Project-level Key Performance Indicators in Construction Projects

A tool for Project Performance Measurement

Master ThesisMSc in Business Administration

Vasileios Iliopoulos

Supervisor: Dr. Wolfgang KetterCo-reader: Prof. Dr. Bert Balk

20/9/2012

Overview Introduction, problem statement and research question

General situation & practical situation for study Theoretical concepts and connections among them

Performance measurement & measures (KPIs) Project Success Project Management Knowledge Areas

Research Methodology & Data Collection Case study approach + interviews

Results & Findings Views on theoretical aspects, KPIs and general remarks

Conclusion Final tool / map Implications & Further Research

Introduction, problem statement & research question

General situation Companies operate under a dynamic and changeable environment

They need to continously improve their performance Starting from performance measurement sound decision making, improved execution

PERFORMANCE EXCELLENCE

Practical situation for study Many business operations deal with project execution

Companies seek project success In Project-based businesses successful project performance translates into an

improved bottom-line

Introduction, problem statement & research question (2)

Problem Statement Projects are not implemented / executed according to pre-set goals, fail

Project results disappoint stakeholders, diverge from success

???Assessment of current situation!

Performance measurement & measures (KPIs) In key knowledge areas

Research questionWhat is the appropriate set of Key Performance Indicators for the

Project Management Knowledge Areas of Scope, Time and Cost, and how can they be applied in construction projects?

Theoretical concepts and connections among them

Performance measurement: importance Perception, coordination and control of companies’ capabilities Recognition of sectors that required increased attention Tracking and monitoring of project progress Correlation of outputs with decision making

Performance measures / KPIs Tools for understanding, managing and improving companies’ functions Complemented by a predetermined level of performance Specific, Measurable, Attainable, Relevant, Timely based

SMART CRITERIA

Theoretical concepts and connections among them (2)

Project success: elements On time and within budget / cost Stakeholder satisfaction Quality and according to specifications Functionality

Project Management Knowledge Areas

Integration

Scope

Time

ProcurementRiskCommunication

Human Resource

Quality

Cost

Theoretical concepts and connections among them (3)

Performance measurement

Business performance

Project-based

business

Performance measures

(KPIs)

Project performance

Project success

Project Management

Knowledge Areas

Figure 5: Theoreticsl aspects and the

connections among them

Research Methodology & Data Collection

The case study approach

Selection of KPIs

Relation of KPIs to

knowledge areas

Preliminary tool / map

Interviews

Refinement of tool /

mapFinal tool / map

Theoretical constructs

Research Methodology & Data Collection (2)

Sources of Information

Project Management Institute (PMI) Project Management Knowledge Areas and KPIs

KPILibrary KPIs

Construction Reports Construction Project Stages

InterviewsFunction and number of interviewees (total 15) Function and number of companies (total 10)

Project Managers (7) Construction (7)

Project Directors (4) Planning & Design (2)

Business Managers (4) PM Consulting (1)

Results & Findings

Views on theoretical aspects Approval and extension of the theoretical concepts Emphasis on project success! Attention mostly on Time and Cost knowledge areas

Business Managers turn the focus on Scope

General findings Business Managers focus on future states while Project

Managers and Directors on improved execution through continuous performance measurement

Crisis and quality factor Empirical work and procedures based on experience

Results & Findings (2)

Views on performance measures / KPIs

Many interviewees use economic ‘indicators’ Lack of training, limited use of PM theories

Prevalent need of simple measures Nearly all KPIs ranked an avg. above 3,5 / 5 KPIs related to deviations from baseline and comparisons

ranked higher ‘Scope creep’ was not considered of crucial importance

Conclusion

Conclusion (2)

Managerial Implications A point of reference for Project Managers, Project Directors

and Business Managers of different scale construction projects

Standardized and mechanized performance measurement procedure

Simple to understand, easy to useFurther research

Examination of the other knowledge areas (priority on Project Quality Management)

Practical validation of the tool

THANK YOU !