Project Margin Variance or Project Cash Position? What are the top Analytics KPI’s for the construction industry?
Contributing: David Clemens – SAP Industry Solution Marketing; Ravi Rathi – SAP EC&O Industry Business Unit
The ability to access and analyze business process data is necessary to successfully manage construction projects. But what key performance indicators (KPI’s) are the most important to managing your business? Knowing what KPI’s will provide the insight for your unique construction company might be the most important requirement of all.
The emergence of enterprise data and information is being used to measure business performance by creating “bench marks”, “yard sticks”,“score cards”, or just “reports”; all types of Performance Management instruments. Typically construction businesses have measured their performance, only looking at financial information; however, managing project execution and resource utilization is also crucial to a construction firms success. Now, an abundance of non-financial information coming from the enterprise systems can be tapped into as well, to develop key performance indicators (KPI’s). A construction firm, more than ever, needs KPI’s to effectively manage the business.
With nearly flat construction growth, especially in the US, projects are scarce, bids are competitive and so keeping a healthy project margin is vital. Now, with enterprise Business Intelligence (BI) solutions, companies have access to capabilities to retrieve the data, make sense of it and establish reporting, score cards and operational dashboards (dashboards are not just for the executives anymore!)
BI solutions can provide these KPI’s.
It’s easy to see that KPI’s are very necessary to successfully run projects and construction business. No company today, whether it’s a general contractor, or highly specialized EPC can afford to know “what happened?” and then make adjustments. Today, better operational and financial performance requires each business area to know “what’s happing, now?”
Maybe more than any services business, project-based engineering and construction companies require a broad scope of focused; informative KPI’s in order to measure project health. Here are several examples of KPI’s that some of the leading construction firms use today:
The list included here is just a sample. There are more KPI’s, some may be very unique to an individual construction business, but the majority are proven as best practice KPI’s. Knowing what to measure in your construction business is the first step in gaining better control of your operations and maintaining healthy, balanced financials. With many best-practice, industry specific KPI’s available, there is an easy way to start, by choosing what’s right for your business. Does your firm have established KPI’s. Are BI solutions being leveraged to create dashboards and scorecards?
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Please let us know your go-to KPI’s in the comment secion below.
Don’t see it listed? Feel free to suggest something.