The Top 5 Key Performance Indicators (KPI’s) for Construction Businesses

The Top 5 Key Performance Indicators (KPI’s) for Construction Businesses

When running any business, Key Performance Indicators (KPI’s) are an essential part of enabling you to achieve your business goals. Businesses from a wide range of sectors and industries make use of KPI’s for the success of their business, and the construction industry should be no different to the others.

However, how do you know what KPI’s you should be using?

That is where the expert business advisors at Quarles BFS come into things. We have put together this handy guide with the Top 5 KPI’s that you should be using to track the success of your construction business. So let’s get started.

1. Average Revenue Per Hour Worked

First and foremost one of the most important things you should know is the average revenue per hour worked. This basically means how much are you earning for each hour your staff members work. The reason this is so important to know is that it will help you identify the most profitable jobs to take on, so you can focus on winning similar projects jobs in future. To work out a project’s average revenue per hour worked KPI, simply take the number of hours it took to complete the job and then divide it by the revenue earnt for the job completion.

2. Waste Per Job

Another KPI that is used to help assess profitability is by measuring the waste per job. By the nature of the construction industry, there will usually be some unavoidable waste on each job. However, if you notice large amounts of waste on your jobs, this is a red flag for you. Look into what is causing the wastage and to put measures in place to decrease waste levels in future, which in turn will increase your profitability.

Check out: Top 10 Problems Facing the Construction Industry in 2017

3. Health And Safety Incident Rate

This is something that is very important to the construction industry as it is a high-risk industry that is more prone to incidents and accidents than other industries. Any health and safety incidents may impact your business in downtime due to staff not being able to work and worst case it may also incur your business legal and medical costs. To work out, this KPI takes the number incidents and divide it by the number of employees you have.

By tracking this KPI, you will notice any trends in your Health and Safety Incident Rate and will, in turn, be able to take necessary action to reduce this in future.

4. Rework Rate

Having to complete rework is the bane of any construction business. It will cost you time and money, along with impacting your client’s satisfaction with the job and likelihood to offer you future projects. This is why making your rework rate a KPI is so important when trying to improve your business. Your Rework rate is measured simply by dividing the number of hours spent on rework by the number of hours in each project.

5. Training And Qualifications

Knowing your workforce is up to speed on all training and regulation required qualifications is just as important as knowing what your profitability is. The construction industry is a very risky industry to begin with, which means there are a lot of regulations in place to ensure that there is as little risk as possible to your employees and the public. By keeping track of your employee’s training and qualifications, you can help mitigate risks that arise when staff do not receive sufficient training.

Check out: 5 Tips To Recruit The Top Construction Workers In Perth

Now there are a lot more KPI’s that you could and should track when it comes to your business, however, as each business is unique no two businesses KPI’s will be exactly the same.

Your KPI’s should be based around helping you to effectively achieve your business goals and objectives. For example, if your goal is to increase profits then you will include a lot more KPI’s around cost management and profitability.

Though no matter what your business goals are you should have included, as a minimum, the above 5 KPI’s as they are all essential to the function of any construction businesses success.

If you are not sure exactly which KPI’s your business should be focusing on, give the expert business advisors at Quarles BFS a call.