How to compete on Analytics

The construction industry is a very difficult business , and running a profitable business requires not only best practices in General Construction but a very fluid understanding of what's going on in a daily basis.

A study by FMI concluded that best-of-class contractors using the following KPIs (Key Performance Indicators)

1. Liquidity indicator
2. Schedule variance indicator
3. Work-In-Progress (WIP) Reporting
     - Margin variance indicator
     - Project and Cash flow indicator
     - Unapproved Change-Order indicator
     - Committed Cost indicator
4. Backlog Indicator
5. Scorecard Indicator

All these KPIs in conjuction will give managers at any level from the project level all the way to senior level with the tools to manage their business and make the necessary adjustements if needed.

Are Construction businesses following these indicators ?

They probably are, one way or another, may be some of the KPIs, but in my experience, putting all this information together is very conversome and time consuming, and managers have to go through an enormous amount of reports, spreadsheets etc. just to gather the Information. This is due to all the disparate systems that exist in these Organizations ranging from Estimating, Project Management, Accounting, HR, Cost, Procurement, etc.

Is the value of these Metrics is understood, then in order to gain competitive advantage the business senior management has to invest in Information technology.

Either look for an integrated solution with processes in place that will capture all the information required to generate these metrics , or secondly create an integration tier with all data from dissimilar applications and systems is manipulated  and presented.

In my opinion the second approach is just a "quick fix" , a tactical solution that will not scale to a company growth.

If we assume that all Contractors have the general construction know-how and follow best practices to carry out their projects, then in my opinion competing on analytics will create a competitive advantage.