This is primarily written about the Australian residential construction market.
What is Construction Management?
To understand how to manage something we must first identify what it is. The four main tenants of construction management are time, budget, quality and safety. Additional items that are also a central responsibility of construction management are regulatory compliance, supply chain management and reporting.
This article focuses on the management of construction time; in later posts I will discuss the other essential elements.
To manage the timely construction of any project you must ensure that all items are properly planned for, including materials, future labour requirements, regulatory and compliance requirements and construction difficulties identified and mitigated, amongst many other things. I am going to concentrate on measures of timely performance, and discuss their positives and negatives.
Construction Time Measurement Strategies
There are many methods of measuring construction performance, and they vary significantly in approach and emphasis:
Reporting periodically (usually monthly) on duration taken from the start of a stage of construction to the end of the stage (e.g. frame, brickwork, fit out, etc.). These are averaged for each stage across all jobs where that construction stage has been completed, in that period.
This allows comparison across multiple supervisors, but is very simplistic as it assumes all contracts should take the same duration in the same stage. It is also prone to significant ups and downs due to the low number of contracts stage completions within a period (anything below seven stage completions makes the statistical average dubious). The other downside to this is that at a monthly average you don’t get the opportunity to resolve problems, you only report on them. It is a good reporting strategy for quarterly, half yearly and yearly supervisor performance charts, and to see the overall average movements across all the supervisors.
This is about placing a theoretical weight against specific milestone tasks in the contracts construction program, and therefore, recording the completion of these tasks during a time-frame, rewards the supervisor of the job. This can be reported per contract, per supervisor or per construction manager.
As a relatively common strategy it aims at weighting different elements of the construction program and links reward accordingly. It is normally a numeric value associated with each milestone, and therefore easy to statistically analyse to identify figures such as sum of value per week and average weekly value for lifetime of a contract. The downside to the weighted markers approach is that it rewards progress on a small subset of the tasks, and therefore progress might be made such that the numbers look good, however significant other works may be left languishing and the numbers won’t tell you this story.
Laying down an ideal world expectation of the construction programme (baseline), allows for comparison at any point in the programme of current forecast against the baseline laid down at the beginning. You are then able to state whether you are ahead or behind the baseline, and give this a numeric value.
This is normally a base measure, which other statistics are gleamed from. Important things to consider are, ‘how realistic is the baseline?’, ‘does the baseline duration adjust with contract complexity and size?’ and ‘do delays outside the control of the construction team get adjusted into the baseline?’ You can also see slippage from the baseline, so that you can easily identify areas of construction issue to be improved. The down side of this is that it consists of a singular number recorded at a point in time against a contract, and therefore is difficult to use to identify trends and averages.
Days of Work Achieved per Period
This measures progress per week against the contract, by measuring the forecast number of days to completion at the beginning of the reporting cycle and then comparing against the same state at the end of the reporting cycle. This gives the metric of days of progress achieved per period, which is a measure of how much closer are you to the end of the project. It allows the complete construction programme to be performance managed, as forgetting items or delaying them will eventually push out the forecast and hence will reduce the number of days progress per period. The issues with this metric is that it can go negative in short periods, and that the construction programme forecast needs a level of accuracy, that can only be achieved with complex project management systems.
At the end of the day, revenue needs to be achieved, and a very common metric is the measure of revenue achieved per period. This is an easy state to collect, and concentrates the supervisors on the important numbers.
The downside to revenue, is that it becomes a numbers game, pushing claims into different periods depending on requirements. This is then very visible to the client, when they check their home against the claim, but the roof isn’t on! Also the inverse happens where a supervisor might delay a claim by a day or two to smooth out for a bad month coming up, messing with important cash flow.
Actual vs Target vs Forecast
None of the performance measures above have included any target setting, and there is no measure of performance against targets. Targets are typically used to get team members to set realistic expectations and manage themselves towards them; a very powerful motivator! This process of target setting can be done on any of the above metrics (and others), but is a very powerful tool when comparing last periods’ target versus actual, then planning for the next week by creating targets from the forecasts (with minor adjustments agreed between the manager and the supervisor).
A powerful tool, but it requires good processes to ensure it works successfully. The method works best when interim reporting is available to the construction team so that they can measure their own tracking against the targets set for themselves.
I have highlighted some of the more common strategies for used construction time performance management, which hopefully gives you a taster of the different methods available. There is no ‘one size fits all’, but it is important to evaluate how to performance manage the most important part of the home builders process; the construction.
In the next article I will be discussing Supplier Performance Management. What metrics are available and how they can be utilised?