UoG

CONSTRUCTION TECHNOLOGY AND

MANAGEMENT PROGRAM

PERFORMANCE MANAGEMENT

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 Chapter one
Focus areas:-
 Performance management
 Performance indicators
 Performance management /measurement
in construction industry
Performance measurement techniques

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 [Link] to Performance Management
Performance is understood as an integral part of Construction
project management system that:
 works for a reasonable balance among its three major purposes:
Accountability; Trend or Progress Assessment; and
Learning: This is related to the two contending performance
demands: Success and/or Failure, or Poor and/or Good
Performances;
 Sets baseline for progress monitoring during Project Definition:
That is, the Performance Criteria;
 Uses objective and subjective measurement & evaluation
techniques during Project implementation and after completion:
 It deals with Performance Measurement, Monitoring and
Evaluation;
 considers process - result orientations within the result -
outcome interface limits of the project: and hence
Uncertainties Changes and Risk Management became a
vital contribution, and
 Consider both the Critical Failure and Success Factors.
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 cont’d…..

 Performance management is seen as a closed

loop control system which deploys policy and
strategy, and obtains feedback from various
levels in order to manage the performance of the
system”
 performance management is the collection and
analysis of performance measures, updating of
past performance goals, implementation of
improvements, and communication of shared
vision.

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 Contd……
 Performance management is simply a
term used to describe a set of activities
that assess whether goals or objectives
are being met. These activities include
 defining work,
 setting goals,
providing feedback and
encouraging development

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 The performance management/measurement process

Vision Performanc Busine

Process
Input

Output
Strateg e ss
y manageme perfor
nt mance

Performanc
e
measureme
6 nt
 Contd…
Importance:
 As such, performance management is intended
to determine the appropriate tool and method
that will enhance the efficiency and
effectiveness of an operation or a company
 A performance management system is to strive
for constant improvements in reducing
wastage in the future.

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 1.2 Performance Criteria (indicators) and measurement

 Performance measurement system “… is the

information system which is at the heart of the
performance management process and it is of
critical importance to the effective and efficient
functioning of the performance management
system.”
 Therefore, performance measurement is the
process of “… determining how successful
organizations or individuals have been in
attaining their objectives.

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 Contd…
 To achieve this, the outputs of organizational
strategic and operational processes are
measured in a quantifiable form to monitor the
vital signs of an organization.
 The relationship between performance
management and measurement can be seen in
its wider context from a process view i.e. input-
process-output

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 Contd….
Performance measurement perspectives

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 Performance Indicators
 Performance Indicators are quantifiable
measurements that reflect the critical
success factors of an organization
 Traditional performance indicators (cost, time
and quality):
Their implementation is usually apparent at
the end of the project, and they can be
classified as <<lagging indicators>>.
 Recent contributions of performance indicators:
indicators tended to concentrate on
productivity and to achieve continuous
improvement is called leading indicators.
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 Contd…
 they are parameters of change or of results, indicating to what extent
the project objectives have been achieved.
 Indicators help to create transparency conveying to others what the
project intends to do
 They clarify the characteristics of the different levels of objectives of a
project.

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 Contd…
 When formulating indicators we should pay
attention that the indicators are:
objectively verifiable
Independent
Plausible
Specific
measurable

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 Indicators
Specify targets on the basis of the
indicators:
Quantity How much?
Quality What?
Target group Who?
Time/Period Starting when and
for how long?
Place Where?

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 Key performance indicators in
construction
 Client satisfaction – product
 Client satisfaction – service
 Defects
 Profitability
 Productivity
 Safety
 Construction cost
 Construction time

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 1.3 Performance management/ Measurement
in the Construction Industry

The construction industry's core business is

undertaking projects in generating new buildings
or refurbishing existing ones for a variety of
clients
 Traditionally performance measurement in
construction is approached in two ways:
 a) in relation to the product as a facility
 b) in relation to the creation of the product
 the latter of the two has been the prime
performance assessment (in terms of success
or failure) of construction projects
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 Contd…
 when assessing the success/failure of
construction projects “a common approach is
to evaluate performance on the extent to
which client objectives like cost, time and
quality were achieved”

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 Contd…
Importance of performance measurement:-
 Feedback as a learning tool
 to make operations and results transparent
aimed at improving both performances and
accountability

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 Contd…
Balanced Scorecard
 The name Balanced Scorecard invokes two
images: that of a balance and that of a
scorecard used to keep a record by making
marks or notches on a card or tally board.
 The Balanced Scorecard (BSC) is a
performance management system which
incorporates four main measurement
categories (perspectives) each of which with a
wide range of potential sub-measures.

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 Contd…
 The difference with traditional approaches to
performance measurement is that it includes a
range of "leading and lagging" indicators -
customer perspective, internal/business
processes, learning and growth, and financial.
 BSC recognizes that the financial measures are
lagging indicators and therefore the result of
the other three leading indicators.

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 Chapter two
Performance factors
Focus areas..
Project resources
Project stakeholders
Project processes
Project productivity

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 Contd…

2.1 RESOURCES
 For any construction Industry to be efficiently operating
and be successful the elements or the resources should
be well known, planned and made available.
 For most of the construction projects, the resources to
look into are the following;
 Human Resources / Labor or Workmen
 Financial Resources / Fund
 Information Resources
 Physical Resources such as Materials, Equipment
and Other Assets
 Services and Management.
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 2.1.1 Human Resources / Workmen/ Labor

All works involved, including the operation of

equipment cannot be executed without human labor.
All other resources are coordinated and generally the
work itself is executed by labor. Therefore careful
planning, organizing and monitoring of workmen are
mandatory.
Human resources include professional, skilled, semi
skilled and unskilled laborers.

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 Contd…

Human resources can be understood in

two values: Capacity and Capability.
Human resources need to be attracted,
selected, developed, motivated and
retained if an organization needs to
successfully accomplish project objectives.

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 Contd….

Human resources need the following skills:

 Communication – Inter - personal, group
interaction - skills
 Problem solving / Conflict resolution / Negotiation
Skills
 Facilitating / Decision – making Skills
 Writing skills for Proposals / Reports / ToRs / ; and
 Hard Skills – Planning, Implementing, Leading and

monitoring tools.

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 2.1.2 Financial Resources / Fund
One of the basic resources in the
construction industry is Fund, which
should be arranged before starting any
project.
The project to be conceived shall be
within the fund available for it.
Usually funds are available from among
Governmental institution, Private
institutions and Donors in the form of
loan or assistance.
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 Financial resources…

The objective and goal of the project is

achieved successfully if and only if the
fund is sufficiently flowing to carry out the
project as planned.
Therefore, it is necessary to ensure
financial planning for smooth cash
inflow and outflow to avoid delays in
project activities.

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 Information can be understood in two terms: data
2.1.3 Information Resources

whether processed or not; and its technology.

Contextual information, data useful for estimating
duration and costs; etc are some of informational
resources used in projects.
Information technology both the hard and soft wares
have brought the processing and management of
such information becomes important and helpful in
facilitating the comparison of several alternatives.
This helps in optimization or maximization of uses of
project resources.

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 2.1.4 Physical Resources

Materials: The large portion of a project cost is

gone to material cost.
proper consideration shall be given in the
planning stage to design with easily
available material without compromising the
quality for the intended purpose and for
proper flow and storage of materials.

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 Contd….
EQUIPMENT:
 Provision of equipment replace the hard
work that can be made by human labor
taking much time within reasonable
period of time.
 It increases efficiency and economy.
 Depending on the types and nature of
construction, machinery at site includes
batching plant, mixers, trucks, tractors,
excavators, dampers, cranes, vibrators,
pumps etc.

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 Resources …

 OTHER ASSETS :
Physical Infrastructures and Owned Land are
assets which can be collaterals for capital
base enhancement and credit facilities .

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 2.1.5 Services and Management
 SERVICES: Services such as acquisition of
land, provisions of water supply, electric
power, communication systems, etc., are very
much necessary in the construction industry.
 MANAGEMENT:
 To coordinate these resources and achieve the
required goal, a system shall be devised to
plan, organize, execute, and control the
project.
 Such system which helps to achieve the
necessary goal is called Construction
Management, without which it will be a
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catastrophe both in cost and completion time
to the project.
 2.2. Stakeholders
 Stakeholders can be defined as either
individuals or units or the organization itself for
which they claim a stake in the project such
that they get benefit from or affected by the
whole processes of the project and its
deliverables.
 They can generally be classified under Direct
and Indirect stakeholders.

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 Contd…
Stakeholders’ relationships management is meant that
attitudes, objectives and self serving interests of individuals,
groups or organizations who have stakes in the project are
reflected in their relationships to affect the success of the
project.
As a result, projects need to manage such
relationships in order to ensure their successful
completions.

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 Contd…
The following … steps are useful for
successful Project stakeholder
management:
Stakeholders’ Identification
Stakeholders’ Information gathering on
recurrent attitudes, strategy (Vision,
Mission, Objectives, etc) and self-serving
interests
Stakeholders’ SWOT Analysis
Stakeholders’ predicted / expected
Behavior, and
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Stakeholders’ Relationships
 [Link]
 “any activity or group of activities that takes an input, adds
value to it and provides output to an internal or external
customer.
 Processes use an organization's resources to provide definitive
results.”
 Therefore, a performance process framework will take strategy
as an input deploy the strategy so that it can derive a number of
measures which are effectively activities; add value to the
strategy by examining its validity and implementation; and
deliver the performance results to the organization or its
shareholders and customers.

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 Contd…
 the construction process as all processes which
guides towards or is a presupposition for the
planned construction works.
 This means that the construction process as a
concept covers sub processes having different
characteristics. These sub processes can be
grouped under three major classifications:
Core processes, Administrative processes
and Public regulatory processes. These
processes are termed Project Processes

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 Contd…
Core Processes Concept Design of buildings, Maintenance Period
Definition Roads, etc & and
/Concept Physical Defect Remedies
Development construction works

Administrative Concept Evaluation Monitoring, Acceptance, Hand

Processes Project Approval Procurement and Over and
Budget Allocation Other Processes

Public Regulatory Right-of-way (if Tender award Final Approval,

Processes necessary) and and
and Changes and User Permit
Regulatory Permits Variation

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 2.4. Productivity
Labor Productivity
Productivity in construction is often broadly
defined as output per labor hour.
labor productivity is a measure of the
overall effectiveness of an operating
system in utilizing labor, equipment and
capital to convert labor efforts into useful
output, and is not a measure of the
capabilities of labor alone.

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Contd…
Construction output may be expressed in
terms of functional units or constant
dollars.
In the functional units, labor productivity is associated with

units of product per labor hour, such as cubic meters of

concrete placed per hour or Kilometers of highway paved per
hour.

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 Factors Affecting Job-Site
Productivity
Job-site productivity is influenced by many
factors which can be characterized either
as:
 labor characteristics,
 project work conditions
 Non-productive activities.

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 labor characteristics
 The labor characteristics include:
Age, skill and experience of workforce
leadership and motivation of workforce
Performance analysis is a common tool for
assessing worker quality and contribution. Factors
that might be evaluated include:
Quality of Work - caliber of work produced or accomplished.
Quantity of Work - volume of acceptable work
Job Knowledge
Safety Consciousness etc.

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 project work conditions
The project work conditions include among
other factors:
Job size and complexity.
Job site accessibility.
Labor availability.
Equipment utilization.
Contractual agreements.
Local climate.
Local cultural characteristics, particularly in
foreign operations.

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 Contd…

A base labor productivity may be

defined for a set of work conditions
specified by the owner or contractor who
wishes to observe and measure the labor
performance over a period of time under
such conditions.
A labor productivity index may then be
defined as the ratio of the job-site labor
productivity under a different set of work
conditions to the base labor productivity.
It is a measure of the relative labor
44 efficiency of a project under this new set
 Non-productive activities
 The non-productive activities include among other factors:
Rework for correcting unsatisfactory work
Temporary work stoppage due to
inclement weather or material
shortage
Time off for union activities
Absente time, including late start and
early quits
Non-working holidays
strikes

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 cont’d….
 The non-productive activities associated with a
project should also be examined in order to
examine the productive labor yield.
 productive labor yield is defined as the ratio of
direct labor hours devoted to the completion
of a project to the potential labor hours.
 The labor hours spent on rework to correct
unsatisfactory original work (and other indirect
labor hrs) represent extra time taken away from
potential labor hours.
 The labor hours related to such activities must be
deducted from the potential labor hours in order
to obtain the actual productive labor yield.
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 Example1 : Effects of job size on productivity

 A contractor has established that under a set of

"standard" work conditions for building
construction, a job requiring 500,000 labor hours
is considered standard in determining the base
labor productivity. All other factors being the
same, the labor productivity index will increase to
1.1 or 110% for a job requiring only 400,000
labor-hours. Assuming that a linear relation exists
for the range between jobs requiring 300,000 to
700,000 labor hours as shown in Figure 1,
determine the labor productivity index for a new
job requiring 650,000 labor hours under
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otherwise the same set of work conditions.
 Figure 1: Illustrative Relationship between
Productivity Index and Job Size

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 solution

The labor productivity index I for the new job

can be obtained by linear interpolation of the
available data as follows:

This implies that labor is 15% less productive

on the large job than on the standard project.

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 Example 2: Productive labor yield;
 In the construction of an off-shore oil drilling
platform, the potential labor hours were found to be
L = 7.5 million hours. Of this total, the non-
productive activities expressed in thousand labor
hours were as follows:
 A = 417 for holidays and strikes
 B = 1,415 for absentees (i.e. vacation, sick time,
etc.)
 C = 1,141 for temporary stoppage (i.e. weather,
waiting, union activities, etc.)
 D = 1,431 for indirect labor (i.e. building temporary
facilities, cleaning up the site, rework to correct
errors, etc.)
50  Determine the productive labor yield after the
 Solution: The percentages of time allocated to
various non-productive activities, A, B, C and D are:

The total percentage of time X for all non-productive activities is:

The productive labor yield, Y, when the given factors for A, B, C and
D are considered, is as follows:

As a result, only 41% of the budgeted labor time was devoted

directly to work on the facility.
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Question???
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