In the construction industry, knowing your Key Performance Indicators is crucial to achieving your strategic objectives, both financial and non-financial, when assessing and managing each project. But are your management teams assessing the right performance measures?

Typically, the key performance indicators (or KPIs) include:

• costs incurred and costs saved in each project
• time spent and time of project completion
• and potentially even quality issues specific to the project.

 

But, is that enough?

Most analysts will say that a more in-depth view into your company will propel your business in the right direction quicker, and the most effective and productive way to gain this crystal clear vision is with predictive KPIs.  

Don’t Forget to Keep Your Eyes on the Road

We’ve all heard the phrase, “Hindsight is 20/20.”  There is no denying the value that past performance indicators bring to the table, but there is also a good chance that we will not arrive to our destination safe and sound if we lock our focus on the rearview mirror.

Historical data is an essential player when it comes to measuring business performance and achieving your strategic objectives, but alone, historical data does not paint a complete picture. It is the predictive performance indicators that provide the necessary insight into future challenges, opportunities, and trends.  These are crucial to your management team’s ability to make proactive moves.

Some examples of predictive and forward-looking KPIs are:

• The buy-out process. The buy-out process begins as soon as the project is awarded. Effective management teams will keep constant track of the buy-out percentage.  Slow buy-out periods can be analyzed and predicted if monitored, allowing for planning in areas of the business where needed.
• Development of bids. Some predictive data surrounding the bid process that could impact your company’s profitability are:
  • The number of pending bids out at any given time.
  • Active prospects and probability of winning bids.
  • Marketing efforts that are working and those which are not.
• Inventory management. The risk of over-purchasing is great in our industry, and when unneeded inventory piles up, your cash flow is affected. A simple exception report can compare monthly purchases with unchanged primary location to encourage use of the current inventory prior to re-order. This analysis gives management teams insight into ways to improve inventory ordering systems, increasing margins and cash flow at the same time.  
• Equipment maintenance. Daily walk-around inspections can provide reports that allow management teams to predict and eliminate equipment downtime based on trends.

What Makes Sense for Your Company?

Knowing which KPIs to select for analysis can be difficult and time-consuming. The most efficient way to determine which KPIs make sense for your company is to begin with assessing your successes and your mistakes.  

Identifying your successes involves determining why these projects were so successful. What was different? Can you attribute the success to better planning? Was there better communication?  Did collaboration play a role in the success? Did you under-promise and over-deliver? If so, why and how did your teams make that happen? Build your KPIs based on your successes.

Next, embrace your mistakes as value brought to the table. Create a list of the projects that were less than successful and dig deep to determine what lessons can be learned from the experience. With this knowledge, KPIs can be created to avoid the same mistakes.

Although, cost, time and quality are all effective measures of business growth, they shouldn’t be your only focus. No one has a crystal ball to look into the future, but predictive analysis and especially predictive KPIs is the next best thing.

Keep digital tools such as eesyQ in mind when it comes to looking for predictive analysis reporting software to easily implement predictive KPIs into your operations and boost your bottom line. Check out the advanced software features and benefits on our website and reach out directly to us for a free demo. In just a few minutes we can show you how eesyQ can make a positive impact on your company’s profitability for less than seventy cents a day.