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KPI Handbook 2007

Forward
A common perception of the construction industry is one in which projects and services are often delivered unsafely, late, over budget and below quality,. Key Performance Indicators have a crucial role to play in improving the reputation of the construction industry by providing organisations with a simple but effective method for monitoring performance. Traditionally, the construction industry has relied on reputation as its main marketing tool. While this, on its own, is undoubtedly important, if combined with hard evidence reputations can be greatly enhanced. KPIs provide this hard evidence and allow those within the industry to compare how organisations are performing. Clients and suppliers, using the SCC KPI framework, can easily set-up a process for measuring key areas of performance such as Satisfaction, Cost, Time, Quality & Safety. The framework offers flexibility in the measurement detail to best suit your own organisations requirements and available resource. . This handbook along with the SCC KPI framework “Method of Measurement” documents should provide you with all the information you need to get started. Further support is available from the Scottish Construction Centre. http://www.scocon.org

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An introduction to the SCC KPI framework
The Scottish Construction Centre KPI Framework was launched in September 2007. The framework incorporates the Scottish Construction Industry KPIs and is an inclusive solution to meet the needs of the Industry. It encourages the adoption of performance measurement by organisations of any size and at any level of the construction supply chain. The framework offers three distinct measurement and reporting levels and combines performance measures in KPI streams. The same KPI streams run through each reporting level of the Framework and these streams (product, service, quality, cost, time, safety, environment, people and business) link the Framework together. Any organisation can use the Framework to progress from one level to the next, with full support from SCC, to suit their performance measurement requirements and changing needs.

The purpose of KPIs
Clients want their projects delivered to the highest possible standards of quality, cost and time, while at the same time respecting the environment and the people involved. The SCC KPI framework allows Scottish construction organisations to:

implement a simple method of measuring and analysing performance at both Project and Organisation level target and drive improvement to process identify performance trends compare performance anonymously to others in the Scottish construction industry compare performance more widely to the UK as a whole share best practice through a network of Sector specific improvement clubs.

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Terminology
The SCC KPI framework and supporting information uses the following definitions: Key Performance Indicator (KPI) Performance Indicator (PI) Benchmark Benchmarking a measure of a critical success factor. a measure used to support or demonstrate the performance of a KPI or KPI stream. the best performance achieved. comparing performance against others, and using the lessons learned from the best to help target and drive improvement. Benchmarking is an ongoing process.

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Using KPIs
KPIs are applied in the construction industry to;

provide a simple but robust performance measurement framework to allow an organisation to understand and demonstrate performance levels help inform procurement decisions by providing measures other than price provide performance benchmarks either on a project or across an organisation provide a standard measurement process for monitoring Partnering and Framework contracts provide health checks on performance to support the drive for continuous improvement help with marketing satisfy the requirements of quality management systems such as ISO 9001. Please note that KPIs should be used as an aid to and not a substitute for professional judgement!!

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KPIs and Best Practice
Performance Measurement and Benchmarking offers organisations real benefit by shining a spotlight on their performance and identifying the areas where action is required to improve. Organisations that embrace performance measurement and gain greatest value from its application adopt a philosophy that includes the following; Commitment to using performance measurement as an ongoing management tool. Simplicity start simply with a few performance measures and add more later. Resist the urge to measure too much. Consistency of measurement across an organisation will deliver greater value to the organisation. Relevance measure what’s important to your organisation and stay focused on the critical issues. Process Analyse Review implement a clearly defined process to collect the information. performance regularly. what is measured to keep focus.

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Communicate the results and improvement actions required.

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Implementing KPIs
Best practice suggests there are five steps to ensure the successful implementation of a robust performance measurement process, which will bring value to your organisation.

Review Act Measure

Learn

Compare

Step 1: REVIEW

The vital first step is to review what to measure, but bearing in mind some golden rules;
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keep it simple keep focused measure what’s important to your organisation measure what’s important to your customers.

Having identified what to measure, you need to agree and implement an appropriate data collection process, ensuring all those involved know what is required of them and when. Step 2: MEASURE Collate together data form existing sources and collect missing data form new surveys. Gather data from other organisations as appropriate, e.g. Contractors will need to use surveys to collect Satisfaction or quality performance data from clients.

a simple, consistent user friendly approach to measurement with well documented process & guidance notes will help gain faith in the results and promote data provision collect Comments where possible to support the data keep an audit trail use IT to help collect and analyse data.

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Step 3: COMPARE

Having collected the data, it is important to analyse & compare and performance both internally and externally. This will provide useful benchmarking information. Learn from the results and provide feedback to those involved in the data provision and more widely as appropriate. Take action to improve processes.

Step 4: LEARN

Step 5: ACT

BUT DON’T STOP THERE…………………… The cycle repeats to drive continuous improvement……. Step 1: REVIEW Re-evaluate the current measures and processes and consider ways in which the measurement process could be improved and measurement framework refined. Consider joining a Performance Improvement Network to benchmark your performance and share best practice with others in your sector.

Benchmarking
The SCC KPI framework offers organisations a standard set of performance indicators, which provide a basis for comparison with others in the Scottish construction industry, and beyond. The SCC framework will produce a summary of benchmark performance for the industry on an annual basis.

Benchmark Clubs
A benefit of measuring performance against a common set of performance indicators is that peer group Benchmarking Clubs can be established, allowing performance comparison directly between similar organisations. The SCC framework offers the Scottish construction industry a series of Sector specific performance improvement clubs each with its own Sector specific measures The Sectors identified initially are:
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Roads Housing Health Education

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Software
An important part of any efficient performance measurement system is the use of IT to streamline the collection and analysis of the information. The SCC framework offers members who register with the Scottish Construction Centre free use of the SCC Performance Improvement software. Visit the SCC website for more information and to access the software - www.scocon.org

KPI support services
KPI Workshops
To support the KPI framework, SCC are providing a series of workshops. Full details are available on the SCC website. Workshops can be delivered to individual organisations or tailored to suit your specific requirements as appropriate.

Help Desk
SCC’s help desk will respond to general enquires on performance measurement and provide direction to the support services available from the Centre. Specific queries on the application and implementation of performance measurement will be referred to BSL.

Consultancy Support
SCC can also provide consultancy support to help individual organisations with any part of their performance measurement process.

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