Performance management in the construction industry

Construction projects are considered a success when they are completed on time and on budget, and when performance goals are achieved. Performance goals are directly related to productivity, time management, and decision making. In order to achieve these goals, and for construction engineering to be executed in the most effective and structured manner, companies need to build and maintain strong teams, track and measure success, and ensure the project runs smoothly. This is where performance management comes into play.

What is performance management in construction?

Performance management in construction is the process of creating a work environment where employees and subcontractors are enabled to perform to the best of their abilities. It is how managers communicate what is expected of their team, measure success, give feedback, and find solutions to barriers that prevent their crew from completing their tasks.

Why is performance management important in construction?

Performance management is important in the construction industry because it allows managers to determine how (and if) employees are contributing to the overall business strategy and project success. Through performance management, managers can identify and address problems quickly and keep employees motivated, engaged, and on schedule—which in turn improves productivity and profitability.

Performance management demonstrates a level of care for a construction company’s team and clients, giving them a competitive edge in the industry.

Current state of performance management in the construction industry

Construction companies have been using the same performance management tactics for years. Some of these tactics work well and should be kept in rotation, while others could use some adjustments or be left out altogether. There is also room for improvement given the advancements of technology and changes to the construction industry and to society.

Some of the existing and well-known performance management systems in place in the construction industry include:

• Lean Construction Process
• Last Planner® System 
• Performance Process Framework 
• The Balanced Scorecard
• Key Performance Indicators (KPIs)

But why is it that while 92% of organizations in North America have a performance management process in place(1), only 54% of project work tasked out by foremen is actually completed within their estimated timeline?(2)

In an industry survey conducted in Q1 of 2020, 70% of businesses reported poor site coordination as the reason construction projects go over budget or past their deadline, while over half of contractors (54%) blamed project delays on poor coordination between subcontractors.(3)

In order to make improvements to a system or process, it is important to first identify the issues to then generate solutions. In this report, we have outlined some of the most common performance management system deficiencies in the construction industry as well as proposed solutions to solve them.

How does your company’s performance management measure up?

It’s one thing to understand the industry’s common deficiencies and actionable solutions, but how exactly does your construction company measure up when it comes to performance management? We’ve created a Construction Performance Management Workbook to help you detect the deficiencies within your organization so the proper actions can be taken to correct them. Identifying your company’s specific performance management pain points is the first step to building a better business. 

Download your copy of the workbook>>

Common deficiencies in project performance management systems

1. Not building a strong team
2. Issues with feedback
3. Unrealistic or unclear goals and KPIs
4. Blindsiding employees
5. Outdated performance review methods or faulty rating systems
6. Poor documentation and relying on memory
7. Issues with delays
8. Not recognizing good work

1. Not building a strong team

Businesses succeed when they have a strong group of employees working together towards the same goal. The ideal team is a mix of individuals with diverse skill sets that complement each other. They should be driven, determined, and dedicated, able to  handle complex problems and solve them with a level head. A strong team should also include workers with experience in their field or who have a willingness and hunger to learn. 

Assembling a strong team can feel like a complex task on a construction project. When a construction company does not use proper assessment and onboarding tools, they can end up with an unorganized and unmotivated team—a key issue detrimental to project success. In fact, 69% of project owners say poor contractor performance is the single biggest reason for project underperformance.(4)

So how do companies end up with a weak team? We’ve outlined the causes (and solutions) below.

Causes 

• Not knowing who is available for work.
• Subcontractors not regularly accepting work.
• Not prioritizing the best subcontractors.
• Poor cycle times.
• Not having documented information about subcontractor performance.
• Zero accountability tracking.

Solutions

• Know which subcontractors are regularly available for work.
• Be aware of which subcontractors regularly accept work.
• Keep a record of which employees and subcontractors regularly complete their tasks on time or ahead of schedule.
• Rank subcontractor cycle times, acceptance rates, lead times, and ticket uploads.

PRO TIP:

Using software that tracks employee and contractor performance and allows you to compare performances against averages can help with assembling the best team for future construction projects. 

Download our workbook to learn more about how Tread’s Hire Roster Solution and Hire Performance Report can help you build a strong, successful team.

Download your copy of the workbook>>

2. Issues with feedback 

Feedback is one of the most important elements of performance management. An employee will not know whether or not they are performing at the level that is expected if they don’t receive any feedback. Communicating feedback, whether positive or negative, is actually preferred and appreciated by 82% of employees, according to one study.(5)

Feedback allows for open discussions about issues that may be restricting employees from performing to their fullest potential. It also allows workers and their concerns to be heard, acknowledged, and addressed which can improve overall job satisfaction and performance—boosting enthusiasm, efficiency, and growth.

With little or no feedback, companies run the risk of employee disengagement by 40%. (5) The most common issues with feedback in the workplace include:

1. Feedback is inconsistent, in-frequent, or not timely
2. Feedback is not clear or constructive 
3. Feedback is one-way

Feedback should be timely, frequent, consistent, clear, constructive, and two-ways. The ideal feedback approach to maintaining proper performance management can be difficult, so we’ve included some solutions to common feedback issues below.

a. Feedback is inconsistent, in-frequent, or untimely

1 in 3 project leads do not give feedback to their employees on a regular basis (e.g. after every completed job or project).(6) This number is incredibly high, considering 62% of lead contractors reported that finding and retaining good workers was their top concern.(7) For those unconvinced of the effectiveness of regular feedback, consider the following: 68% of employees who receive consistent feedback feel fulfilled in their jobs(8), and 43% of highly engaged employees receive feedback at least once a week.(3) This indicates that there is no better reason to schedule regular feedback with employees. 

So, how do construction companies find themselves giving inconsistent, infrequent, and untimely feedback? See below for the common causes and solutions.

Causes

• Feedback is not scheduled.
• Feedback schedules are too rigid. 
• The process is not owned by the same or right person.
• Feedback and reviews are an afterthought.
• Feedback is withheld until a much later date.

Solutions

• Schedule regular team meetings.
• Schedule flexible feedback sessions in accordance with project benchmarks.
• Frequently check in with your team (formally and informally).
• Conduct multiple evaluations throughout the year or throughout a project. (E.g. event-based evaluations.)
• Establish effective lines of communication. 
• Understand key project objectives.
• Use the Last Planner System.

Since the construction industry operates in a project-centric environment, consistent feedback can be especially challenging to execute. Some employees will be working on multiple projects throughout the course of a year while others will be working as part of a team on a long-term project. This means that the strategic goals, objectives, and timelines for each employee will be different. Enforcing a rigid performance evaluation process is not the best approach for construction organizations. The flow of performance management needs to align with how work is done and should match the speed and pace of the construction project.

PRO TIP:

Schedule weekly meetings with your crew. Conduct informal check-ins throughout the project and schedule time for a formal performance review at project closeout. Use a software program that will prompt and remind you to schedule reviews in a timely manner.

b. Feedback is not clear or constructive 

Did you know that 17% of employees feel that the feedback they get is not specific enough to help them perform better?(9) Or that teams led by project managers who focus on their weaknesses are 26% less likely to be engaged?(8) These common deficiencies demonstrate the need for clear and constructive feedback.

Here are some of the common causes and solutions for unclear and unconstructive feedback:

Causes

• Only focusing on problems. 
• Not offering solutions.
• Not explaining clear paths to improvement.

Solutions

• Set measurable objectives.
• For every problem, offer a solution.
• Solutions should have a clear plan of action to get there.

PRO TIP:

Follow up with your employees after an evaluation to see how they are doing and if they are having any problems implementing the action plan that came from your feedback. Follow-up should be timely—aim for one to two weeks after your discussion.

c. Feedback is one-way

Feedback should never be one-directional on a construction site. Managers need to be able to give feedback while also listening to the responses from employees. It is one thing to listen but managers should respect their employees’ response, taking their feedback into consideration and looking for solutions that address their concerns.

When employees feel heard on-site, they perform better and are 4.6 times more likely to feel empowered to do their best work.8 Employees can only truly feel heard through two-way communication.

How do construction companies end up in one-way feedback communication scenarios? See below for common causes and solutions.

Causes

• Catching employees off-guard and offering feedback when employees are not prepared for a development conversation.
• Not asking for the employee’s input or response.
• Not facilitating open communication.
• Not facilitating a communicative environment.
• Not checking in consistently.
• Sending emails or notifications and not responding to replies from employees.

Solutions

• Send out surveys or questionnaires to employees to facilitate two-way communication.
• Practice an open-door policy.
• Encourage crew members to give feedback on the project and their manager(s) and offer suggestions for improvements.
• Use online management tools that allow employees and managers to leave feedback.
• Always respond to all emails and calls from crew members.

PRO TIP:

Consider allowing employees to create or lead their own formal review. Let employees create the evaluation, set up the performance measurement parameters, and provide input throughout the project’s lifecycle—for both themselves and their teammates.

3. Unrealistic or unclear goals and KPIs

Without realistic and clearly defined goals and KPIs, employees will not know what is expected of them and project performance will suffer. Project manager expectations may be different from customer expectations and this can cause confusion amongst workers.

To ensure project success, employees need to know exactly what is expected of them and what is needed to meet these expectations. Goals and KPIs should also be realistic for the estimated timeframe, budget, skill set, etc.  

But why is it that so many goals and KPIs are unrealistic or unclear?

Causes

• Employees don’t understand exactly what is expected of them.
• KPIs are not measurable.
• KPIs are strictly financial.

Solutions

• Clearly defining role-based competencies for every employee and subcontractor.
• Assign goals at the project level and assign them to team members selectively. 
• Set measurable, non-financial KPIs and objectives with a plan to achieve them. It is important to measure overall performance based on non-financial performance metrics—including customer relations, operations, quality, cycle-time, and the supply chain pipeline. This helps employees and subcontractors track their own performance and keep themselves accountable more easily.
• Perform regular check-ins, collaborations, and reviews to ensure crew members still understand what is expected of them.
• Use the Balanced Scorecard method.
• Collect and measure performance metrics like cycle times for an accurate look at the average and create strategic goals based on data.

PRO TIP:

Use a construction-specific software program that automates KPIs reporting to quickly and accurately gather data on metrics such as cycle times. 

Download your own copy of our workbook to learn how Tread’s KPI Report can help managers make strategic, data-driven goals.

Download the workbook>>

4. Blindsiding employees 

Employees are more likely to bring solutions to the table when they have some time to think about the issues and prepare for a meeting. Surprising crew members with last-minute meetings is not always the best approach to performance management. Here are some other reasons companies blindside their employees and solutions to resolve them.

Causes

• Feedback is not timely.
• Presenting a laundry list of tasks or items for employees to work on all at once. 
• Employees don’t have visibility into what other crew members are working on.
• Managers don’t have full visibility or context into crew member tasks and progress.

Solutions

• Share information when it is the most relevant. Do not wait too long to address issues.
• Prioritize tasks and communicate them to employees.
• Be transparent. Project team members should be permitted to view each other’s goals and be encouraged to add their input.

PRO TIP:

Managers should visit the job site often and connect with their site team as well as their management team to build a relationship with everyone. This serves as an informal way to start the performance management conversation and gain context. 

5. Outdated performance review methods or faulty rating systems

58% of executives believe their current performance management approach drives neither employee engagement nor high performance.(10) Major companies like Adobe have completely gotten rid of their performance management reviews and replaced them with one on ones. Sticking to review methods or rating systems that have been in place for years is not always the best approach for a construction company. This limits the company’s ability to grow and thrive in the ever-changing construction industry. 

So why do so many companies find themselves using outdated review and rating systems?

Causes

• Sticking to “the way it’s always been.” 
• Being afraid to use new software or technology.
• Not allowing managers to fully step into their leadership role and own the process.

Solutions 

• Review existing performance measures to determine what works for the company and what does not.
• Consider using an app or software program to help improve and automate outdated processes.
• Use automation to generate reports and statistics to help compare performance across all crew members and create more accurate rating systems.

PRO TIP:

Consider empowering managers and team leads to own their performance management process. Allow them to set goals, skills, vacancies, budgets, and job requirements for the projects they manage. 

6. Poor documentation and relying on memory

Managers cannot be expected to remember everything over the course of a year or project. Annual reviews can become more of a “short-term memory review” since it is difficult to remember everything that’s happened in a year without the proper systems and technology in place. 

Having the right data helps with performance reviews. For example, knowing which drivers accept the most jobs, have the most signed tickets, and drive the safest. Data should be stored in a cloud-based platform that can be accessed at any time to help with correcting performance issues, disputes, and future hiring decisions.

So, how do so many companies end up with poor documentation practices?

Causes

• Using pen and paper or word documents and spreadsheets to track important information such as driver details, tickets, and cycle times. 
• Not having a centralized hub that collects real-time data or allows stakeholders to upload valuable information throughout a project as it arises. 

Solutions

• Document employee and subcontractor performance information throughout the year.
• House information on a digital platform for easy access, organization, and comparison.
• Use a collaborative program that collects and records data in real-time and allows crew members to input issues as soon as they arise.

PRO TIP:

Use a software system that tracks driver cycle times, driver behavior, and ticketing with automated reporting to help with accurate documentation.

Get more information in our workbook about how Tread’s Cycle Time Report, Driver Locations Report, and Ticket-to-Ticket Report can help construction managers keep clear and accurate documentation over the course of a project.

Download the workbook>>

7. Issues with delays

Schedule delays are some of the biggest problems in performance management. For example, when drivers are unable to complete a pickup or delivery on time, crew members are left waiting around. Alternatively, if materials are delivered too early, issues with storage may arise. And what happens if the wrong materials or amount are delivered after a delay? Identifying these issues early on helps with decision making and allows managers and workers to take the appropriate actions required to keep a project development running smoothly.

Here are some of the common causes for project and schedule delays as well as some solutions:

Causes

• Disconnect in the communication with suppliers.
• Disconnect in the communication with drivers.
• Poor scheduling, estimating, or forecasting.

Solutions

• Collaborate with all vendors frequently and check in often.
• Follow up on hourly KPIs like tonnage hauled, cost per truck, etc.
• Eliminate wasteful activities like re-work and waiting using the Last Planner System.
• Have backup plans in place should delays occur.

PRO TIP:

Consider using a fleet tracking program that gives managers full visibility into cycle times and site traffic in real-time. Set up custom alerts to be notified when delays occur and use this data to help with future scheduling and forecasting.

Download our workbook to learn more about Tread’s Live Cycles Report and Site Traffic Report to keep track of delays and act quickly.

Download the workbook>>

8. Not recognizing good work

Did you know that 69% of employees will work harder if they feel their efforts are better recognized?(8) Studies have shown that when it comes to motivating action (for example, working longer hours) rewards are more effective than punishment.(11)

Rewarding good work reinforces excellence and encourages employees to continue with the type of desired output that strengthens project performance. On the other hand, addressing poor performance allows for continuous improvement that corrects failure and helps achieve the desired project outcomes.

But why do companies find themselves in a position where poor performance is an issue?

Causes

• Ignoring poor performance.
• Not reprimanding or correcting poor performance.
• Not rewarding good performance.

Solutions

• Track performance progress and achievements.
• Recognize and reward teams that meet or exceed expectations. Recognition can be done through verbal or written communication, and awards can be monetary or non-monetary.
• Reprimand poor performance or bad behavior.

PRO TIP:

Consider offering bonuses or incentives for good performance like finishing tasks early, on time, under budget, or on budget.

Performance management solutions for construction projects

Tread offers a number of automated reporting solutions that help construction companies improve their performance management systems. 

Our Hire Performance Report allows construction and fleet managers to gauge driver performance and make deployment decisions accordingly, while our Hire Roster Solution helps give a complete picture of internal and external driver availability. 

KPI Report collects data on key KPIs such as hourly hauling costs, tonnage hauled and distance traveled, to help managers determine if projects are on track.

Our Cycle Time Report allows managers to assess driver and project productivity, the Driver Locations Report provides timestamped geographical and activity data for each driver, and   Ticket-to-Ticket Report uses ticket upload times to track cycle data without GPS or geofence data available. 

Accessing all of this information in one platform optimizes hiring, scheduling, dispatching, and management.

Request a free demo to learn how Tread’s specialized tracking and reporting can improve your performance management system.

^{(1) The State of Performance Management 2020: Adapt key practices to succeed in uncertain times
(2) Construction Planning Efficiency and Delivery Time Performance: Analysing Failure in Task-Level ‘Hit Rates’
(3) 2020 Report: Construction Suffers From Wasted Time & Slow Payment
(4) Climbing the curve. 2015 Global Construction Project Owner’s Survey
(5) Feedback: You Need To Lead It
6) [Executive Summary] 2017 Maryland Construction Industry Survey Results
(7) How to Completely Change the Way Your Construction Company Does Performance Reviews
(8) Mind-blowing Statistics on Performance Reviews and Employee Engagement
(9) Employee feedback demystified: a comprehensive guide for managers
(10) Reinventing Performance Management
(11)  What Motivates Employees More: Rewards or Punishments?}