Important Performance Indicators for Construction

Key performance indicators (KPIs) are crucial for ensuring standards, increasing efficiency, and determining a project’s success. KPIs can differ depending on the project, industry, or specialization, and on which critical success factors (CSF) a firm has determined to be important. This article focuses on two important indicators the construction industry can use to improve its unique set of productivity and performance challenges: schedule and productivity.

For some background, a leading indicator is based on dynamic, real-time data that allows project managers to make predictions or react immediately to potential problems. Lagging indicators are data collected during a project which are usually reported after the fact and disallow an immediate reaction. Analyzing for the right leading indicators is dependent upon having project management software optimized for such a purpose.

Schedule and Productivity Indicators

The traditional way of tracking costs is to compare budget to cost, usually in a report, and measuring the over/under. This information is important to have but is considered a lagging indicator because by the time analysis happens, the last brick has already been laid and last check has been cut.

For companies that self-perform their work, a more dynamic version of this KPI measures plans against daily projections allowing corrections to budget and schedule revisions as necessary. To develop this leading indicator requires adopting the Earned Hour standard, to measure the variance of planned percent complete vs actual percent complete during a specific period of time. Hours are Earned as quantities are installed, providing an accurate representation of progress (Earned Hrs./Estimated Hrs. = % Complete.) Hours Earned can also be used to calculate Productivity (Earned Hrs./Actual Hr. = Productivity). A prerequisite to enacting this process is to have well-defined Work Breakdown Structure (WBS) in order to drill up or down to, which is made easier with software that allows this capability. For more on WBS, see one of our previous articles on the subject.  

A Successful Project

There are many more types of KPIs relying on different equations to measure project performance. While this article is just a short introduction of a couple of these, the takeaway is that many of these KPI calculations can be calls to action and facilitate more accurate job cost forecasting. Having tools that include a well thought out WBS, with reports and dashboards that provide accurate, timely performance measures is not something that is a “nice to have”, these tools are a “must have” in the highly competitive construction environment.


See How TLMS Can Help With Your Scheduling and Productivity