Application of Key Performance Indicators in the

Construction Industry: a comparison of the United Kingdom

with the Czech Republic

Abstract:
In the 21st Century high emphasis is put on effectiveness and efficiency in satisfying
client demand. This emphasis is especially prevalent in the construction industry due to
the high levels of expenditure involved. The problem in this area is that construction
companies on the one hand do not want high expenditure, yet on the other they want
significant profits. The key to success can be found in appropriate measurement of
performance in the short-term as well as the long-term. Best practice in measurement
can be represented through use of Key Performance Indicators (KPIs). This paper
compares the use of KPIs in the construction industry in both the Czech Republic (CR)
and the United Kingdom (UK). Facilities Managers in both countries are familiar with
this measurement technique, but each from a different point of view. According to
literature UK applications have a long history and KPIs are sophisticate in their design;
they are used widely in the field (client satisfaction, defects, construction time and cost,
productivity, profitability, impact of environment, etc.) and up-to-date databases exist
(Construction Excellence, 2004). In CR KPI histories are relatively short although their
use in Facilities Management is found (Strup, 2008). The paper concludes with current
best practice and potential future steps that both countries could move towards in the
construction industry. For CR recommendations are made on how to establish construction
KPIs for today’s practices.

Keywords:
Construction Industry, Czech Republic, Key Performance Indicator, United Kingdom.

1 Introduction
In the 21st Century, world is rapidly changing and customers are increasingly
sophisticated; they demand high quality goods and efficient services rather than low-
priced standardized supply. Client in the construction industry expects to delivery
project on time, on budget, free from defects, efficient, right first time and safety. This
demand puts on the construction company’s shoulders formidable task, they have to
continually manage and improve their work to fully satisfy client’s requests. But
managing and improving can exist without measuring which was confirmed by
Amaratunga (2001) “You can’t manage, what you can’t measure“ and Hayward (1998)
added, “If you can’t measure it, how can you improve it”.
On the other hand in 21st Century the competition between the Construction Companies
starts to be international. For instance on the Czech construction field operate local
companies (Matrostav, a.s., etc.) as well as the international companies with Czech
basement (Stavby silnic a železnic, a.s from 2006 part of French EUROVIA company;
SKANSKA CZ part of the Sweden SKANSKA; etc.). There is day-to-day hard fight for
the profits between those big players on the construction market. They are benchmark
by clients, consultants, contractors and suppliers according different point of view and
the companies have to be able to hold it with excellent score.
Those two main topics, ability to satisfy client and ability to compete, put companies
before complication question: “How our company can be measured with other
companies in the same branch?”, “Which tools are used for this measure?”, and
consequence question can be formulated as “How we can to be sure that we compare
the appropriate dates with the same type of dates from another company?”
The answer for this question can be found in the UK work experience. The using Key
Performance Indicators as a metrology for effective measurement is one of the best
tools from the UK tools. The practise in UK is on the high level and KPIs are very
widely used in a various fields not just in the Construction Industry.

2 Literature Review
Literature review was done for both countries and provides the whole view of using
KPIs as a measurement tool. Firstly literature review was performed in the UK and
secondly in the Czech literature. Both sources brought out interesting pound of views.

2.1 United Kingdom

United Kingdom has long history in usage KPIs in the companies. In 1961 D. Ronald
Daniel used KPIs as a part of achieving business strategy with context of critical
success factors (Cooper, 2006). In 1998 UK Constructing Excellence has pooling
knowledge and providing benchmarking in the Construction Industry. From the 1999
they started with the government support and looking at client’s satisfaction to
predictability of cost and timing. They did this by developing Key Performance
Indicators (KPI) for the whole UK industry (Cunningham, 2008). Nowadays UK
Construction Excellence has over 700 different types of analyses on KPI data.
In UK exists wide field of organizations, web sites and software programs to support
the KPIs and benchmarking activities. For instance, from organization can be
presented: Construction Excellence with website www.kpizone.co.uk , BRE Trust
Companies on the www.bre.co.uk or BERR Department of Business Enterprise &
Regulatory Reform on website www.berr.gov.uk. Case studies are available on the
www.kpizone.co.uk and are interested in the public sector as well as to the private
sector.
The KPIs research field cannot be left from this paper. Here are two interesting theses
from Helen Duncan (2007) and Saeid Fahid (2007). Both found the KPIs as important
component of quality measurement of services and products.

2.2 Czech Republic

Although using tools for measurements are widely spread in the Czech Construction
Industry. The measurement is focused on local measurement in the company and
national/international measurement (benchmarking) mostly does not exist. Specifically
usage of KPIs, in the same form as in UK, does not have long history and it is possible
to found just in the Facility Management (FM). FM can be connected with the
Construction Industry as a part of it. As Nedved (2008) from Technic.Ihned.cz
mentioned: “FM is concerned to every thing what is linked to building or building
areas”.
Literature research showed that there are a small number of publications and web sites
concerned to KPIs. As a first publication in the Czech language is book from Štrup and
Vyskočil “Podpůrné procesy a snižování režijních nákladů” (Facility management)
(Support processes and reducing overhead cost FM) (2003). More information about
KPIs can be also find at the websites as an International Facility Management
Association (IFMA.CZ) www.ifma.cz, Facility Management Institute
www.fminstitute.cz.
3 Research Methodology
As a research methodology for the first part of research was chosen the most suitable
methodology: “analysis”. Since the research has started with the UK as a country where
KPIs have a long history; the decision for chosen analysis methodology was obvious.
Analysis started with simply question: “How our company can be compared with
another companies in the branch?” Answer to this question showed that the KPIs could
be the appropriate tool for measurement in the Construction Industry. From this stage
the research started be oriented only on KPIs and dual methodology was used for
comparing to the KPIs application in both countries.
The UK finding was considered as a primary research data. The reason for this decision
was made based on location of the researcher. The researcher was locating in the UK
University as a PhD student. The information about UK Construction Industry (library,
university databases, etc.) was closer than information about CR Construction Industry.

4 Findings and Discussion

The finding about KPIs in the UK was very wide and complex. The finding from the
CR was not as deep and in the form as Construction Industry KPIs known in the UK
practically do not existence.

4.1 United Kingdom

United Kingdom, how was mentioned above, has long history in usage KPIs in the
Construction Industry. Clients and users can find every information on the website
www.kpizone.com where are annual reports, methods of measurement, data collection
forms, trend charts, examples and links to improve performance for each KPI. The
Construction Industry KPIs are produced by a partnership of the Department for
Business, Enterprise & Regulatory Reform (BERR formerly DTI) and Constructing
Excellence using data from BERR, Building Cost Information Service, Health and
Safety Executive, Dun & Bradstreet and other third-party financial analysts
(Construction Excellence, 2009). KPIs are collected annually and are divided to the
three general groups: Economic KPI, Respect for People KPI, Environment KPI. The
annual report for year 2008 is usually published in June 2009.

4.1.1 Content of the three general groups

First used KPIs are “Economic KPIs” and it is sorted into the ten groups.
• Client Satisfaction - Product • Productivity
• Client Satisfaction - Service • Safety
• Profitability • Defects
• Cost Predictability (Project, Design, Construction) • Cost
• Time Predictability (Project, Design, Construction) • Time

The second group is “Respect for People KPIs” addresses 10 key areas of social
performance in the construction industry.
• Employee Satisfaction • Qualifications & Skills
• Staff Turnover • Equality & Diversity
• Sick Absence • Training
• Safety • Pay
• Working Hours • Investors in People

The third group is “Environment KPIs” address 10 key areas of environmental

performance in the construction industry.
• Impact on the Environment – Product & Construction Process
• Energy Use (Designed) – Product
• Energy Use – Construction Process
• Mains Water Use (Designed) – Product
• Mains water Use – Construction Process
• Waste – Construction Process
• Commercial Vehicle Movements – Construction Process
• Impact on Biodiversity – Product & Construction Process
• Area of Habitat Created/Retained - Product
• Whole Life Performance – Product

4.1.2 KPIs application procedures and their benefits

Construction Excellence also provides guide how to establish KPI and how to use them
in the businesses. The steps are very simple and understandable but the guide also
points out common mistakes. The most corrected mistakes are the tendency to measure
to many KPIs which results in confusion, report the result from each KPI separately and
not in the context, do not react to result and at the end do not measure KPI again. All
those mistakes can be avoided by carefully follow KPI guide. The user of KPI has to
focus to the importance for the company or for the client. The complete point of view is
expressed on the radar chart (Figure 1).

Figure 1: Radar chart

(Source: Construction Excellence , 2009)

The KPI and radar chart provide evidence just about the company but Construction
Excellence also offers graphs about whole national industry, where can user compare
his company with another. Those graphs are made annually and the data are collected
from all companies and are anonymous (Figure 2).
 Figure 2: KPI for Client Satisfaction and example of the calculation of a benchmark score
(Source: Construction Excellence, 2009)

The example showed that the company wishes to benchmark its profitability. Its
performance (profit of 10%) equates to a benchmark score of 49%. This means that
49% of companies have achieved equal or lower profitability, and the remaining 51%
have achieved higher profitability than the example company. Those data’s and the
global view to all KPI can make advantage for the company as an inter-satisfaction as in
competition.

4.2 Czech Republic

KPIs do not exist in this form in the CR. The companies mostly use their own tools and
statistics. The commonly used tool is checklist. Generally the CR Construction
companies have majority of KPIs with different name, which is not wrong. The biggest
problem is that the companies have just internal databases. KPIs as an elementary
meaning exist in the FM where is used on the internal level.

5 Conclusion and Further Research

The research obtained the answers for following questions: “How our company can be
measured with other companies in the same industry?”, “Which tools can be used for
this measurement?” and “How we can to be sure that we compare the appropriate data
with the same type of data from another company?”. The answers to those questions
were found in the UK Construction Industry in the KPI form and in the benchmarking
action. Contrary, in the CR Construction Industry this KPI form and benchmarking
action do not exist and the answers to the primary questions in the CR cannot be found.
The CR Construction companies apply usually same tools, but with different name. But
the biggest problem is that those data are not compared nationally and the companies
miss information about their position on the Construction market. In the time of global
cooperation combined with global crises the companies cannot forfeit any information,
which can be transformed to the company advantage.
This paper answered all questions that this paper should solve. This research will
continue further to expand its findings. Following research will find specific common
tools such as KPIs, scorecards, etc. Those are nowadays used for controlling and
measurement in the both countries, but only with different name, but with the same
content. Research will be focused more on the CR. The goal of whole research is to
joint the results from previous researches and to find the best solution preferentially for
the CR.
6 References
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