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Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/9489

Title: Performance measurement for construction businesses
Authors: Ahmad-Latiffi, Aryani
Keywords: Construction organisation
Performance measurement
Migration path
Issue Date: 2012
Publisher: © Aryani Ahmad Latiffi
Abstract: Measurement of performance is important to the construction sector as an additional way of improving and sustaining competitiveness in the long-term. Most large construction organisations in the United Kingdom (UK) practise performance measurement because they believe it affects their business positively in the longer-term. Performance measurement is thus, recognised as an important way of keeping an organisation on track in achieving its strategic objectives. However, there are still construction organisations that believe performance measurement does not aid in creating and developing appropriate strategies for their organisations, but helps organisations in identifying areas where they did or did not perform well. The improvements in performance thus, can only be brought about through step-by-step strategic guidance to organisations to achieve their performance targets. The first step towards achieving these targets comprises the following: understand the performance measurement process of organisations, and identify the appropriate criteria that need to be measured to improve business; identify strengths and opportunities, which in turn can create a way to maximise profits for an organisation. Such an approach would help organisations target relevant performance measurements and embed them in their organisational strategy in a structured step-by-step manner. Premised on the foregoing, this research project aims to investigate potential tools for improving performance measurement practices in the construction industry. In addition, this research aims to assist organisations in implementing performance measurement in a proper manner and to help them understand the performance measurement process. The first step (objective 1) of this research is to review the generic body of literature in performance measurement to understand key concepts, definitions and existing practices and identify commonly used performance measurement tools. It is noted that there are several definitions of performance measurement. However, at its basic level, performance measurement is a process of determining how successful organisations or individuals have been in attaining their objectives and strategies. To achieve this, the outputs of an organisation's strategic and operational processes are measured in a quantifiable form; the results are used to monitor closely the performance of the organisation, internally and externally. Findings of the review (and later those of objectives 2 and 3) reveal that the Balanced Scorecard (BSC) and the European Foundation for Quality Management (EFQM) Excellence Model are the two most widely known and used tools, in all sectors including construction, to measure an organisation s performance. Semi-structured interviews (objectives 2 and 3) were conducted with performance measurement directors and managers in large UK construction companies. The interviews revealed that performance measurement is being practised in organisations directly or indirectly to help improve businesses and profits. The purpose of interviews was to seek the organisations views on how they approach and conduct performance measurement and derive benefits from it. All organisations agreed that the financial aspects such as profit margins and growth, as well as non-financial aspects such as health and safety and customer satisfaction are important criteria to be measured. Both financial and non-financial criteria need to be considered and included in an organisation's strategy; they are important considerations for any future strategy development. Findings of the interviews and the literature review suggest the best way to create an organisation's strategy as the following: understand the performance measurement process of organisations and identify the appropriate criteria, which need to be measured to improve business; identify strengths and opportunities, which in turn can create a way to maximise profits for an organisation. This led to