Determining Criticality of Performance Indicators for a Construction Company

Abstract

Because of stiff competition in the construction business, it is necessary for construction companies to measure their performance on a regular interval for long-term survival. Therefore, it is imperative for construction companies to determine the parameters critical to the measurement of their performance. This study identifies the performance indicators, financial as well as non-financial, for construction companies to measure their performance. In a previous study, the authors identified a total of 20 performance attributes and applied principal component analysis which extracted six components called performance indicators. These performance indicators are profitability and asset management; key stakeholders’ satisfaction; time and cost predictability; environment, health, and safety; quality consciousness; and employee turnover. The present study utilized structural equation modelling (SEM) to determine the criticality of these performance indicators for which a questionnaire survey and structured interview approach were adopted. A total of 106 responses were collected from 90 different construction companies operating in various parts of India. The findings indicate that ‘quality consciousness’ is the most critical performance indicator whereas the ‘employee turnover’ is the least critical performance indicator in measuring the performance of a construction company. The performance indicators obtained from this study may help construction companies to measure and compare their performances with their competitors and setting out a strategy to remain competitive in the market.