KPI Nuts

Benchmarking and key performance indicators (KPIs) are changing all that and forcing the industry to pull its socks up in the process. While Egan and Latham before him have clearly identified the need for improvement within the construction industry, you can't improve until you measure. In the past, few firms had the mechanisms in place to even know what levels of defects they had on-site, let alone whether their performance was better than their peers.

Benchmarking and the associated measurement and analysis tools now springing up, will not only allow m&e contractors to give information to prospective clients about their past performance, but should also give firms a clear indication of how their business is performing and where improvements need to be made.

Newly launched, the set of ten headline KPIs for m&e contractors is the work of the Building Services arm of the Construction Best Practice Programme managed by BSRIA. BSRIA has monitored installations during 1999 and established benchmark performances for the following areas: client satisfaction with installation, design, service and o&m manual, defects to building services, predictability of cost and time, profitability, productivity and safety.

Those well versed in benchmark matters will notice that the KPIs mirror those produced for the construction industry generally by the DETR last year. Focusing strongly on client satisfaction parameters, they differ from the 12 KPIs developed jointly by the ECA and HVCA (see EC, June 1999, page 25).

Sensibly avoiding any duplication of effort, the intention is that the two will dovetail, with BSRIA's data being used for general indicators of where business improvement may be needed and the ECA/HVCA suite being the better bet for detailed analysis of contract management.

So how did clients rate the performance of m&e contractors in BSRIA's survey? "Overall, the results show the m&e industry in a favourable light," says BSRIA's Gerry Samuelsson-Brown. "Client satisfaction levels generally run out at about 80%." Interestingly, clients rated m&e contractors better than consultants in terms of design. "Clients thought that m&e contractors were more innovative than design consultancies," says Samuelsson-Brown, "and were flexible and non-confrontational." The findings perhaps indicate that closer integration of design and construction is what clients are looking for.

The results for the surveys on predictability of cost show that contractors are likely to go over budget by about 3% typically.

However, when clients were asked to examine the variations to contract on projects, surprise, surprise, these were found to be the culprit for poor cost predictability.

Of all the headline indicators, defects gave the best results. "There were very few really defective installations," explains Samuelsson-Brown.

The choice of procurement route proved to be a significant factor across the board. The poorest scores were achieved on projects procured by a main contractor, with a direct contract with the client being better and a partnering agreement best. At last there is proof that bringing in the m&e contractor early achieves the best results.

Obviously there is still much work to be done, but this work, alongside that of the ECA and the HVCA benchmarking teams, is providing useful pointers as to where the industry is falling behind.

Inevitably, with only a disappointing, though statistically representative, 3% response rate to BSRIA's survey, the results probably represent the best of the industry rather than a true average.

Nevertheless, BSRIA has ensured a very good mix of projects, with 51% new build, 49% refurbishment, a spread of private and public sector projects, and a mix of installations from m&e (41%), electrical-only (30%) and mechanical-only contractors (29%).

The averages given in the KPI charts will, of course, be updated as more data is put into the system.

With the likes of BSRIA's Benchmarking Club (see box Do you measure up?) set to refine and hone the parameters, now is the time to get yourself involved. The industry-wide information can then be tailored to your peer group, perhaps sharing data with other contractors in your area or other national m&e contractors, for example.

BSRIA is set to offer third party verification of procedures, and those contractors with good KPI scores will be starting to extract market advantage with clients very soon. Can you afford to be left behind?