Common KPIs for the Construction and Trades Industries

It’s an exciting time to be in the construction industry in America. As the nation recovers from the impacts of Covid shutdowns and economic slowdown, and enters a period of growth, the construction industry stands to be a major player. The Infrastructure Investment and Jobs Act promises to renew and rebuild America’s aging highways, roads, and bridges and will require the muscle of the construction industry to get the job done.

So how do you measure success in your construction business? The metrics you choose now will help shape your company’s future. Key Performance Indicators (KPIs) offer you the opportunity to gauge and monitor vital aspects of your business. Let’s take a look at what they can do for you.

Why KPIs Are Important

Tracking your company’s growth is a great way to spot minor troubles before they become major headaches. But which metrics are most informative? Do you measure your company’s success by new contracts signed, increased investment in equipment, or number of new hires? The metrics you use should provide useful timely information that helps you assess where your company stands and where it’s heading.

So what goes into a robust and effective KPI? When choosing the most appropriate KPIs to gauge your company’s growth, ask yourself these 5 simple questions.

  • Is the KPI specific?
  • Does it accurately measure progress?
  • Does it focus on achievable goals?
  • Does it use benchmarks to gauge progress?
  • Does it address a specific time frame?

A good KPI will reflect your company’s story and while setting clear goals for the future. And a robust set of KPIs will help you see how various departments and teams interact, promoting increased efficiency and highlighting any pain points in interdepartmental coordination.

A robust KPI should be reflective of your company’s plans and goals, should be shared with stakeholders, and should be updated to reflect any substantive changes in the dynamics of your construction business.

Why Construction Leaders Should Care

How do you track your company’s success? Do you look at new contracts signed, jobs completed under budget, or some other measure? Most companies tend to look at the financial bottom line, rather than at organizational pain points that sap efficiency. If you’re neglecting organizational resistance, you may be allowing your company to lose money and not even know it.

So when thinking about KPIs, it’s essential to examine the dynamics of your business, and to consider what actionable items your performance indicators may reveal. For example, you may learn that time lags in receiving needed materials are slowing your responsiveness. Because of what you learned from the KPI, you can now take action to reduce those delays and boost project efficiency. Similarly, KPIs can alert you to potential hazards, and can help you compare performance from job to job.

Common KPIs in Construction

While many construction managers prefer to look solely at financial indicators, KPIs can reveal more about your business and its processes, while alerting you to potential gaps in efficiency. Here are some performance metrics you may find useful…

  • Traditional Cost & Profit: The bottom line is perhaps the simplest measure of how your company is doing. Often, however, it doesn’t reveal the full picture.
  • Safety: If you’re skimping on safety to get jobs completed on deadline, you may not be saving at all. A safety issue or workplace injury can result in significant downtime for injured workers and damaged equipment. It can also result in disability claims and even lawsuits. Don’t make safety a back-burner issue. Use your KPIs to ensure you’re running a safe job site on every project.
  • Quality Control: Chances are, your company prides itself not only on timely work, but also on the quality of the build. Having architects or engineers on site can help increase efficiency and spot potential problems before they become costly. Having a KPI that focuses on quality control helps ensure that your builds are the best they can be–a great way to avoid dissatisfied clients. You may, for example, choose to track defects identified, rework costs, and site inspections (passed or failed).
  • Employees: Worker job satisfaction is an important indicator of the health of your construction business. Workers who feel secure, safe, and content in their jobs will likely show lower turnover rates and produce better work. By gauging employee satisfaction and turnover, you may learn how to improve retention of skilled workers, a money-saver for your business.
  • Performance: Gauging worker performance is another way to assess your company’s health. KPLs can help you look at the daily revenue generated versus the amount of time and materials wasted.
  • Subcontractor Inventory: The difference between completing a job on time and on budget often depends on subcontractors. Do your subcontractors have sufficient materials in stock to complete the project, or will there be reordering delays. Questions like this can help you spot waste and inefficiency in daily work processes.

Work with a Professional

The success of your business depends on sound financial planning. Why leave the future of your business to chance. At Moskowitz LLP, we’ve built our reputation partnering with businesses like yours. We can help you assess your company’s current position and help you build a strong operational and financial plan to sustain and grow your company. Don’t go it alone. Be sure a Moskowitz representative is in your corner. Contact us today!