Analysis of Contextual Challenges

Sir John Egan’s report, Rethinking Construction, challenged the industry to measure its performance over a range of its activities and to meet a set of ambitious improvement targets. Moreover, the purpose of Key Performance Indicators (KPIs) is to enable the measurement of project and organisational performance throughout the construction industry. Latham (1994) and The Construction Industry Board (1998) introduced the following key performance indicators (Figure 2.7.):

Figure 2.7. Key Performance Indicators’ Resource, adopted from Mbgua et al. (1999).

36 | P a g e Clients of the construction industry want their projects delivered: on time, on budget, free from defects, efficiently, right first time, safely, by profitable companies (contractors’ inability to make a profit was identified as a major reason for project cost and time over-runs in Sir Michael Latham’s report ‘Constructing the Team’ (1998)). Moreover, regular clients expect continuous improvement from their construction team to achieve year-on-year reductions in project costs and reductions in project times.

The KPI Pack (2000), with the support of The Department of the Environment, Transport and the Regions, the Construction Industry Board, and the Movement for Innovation, through the Construction Best Practice Programme, presents the construction industry’s range of performance using seven groups, but omits the more detailed elements of performance. These seven are listed in table 2.6 below, including their objectives and sub-objectives:

 Chapter 2 – Literature Review

37 | P a g e

PERFORMANCE GROUP

OBJECTIVES SUB - OBJECTIVES

Time Provide a suite of KPIs which facilitate measures of time performance improvement on a project by project basis, either within a single

company or within a market sector.

1. Time for Construction 2. Time Predictability –

Design

3. Time Predictability – Construction

4. Time Predictability – Design & Construction 5. Time Predictability –

Construction

6. (Client Change Orders) 7. Time Predictability –

Construction

8. (Project Leader Change Orders)

9. Time to Rectify Defects

Cost Provide a suite of KPIs which facilitate measures of cost performance improvement on a project by project basis, either within a single

company or within a market sector

1. Time for Construction 2. Time Predictability –

Design

3. Time Predictability – Construction

4. Time Predictability – Design & Construction 5. Time Predictability –

Construction

6. (Client Change Orders) 7. Time Predictability –

Construction

8. (Project Leader Change Orders)

9. Time to Rectify Defects

Quality Provide a suite of KPIs which can be used to measure quality improvements from the start of a project by measuring the number of ‘quality issues’.

1. Defects Headline 2. Quality Issues at

Available for Use Operational Period? 3. Quality Issues at End of

38 | P a g e Period

Client Satisfaction Provide a suite of KPIs which measure client satisfaction on a project by project basis which can be used throughout the supply chain. Use surveys to assess whether projects meet clients’ expectations and whether they are satisfied with the results.

1. Client Satisfaction Product – Standard Criteria

2. Client Satisfaction Service – Standard Criteria 3. Client Satisfaction –

Client-Specified Criteria

Client Changes Provide a suite of KPIs which facilitate measures of the extent to which a project has been affected by changing specifications during the construction phase, either within a single company or within a market sector.

1. Change Orders – Client Diagnostic

2. Change Orders – Project Manager

Business Performance

Provide a suite of KPIs which facilitate measures of

business performance on a project or company basis along the supply chain, either within a single company or within a market sector.

1. Profitability (company) 2. Performance

3. Productivity (company) 4. Return on Capital

employed (company) 5. Return on Value Added

(company)

6. Interest Cover (company) 7. Return on Investment

(client)

8. Profit Predictability (project)l

9. Ratio of Value Added (company) Repeat Business (company) 10.Outstanding Money

(project)

11.Time taken to reach Final Account (project)

Health and Safety Provide a suite of KPIs which facilitate measures of the frequency of lost time and reportable accidents and

1. Reportable Accidents (inc fatalities)

2. Reportable Accidents (non-fatal)

 Chapter 2 – Literature Review

39 | P a g e fatalities. 3. Lost Time Accidents

Operational 4. Fatalities

Table 2.6.Key Performance Indicators published by the UK Government (2000) The above factors have been used since 2000 and reports from 2010, 2011 and 2012 show a significant input in the development of construction experience in the last 13 years. The Minister of the Department of Business, Innovation and Skills has mentioned the importance of project performance indicators in maintaining and building project performance but the timely delivery of projects has declined over the last year. A survey conducted by the Ministry shows that 79% of contractors’ turnover was attributable to repeat clients. Therefore, the message disseminated within the construction environment is the need to strengthen ties with existing clients and secure profitable repeat business. In particular, according to the same report (KPIs, 2012), clients had a higher level of satisfaction on projects where KPIs have been deployed to monitor their project. Therefore, it is vital to sustain project managers’ interest on how to maintain their project performance at high levels. Due to the complexity of evaluating all the above key performance indicators, the researcher focused on testing the following four KPI sub-objectives (table 2.7).

KEY PERFORMANCE

INDICATORS

SUB - OBJECTIVES

Time

Accurate Time Prediction – Design & Construction

Cost

Accurate Cost Prediction – Design & Construction

40 | P a g e Raise quality issues

Business Performance

Return on Investment (client).

Table 2.7: KPIs used for the current research purposes

The above table was used in the research to design the interface of the conceptual framework and to design the survey and the structured interviews.

2.4. Summary

Thus, inefficiencies in the technical, human behavioural and contextual skills of any project need to be improved and developed by enhancing the project manager’s main roles – accountable, authoritative and responsible – into a more interactive role engaging with people ‘on demand’. This interactive role will provide project managers with the ability to enhance problem solving and decisional quality, before and during the project life cycle, and with the ability to predict a problem in advance, or to react to a problem by having facts and/or data and expertise of what is required. This lies in a proactive behaviour whose antecedents are: having a flexible role, co– worker trust, self–efficacy, being change oriented, control appraisal, job autonomy, proactive personality and supportive supervision.

The enabling relationship is defined as team collaboration. The key identified characteristics of team collaboration according to the secondary data are: individuals (skills), teams (roles, relationships, shared awareness/knowledge and common ground), tasks (structure), support (tools, networks, resources, training, knowledge management and error management) and context (organisational structure). Subsequently, in order to support collaboration, integrated collaborative technologies need to be used.