaction with contractors and consultants.

Ward qualified the clients' survey by remarking that some of the negative movements recorded could be attributed to "clients becoming more demanding" and "perhaps the industry is being more honest about the time a project should take and not being too compliant in agreeing with what the client wants to hear". He added: "It shows the industry is working better with clients."

This year's results showed a rise from 58% to 63% in the number of projects finishing over programme. The number of projects finishing on time dropped from 33% to 21%. The average delay before starting on site rose from 53 days to 71 days, while the average delay between actual completion and anticipated completion moved marginally from 48 days to 47 days. The only good news was that the number of projects finishing under programme rose from 9% to 16%.

The CCF also recorded a significant drop in the number of projects keeping to budget (down to 12% from 55% in the previous year). While there was a marked improvement in the number of schemes finishing below budget (43% for 1999-2000 compared with 13% in 1998-99), the number of schemes finishing over budget rose 13% to 45%.

However, the average total cost of overspending on a project, comparing contract sums to final account, dipped from 0.75% to 0.48%.

Although consultants did not fare too well in some questions, they did rate highly in their ability to come in at or below the budget set for their services - a figure of 76% was recorded. By contrast, the ability of contractors to finish on or below budget was significantly lower at 54%.

Clients' overall satisfaction with the quality of finished product dipped from 7.9 to 7.5 measured on a scale of 1 to 10.

Changes in the way defects were measured this year mean the results are not directly comparable. Nonetheless, there was an increase from 5.9% to 7.6% in the number of projects that experienced major defects that substantially delayed handover.

CIB chairman Chris Vickers said: "The industry now believes KPIs are not a waste of time. They are a business benefit and businesses will benefit by sharing them across the industry. The industry is improving and it is important to get that message across."

Plans are also afoot to introduce additional KPIs covering respect for people, sustainability, and whole-life performance.

Ward said the CIB hoped to have a report on the respect for people KPIs by this summer. "The expectation is to test the KPIs on some of the demonstration projects and get some feedback," he said.

Terry Rochester of the Construction Clients' Forum confirmed forum members want to use respect for people KPIs to test whether there has been a change of culture among contractors and consultants.

Ward said work on whole-life performance KPIs was being progressed by a forum set up by the Building Research Establishment. "We will be looking at whole-life performance as well as whole-life cost predictability," said Ward. The latter will use information garnered from projects, particularly private finance initiative schemes, and compare the cost estimates made during the design phases against their actual repair and maintenance costs.

Work is also proceeding on preparing KPIs to measure sustainability. Owing to the complexity of making comparisons on certain environmental issues - such as whether it is better to use timber (which is a sustainable resource) as opposed to steel (which is energy intensive to manufacture but is stronger and longer lasting) -Êno date is being given for when KPIs might be available.

Ward also did not dismiss preparing KPIs to cover firms' payment performances to their subcontractors and suppliers. This is sorely wanted by organisations representing specialist contractors, which point to late payment and other forms of payment abuse as being one of the largest concerns of subcontracted firms and suppliers. Ward said the CIB is contemplating looking at trends in procurement and how these affect payment.