A framework for measuring business performance in construction contracting organisations

Performance measurement has become evermore critical to business success and has been subject to a considerable amount of research and attention over the past two decades The inadequacy of traditional financially based performance measurement and the introduction of non-financial measures have been the triggers for much of this research and attention. Moreover, the Egan and Latham reports have advocated performance improvement in the construction industry, with performance measurement being a key element. Many frameworks and tools have been developed to address the recent advancements in the area. The frameworks / tools most utilised in the UK construction industry are the Key Performance Indicators (KPI), the European Foundation for Quality Management (EFQM) Excellence Model, and the Balanced Scorecard. Other frameworks have been utilised in other countries, such as the Baldrige Excellence Model in the USA, and further frameworks exist in literature. Construction companies have had to face the dilemma of choosing among the different performance measurement frameworks / tools available, or face the confusion that can be caused by using more than one simultaneously. Hence, the aim of this research is to develop a framework that measures business performance in a more comprehensive manner. The scope of the research is to focus on construction contracting organisations, as a proof of concept, with possible future modifications / generalisations to other types of construction companies. An analysis of the gaps in knowledge in business performance measurement, conducted based on the literature review, came to confirm the need for this research. A `Construction Strategy Map' was devised to measure strategic performance in the framework, based on the strategy map feature of the Balanced Scorecard but adapted for construction contracting organisations. An illustrative case study was presented to show how the Construction Strategy Map was used to develop an organisational strategy map in a major UK contracting organisation. Another tool for measuring excellence performance in the framework, the `Construction Excellence Model', was also devised, and based on the initial hybrid framework previously developed in this research. A statistical analysis was used to confirm the model that addressed the issues of reliability and validity of the questionnaire survey as a measuring instrument, evaluated the criteria and sub-criteria of the model using confidence intervals and factor analysis, and computed empirical weights of the model criteria using factor regression coefficients. The performance measurement framework in its entirety, as well as its components (the integrated methodology, the Construction Strategy Map, and the Construction Excellence Model) were validated through expert feedback. The framework was further evaluated in terms of performance measurement frameworks in business and construction management literature and the performance improvement techniques of six sigma, lean construction, knowledge management and sustainable construction, to strengthen its external validity. Finally, the conclusions, benefits and limitations of the framework, recommendations to industry and possible further work in research were discussed.