RubinBrown’s Construction Services Group recently attended the Construction Financial Management Association (CFMA) Heartland Conference in Council Bluffs, Iowa.
There was a busy slate of speakers at the conference covering a range of topics including technology innovation within the construction industry, creating an innovative workplace, and key performance metrics for construction companies.
A significant driver of technology innovation is the increased movement toward mobile computing. Mobile computing is centered on wearable technology that creates an augmented reality for the user. The shift started with smart phones and is progressing with the creation of products like Google Glass and Apple Watch. These products will become increasingly important as companies figure out how to utilize this technology to make their workforce more efficient.
Specifically, construction companies will be able to utilize products like Google Glass for project building specifications, change orders, and reviewing blueprints in real-time on mobile devices. Additionally, project managers will be able to manage employee “to do lists,” provide live guidance on difficult tasks, and receive project status updates through this same technology. Ultimately, there will be significant advancements in technology over the coming years, but it is up to companies to think innovatively on how these advancements can be effectively applied to increase work force efficiency.
Innovative Workplace Culture
Workplace culture was the next item on the agenda. Developing an innovative corporate culture is imperative. Below is a summary of the keys identified in the presentation:
- An innovative workplace culture provides direction
- Use a big statement to shape a big vision – What are we trying to achieve?
- An innovative workplace culture invites broad participation
- The best ideas come from people with different perspective participating in innovation – Who is participating in your company?
- An innovative workplace culture meaningfully engages and involves employees
- Use different exercises to engage employees and break conventional thinking – What’s YOUR experience?
- An innovative workplace culture encourages change
- Analyze how change ready your organization is - What are you willing to change?
- An innovative workplace culture pursues smart possibilities
- Create vital change to meaningfully propel an organization forward – What ideas will you pursue?
- An innovative workplace culture stays agile
- Continue to focus on what is important – How do you measure success?
- An innovative workplace culture celebrates progress and success
- How are you celebrating progress and success?
Key Performance Indicators (KPIs) for Construction Companies
Finally, KPIs for construction companies were discussed at length. Identifying meaningful KPIs, and integrating those KPIs into management reporting can be extremely valuable for business owners and their management teams. A performance indicator is a type of performance measurement that an organization may use to evaluate success. However, in order to choose the right KPI, an organization must understand what they value and identify the key activities that drive the desired results. When developing a KPI, it is important to make sure they follow the SMART criteria. SMART criteria means that a KPI should be Specific to the business, Measurable, Achievable, Relevant to the success of the organization, and Time phased. Below is a number of KPI categories and examples of each:
- Financial indicators
- Return on assets
- Return on equity
- Quantitative indicators
- Revenue per/by project manager
- Margin earned per/by project manager
- Qualitative indicators
- Customer satisfaction survey results
- Employee survey results
- Leading indicators
- Months in backlog
- Business development pipeline
- Lagging indicators
- Closed job analysis
- % of profit gain/fade
- Input indicators
To properly implement KPIs, it is important to involve impacted individuals in the process and to receive their buy-in on defining success. Additionally, it is important to limit the number of KPIs and ensure that they meet the SMART criteria. This is important because what gets measured is what gets done. Finally, factor in time to develop forecasts/establish targets for KPI, compare actual results to targets, and monitor and follow up on actionable items.
As always, the CFMA conference was enjoyable and focused on relevant, hot topics. We will continue to keep you up to date with information important to the construction industry.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
All Construction News Construction Overview