Performance enhancers

Do you know how your tendering costs compare with those of your competitors? What about performance to time and cost predictions? Let's face it, exhaustive analysis of its efforts is not one of the industry's strong suits.

More importantly, perhaps, how can clients make informed decisions when selecting contractors if they have so little to go on? No wonder that in a recent survey by the Constructors' Liaison Group, only 12% of tenders said any method of assessment other than price would apply.

Help is at hand courtesy of the ECA. A joint inititaive with the HVCA and North West London Training Enterprise Council, has produced a benchmarking system which will allow contractors to measure their work and allow firms to focus on where changes to the business need to be made.

This is no navel-gazing exercise, however. As Stuart Burchell, ECA project manager for the initiative, points out: "If contractors are going to take the trouble to measure their performance, then they will want some market recognition for it. The better performing firms will want to project that." So what indicators have the working group come up with? By working closely with 50 contractors from the London Region to determine the critical factors in the project delivery process, 12 key performance indicators (KPIs) have been earmarked.

The 12 KPIs – the first four concern tendering, the next five concentrate on the management of contracts and the final three on quality – are very much a starting point in the process, and they will be honed as the project progresses.

Acknowledging it would be difficult for contractors to focus on all 12 KPIs at once, Stuart Burchell believes: "The four KPIs concerning tendering offer the most potential for headway in terms of business improvement, while the three concerning quality are the most difficult to grasp." Contractors will be able to judge their performance against the average achieved by the participating firms. Obviously, just 50 firms from the ECA and HVCA is hardly likely to be truly representative of the industry so, over time, the norm for each KPI will be differentiated according to the size of firm, the market served or the service offered as firms get on board.

Stuart Burchell hopes to double ECA members' participation over the next three months with a target of 200 firms within a year. The HVCA is similarly committed to getting its members involved.

Getting clients interested in the project is equally important. Burchell is currently talking to local authorities to encourage them to use KPIs for selection of contractors in terms of best value rather than lowest cost. "We are looking at tweaking the indicators to make them more customer relevant. In fact, local authorities are more interested in hard measures than customer satisfaction ratings." Customer satisfaction ratings do figure strongly, however, in the KPIs just issued by the Construction Best Practice Programme for use across the industry. Of the ten KPIs, seven relate to project performance –client satisfaction (product and service), defects, predictability (cost and time), construction (cost and construction time) and three are measures of company performance – profitability, productivity and safety. It remains to be seen how the ECA scheme will dovetail.

If scores become market sensitive then validity will become an issue. "We've not really faced that yet," admits Burchell. "Third party checks are a bit further down the line." But contractors need to make a start somewhere. As Burchell points out: "Before you can improve, you need to measure."