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Improving project management performance of large contractors using benchmarking approach
Available online at www.sciencedirect.com INTERNATIONAL JOURNAL OF
PROJECT MANAGEMENT International Journal of Project Management 26 (2008) 758–769 www.elsevier.com/locate/ijproman
Improving project management performance of large contractors using benchmarking approach Van Truong Luu a, Soo-Yong Kim
b,*
, Tuan-Anh Huynh
c
a
b
Interdisciplinary Program of Construction Engineering and Management, Pukyong National University, San 100, Yongdang-Dong, Nam-Gu, Busan 608-739, Republic of Korea Division of Construction Engineering, Pukyong National University, San 100, Yongdang-Dong, Nam-Gu, Busan 608-739, Republic of Korea c Power Engineering and Consulting Company No. 3 (PECC3), Ho Chi Minh City, Viet Nam Received 8 February 2007; received in revised form 1 October 2007; accepted 2 October 2007
Abstract This paper presents how benchmarking approach can be applied to evaluate and improve the construction project management. A conceptual research framework was generally developed to perform a benchmarking study of the project management performance (PMP) from the contractor’s viewpoint. Three typical large contractors are involved in this study to validate the research approach. The paper provided in nine key performance indicators (KPIs) which can be applied to measure PMP and evaluate potential contractors as well as their capacity by requesting these indices. The findings suggested that benchmarking approach can help construction firms to learn from the best practices of others and carry out continuous improvement. The research methodology has general use thus it may be applied to other contractors with minor modifications. Ó 2007 Elsevier Ltd and IPMA. All rights reserved. Keywords: Benchmarking; Construction; Implementation; Key performance indicator (KPI); Managing projects; Vietnam
1. Introduction Traditionally, companies with all of their components of business models working together can often achieve longlasting success [1]. Similarly, the construction contractors succeed in their business for many years with one measure only – financial norms [2]. With the effect of the management that concentrates on this single measure (profit maximization) may disregard of investing time and money in the improvement of these key success factors [2]. All construction activities may have risk and uncertainty [3], especially in developing countries where the construction environment is much riskier [4]. Vietnam is not an exception. In order to exit and emulate in the dynamic marketplace, contractors must continually improve the *
Corresponding author. Tel.: +82 51 620 1548; fax: +82 51 628 2231. E-mail address: [email protected] (S.-Y. Kim).
0263-7863/$30.00 Ó 2007 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2007.10.002
construction project management, the project quality, and their own operation. Performance measurement is the heart of ceaseless improvement. Performance management aims at offering managers and members of staff of all ranks the ability to develop the direction, traction and speed of their organization [5]. As a regular rule, benchmarking is the next step to improve contractors’ efficiency and effectiveness of products and processes. This study is focusing on Vietnam, a developing country in South East Asia with a reformed economical policy. The major purpose of this research is to measure and improve the project management performance (PMP) of large contractors in this local market using benchmarking approach. The research questions seem to be localized, but the approach has general use. Therefore, the paper results in valuable lessons for both researchers and practitioners in application of benchmarking to improve their performance.
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
2. Literature review 2.1. Background on benchmarking Xerox Corporation initiated the concept of benchmarking in order to encounter with the Japanese competitive challenge of the 1970s [6,7]. There are several ways to classify types of benchmarking. Based on what benchmarking focused on, three types of benchmarking are: (1) performance; (2) process; and (3) strategic. The comparison between one company and another may depend on performance benchmarking [8]. It is loosely to point out that performance benchmarking is the comparison with established standards or performance data of other organizations in order to improve the organization’s own performance. The comparison of methods and practices for performing business processes is based on the process benchmarking so as to learn from the best and to improve ones own processes whereas strategic benchmarking is the comparison of the strategic choices and dispositions which is made by other organizations for the purpose of collecting information so that they would be able to improve their own strategic planning and positioning [6]. Regarding the environment against benchmarking, the classifications of benchmarking are among internal, external. With internal benchmarking, an organization collects data on its own performance and assessment so as to make improvements through comparing to past years [9], whereas the comparison between one organization and competitors in the same industry is external benchmarking [10]. When dealing with external benchmarking, organizations focus on the identification of performance gaps and learn the best practice of competitors. Although benchmarking has many advantages but it is not a magic tool. ‘‘Benchmarking should not utilize as a way to set goals’’ [7]. It should be used as an improvement tool. Regarding main problems affecting a successful benchmarking study, Kozak [9] pointed out time constraints, competitive barriers, lack of both management commitment and professional human resources, resistance to change, poor planning and short-term expectation as key problems. 2.2. Previous research The use of benchmarking technique in various fields has appeared in many academic journals and technical reports. Many studies have been undertaken on the application of benchmarking to customer satisfaction, occupancy rates, capital investment [13–15], productivity in tourism and hotels [16], measuring and improving the performance of tourist destinations [17], financial savings [11], and operation improvements [11]. Since underlying principles of benchmarking resulted from Deming’s quality management theory [18], the application of benchmarking has predominantly focused on quality management [10,18,19]. Other efforts has recently
759
been paid to examples of the effectiveness of benchmarking, but they have focused on application oriented [20], promoting profitability of benchmarking [21,22] as well as its possible benefits [23], results oriented [24] and method oriented [25]. Benchmarking approach has also proved its usefulness in measuring PMP based on key performance indicators (KPIs) or success criteria. There were some papers that provided valuable findings on the different KPIs to measure PMP. New frameworks have been proposed to consider success criteria [26] and to define project success [27]. Success factors and criteria have been also identified through summarizing several research works [28]. Furthermore, Nguyen et al. [29] uncovered 15 project success factors grouped under four COMs: comfort, competence, commitment and communication. According to Shenhar et al. [30], four dimensions for measuring project success are project efficiency, impact on the customer, direct and business success, and preparing for the future. However, regarding perceptions of project success, Wateridge [31] confirmed that project managers often concentrated on the success factors without success criteria whereas users may be more concerned about their happiness with performance in the long-term. Since project managers’ success is judged on the quality of a project [32], quality performance measures have been used instead of traditional performance measures of meeting time and costs. To cope with the rise of stakeholders in project management, Mallak et al. [33] identified and radically discussed categories of stakeholders to manage and design strategies for satisfying the stakeholders. In construction industry, the application of benchmarking has also emerged in many academic journals and technical reports and following are a review of predominant papers. 2.3. Benchmarking in the construction industry Contemporary benchmarking practice frameworks have been proposed to improve construction productivity [34] and identify critical success factors for design-build projects in construction [35]. Furthermore, Chan and Chan [36] suggested a set of KPIs to formulate a framework for measuring and benchmarking the success of selected construction projects. Models for application of benchmarking approach have focused on the UK construction industry [8] and improvement of contractor selection for construction projects [37] in Hong Kong. Application of benchmarking approach is very promising. Benchmarking can be used to improve the overall attainment of total quality management for a UK construction organization [2], to evaluate construction safety management in China [38], to assess safety climates of employees and contractors working within a partnership arrangement [39], and to analyze the quality of project planning for selected industries in Israel [40]. Interestingly, benchmarking also was suggested as a useful tool to investigate and manage changes on construction projects [8]. The literature revealed that very few
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efforts have been devoted to the application of benchmarking to assess PMP of contractors in developing countries where the construction industry plays a key role in the economy’s grow rate. Therefore, the core objective of this study is to develop a conceptual framework for improving PMP of large contractors in Vietnam using benchmarking approach. To measure PMP, a set of KPIs and sub-KPIs were addressed through literature review and expert interviews. Three typical large contractors are involved in this study to validate the proposed framework and identified KPIs. 3. Research methodology The selection of an appropriate framework plays a key role in executing a good study. Therefore, the study adopted steps which were pointed out by Lankford [7] as a conceptual framework for developing the benchmarking process. However, it has been adjusted and broken down in accordance with specific conditions of Vietnamese construction industry (VCI). Table 1 shows the profile of three typical large contractors involved in benchmarking the effectiveness of PMP. Since an external benchmarking study is applied when an organization has a desire to improve its performance through the best practices of competitors [7], the Construction and Investment Corporation 8 (CIC8) were selected as an internal organization. The Cotec Construction Corporation (CotecCons) is currently among leading state-owned contractors in Vietnam [50,51]. The Hoa Binh Construction and Real Easteate Corporation (HBC) have gained the owners’ confidence in construction and decoration services thereby HBC have become one of reliable private contractors over the last 2 years [52]. As a result, HBC and CotecCons were selected as competitors. Moreover, HBC and CotecCons had good practices in PMP but failures in real-estate business whereas CIC8 had fairly successful in real-estate but bad practices in
PMP. Furthermore, this paper describes only a first stage of an overall study that benchmark both PMP and the real-estate business between aforementioned contractors. The overall study is a part of a program sponsored by the Vietnam Association of Construction Contractors (VACC) in order to meet two objectives. First, the Vietnamese construction companies (VCCs) enhance their capabilities to compete with foreign companies when Vietnam enters World Trade Organization (WTO). Secondly, probable barriers to application of new management frameworks, for example benchmarking and balanced scorecard, into a construction company are identified for removal. The planed program duration is 2 years (2005–2007). Three outputs of the program are: (1) improving practical skills and knowledge of VCCs’ labor force; (2) achieving effective corporate governance in the VCI; and (3) improving and consolidating VCC’s competitive advantages. Therefore, all participants can benefit from the overall study and then the authors received strong commitments from top managers to conduct the study. All the contractors have similarities in type, size, number of staffs, average annual revenue, and products but they are different from the effectiveness of PMP. In Vietnam, a contractor is normally considered small, medium, and large when his average annual revenue is from 50 billion VND ($1.00 VND16045) to 100 billion VND, 100 billion VND to 200 billion VND and greater than 200 billion VND, respectively. Moreover, this study assumed that large contractors must have number of skilled workers, and number of unskilled workers greater than 500 and 1000 persons, respectively. Fig. 1 illustrates the conceptual framework of research methodology, in which the determination of KPIs is an initially important step. These KPIs plays a key role in providing information on the performance of construction tasks and PMP [41]. Since authors’ expectation is to give facilities for practice, the detail research approach is thoroughly introduced in below sections.
Table 1 A profile of large contractors Contractor
Construction investment company 8 (CIC8) Hoa Binh Corporation (HBC) Cotec Construction Corporation (CotecCons)
Identifying KPIs
Staffs* Annual Major services net revenue (billion VND) 350; 580; 1500 300; 820; 1800 340; 730; 1600
206
240
Construction, decoration, trading in construction materials, real-estate investment Construction, decoration, realestate investment
Refer to Figure 2
Data collection for benchmarking
An internal organization (CIC8)
A competitor 1 (HBC)
A competitor 2 (CotecCons)
Data analysis for benchmarking
210
Construction, decoration, realestate investment and equipment installation
Refer to Figure 3
Conclusions and Recommendations
Staffs*
= the number of engineers/architects, skilled workers, and Note: unskilled workers, respectively.
Fig. 1. A conceptual framework for the research methodology.
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
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3.1. Identifying KPIs
3.2. Data collection for benchmarking
The main purpose of this step is to identify appropriate KPIs may measure the performance towards objectives of project management. Normally, the project and organizational performance is measured in terms of KPIs ([42] cited in [36]). Since too many KPIs can lead to unmanageable, management must select appropriate KPIs for each objective of project management. A set of raw KPIs was initially uncovered from a rigorous literature review of previous studies on KPIs/success criteria [2,8,26–41,43]. Unstructured interviews have been conducted to refine factors being in accordance with measuring PMP of large contractors. An expert group of nine construction practitioners and five academic researchers was asked to rate factors on five-point Likert scales. After considering conditions of VCI and characteristics of an effective KPI proposed by Isˇorait_e [6], aforementioned expert interviews resulted in 30 preliminary KPIs. The first questionnaire was designed and distributed to 92 professionals with more than 5 years experience working for large contractors. The study adopted five-point Likert scales (from 1 = ‘not important to measure PMP’ to 5 = ‘very important to measure PMP’) to assign to respondents’ rating. Thirty-two full responses were obtained showing a reply rate of 34.7%. Analyzing the data resulted in nine factors which were significant in measuring PMP. Table 2 shows the mean value and standard deviation of nine factors. Standard deviation of each factor was small enough to conclude the respondents agreed on its significance. In addition, the reliability analysis also resulted in the Cronbach’s alpha coefficient of 0.808. Therefore, those factors may be considered as major KPIs for next steps of the study.
Data collection plays a key role in the research process [44], especially in a benchmarking study. Fig. 2 represents a framework of data collection for benchmarking. The sources to collect data for benchmarking coming from 15 projects were resulted from five for each contractor. All of those had common baseline conditions that were consistent with comparing across companies and projects. For instance, all projects were: (1) building construction projects; (2) located in Ho Chi Minh city; (3) commenced and completed during the past 2 years (2004–2005); (4) small variations of the project scope; (5) the same structural system and foundation; (6) removed the inflation impact from construction costs; and others. Since without radical verification of identified KPIs may lead to foolish benchmarking, identified KPIs were revised by 18 project managers and 9 engineers who worked directly for 15 selected projects. The purpose of this work is to ensure whether nine KPIs are appropriate for measuring PMP. Respondents agreed with nine KPIs and their quantifying but disagreed with quantitative formulas of KPI-1 and KPI-2. They argued that inflation impacts should be removed from construction costs and the extension of time (granted by owners) should be added in revised construction time. These were carefully discussed to finalize quantitative formulas of KPI-1 and KPI-2 (Table 2). Data collection traditionally starts with a pilot data collection phase [8]. Thus, the essential information to design questions in a second survey was identified through a pilot survey involved in 27 aforementioned project managers and engineers. The purpose of this
Table 2 Major KPIs with evaluation approach Code KPI-1 KPI-2
KPI-3
KPIs Construction cost performance Construction time performance
KPI-7
Customer satisfaction on services Customer satisfaction on products Quality management system (QMS) The project team performance Change management
KPI-8
Material management
KPI-9
Labor safety management
KPI-4 KPI-5 KPI-6
Note: SD = standard deviation.
Evaluation approach The percentage of construction cost variance ¼
actual construction cost-estimated construction cost estimated construction cost
100
construction time The percentage of construction time variance ¼ discounted revised construction time 100 where, discounted construction time = actual construction time revised construction duration, revised construction time = original construction duration (recorded in contract) + the extension of time (granted by the owner) The degree of customer satisfaction on the contractor’s construction services is measured by a 10-point Likert-type mark (from 1 = ‘‘extremely dissatisfied’’ to 10 = ‘‘extremely satisfied’’) The degree of customer satisfaction on the contractor’s construction products is measured by a 10-point Likert-type mark (from 1 = ‘‘extremely dissatisfied’’ to 10 = ‘‘extremely satisfied’’) The degree of QMS performance is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The project team performance at the project level is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The change management performance at the project level is measured by a five-point Likertype mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The material management performance at sites is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The labor safety performance at the project level is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’)
SD
Mean
0.456
4.7187
0.482
4.6563
0.491
4.3750
0.456
4.2812
0.390
3.9062
0.420
3.7812
0.498
3.5938
0.504
3.5625
0.508
3.5000
762
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769 Interview top management
Verify KPIs and identify sub-indicators
Design questionnaires and make a pilot test
Collect data on PMP of competitors
Review project documents
Visiting construction sites, qualitative observations, and so on
Collect the following data: • Main information of projects, • Managing project documents, • Records of project finance, • Documents of checking and taking over the buildings, • Project team activities, • Quality management system (QMS) performance, and so on.
Collect data on PMP of the internal organization
Combine collected data
Check the adequateness of collected data
No
Re-collect inadequate data
Yes Collected data are ready for analysis and benchmarking
Fig. 2. Data collection for benchmarking.
survey is to uncover possible sub-indicators of each KPI in order to facilitate measures in practice. Based on identified sub-indicators through the pilot survey, questions are ready to collect data from 15 selected projects. Fifteen project managers are concerned in data collection. Interview methods are widely used because of general application for differing information requirements and differing situations [44] and, therefore, semi-structured interviews were selected to collect data relating to KPI-1, KPI-2, KPI-5, KPI-6, KPI-7, KPI-8 and KPI-9 (Table 2). In addition, the authors have used various data to discover best practices among contractors. Those data came from observations, and historical project documents (e.g. site diaries, contract documents, the project’s budget and schedule, bids, quality control programs, safety programs, punchlists, as-build drawings and so on). These were combined with sudden investigations without any notice or partial working together with project teams at sites to know whether the information provided by participants are reliable. The personal contact methods normally produce a high response rate, thus customers were interviewed to portray their satisfactions about the contractor’s services (KPI-3) and products (KPI-4). According to the definition of customers suggested by Mallak et al. [33] and Vietnamese business environment, customers in this study are project owners and capital suppliers. The detailed measures of KPIs are discussed in the next section. Since adequate data and useful data play a crucial role in achieving a good
research project [45] cited in [12], before analyzing, the inadequate data was collected again to ensure it was adequate and useful for benchmarking. 3.3. Data analysis for benchmarking The main purpose of this phase is to seek gaps in PMP of CIC8 and competitors (HBC and CotecCons). Fig. 3 illustrates the conceptual framework of data analysis for benchmarking. It is necessary to point out that how data are measured and processed before analyzing. As mentioned above, each KPI may be quantified through a set of sub-indicators. Quantitative measures are applied to KPI-1 and KPI-2. Based on the review of historical project documents, the construction cost performance (KPI-1) was measured by the percentage of cost-overrun in comparison with the estimated cost, while the construction time performance (KPI-2) was measured by the percentage of time-overrun as compared to the revised project duration recorded in contracts (refer to Table 2). Since customer satisfaction typically measured by Liker scales [49], project owners and capital suppliers were asked to rate various levels of satisfaction about the contractor’s services (KPI-3) and products (KPI-4) on ten point Likert scales (from 1 = ‘extremely less than expected’ to 10 = ‘extremely better than expected’). For example, as shown in Table 3, the score of each contractor corresponding to the sub-indicator S01 (cooperation with the owner) of KPI-3 is then computed as follows:
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769 KPIs
An internal organization (CIC8)
A competitor 1 (HBC)
763
A competitor 2 (CotecCons)
Sub-indicator 1 Sub-indicator 2 Cross-case synthesis using marks Sub-indicator … Sub-indicator n
Identify and record the actual PMP of the internal organization (CIC8) and the best practice of competitors.
Analyze the differences in PMP between the internal organization (CIC8) and competitors Make minor modifications in order to apply the best practice of competitors to the internal organization (CIC8)
Fig. 3. Data analysis for benchmarking PMP.
Table 3 Respondents’ evaluation about ‘Cooperation with the owner’ sub-indicator S-01 (KPI-3) Organization
No. of responses
Respondents’ evaluation using 10point Likert-type mark (S-01) 1
CIC 8 HBC CotecCons
2
5 5 5
3
4
5
6
7
8
1
2 1
2 2 1
1 1
1 2
9
5.2 6.4 7.6
14þ25þ26 CIC8 scoreðS-01Þ ¼ ¼ 5:2 5 15þ26þ17þ18 HBC scoreðS-01Þ ¼ 5 ¼ 6:4
4.1. Discussion of major KPIs
Score
10
1
4. Analysis and findings
16þ17þ28þ19 CotecCons scoreðS-01Þ ¼ 5 ¼ 7:6
According to these scores, the gaps and good practice in PMP of CIC8 and competitors have been addressed. Nevertheless, site observations, reviewing historical project documents and qualitative observations were integrated to validate reliability of collected data. Similarly, based on corresponding sub-indicators, KPI-5, KPI-6, KPI-7, KPI-8, and KPI-9 were measured using five-point Liker scales. By similar calculations, the scores of these KPIs and sub-indicators were then averaged to highlight the best practice among contractors. Since ‘‘the main finding from the analysis phase must be communicated and gain the acceptance of the involved persons, otherwise the study will not be successful’’ [6], all findings were represented to top managers so as to come up a commitment to practice.
By applying the realities of VCI, major KPIs can be discussed to uncover what behind the respondents’ judgment on KPIs. The order of KPIs in this section does not imply priorities in term of performance. Table 2 represents descriptions of nine KPIs that may be considered as major indicators to measure PMP. These KPIs may reflect the current tendency for the choice of performance indicators in Vietnam. The construction cost performance (KPI-1) and construction time performance (KPI-2) were highly evaluated as major indicators to measure PMP. These indicators not only show the spent time, but it also describes the efficiency in the project management. Two next indicators are the satisfaction of customers about the service (KPI-3) and products (KPI-4) which are also highly evaluated by respondents. This implied that the customer satisfaction is considered as an important performance indicator in the current business environment in Vietnam. Normally, customers expect the project completion as planed, quickly, inexpensively, and at the best quality possible whereas capital suppliers want more information for assessing the risk of their investment [33]. As a result, construction products and services in developing countries must meet those requirements. Furthermore, the contractors need to own an efficiency system of quality management in order to have products that may meet owners. Therefore, the performance of quality management system (QMS) has got the high rate responses. The quality of the project is recognized as one of important indicators which owners concern for. That is not only an important criterion for the growth of a con-
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
tractor but also a ‘‘touchstone’’ for measuring the subsistence and the reputation of contractors. The project team performance (KPI-6) is rather highly evaluated. Most responses agreed that a well-synchronized and effective project team will bring out many advantages leading to project’s success. In Vietnam, the dispute between the owner and the contractor that caused delays in payments by owners are common. Due to the lack of experience, contractors cannot forecast modifications and contingencies during construction phase. In addition, most Vietnamese contractors have no effective system which can record changes at the construction site. Especially, contracts usually omit or loosely mention about this matter. Hence, the change management performance (KPI-7) was considered as an indicator to measure PMP. Two last items in Table 2 are the material management (KPI-8) and the labor safety management (KPI-9). Material cost is a main element of total construction cost, thus an efficient management of materials will bring forth much competitive advantages to contractors. Moreover, the stakeholders paid more and more attention to safety management performance. It is widely accepted that labor safety yet strongly affects on the construction productivity, therefore, labor safety management is rated as an indicator for measuring PMP. 4.2. Lessons learned for improvement of construction cost performance (KPI-1) and time performance (KPI-2) Figs. 4 and 5 indicate that CotecCons obtained a lowest average percentage of cost-overrun and time-overrun among contractors. Therefore, the CotecCons’s best practices in KPI-1 and KPI-2 were identified to recommend how the CIC8’s performance should be improved. Based on the integration of historical project documents, the site observation and the field survey, the following best practices of CotecCons were recoded:
Contractor
CotecCons
HBC
0.60%
1%
CIC8
5%
0%
1%
2%
3%
4%
5%
6%
The percentage of construction cost variation
Fig. 4. The construction cost performance among contractors (2004– 2005).
CotecCons
Contractors
764
HBC
2%
5%
CIC8
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
The percentage of construction time variation
Fig. 5. The construction time performance among contractors (2004– 2005).
The CotecCons used the specialized software to estimate quantities for projects and calculate the unit price for these items and then a final price. The firm established a contract group to prepare contract documents, to manage actual construction cost, to monitor material prices, to calculate unit prices, and so on. This group consisted of excellent quantity surveyors and experts who have thorough understanding of material prices, estimation techniques, contract types and construction technology. This resulted in high accuracy estimations and in effective cost management. CotecCons also appointed professional cost engineers to the projects. These cost engineers are fully responsible for cost management at site and have thorough skills so as to monitor construction costs; Project planning and scheduling were undertaken by experience experts who can apply MS Project to assign resources and costs, track the project’s performance, review a current project status, and analyze performance with earned value analysis. The task force was established timely to intervene into time management at site in urgent situations; Weekly meeting, even daily meeting in urgent cases, was held with parties so as to solve problems occurred at construction sites. The meeting agenda is well-prepared to avoid waste time. In addition, sub-contractors and vendors were required to submit weekly schedules for daily monitoring. Moreover, valuable lessons were documented so that the lessons learned from completed projects can be used to manage changes and improve its performance; To accelerate construction work, the CotecCons has launched appropriate campaigns and the incentive wage to promote emulative spirit among workers. Also, technical training courses are usually provided to workers and on-site engineers as a solution to remove main causes of delays such as inadequate experience, improper planning, poor site management, inappropriate construction methods, and improper monitoring.
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
Unfortunately for the CIC8, it is quite the reverse. For example, CIC8 appointed no capable engineer to undertake cost management at sites and had no meeting to learn from completed projects. Furthermore, loose cost control, poor material management at site, careless choosing subcontractors were the other causes of poor construction cost management at CIC8. The bad performance of CIC8 resulted from the following causes: (1) planning and scheduling were undertook by un-experienced engineers who only use a bar chart to control; (2) non-synchronizing between costs and resources; (3) non-periodic meeting at sites; (4) slow decision making; (5) poor communication and relation among parties; and (6) no technical training course to employees. A recent study on large construction projects in Vietnam [46] also confirmed above problems. 4.3. Lessons learned for improvement of customer satisfaction (KPI-3 and KPI-4) Table 4 represents customer satisfaction about the performance of all contractors. There are two kinds of customer satisfaction involved in the study. The first one is the satisfaction in terms of construction products including the quality, wholesale price, material, and aesthetics. The second-one is the satisfaction of customers about services of contractors such as the efficiency of communication, the transparency, the readiness to solve problems during a construction phase. CotecCons, as shown in Table 4, have obtained best performance with the sub-indicator’s score was a range from 6.8 to 8.4 whereas CIC8 only gained from 3.8 to 5.8. The performance gap analysis indicated that customers have less satisfied with scheduling performance, aesthetic, site management of CIC8. Since customer satisfaction is an elusive concept related to various aspects of human perceptions [49], CIC8 must adapt itself to the best practices of competitors discussed in other sections to improve above bad performance.
The score of sub-indicators
CIC8
4.4. Lessons learned for improvement of QMS performance (KPI-5) HBC, as shown in Table 5, had highly scores with Q-04, Q-05 and Q-07 sub-indicators, while CotecCons had highly score in Q-01, Q-02, Q-03 and Q-06. Accordingly, the following best practices in PMP of both competitors were identified: CotecCons established the Department of quality management that has undertaken quality management activities. The head of this department is fully responsible for the quality management system and directly reported to a general manager. This department has the power to carrying out periodical or sudden inspection on the construction site in order to discover defects and deal with problems occurred in the performance of QMS. Due to providing technical training to employees, most employees have the thorough understanding of quality management knowledge, and then these bring out the best practices in QMS performance. HBC used professional forms and procedures continually improved in order to ensure the appropriateness of QMS. To facilitate to practitioners’ works, the following issues are included in each procedure: standards are well described; how defects are tracked out; who is responsible for under-qualified products, how to check and take over construction works. Questionnaires that were usually sent to customers during construction phase helped HBC to gain the owners’ assessment about construction process and quality. Since most scores were less than 2.0 (Table 5), CIC8 obtained bad performance in QMS. Although CIC8 received certificate of ISO 9001:2000 but the QMS implementation is only very strict at office whereas very lax at site. Lack of QMS training was also provided to employees. Procedures and forms were too difficult for workers
Table 5 Respondents’ evaluation about the QMS performance at site (KPI-5)
Table 4 Respondents’ evaluation about KPI-3 and KPI-4 Coding
765
HBC
KPI-3: The customer satisfaction on the contractor’s services S-01 Cooperation with the owner 5.2 6.4 S-02 Organization and administration 4.4 6.2 at site S-03 A sense of responsibility 5.8 7.4 S-04 The provision of solutions to solve 5.4 7.2 defective works
CotecCons 7.6 7.6 8.0 8.4
KPI-4: The customer satisfaction on the contractor’s products S-05 Construction schedule 3.8 6.2 6.8 performance S-06 Construction quality 5.0 6.6 7.4 S-07 Aesthetic of construction products 4.8 7.6 7.4 S-08 Construction materials and 5.0 7.0 7.8 equipments
Coding
The score of sub-indicators
CIC8
HBC
CotecCons
Q-01
Radical application of QMS into projects All project staffs are imparted and they have a thorough understanding of QMS The implementation of QMS by staffs The appropriation of procedures and forms for projects The continuous improvement of procedures and forms in order to be suitable for projects The audit of QMS at the project level Activities of QMS towards customers
2.0
3.6
3.8
2.6
3.6
3.8
1.8
3.6
3.8
2.0
4.0
3.8
2.0
4.0
3.8
1.8
3.6
4.0
2.0
4.0
3.8
Q-02
Q-03 Q-04 Q-05
Q-06 Q-07
766
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and foreman to understand. In addition, inadequacy of site inspection and paying inattention to the customer feedback were also causes of bad QMS performance. 4.5. Lessons learned for improvement of project team performance (KPI-6) Most sub-indicators with highly scores fall into HBC (Table 6), thus the following HBC’s best practices were discovered to come up improvement of CIC8’s performance: The project team established at the project commencement is staffed entirely by competent employees. The HBC provided for the policy and procedures that help the team members in doing their jobs. Objectives, responsibility and authority of project team clearly stipulated through processes, procedures, and rules, thus the HBC’s project team performance is highly evaluated. All members of the project team clearly understand their role in the success of projects. As a result, they wholeheartedly work with full responsibility for given tasks. Team work is first in their operation. The CIC8’s performance is different from the HBC’s one. The project team consisted of incompetent employees. The top management paid inattention to the role and responsibility of project teams. Furthermore, the bad performance of project teams in CIC8 also resulted from other sources such as inadequate policies and procedures that involved in performing given objectives of project management, lack of communication among staffs, no human resource management plan at sites, unclear responsibility among staffs, and slow making decision in construction phase. 4.6. Lessons learned for improvement of change management (KPI-7), material management (KPI-8), and labor safety (KPI-9) performance The results in Table 7 indicated that CotecCons obtained the best performance among contractors, thus the following the best practices were documented: Table 6 Respondents’ evaluation about the project team performance at site (KPI-6) Coding
The score of sub-indicators
CIC8
HBC
CotecCons
P-01
The establishment of the project team Top management support to the project team The clear stipulation of objectives of project team, responsibility and authority. The obvious procedures in the project team activities The obvious definition of role, rights and duties of each member of project team The degree of teamwork among members
2.0
4.0
4.0
2.0
4.0
3.6
2.0
4.0
3.6
2.0
4.0
3.6
2.6
4.0
3.8
2.6
4.0
3.8
P-02 P-03
P-04 P-05
P-06
Well-prepared and careful-considered articles of the contract are valuable lessons, especially in the article of changes. These will eliminate disputes among the parties in construction phase. This organization strictly follows the slogan ‘as more specific and more detailed in contract documents as easily avoiding disputes in the future’. ‘‘The Federation Internationale Des Ingenieurs-Councils (FIDIC) form of contract is mainly used with modifications to meet local laws and project requirements’’ [47]. It should be noted that Vietnam economy has just transformed from centralized into market economy, thus the FIDIC form of contract is unfamiliar with Vietnamese contractors. The project team recorded all changes and then timely informed to the project parties about possible impacts to time and cost, and how to solve them. Moreover, the team also kept a record of changes and their affects to provide valuable lessons for other projects. CotecCons applied an effective procurement system, including well-prepared material procurement planning, clear-documented solicitation, transparent choosing among potential suppliers, and well managing the relationship with suppliers. It is notably to mention that good material management of CotecCons results from an appropriate site layout plan, a careful investigation, strict conformity with ISO 9001:2000, perfect processes of receiving and delivering materials at site, and a computerized material planning to optimize the material reserve at site. CotecCons has also provided safety training to all employees and then issued safety certification. Only engineers and workers who have a safety certification may work at sites. Since safety procedures well planned, monitored, controlled may continuously motivate employees for safely carrying out the work [48], formal instructions on safety procedures have given to all employees before doing any activity. In addition, CotecCons has sufficiently provided personal protective equipment, and strictly disciplined the persons who violated the safety regulation. Safety officers, who has full responsible for safety planning, inspection, reporting and for imparting safety procedures to workers, was assigned to each construction site. Conversely, CIC8 always encounters delays of material delivery because of inappropriate site layout, poor material planning, and the inconformity of ‘receive and deliver materials’ process with acceleration. CIC8 also assigned safety officers and provided safety instructions but it was formalism. As a result, safety is often violated and rarely mentioned in weekly meetings. Finally, ‘‘simply identifying the best practices without importing them to ones own organization is not benchmarking’’ [6], thus lessons were given to the CIC8’s top managers as recommendations for improvement. They adapted their performance to the competitors’ best practices. However, if an organization gets no benefits, it will
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Table 7 Respondents’ evaluation about KPI-7, KPI-8, KPI-9 among contractors Coding
The score of sub-indicators
CIC8
HBC
CotecCons
KPI-7: The change management performance at site CH-01 The obvious stipulation for articles and procedures in contracts to manage changes CH-02 Approving changes before it is done CH-03 Keeping a record of changes during construction phase CH-04 The timely information to project team CH-05 The timely action of project team to changes CH-06 Keeping a record of changes and its affects as lessons learned for other projects
2.0 2.0 2.6 2.6 2.4 1.6
3.4 3.6 3.6 3.8 3.6 3.0
4.0 4.0 4.0 4.4 4.0 3.4
KPI-8: The material management performance at site Material provision planning M-01 The harmony in material management between the construction site and the company level M-02 The effectiveness of material management plan M-03 Radical application of material management plan in construction phase M-04 The transparence in evaluation suppliers
2.4 2.6 2.6 3.2
4.0 3.6 3.6 4.0
4.0 4.2 4.2 4.4
Material management in construction phase M-05 The degree of computerization in material management M-06 The effectiveness of material management at site M-07 The effectiveness of keeping a record of material usage and inventory M-08 The strict supervision in receiving and delivering materials at sites
2.0 3.0 2.6 3.0
2.6 3.4 3.2 4.2
3.6 4.0 3.6 4.4
KPI-9: The labor safety management performance at site L-01 Radical implementation of safety management at construction sites L-02 Project management always gives priority to safety in periodical meetings L-03 Safety plans are well-prepared by site engineers. L-04 Strict discipline and rewards in safety performance L-05 Providing personal protective equipment to workers
3.4 2.4 2.0 2.0 3.0
4.4 4.0 3.4 3.4 4.4
4.8 4.8 4.0 4.0 4.6
do nothing to change their own process [7]. ‘‘Benchmarking would be useful to the industry in achieving the 30% cost reduction’’ [8], as a result the study considered cost reduction rate as a criterion for benchmarking effectiveness. Because of the time limitation of research conditions from sponsors’ requirement (within 6 months), the financial measurement indicated that cost reduction rate is approximately 14% after making changes in the own organization (CIC8). This rate is less than an expectation rate. However, it is widely accepted that construction products have long fife cycle, thus 6 months are too short for benchmarking to evaluate its effectiveness. 5. Conclusions The major objective of this paper is to explore the application of benchmarking approach for improving the project management performance (PMP) among large contractors in Vietnam. A conceptual framework was developed in general to realize the benchmarking study on PMP. Nine significant KPIs were used as major indicators of PMP for construction projects from the contractor’s viewpoint. The typical three large contractors are involved in this research to benchmark the effectiveness of PMP. Above KPIs were insightfully verified and applied into 15 selected building projects. The sub-indicators corresponding to each of KPIs are discover so as to facilitate for practitioners in measuring PMP. Qualitative and quantitative measures were use to come up the scores of KPIs. Identified KPIs uncovered which KPIs are important to ensure high levels of PMP, and which ones should be
aligned in practices to make a qualitative judgment on success of construction projects in developing countries. In practice, owners may use proposed KPIs to evaluate potential contractors by requesting these indices. Particularly, construction companies may judge their own operations to determine concurrently their strongpoint and weakness, and afterward to improve their performance. The large contractors may also consider the aforementioned best practices as lessons learned for their projects. The findings suggest that benchmarking approach can help construction firms to compare their performance to competitors, to learn from the good practices of others and to carry out changes for continually improvement. Moreover, the results also encourage practitioners to benefit from the benchmarking. Limitations are unavoidable although extensive efforts were taken into this study which is focused on residential construction projects where other civil engineering projects were not included. Further studies may be extended by including more KPIs and sub-indicators. This research used the case studies of three large contractors to validate its conceptual framework and to exemplify its application. Thus, the generalization for other similar contractors may be impossible. Future studies should apply the proposed conceptual framework to other construction projects so that benchmarking approach may prove its usefulness in project management improvement. Findings seem to be localized, however the approach in this research is general thus it may be applied to other construction projects or contractors with minor modifications.
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Acknowledgements The authors would like to express their gratitude to the editor and the reviewers for their valuable comments to this manuscript. The authors are very grateful to the Chief Executive Officer (CEO), site engineers, project managers and site managers who worked for the CIC8, the HBC and the CotecCons as well as owners of 15 construction projects for their helps. References [1] Johnston Jr RE, Bate JD. The power of strategy innovation: a new way of linking creativity and strategic planning to discover great business opportunities. New York: AMACOM; 2003. p. 3. [2] Sommerville J, Robertson HW. A scorecard approach to benchmarking for total quality construction. Int J Quality Reliab Manage 2000;17(4/5):453–66. [3] Construction Industry Institute (CII). Management of project risks and uncertainties, publication 6-8, cost/schedule control task force. University of Texas; 1989. Available from website:
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PROJECT MANAGEMENT International Journal of Project Management 26 (2008) 758–769 www.elsevier.com/locate/ijproman
Improving project management performance of large contractors using benchmarking approach Van Truong Luu a, Soo-Yong Kim
b,*
, Tuan-Anh Huynh
c
a
b
Interdisciplinary Program of Construction Engineering and Management, Pukyong National University, San 100, Yongdang-Dong, Nam-Gu, Busan 608-739, Republic of Korea Division of Construction Engineering, Pukyong National University, San 100, Yongdang-Dong, Nam-Gu, Busan 608-739, Republic of Korea c Power Engineering and Consulting Company No. 3 (PECC3), Ho Chi Minh City, Viet Nam Received 8 February 2007; received in revised form 1 October 2007; accepted 2 October 2007
Abstract This paper presents how benchmarking approach can be applied to evaluate and improve the construction project management. A conceptual research framework was generally developed to perform a benchmarking study of the project management performance (PMP) from the contractor’s viewpoint. Three typical large contractors are involved in this study to validate the research approach. The paper provided in nine key performance indicators (KPIs) which can be applied to measure PMP and evaluate potential contractors as well as their capacity by requesting these indices. The findings suggested that benchmarking approach can help construction firms to learn from the best practices of others and carry out continuous improvement. The research methodology has general use thus it may be applied to other contractors with minor modifications. Ó 2007 Elsevier Ltd and IPMA. All rights reserved. Keywords: Benchmarking; Construction; Implementation; Key performance indicator (KPI); Managing projects; Vietnam
1. Introduction Traditionally, companies with all of their components of business models working together can often achieve longlasting success [1]. Similarly, the construction contractors succeed in their business for many years with one measure only – financial norms [2]. With the effect of the management that concentrates on this single measure (profit maximization) may disregard of investing time and money in the improvement of these key success factors [2]. All construction activities may have risk and uncertainty [3], especially in developing countries where the construction environment is much riskier [4]. Vietnam is not an exception. In order to exit and emulate in the dynamic marketplace, contractors must continually improve the *
Corresponding author. Tel.: +82 51 620 1548; fax: +82 51 628 2231. E-mail address: [email protected] (S.-Y. Kim).
0263-7863/$30.00 Ó 2007 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2007.10.002
construction project management, the project quality, and their own operation. Performance measurement is the heart of ceaseless improvement. Performance management aims at offering managers and members of staff of all ranks the ability to develop the direction, traction and speed of their organization [5]. As a regular rule, benchmarking is the next step to improve contractors’ efficiency and effectiveness of products and processes. This study is focusing on Vietnam, a developing country in South East Asia with a reformed economical policy. The major purpose of this research is to measure and improve the project management performance (PMP) of large contractors in this local market using benchmarking approach. The research questions seem to be localized, but the approach has general use. Therefore, the paper results in valuable lessons for both researchers and practitioners in application of benchmarking to improve their performance.
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2. Literature review 2.1. Background on benchmarking Xerox Corporation initiated the concept of benchmarking in order to encounter with the Japanese competitive challenge of the 1970s [6,7]. There are several ways to classify types of benchmarking. Based on what benchmarking focused on, three types of benchmarking are: (1) performance; (2) process; and (3) strategic. The comparison between one company and another may depend on performance benchmarking [8]. It is loosely to point out that performance benchmarking is the comparison with established standards or performance data of other organizations in order to improve the organization’s own performance. The comparison of methods and practices for performing business processes is based on the process benchmarking so as to learn from the best and to improve ones own processes whereas strategic benchmarking is the comparison of the strategic choices and dispositions which is made by other organizations for the purpose of collecting information so that they would be able to improve their own strategic planning and positioning [6]. Regarding the environment against benchmarking, the classifications of benchmarking are among internal, external. With internal benchmarking, an organization collects data on its own performance and assessment so as to make improvements through comparing to past years [9], whereas the comparison between one organization and competitors in the same industry is external benchmarking [10]. When dealing with external benchmarking, organizations focus on the identification of performance gaps and learn the best practice of competitors. Although benchmarking has many advantages but it is not a magic tool. ‘‘Benchmarking should not utilize as a way to set goals’’ [7]. It should be used as an improvement tool. Regarding main problems affecting a successful benchmarking study, Kozak [9] pointed out time constraints, competitive barriers, lack of both management commitment and professional human resources, resistance to change, poor planning and short-term expectation as key problems. 2.2. Previous research The use of benchmarking technique in various fields has appeared in many academic journals and technical reports. Many studies have been undertaken on the application of benchmarking to customer satisfaction, occupancy rates, capital investment [13–15], productivity in tourism and hotels [16], measuring and improving the performance of tourist destinations [17], financial savings [11], and operation improvements [11]. Since underlying principles of benchmarking resulted from Deming’s quality management theory [18], the application of benchmarking has predominantly focused on quality management [10,18,19]. Other efforts has recently
759
been paid to examples of the effectiveness of benchmarking, but they have focused on application oriented [20], promoting profitability of benchmarking [21,22] as well as its possible benefits [23], results oriented [24] and method oriented [25]. Benchmarking approach has also proved its usefulness in measuring PMP based on key performance indicators (KPIs) or success criteria. There were some papers that provided valuable findings on the different KPIs to measure PMP. New frameworks have been proposed to consider success criteria [26] and to define project success [27]. Success factors and criteria have been also identified through summarizing several research works [28]. Furthermore, Nguyen et al. [29] uncovered 15 project success factors grouped under four COMs: comfort, competence, commitment and communication. According to Shenhar et al. [30], four dimensions for measuring project success are project efficiency, impact on the customer, direct and business success, and preparing for the future. However, regarding perceptions of project success, Wateridge [31] confirmed that project managers often concentrated on the success factors without success criteria whereas users may be more concerned about their happiness with performance in the long-term. Since project managers’ success is judged on the quality of a project [32], quality performance measures have been used instead of traditional performance measures of meeting time and costs. To cope with the rise of stakeholders in project management, Mallak et al. [33] identified and radically discussed categories of stakeholders to manage and design strategies for satisfying the stakeholders. In construction industry, the application of benchmarking has also emerged in many academic journals and technical reports and following are a review of predominant papers. 2.3. Benchmarking in the construction industry Contemporary benchmarking practice frameworks have been proposed to improve construction productivity [34] and identify critical success factors for design-build projects in construction [35]. Furthermore, Chan and Chan [36] suggested a set of KPIs to formulate a framework for measuring and benchmarking the success of selected construction projects. Models for application of benchmarking approach have focused on the UK construction industry [8] and improvement of contractor selection for construction projects [37] in Hong Kong. Application of benchmarking approach is very promising. Benchmarking can be used to improve the overall attainment of total quality management for a UK construction organization [2], to evaluate construction safety management in China [38], to assess safety climates of employees and contractors working within a partnership arrangement [39], and to analyze the quality of project planning for selected industries in Israel [40]. Interestingly, benchmarking also was suggested as a useful tool to investigate and manage changes on construction projects [8]. The literature revealed that very few
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efforts have been devoted to the application of benchmarking to assess PMP of contractors in developing countries where the construction industry plays a key role in the economy’s grow rate. Therefore, the core objective of this study is to develop a conceptual framework for improving PMP of large contractors in Vietnam using benchmarking approach. To measure PMP, a set of KPIs and sub-KPIs were addressed through literature review and expert interviews. Three typical large contractors are involved in this study to validate the proposed framework and identified KPIs. 3. Research methodology The selection of an appropriate framework plays a key role in executing a good study. Therefore, the study adopted steps which were pointed out by Lankford [7] as a conceptual framework for developing the benchmarking process. However, it has been adjusted and broken down in accordance with specific conditions of Vietnamese construction industry (VCI). Table 1 shows the profile of three typical large contractors involved in benchmarking the effectiveness of PMP. Since an external benchmarking study is applied when an organization has a desire to improve its performance through the best practices of competitors [7], the Construction and Investment Corporation 8 (CIC8) were selected as an internal organization. The Cotec Construction Corporation (CotecCons) is currently among leading state-owned contractors in Vietnam [50,51]. The Hoa Binh Construction and Real Easteate Corporation (HBC) have gained the owners’ confidence in construction and decoration services thereby HBC have become one of reliable private contractors over the last 2 years [52]. As a result, HBC and CotecCons were selected as competitors. Moreover, HBC and CotecCons had good practices in PMP but failures in real-estate business whereas CIC8 had fairly successful in real-estate but bad practices in
PMP. Furthermore, this paper describes only a first stage of an overall study that benchmark both PMP and the real-estate business between aforementioned contractors. The overall study is a part of a program sponsored by the Vietnam Association of Construction Contractors (VACC) in order to meet two objectives. First, the Vietnamese construction companies (VCCs) enhance their capabilities to compete with foreign companies when Vietnam enters World Trade Organization (WTO). Secondly, probable barriers to application of new management frameworks, for example benchmarking and balanced scorecard, into a construction company are identified for removal. The planed program duration is 2 years (2005–2007). Three outputs of the program are: (1) improving practical skills and knowledge of VCCs’ labor force; (2) achieving effective corporate governance in the VCI; and (3) improving and consolidating VCC’s competitive advantages. Therefore, all participants can benefit from the overall study and then the authors received strong commitments from top managers to conduct the study. All the contractors have similarities in type, size, number of staffs, average annual revenue, and products but they are different from the effectiveness of PMP. In Vietnam, a contractor is normally considered small, medium, and large when his average annual revenue is from 50 billion VND ($1.00 VND16045) to 100 billion VND, 100 billion VND to 200 billion VND and greater than 200 billion VND, respectively. Moreover, this study assumed that large contractors must have number of skilled workers, and number of unskilled workers greater than 500 and 1000 persons, respectively. Fig. 1 illustrates the conceptual framework of research methodology, in which the determination of KPIs is an initially important step. These KPIs plays a key role in providing information on the performance of construction tasks and PMP [41]. Since authors’ expectation is to give facilities for practice, the detail research approach is thoroughly introduced in below sections.
Table 1 A profile of large contractors Contractor
Construction investment company 8 (CIC8) Hoa Binh Corporation (HBC) Cotec Construction Corporation (CotecCons)
Identifying KPIs
Staffs* Annual Major services net revenue (billion VND) 350; 580; 1500 300; 820; 1800 340; 730; 1600
206
240
Construction, decoration, trading in construction materials, real-estate investment Construction, decoration, realestate investment
Refer to Figure 2
Data collection for benchmarking
An internal organization (CIC8)
A competitor 1 (HBC)
A competitor 2 (CotecCons)
Data analysis for benchmarking
210
Construction, decoration, realestate investment and equipment installation
Refer to Figure 3
Conclusions and Recommendations
Staffs*
= the number of engineers/architects, skilled workers, and Note: unskilled workers, respectively.
Fig. 1. A conceptual framework for the research methodology.
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
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3.1. Identifying KPIs
3.2. Data collection for benchmarking
The main purpose of this step is to identify appropriate KPIs may measure the performance towards objectives of project management. Normally, the project and organizational performance is measured in terms of KPIs ([42] cited in [36]). Since too many KPIs can lead to unmanageable, management must select appropriate KPIs for each objective of project management. A set of raw KPIs was initially uncovered from a rigorous literature review of previous studies on KPIs/success criteria [2,8,26–41,43]. Unstructured interviews have been conducted to refine factors being in accordance with measuring PMP of large contractors. An expert group of nine construction practitioners and five academic researchers was asked to rate factors on five-point Likert scales. After considering conditions of VCI and characteristics of an effective KPI proposed by Isˇorait_e [6], aforementioned expert interviews resulted in 30 preliminary KPIs. The first questionnaire was designed and distributed to 92 professionals with more than 5 years experience working for large contractors. The study adopted five-point Likert scales (from 1 = ‘not important to measure PMP’ to 5 = ‘very important to measure PMP’) to assign to respondents’ rating. Thirty-two full responses were obtained showing a reply rate of 34.7%. Analyzing the data resulted in nine factors which were significant in measuring PMP. Table 2 shows the mean value and standard deviation of nine factors. Standard deviation of each factor was small enough to conclude the respondents agreed on its significance. In addition, the reliability analysis also resulted in the Cronbach’s alpha coefficient of 0.808. Therefore, those factors may be considered as major KPIs for next steps of the study.
Data collection plays a key role in the research process [44], especially in a benchmarking study. Fig. 2 represents a framework of data collection for benchmarking. The sources to collect data for benchmarking coming from 15 projects were resulted from five for each contractor. All of those had common baseline conditions that were consistent with comparing across companies and projects. For instance, all projects were: (1) building construction projects; (2) located in Ho Chi Minh city; (3) commenced and completed during the past 2 years (2004–2005); (4) small variations of the project scope; (5) the same structural system and foundation; (6) removed the inflation impact from construction costs; and others. Since without radical verification of identified KPIs may lead to foolish benchmarking, identified KPIs were revised by 18 project managers and 9 engineers who worked directly for 15 selected projects. The purpose of this work is to ensure whether nine KPIs are appropriate for measuring PMP. Respondents agreed with nine KPIs and their quantifying but disagreed with quantitative formulas of KPI-1 and KPI-2. They argued that inflation impacts should be removed from construction costs and the extension of time (granted by owners) should be added in revised construction time. These were carefully discussed to finalize quantitative formulas of KPI-1 and KPI-2 (Table 2). Data collection traditionally starts with a pilot data collection phase [8]. Thus, the essential information to design questions in a second survey was identified through a pilot survey involved in 27 aforementioned project managers and engineers. The purpose of this
Table 2 Major KPIs with evaluation approach Code KPI-1 KPI-2
KPI-3
KPIs Construction cost performance Construction time performance
KPI-7
Customer satisfaction on services Customer satisfaction on products Quality management system (QMS) The project team performance Change management
KPI-8
Material management
KPI-9
Labor safety management
KPI-4 KPI-5 KPI-6
Note: SD = standard deviation.
Evaluation approach The percentage of construction cost variance ¼
actual construction cost-estimated construction cost estimated construction cost
100
construction time The percentage of construction time variance ¼ discounted revised construction time 100 where, discounted construction time = actual construction time revised construction duration, revised construction time = original construction duration (recorded in contract) + the extension of time (granted by the owner) The degree of customer satisfaction on the contractor’s construction services is measured by a 10-point Likert-type mark (from 1 = ‘‘extremely dissatisfied’’ to 10 = ‘‘extremely satisfied’’) The degree of customer satisfaction on the contractor’s construction products is measured by a 10-point Likert-type mark (from 1 = ‘‘extremely dissatisfied’’ to 10 = ‘‘extremely satisfied’’) The degree of QMS performance is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The project team performance at the project level is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The change management performance at the project level is measured by a five-point Likertype mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The material management performance at sites is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’) The labor safety performance at the project level is measured by a five-point Liker-type mark (from 1 = ‘‘very bad performance’’ to 5 = ‘‘very good performance’’)
SD
Mean
0.456
4.7187
0.482
4.6563
0.491
4.3750
0.456
4.2812
0.390
3.9062
0.420
3.7812
0.498
3.5938
0.504
3.5625
0.508
3.5000
762
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769 Interview top management
Verify KPIs and identify sub-indicators
Design questionnaires and make a pilot test
Collect data on PMP of competitors
Review project documents
Visiting construction sites, qualitative observations, and so on
Collect the following data: • Main information of projects, • Managing project documents, • Records of project finance, • Documents of checking and taking over the buildings, • Project team activities, • Quality management system (QMS) performance, and so on.
Collect data on PMP of the internal organization
Combine collected data
Check the adequateness of collected data
No
Re-collect inadequate data
Yes Collected data are ready for analysis and benchmarking
Fig. 2. Data collection for benchmarking.
survey is to uncover possible sub-indicators of each KPI in order to facilitate measures in practice. Based on identified sub-indicators through the pilot survey, questions are ready to collect data from 15 selected projects. Fifteen project managers are concerned in data collection. Interview methods are widely used because of general application for differing information requirements and differing situations [44] and, therefore, semi-structured interviews were selected to collect data relating to KPI-1, KPI-2, KPI-5, KPI-6, KPI-7, KPI-8 and KPI-9 (Table 2). In addition, the authors have used various data to discover best practices among contractors. Those data came from observations, and historical project documents (e.g. site diaries, contract documents, the project’s budget and schedule, bids, quality control programs, safety programs, punchlists, as-build drawings and so on). These were combined with sudden investigations without any notice or partial working together with project teams at sites to know whether the information provided by participants are reliable. The personal contact methods normally produce a high response rate, thus customers were interviewed to portray their satisfactions about the contractor’s services (KPI-3) and products (KPI-4). According to the definition of customers suggested by Mallak et al. [33] and Vietnamese business environment, customers in this study are project owners and capital suppliers. The detailed measures of KPIs are discussed in the next section. Since adequate data and useful data play a crucial role in achieving a good
research project [45] cited in [12], before analyzing, the inadequate data was collected again to ensure it was adequate and useful for benchmarking. 3.3. Data analysis for benchmarking The main purpose of this phase is to seek gaps in PMP of CIC8 and competitors (HBC and CotecCons). Fig. 3 illustrates the conceptual framework of data analysis for benchmarking. It is necessary to point out that how data are measured and processed before analyzing. As mentioned above, each KPI may be quantified through a set of sub-indicators. Quantitative measures are applied to KPI-1 and KPI-2. Based on the review of historical project documents, the construction cost performance (KPI-1) was measured by the percentage of cost-overrun in comparison with the estimated cost, while the construction time performance (KPI-2) was measured by the percentage of time-overrun as compared to the revised project duration recorded in contracts (refer to Table 2). Since customer satisfaction typically measured by Liker scales [49], project owners and capital suppliers were asked to rate various levels of satisfaction about the contractor’s services (KPI-3) and products (KPI-4) on ten point Likert scales (from 1 = ‘extremely less than expected’ to 10 = ‘extremely better than expected’). For example, as shown in Table 3, the score of each contractor corresponding to the sub-indicator S01 (cooperation with the owner) of KPI-3 is then computed as follows:
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769 KPIs
An internal organization (CIC8)
A competitor 1 (HBC)
763
A competitor 2 (CotecCons)
Sub-indicator 1 Sub-indicator 2 Cross-case synthesis using marks Sub-indicator … Sub-indicator n
Identify and record the actual PMP of the internal organization (CIC8) and the best practice of competitors.
Analyze the differences in PMP between the internal organization (CIC8) and competitors Make minor modifications in order to apply the best practice of competitors to the internal organization (CIC8)
Fig. 3. Data analysis for benchmarking PMP.
Table 3 Respondents’ evaluation about ‘Cooperation with the owner’ sub-indicator S-01 (KPI-3) Organization
No. of responses
Respondents’ evaluation using 10point Likert-type mark (S-01) 1
CIC 8 HBC CotecCons
2
5 5 5
3
4
5
6
7
8
1
2 1
2 2 1
1 1
1 2
9
5.2 6.4 7.6
14þ25þ26 CIC8 scoreðS-01Þ ¼ ¼ 5:2 5 15þ26þ17þ18 HBC scoreðS-01Þ ¼ 5 ¼ 6:4
4.1. Discussion of major KPIs
Score
10
1
4. Analysis and findings
16þ17þ28þ19 CotecCons scoreðS-01Þ ¼ 5 ¼ 7:6
According to these scores, the gaps and good practice in PMP of CIC8 and competitors have been addressed. Nevertheless, site observations, reviewing historical project documents and qualitative observations were integrated to validate reliability of collected data. Similarly, based on corresponding sub-indicators, KPI-5, KPI-6, KPI-7, KPI-8, and KPI-9 were measured using five-point Liker scales. By similar calculations, the scores of these KPIs and sub-indicators were then averaged to highlight the best practice among contractors. Since ‘‘the main finding from the analysis phase must be communicated and gain the acceptance of the involved persons, otherwise the study will not be successful’’ [6], all findings were represented to top managers so as to come up a commitment to practice.
By applying the realities of VCI, major KPIs can be discussed to uncover what behind the respondents’ judgment on KPIs. The order of KPIs in this section does not imply priorities in term of performance. Table 2 represents descriptions of nine KPIs that may be considered as major indicators to measure PMP. These KPIs may reflect the current tendency for the choice of performance indicators in Vietnam. The construction cost performance (KPI-1) and construction time performance (KPI-2) were highly evaluated as major indicators to measure PMP. These indicators not only show the spent time, but it also describes the efficiency in the project management. Two next indicators are the satisfaction of customers about the service (KPI-3) and products (KPI-4) which are also highly evaluated by respondents. This implied that the customer satisfaction is considered as an important performance indicator in the current business environment in Vietnam. Normally, customers expect the project completion as planed, quickly, inexpensively, and at the best quality possible whereas capital suppliers want more information for assessing the risk of their investment [33]. As a result, construction products and services in developing countries must meet those requirements. Furthermore, the contractors need to own an efficiency system of quality management in order to have products that may meet owners. Therefore, the performance of quality management system (QMS) has got the high rate responses. The quality of the project is recognized as one of important indicators which owners concern for. That is not only an important criterion for the growth of a con-
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
tractor but also a ‘‘touchstone’’ for measuring the subsistence and the reputation of contractors. The project team performance (KPI-6) is rather highly evaluated. Most responses agreed that a well-synchronized and effective project team will bring out many advantages leading to project’s success. In Vietnam, the dispute between the owner and the contractor that caused delays in payments by owners are common. Due to the lack of experience, contractors cannot forecast modifications and contingencies during construction phase. In addition, most Vietnamese contractors have no effective system which can record changes at the construction site. Especially, contracts usually omit or loosely mention about this matter. Hence, the change management performance (KPI-7) was considered as an indicator to measure PMP. Two last items in Table 2 are the material management (KPI-8) and the labor safety management (KPI-9). Material cost is a main element of total construction cost, thus an efficient management of materials will bring forth much competitive advantages to contractors. Moreover, the stakeholders paid more and more attention to safety management performance. It is widely accepted that labor safety yet strongly affects on the construction productivity, therefore, labor safety management is rated as an indicator for measuring PMP. 4.2. Lessons learned for improvement of construction cost performance (KPI-1) and time performance (KPI-2) Figs. 4 and 5 indicate that CotecCons obtained a lowest average percentage of cost-overrun and time-overrun among contractors. Therefore, the CotecCons’s best practices in KPI-1 and KPI-2 were identified to recommend how the CIC8’s performance should be improved. Based on the integration of historical project documents, the site observation and the field survey, the following best practices of CotecCons were recoded:
Contractor
CotecCons
HBC
0.60%
1%
CIC8
5%
0%
1%
2%
3%
4%
5%
6%
The percentage of construction cost variation
Fig. 4. The construction cost performance among contractors (2004– 2005).
CotecCons
Contractors
764
HBC
2%
5%
CIC8
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
The percentage of construction time variation
Fig. 5. The construction time performance among contractors (2004– 2005).
The CotecCons used the specialized software to estimate quantities for projects and calculate the unit price for these items and then a final price. The firm established a contract group to prepare contract documents, to manage actual construction cost, to monitor material prices, to calculate unit prices, and so on. This group consisted of excellent quantity surveyors and experts who have thorough understanding of material prices, estimation techniques, contract types and construction technology. This resulted in high accuracy estimations and in effective cost management. CotecCons also appointed professional cost engineers to the projects. These cost engineers are fully responsible for cost management at site and have thorough skills so as to monitor construction costs; Project planning and scheduling were undertaken by experience experts who can apply MS Project to assign resources and costs, track the project’s performance, review a current project status, and analyze performance with earned value analysis. The task force was established timely to intervene into time management at site in urgent situations; Weekly meeting, even daily meeting in urgent cases, was held with parties so as to solve problems occurred at construction sites. The meeting agenda is well-prepared to avoid waste time. In addition, sub-contractors and vendors were required to submit weekly schedules for daily monitoring. Moreover, valuable lessons were documented so that the lessons learned from completed projects can be used to manage changes and improve its performance; To accelerate construction work, the CotecCons has launched appropriate campaigns and the incentive wage to promote emulative spirit among workers. Also, technical training courses are usually provided to workers and on-site engineers as a solution to remove main causes of delays such as inadequate experience, improper planning, poor site management, inappropriate construction methods, and improper monitoring.
V.T. Luu et al. / International Journal of Project Management 26 (2008) 758–769
Unfortunately for the CIC8, it is quite the reverse. For example, CIC8 appointed no capable engineer to undertake cost management at sites and had no meeting to learn from completed projects. Furthermore, loose cost control, poor material management at site, careless choosing subcontractors were the other causes of poor construction cost management at CIC8. The bad performance of CIC8 resulted from the following causes: (1) planning and scheduling were undertook by un-experienced engineers who only use a bar chart to control; (2) non-synchronizing between costs and resources; (3) non-periodic meeting at sites; (4) slow decision making; (5) poor communication and relation among parties; and (6) no technical training course to employees. A recent study on large construction projects in Vietnam [46] also confirmed above problems. 4.3. Lessons learned for improvement of customer satisfaction (KPI-3 and KPI-4) Table 4 represents customer satisfaction about the performance of all contractors. There are two kinds of customer satisfaction involved in the study. The first one is the satisfaction in terms of construction products including the quality, wholesale price, material, and aesthetics. The second-one is the satisfaction of customers about services of contractors such as the efficiency of communication, the transparency, the readiness to solve problems during a construction phase. CotecCons, as shown in Table 4, have obtained best performance with the sub-indicator’s score was a range from 6.8 to 8.4 whereas CIC8 only gained from 3.8 to 5.8. The performance gap analysis indicated that customers have less satisfied with scheduling performance, aesthetic, site management of CIC8. Since customer satisfaction is an elusive concept related to various aspects of human perceptions [49], CIC8 must adapt itself to the best practices of competitors discussed in other sections to improve above bad performance.
The score of sub-indicators
CIC8
4.4. Lessons learned for improvement of QMS performance (KPI-5) HBC, as shown in Table 5, had highly scores with Q-04, Q-05 and Q-07 sub-indicators, while CotecCons had highly score in Q-01, Q-02, Q-03 and Q-06. Accordingly, the following best practices in PMP of both competitors were identified: CotecCons established the Department of quality management that has undertaken quality management activities. The head of this department is fully responsible for the quality management system and directly reported to a general manager. This department has the power to carrying out periodical or sudden inspection on the construction site in order to discover defects and deal with problems occurred in the performance of QMS. Due to providing technical training to employees, most employees have the thorough understanding of quality management knowledge, and then these bring out the best practices in QMS performance. HBC used professional forms and procedures continually improved in order to ensure the appropriateness of QMS. To facilitate to practitioners’ works, the following issues are included in each procedure: standards are well described; how defects are tracked out; who is responsible for under-qualified products, how to check and take over construction works. Questionnaires that were usually sent to customers during construction phase helped HBC to gain the owners’ assessment about construction process and quality. Since most scores were less than 2.0 (Table 5), CIC8 obtained bad performance in QMS. Although CIC8 received certificate of ISO 9001:2000 but the QMS implementation is only very strict at office whereas very lax at site. Lack of QMS training was also provided to employees. Procedures and forms were too difficult for workers
Table 5 Respondents’ evaluation about the QMS performance at site (KPI-5)
Table 4 Respondents’ evaluation about KPI-3 and KPI-4 Coding
765
HBC
KPI-3: The customer satisfaction on the contractor’s services S-01 Cooperation with the owner 5.2 6.4 S-02 Organization and administration 4.4 6.2 at site S-03 A sense of responsibility 5.8 7.4 S-04 The provision of solutions to solve 5.4 7.2 defective works
CotecCons 7.6 7.6 8.0 8.4
KPI-4: The customer satisfaction on the contractor’s products S-05 Construction schedule 3.8 6.2 6.8 performance S-06 Construction quality 5.0 6.6 7.4 S-07 Aesthetic of construction products 4.8 7.6 7.4 S-08 Construction materials and 5.0 7.0 7.8 equipments
Coding
The score of sub-indicators
CIC8
HBC
CotecCons
Q-01
Radical application of QMS into projects All project staffs are imparted and they have a thorough understanding of QMS The implementation of QMS by staffs The appropriation of procedures and forms for projects The continuous improvement of procedures and forms in order to be suitable for projects The audit of QMS at the project level Activities of QMS towards customers
2.0
3.6
3.8
2.6
3.6
3.8
1.8
3.6
3.8
2.0
4.0
3.8
2.0
4.0
3.8
1.8
3.6
4.0
2.0
4.0
3.8
Q-02
Q-03 Q-04 Q-05
Q-06 Q-07
766
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and foreman to understand. In addition, inadequacy of site inspection and paying inattention to the customer feedback were also causes of bad QMS performance. 4.5. Lessons learned for improvement of project team performance (KPI-6) Most sub-indicators with highly scores fall into HBC (Table 6), thus the following HBC’s best practices were discovered to come up improvement of CIC8’s performance: The project team established at the project commencement is staffed entirely by competent employees. The HBC provided for the policy and procedures that help the team members in doing their jobs. Objectives, responsibility and authority of project team clearly stipulated through processes, procedures, and rules, thus the HBC’s project team performance is highly evaluated. All members of the project team clearly understand their role in the success of projects. As a result, they wholeheartedly work with full responsibility for given tasks. Team work is first in their operation. The CIC8’s performance is different from the HBC’s one. The project team consisted of incompetent employees. The top management paid inattention to the role and responsibility of project teams. Furthermore, the bad performance of project teams in CIC8 also resulted from other sources such as inadequate policies and procedures that involved in performing given objectives of project management, lack of communication among staffs, no human resource management plan at sites, unclear responsibility among staffs, and slow making decision in construction phase. 4.6. Lessons learned for improvement of change management (KPI-7), material management (KPI-8), and labor safety (KPI-9) performance The results in Table 7 indicated that CotecCons obtained the best performance among contractors, thus the following the best practices were documented: Table 6 Respondents’ evaluation about the project team performance at site (KPI-6) Coding
The score of sub-indicators
CIC8
HBC
CotecCons
P-01
The establishment of the project team Top management support to the project team The clear stipulation of objectives of project team, responsibility and authority. The obvious procedures in the project team activities The obvious definition of role, rights and duties of each member of project team The degree of teamwork among members
2.0
4.0
4.0
2.0
4.0
3.6
2.0
4.0
3.6
2.0
4.0
3.6
2.6
4.0
3.8
2.6
4.0
3.8
P-02 P-03
P-04 P-05
P-06
Well-prepared and careful-considered articles of the contract are valuable lessons, especially in the article of changes. These will eliminate disputes among the parties in construction phase. This organization strictly follows the slogan ‘as more specific and more detailed in contract documents as easily avoiding disputes in the future’. ‘‘The Federation Internationale Des Ingenieurs-Councils (FIDIC) form of contract is mainly used with modifications to meet local laws and project requirements’’ [47]. It should be noted that Vietnam economy has just transformed from centralized into market economy, thus the FIDIC form of contract is unfamiliar with Vietnamese contractors. The project team recorded all changes and then timely informed to the project parties about possible impacts to time and cost, and how to solve them. Moreover, the team also kept a record of changes and their affects to provide valuable lessons for other projects. CotecCons applied an effective procurement system, including well-prepared material procurement planning, clear-documented solicitation, transparent choosing among potential suppliers, and well managing the relationship with suppliers. It is notably to mention that good material management of CotecCons results from an appropriate site layout plan, a careful investigation, strict conformity with ISO 9001:2000, perfect processes of receiving and delivering materials at site, and a computerized material planning to optimize the material reserve at site. CotecCons has also provided safety training to all employees and then issued safety certification. Only engineers and workers who have a safety certification may work at sites. Since safety procedures well planned, monitored, controlled may continuously motivate employees for safely carrying out the work [48], formal instructions on safety procedures have given to all employees before doing any activity. In addition, CotecCons has sufficiently provided personal protective equipment, and strictly disciplined the persons who violated the safety regulation. Safety officers, who has full responsible for safety planning, inspection, reporting and for imparting safety procedures to workers, was assigned to each construction site. Conversely, CIC8 always encounters delays of material delivery because of inappropriate site layout, poor material planning, and the inconformity of ‘receive and deliver materials’ process with acceleration. CIC8 also assigned safety officers and provided safety instructions but it was formalism. As a result, safety is often violated and rarely mentioned in weekly meetings. Finally, ‘‘simply identifying the best practices without importing them to ones own organization is not benchmarking’’ [6], thus lessons were given to the CIC8’s top managers as recommendations for improvement. They adapted their performance to the competitors’ best practices. However, if an organization gets no benefits, it will
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767
Table 7 Respondents’ evaluation about KPI-7, KPI-8, KPI-9 among contractors Coding
The score of sub-indicators
CIC8
HBC
CotecCons
KPI-7: The change management performance at site CH-01 The obvious stipulation for articles and procedures in contracts to manage changes CH-02 Approving changes before it is done CH-03 Keeping a record of changes during construction phase CH-04 The timely information to project team CH-05 The timely action of project team to changes CH-06 Keeping a record of changes and its affects as lessons learned for other projects
2.0 2.0 2.6 2.6 2.4 1.6
3.4 3.6 3.6 3.8 3.6 3.0
4.0 4.0 4.0 4.4 4.0 3.4
KPI-8: The material management performance at site Material provision planning M-01 The harmony in material management between the construction site and the company level M-02 The effectiveness of material management plan M-03 Radical application of material management plan in construction phase M-04 The transparence in evaluation suppliers
2.4 2.6 2.6 3.2
4.0 3.6 3.6 4.0
4.0 4.2 4.2 4.4
Material management in construction phase M-05 The degree of computerization in material management M-06 The effectiveness of material management at site M-07 The effectiveness of keeping a record of material usage and inventory M-08 The strict supervision in receiving and delivering materials at sites
2.0 3.0 2.6 3.0
2.6 3.4 3.2 4.2
3.6 4.0 3.6 4.4
KPI-9: The labor safety management performance at site L-01 Radical implementation of safety management at construction sites L-02 Project management always gives priority to safety in periodical meetings L-03 Safety plans are well-prepared by site engineers. L-04 Strict discipline and rewards in safety performance L-05 Providing personal protective equipment to workers
3.4 2.4 2.0 2.0 3.0
4.4 4.0 3.4 3.4 4.4
4.8 4.8 4.0 4.0 4.6
do nothing to change their own process [7]. ‘‘Benchmarking would be useful to the industry in achieving the 30% cost reduction’’ [8], as a result the study considered cost reduction rate as a criterion for benchmarking effectiveness. Because of the time limitation of research conditions from sponsors’ requirement (within 6 months), the financial measurement indicated that cost reduction rate is approximately 14% after making changes in the own organization (CIC8). This rate is less than an expectation rate. However, it is widely accepted that construction products have long fife cycle, thus 6 months are too short for benchmarking to evaluate its effectiveness. 5. Conclusions The major objective of this paper is to explore the application of benchmarking approach for improving the project management performance (PMP) among large contractors in Vietnam. A conceptual framework was developed in general to realize the benchmarking study on PMP. Nine significant KPIs were used as major indicators of PMP for construction projects from the contractor’s viewpoint. The typical three large contractors are involved in this research to benchmark the effectiveness of PMP. Above KPIs were insightfully verified and applied into 15 selected building projects. The sub-indicators corresponding to each of KPIs are discover so as to facilitate for practitioners in measuring PMP. Qualitative and quantitative measures were use to come up the scores of KPIs. Identified KPIs uncovered which KPIs are important to ensure high levels of PMP, and which ones should be
aligned in practices to make a qualitative judgment on success of construction projects in developing countries. In practice, owners may use proposed KPIs to evaluate potential contractors by requesting these indices. Particularly, construction companies may judge their own operations to determine concurrently their strongpoint and weakness, and afterward to improve their performance. The large contractors may also consider the aforementioned best practices as lessons learned for their projects. The findings suggest that benchmarking approach can help construction firms to compare their performance to competitors, to learn from the good practices of others and to carry out changes for continually improvement. Moreover, the results also encourage practitioners to benefit from the benchmarking. Limitations are unavoidable although extensive efforts were taken into this study which is focused on residential construction projects where other civil engineering projects were not included. Further studies may be extended by including more KPIs and sub-indicators. This research used the case studies of three large contractors to validate its conceptual framework and to exemplify its application. Thus, the generalization for other similar contractors may be impossible. Future studies should apply the proposed conceptual framework to other construction projects so that benchmarking approach may prove its usefulness in project management improvement. Findings seem to be localized, however the approach in this research is general thus it may be applied to other construction projects or contractors with minor modifications.
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