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Annals of DAAAM for 2009 & Proceedings of the 20th International DAAAM Symposium, Volume 20, No. 1, ISSN 1726-9679
ISBN 978-3-901509-70-4, Editor B. Katalinic, Published by DAAAM International, Vienna, Austria, EU, 2009
Make Harmony Between Technology and Nature, and Your Mind will Fly Free as a Bird
PROJECT SCORECARD IN CONSTRUCTION PROJECTS
KATIC, D[ragan] & BEVANDA, L[adislav]
Abstract: This paper describes performance measurement
methodology of construction projects from construction
company view. Traditional performance indicators (time, cost,
quality) are not sufficient for balanced view of project success
or fail. They are lagging indicators because they constitute
results of project execution and do not show drivers
performance indicators of construction projects. Project
scorecard (PSC) is methodology of translating the project plans
and goals in criteria success through financial and non-
financial indicators in performance measurement system. For
each defined project goals it is need to determine critical
success factors and appropriate key performance indicators.
PSC is founded on requests of the projects technical
specifications and project management. Contribution of PSC
application is in efficiency execution construction company
strategy through their projects.
Key words: performance measurement, project scorecard,
construction projects
1. INTRODUCTION
The construction industry in general has a bad rating due to
un-efficient execution of projects. This paper shortly describes
project scorecard to measure the performance of construction
projects from the standpoint of construction companies.
Throughout the last two decades a number of industries
have introduced new methods and techniques (concurrent
engineering, lean production, TQM, etc) to improve their
performance. The main driver behind those philosophies is the
optimization of an organization’s performance both internally
and externally within its respective market place. Inevitably,
this has led to the rethinking of performance management
systems through effective performance measurement
(Kagioglou et al., 2001).
Organizations traditionally have measured their
performance solely in financial terms. This limited approach of
measurement the performance success is not sufficient because
it show the results of decisions made in paste, have no impact
on improving current performance and don’t show causes of
such results. It is very important to see how to measured
organizational performance, as has the impact on market share,
so this may be accepted from potential investors, employees
and customers. For these, the most important is system that
represents balance between financial score and drivers for
further performance. At the same time that system beam
intangible assets potential and help organizations in
enforcement different strategies.
All organizations today create sustainable value from
leveraging their intangible assets such as human capital,
databases and information systems, high quality processes,
customer relationships and brands, innovation capabilities and
culture. Because an organization’s intangible assets may easily
represent more than 75 percent of its value, then its strategy
formulation and execution need to explicitly address their
mobilization and alignment (Kaplan & Norton, 2004).
The new research’s area has developed, whose objectives
were to identify the correct number and types of performance
measures in ways that are integrated into company strategy.
4th UPS
2. PERFORMANCE MANAGEMENT IN
CONSTRUCTION
Performance management has defined as the use of results
performance measurement to achieve a positive change in
organization’s culture, a business system and processes, set
agreed objectives, effectively utilize resources, informed the
management about the need for changes strategic goals demand
and results could be exchanged in order to stimulate continuous
system improvement (Vukomanovic et al., 2008).
At the beginning of 1990-those years in the development of
tools for performance management developed the balanced
scorecard (BSC) of the author R. Kaplan and D. Norton, as one
of the most important inventions in the field of management.
The BSC results in helping organizations work through
effective measurement of organizational performance, increase
intangible assets and implementation strategies through
financial and nonfinancial indicators.
In 2005 Neely took the surveys about citation analysis of
work in the field of performance measurement to explore
developments in the field globally. According to this research,
through analysis of citation data, it is obviously dominance of
Kaplan and Norton and BSC. Between 1991 and 1995 the 10
most frequently cited works are cited 514 times. 56,8 per cent
of these 514 citations are work from Norton on the balanced
scorecard and that has increased in the last few years (60 per
cent of 2002 citations, 58 per cent of citations in 2003 and 59
per cent citations in 2004).
The BSC examines organizational strategy and make it
clearer through prism of different perspectives. Measures
selected in the BSC represent tool that senior management can
use to help employees and external stakeholders by the results
and performance drivers that help organizations achieve its
mission and strategic goals (Niven, 2002).
The BSC allows managers to look at the business from four
important perspectives. It provides the answer to four basic
questions (Letza, 1996.):
 Customer perspective: How do customers see us?
 Internal perspective: What must we excel at?
 Innovation and Learning perspective: Can we
continue to improve and create value?
 Financial perspective: How do we look to
shareholders?
The following keywords are most important in the BSC:
 Goals: Briefly statements that describe what must we
do in each of four perspectives how to achieve our
strategic plan.
 Measures: Indicators that we use for monitoring our
success in achievement ours goals.
 Targets: Quantitative values that determine success of
measurement.
 Initiatives: What do we have to do get given goals.
The BSC could be extend with new perspective such as
projects and suppliers and adapt for construction industry. The
main problem of the BSC is finding the optimal model choice
of key performance indicators and the inability of
benchmarking (Vukomanovic et al., 2008).
0936
3. PROJECT SCORECARD IN CONSTRUCTION
PROJECTS
The subject of performance measurement is vast and
numerous authors continuously add to the body of literature on
the subject. Most authors agree that managers measure for two
main reasons. Either they want to know where there are and
what they have to improve or they want to influence their
subordinate’s behavior (Beatham et al., 2004).
In the transformation process of mission, vision and
strategy for the construction company as a business system has
defined measurable goals are essential for the success of
business. Construction business companies implement their
activities through construction projects.
The balanced scorecard (BSC) of construction company
contains goals and measures those represent basis for
development particularly balanced scorecard on the project’s
level known as project scorecard (PSC). The PSC is used for
measurement and controlling project’s goals.
Project scorecard (PSC) is based on technical specification
requirements and the requirements related to project
management. PSC is a way to manage and implement the
project through a set of measurable project’s goals essential to
the project success. These measurable goals are determined
through a set of key performance indicators (KPIs).
The KPIs are compilations of data measures used to assess
the performance of a construction operation. They are the
methods management uses to evaluate employee performance
of particular task. These evaluations typically compare the
actual and estimated performance in terms of both
workmanship and product (Cox et al., 2003). The KPIs is
method for measuring construction project success. They
encourage others project’s participants (owners, contractors,
customers) to their contribution in final project success. The
aim of KPIs is measuring project and company performance.
Project success is almost the ultimate goal for every project.
However, owners, designers, consultants, contractors have their
own project objectives and criteria for measuring success. It
means different things to different people (Chan & Chan,
2004).
The project’s plans and goals are transformed in success
criteria through performance system financial and nonfinancial
indicators. For each set of goal has defined critical success
factors with appropriate performance measures (indicators).
The set of key performance indicators contain lagging and
leading indicators. The leading indicators diagnose current
performance and enable forehand corrective actions toward
deviation of given target during project execution.
Designing performance measures is process with input and
output information. Each performance measures need to contain
title, purpose, relates to, target, formula, frequency of
measurement, frequency of review, who measures, source of
data, who owns the measure, what do they do, who acts on the
data, what do they do, notes and comments (Neely et al., 1997).
Time, cost and quality (iron triangle) are the basic criteria
of project performance but they are not enough for balanced
view of project performance or success.
The set of KPIs include objective indicators and subjective
ones to measure the performance of a construction projects.
According Vukomanovic (2006.) the top ten KPIs in
construction projects are quality, cost of construction, owners
involving in construction, changes in supporting to project,
increase of construction time, customer satisfaction, employee
satisfaction in company, innovation and learning, time of
construction and identification client interest.
As the result of processes cascading mission, vision and
strategy in the balanced scorecard and after that in project’s
goals through performance measures or the KPIs is created the
project scorecard of construction project shown in the figure 1.
Fig. 1. Project scorecard
Realized achievement of performance measures (indicators)
at project level represents input data for performance evaluation
at construction company level through the balanced scorecard.
4. CONCLUSION
The aim of this paper was to point the project scorecard
(PSC) as methodology of translating the project plans and goals
in criteria success through performance measures (indicators) in
performance measurement system. Performance measurement
of construction projects through project scorecard providing
efficiency execution construction company strategy through
their projects.
For further research recommendation is finding the optimal
model choice of the performance measures or the key
performance indicators for project scorecard.
5. REFERENCES
Beatham, S., Anumba, C. & Thorpe, T. (2004). KPIs: a critical
appraisal of their use construction, An International
Journal, Vol. 11, No. 1, 93-117
Cox, R.F., Issa, R.A. & Ahrens, D. (2003). Management's
perception of key performance indicators for construction,
Journal of construction management and engineering, pp
142-151
Kagioglou, M.; Cooper, R. & Aouad, G. (2001). Performance
management in construction: a conceptual framework,
Construction Management and Economics, 19, pp 85-95
Kaplan, R. S. & Norton, D. P. (2004). The strategy map: guide
to aligning intangible assets, Harvard Business School
Press, Vol. 32, No. 5, pp 10-17
Letza, S. R. (1996). The design and implementation of the
balanced business scorecard: an analysis of three companies
in practice, Business process Re-engineering &
Management Journal, Vol. 2, No. 3, 54-76
Nelly, A. (2005). The evolution of performance measurement
research, International Journal of Productivity and
Performance management, Vol. 25, No. 12, 1264-1277
Nelly, A., Richards, H., Mills, J., Platts, K. & Bourne, M.
(1997). Designing performance measures: a structured
approach, International Journal of Operations and
Production management, Vol. 17, No. 11, 1131-1152
Niven, P. (2002). Balanced scorecard step-by-step –
Maximizing Performance and Maintaining Results, John
Wiley&Sons, New York
P.C. Chan, A. & P.L. Chan, A. (2004). Key performance
indicators for measuring construction success, An
International Journal, Vol. 11, No. 2, pp 203-221
Vukomanovic, M. (2006). The Key Performance indicators in
project oriented construction, Master work, Zagreb
Vukomanovic, M.; Radujkovic, M. & Burcar Dunovic, I.
(2008). Performance management models in construction
companies, Gradjevinar 60, pp 771-778
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