It's not just about the money.
Imagine you’ve just picked up the keys to your new property. Congratulations! You’re going to turn this empty shell of a building into the most successful gym in your town. You’ve established your brief, so you know exactly what you want. You’ve set a budget and secured funding. You’ve engaged a construction firm who assure you that they can successfully deliver your project.
How will you measure the success of the project? Unless you have measurable KPIs, it will be hard for you to judge whether your contractor has delivered what they promised. If they haven’t, your gym may not be ready to open on time and delays will definitely cost you money.
Equally, if the build is completed on time but the quality of the finish is shoddy, you may struggle to attract as many customers as you’d planned. Finally, you need your build to be completed safely; construction is dangerous work and the last thing you want is for anyone to be harmed during your project.
Measuring progress against the agreed budget and timescale is the obvious thing to do but it may not tell the whole story. Best practice is to break down your KPIs to three main areas for measurement: quality, cost and safety.
Quality
At the outset of your project, requests for information (RFIs) from your contractor can give an early warning of impending quality issues. Of course you want your contractor to have fully understood your brief, and ask questions to clarify, but an excessive number of RFIs may indicate that your contractor is struggling to understand what’s required. Either your brief is not clear enough or your contractor is not reading the supplied information properly. The quality of the project delivery may be under threat either way.
The number, complexity and value of changes to the scope of works should be tracked as part of your quality KPIs. It isn’t uncommon for a client to have a few minor changes of mind as a construction project progresses. However, a high number of complicated, high value changes could indicate that the brief was not sufficiently developed to deliver what the client needs. It could also indicate that your chosen contractor was not able to deliver the project as specified and needs to make changes according to their capabilities.
When your project reaches completion, it is normal to expect a few snags. Nobody is perfect, after all. You should measure the number of snags and the time it takes to close them out. Minor decorative snags probably won’t affect your ability to open your gym, but they are still defects. They need to be addressed quickly.
We would judge that a project with snags that prevent you from using your property is not completed. We have, on occasion, had a contractor try to convince us otherwise but, if you can’t open your gym, the project definitely is not finished.
Cost
Of course, it is critically important to control the cost of your construction project. At the most basic level, you need to be sure that the cost of materials and labour are within budget so that you will be able to afford to finish the project. Regular dialogue with your contractor will give you the information you need to predict and control these expenses.
A less obvious expense, which is just as important to track, is the expense of delay. Hopefully, your project manager is working with your contractor to guarantee that your project will be delivered on time but, in the event that you have delays, you can work out what that costs you. This is known as Liquidated Damages and is equal to your predicted gross profit for the period of delay. For example, for a delay of one week:
Turnover £10,000
Expenses £7,500
Liquidated damages £2,500
Thus, a delay of one week will cost your business £2,500.
Safety
Ultimate responsibility for Health and Safety compliance on a construction site lies with the client. You must ensure that adequate resources are allocated for this.
Health and Safety is a large and important topic, which we will discuss in more depth in a later blog post, and you should include it in your KPIs. Example metrics could include number of accidents, number of near hits and number of unauthorised accesses to the site.
Measuring project KPIs is a great way to keep control of the progress of your project. It makes sure costs and timescales don’t go out of the window and your finished construction is of high quality and safely delivered. If this all seems like a lot of hard work, don’t worry: a good project manager will expect to measure these KPIs on your behalf and report any worrying trends to you.
If you would like complimentary advice on how to measure your project’s KPIs, please get in touch.
Author
Elizabeth Hewitt
Director of Marketing at Iconic Project Management Limited. We specialise in retail, leisure and commercial construction.