Key Performance Indicators in Construction Quality Management System
Poh Ngoh kiew, UTM RAZAK School of Engineering & Advanced Technology, Universiti Teknologi Malaysia
Kuala Lumpur, Jalan Semarak, 54100 Kuala Lumpur, nkpoh2@live.utm.my
Syuhaida Ismail, PhD,UTM RAZAK School of Engineering & Advanced Technology, Universiti Teknologi Malaysia
Kuala Lumpur, Jalan Semarak, 54100 Kuala Lumpur, syuhaida@ic.utm.my
Aminah Mohd Yusof, PhD,Faculty of Civil Engineering, Universiti Teknologi Malaysia, 81310 UTM Johor Bahru
aminahyusof@utm.my
Abstract:
Measuring success in business performance is a challenge for the construction industry. Thus, quality
management systems (QMSs) have been implemented in the construction industry for more than two
decades in Malaysia. However, with the quality management system (QMS) inplace, construction
industry in Malaysia is still synonym with high-profile problems such as cost of project increases, late
project delivery, poor quality, abandoned projects and major defective works.Therefore, this paper
emerged with the aim of appraising KPI, a formal set of strategic performance tool, so that it can be
incorporated into the current construction quality management system (CQMS) in Malaysia. This aim
can be achieved by identifying the current practice of ISO 9000 as a part of CQMS in Malaysia,
determining the attributes of KPIs in construction industry in order to permit its elements to be
implemented in the CQMS and proposing the supports from the KPIs team in ensuring the success of
KPIs implementation in CQMS. Through literature review, the understandings on these matters are
obtained. This paper proposes that KPIs should be incorporated in to the CQMS in Malaysia in
confronting the problematic issues within construction industry. It is expected that this paper could
assist the top management of respective construction companies to improve their current practice in
CQMS by better understanding the elements of KPIs.
Keywords: Key performance indicators, construction Industry, quality management,
1.
Introduction
Measuring success in business performance is a challenge for construction organization. There are
many intelligence tools, techniques, methodologies and best practices being implemented for
performance measurement in construction industry. Although, total quality management (TQM) has
been used extensively and beneficially in manufacturing and engineering industry to control process
and prevent defects. However, TQM implementation in the construction industry is not an easy
matter due to the complexity and dissimilarity of industries which can not be regarded as same
practices. Other techniques, such project-management, partnerships, Quality-Assurance Plan (QAP),
Quality Function Deployment (QFD), Jobsite Quality Planning (JQP) and/or to ISO 9000 and 14000
standards have tried to incorporate TQM approach into their practices. Moreover, if you can't
measure it, the ho a ou i pro e it ? Hence, there is a great need in the construction industry
for identifying a set of common indicators to be used by construction executive and project managers
in measuring construction performance at the project levelas a part of achieving business strategyto
delivery project on time, on budget, free from defects, efficient, right first time and safety. This set of
key performance indicators will make objectives quantifiable, providing visibility into the performance
of organizations and enabling decision makers to take action in achieving the desired outcomes.
2.
ISO 9000 in Construction Industry
In construction industry, ISO9000 series of standards have been wisely implemented worldwide. The
ISO 9000 is based on customer focus, leadership, involvement of people, process approach, system
Page 1
approach, continual improvement, factual approach and mutual beneficial supplier relationship,
which are extracted from the eight principles of TQM. However, the current ISO 9000 has caused
construction companies focus only on improving the implementation of ISO9000 certified by
accreditation bodies, sothat they can achieve their performance in accordance with the international
standards with guidance from the International Accreditation Forum (IAF). Their performances are
generally measured or assessed based on their operation within financial constraints, successfully
gaining market position and obtaining profitability.
The construction project is largely unique because of the customization. No projects are alike, as it
needs to suit environment of the job site with the particular functions, design or preferences.
According to Rowlinson and Walker (1995), the construction industry is characterized by its nonstandardisation. The construction is a complex system in which many participant’s involvement from
pre-contract stage to post-contract stage in the construction, whereany short coming issues will effect
the performance of the projects completion.
In worldwide, there are approximately 24 percent of projects being failed, cancelled, or delivered but
never can be used (Collaboration, Management and Control Solutions, 2009). In Malaysia, project
failures increased with billions of ringgits are wasted annually; especially the government
construction projects. Some of the failed projects are due to abandoned, delayed and defected
problems.
This is supported by CIDB (2007) who claims that the working group on productivity and the rates of
quality failure records the construction failures at 50 percent in design faults, 40 percent in
construction faults and 10 percent in material faults. As such, why the failure rates are still in the high
range even when ISO 9000 has being implemented since year 1992 in Malaysia? How effective the
implementation of the ISO 9000 in construction industry? Are construction companies obtained
certification only to demonstrate that they have a formal set of management system? Has the
credibility of ISO certification become diluted due to insufficient oversight of the registrars?
In this perpective, it is critical to assess the current success level of those non-qualified or qualified
ISO construction companies after more than five years of implementation. To achieve this objective,
there is a need to incorporate the KPIs into CQMS for owner to measure and benchmark their overall
project performance.
3.
Understanding of Key Performance Indicators
KPIs have ee i e ted a d ra ded
Busi ess I tellige e BI as e h arki g Para e ter,
2007 and Peterson, 2007). Since then, various models of KPIs have been adopted around the globe
with different levels such as European Foundation for Quality Management excellence model,
balanced scorecard modeland key performance indicators model.With such successful
implementation, KPIs have been re-defined by BSRIA (2003) as qualitative or quantitative
measurement of the activities of a project or organization towards its objectives.Constructing
E elle e 2007 defi es o stru tio KPIs as atio al data sets agai st hi h a proje t or a
company can benchmark its perfor a e .
As claimed by David Parmenter (2012), KPIs represent a set of measures focusing on those aspects of
organizational performance that are the most critical for the current and future success of the
orga izatio where Ver fe orga izatio s really monitor their true KPIs, because very few have
e plored hat a KPI a tuall is .
However, this paper proposes that construction KPIs demonstrate and measure the cost, time and
quality aspects for the customer satisfaction of project construction organizational performance
monitoring. These include organization and management in the total project life cycle (TPLC)
phasesfrom pre-construction phase to post-construction phase, which involves preparatory,
procurement, contract award and contract management in pre-operational (design, construction and
commissioning) and operational phase, the most critical component determining the deliverance of
the project or asset.
Page 2
The management of KPIs engages seven stepsais shown in Figure 1. The first step is to determine the
areas to measure by selecting KPIs that meet the needs of the company and its client. The second
step initiates with data collection which advise and guide the gathering of realible data that is tally
with the national definitions. Third step is to transform data into information that can be
benchmarked, where a typical initiation time calculated KPIs is shown in Table 1.
Figure 1.Seven step process of KPIs Management
Time ( week)
Original
Actual
KPIs (InitiationTime) as at Aug
2011
(As at Aug
2010)
(As at Aug
2011)
INITIATION 's TIME
Item
Description
1
Feasibility study -Consultant
7.06
12
17
2
Land Acquistion
9.29
52
56
3
Forming Management Team
8.89
24
27
4
Consultants Engagement
9.23
24
26
5
Conception Drawing Preparation
8.33
5
6
Bridging Loan Approval
8.57
24
28
Initiation - Time
8.56
6
Ave.
KPIs
Table 1. Example of Typical initiation time calculated KPIs
The KPIs input calculation then leads to the forth step of storing the results by the project or
organization based on the desired objectives by producing the charts and reports in reference with
the prior calculated result. An easily understood typical initiation time chart is shown in Figure 1 using
scoring system from 1 to 10, which score 1 means totally dissatisfied, score 5or 6 means neither
satisfied nor dissatisfied and score 10 means total satisfied. The results demonstrate that well
reported results will show where the strengths and weaknesses are laid in the fifth step. The action
taken under sixth step for the whole purpose of the performance management system is to improve
Page 3
performance. Finally, the whole processes must be measured again whilst establishing KPIs as an
integral part of the project for continuous improvement.
KPIs should tell the management about what action needs to be taken and to prevent a recurrence
for current and future success of the construction organizational. However, a lot of KPIs have been
mislabelled and misused due to lack of focus and alignment and as well as under achievement.
Figure 2. Example of Typical initiation time KPIs chart
4.
Support from KPI Team for The Success of Implemention
In achieving the effectiveness and efficiency on the implementation of KPIs for construction QMSs,
total commitment from top management and at all levels of organization are needed. Forming a KPIs
steering committee is essential where the team members consist of heads of department. The key
functions of team members areto act as facilitator in monitoring the results of the implemented
KPIsin materiaising the objectives of the company without argument. Pursuing and justifying the
goals on the requirement for KPIs implementation,providing exercise onKPIs toolsvia training to
develop understading on theprocess approach incollecting, presentingand analysing data for
benchmarking; developing an operating procedureto support KPIs and represent an opportunity for
improvement; integrating all functional departments in finding what to do in critical aspects to
increase organization performance,u dersta d the uses a d e efits of a orga izatio ’s easuri g;
monitoring and analytical processes by using KPIs for problem-solving and decision making; create a
healthy working environment by providing teambuiding activities; selecting leaders to motivate
subordinates in which they are doing things differently from the way things used to be done;
motivating all employees to participating the whole process of KPIs implemention with reward and
recognition system; informing the latest su ess KPIs
pu li izi g through o pa ’s e letter,
meetings, videos playing, bulletins,the intercom system and so on.
5.
Conclusion
Hence, this paper has successfully achieved its aim of appraising KPI, a formal set of strategic
performance tool, so that it can be incorporated into the current CQMS in Malaysia. The current
practice of ISO 9000 has been identified as a part of CQMS in Malaysia and the attributes of KPIs in
Page 4
construction industry have been determined in permitting its elements such as decision on what to
measure, monitoring the true KPIs, measure time, cost and quality aspects for the customer
satisfactionin TPLC phases in which to be implemented in the CQMS. On the other hand, the actions
and supports that should be initiated by the KPIs teams have been proposed by this paper in ensuring
the success of KPIs implementation in CQMS. Further studies especially on the development of the
KPIs framework for CQMS practices within Malaysian construction industry are expected to be carried
out where this paper stands as a stepping stone for KPIs to be incorporated into CQMS in Malaysia.
References
BSRIA (Building Services Research and Information Association Limited) Report (2003). World KPIs
and Benchmarking – Milestone 1: Summary of Existing UK Schemes. Compiled by Holley,
A.M. and Samuelsson-Brown, G. Report 70830/B. Berkshire: BSRIA Limited October, 2003.
Constructing Excellence (2007). KPI Pack (Ring-Bound). England: Constructing Excellence Limited.
Available
online
at
http://www.constructingexcellence.org.uk/zones/kpizone/supportservices/kpipacks.jsp
David Parmenter (2012). Key Performance Indicators for Government and Non Profit Agencies. John
Wiley & Sons, Inc.,Hoboken, New Jersy. Page 74.
Parameter, D. (2007). Key Performance Indicators: Developing, Implementing and Using Winning KPIs.
New Jersey: John Wiley & Sons, Inc.
Peterson, E.T. (2007). The Big Book of Key Performance Indicators.
Rowlinson, S.M., & Walker, A. (1995). The construction industry in Hong Kong. Hong Kong:
Longman.
Page 5