Benchmarking for Quality Management & Technology

Benchmarking and improving construction productivity

Sherif Mohamed

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To cite this document:
Sherif Mohamed, (1996),"Benchmarking and improving construction productivity", Benchmarking for Quality Management &
Technology, Vol. 3 Iss 3 pp. 50 - 58
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Jaideep Motwani, Ashok Kumar, Michael Novakoski, (1995),"Measuring construction productivity: a practical approach",
Work Study, Vol. 44 Iss 8 pp. 18-20 http://dx.doi.org/10.1108/00438029510103310
Albert P.C. Chan, Ada P.L. Chan, (2004),"Key performance indicators for measuring construction success", Benchmarking:
An International Journal, Vol. 11 Iss 2 pp. 203-221 http://dx.doi.org/10.1108/14635770410532624
G. Anand, Rambabu Kodali, (2008),"Benchmarking the benchmarking models", Benchmarking: An International Journal, Vol.
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Benchmarking and improving

construction productivity
Sherif Mohamed

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50

Benchmarking for Quality

Management & Technology,
Vol. 3 No. 3, 1996, pp. 50-58.
MCB University Press, 1351-3036

School of Engineering, Griffith University, Gold Coast Campus,

Queensland, Australia
Introduction
The ever-rising customer requirements and expectations have increased
demands for continually introducing improvements in the cost, timing and
quality of the construction output. As world competition intensifies, leading
construction organizations throughout the world continue to be more active in
enhancing their competitive position by improving their performance. Thus,
setting new operating targets and standards for national markets. This
dynamic mechanism and the well-known fierce national competition have
raised the awareness of performance measurement (benchmarking) among the
majority of construction organizations.
During the 1990s there has been considerable interest in benchmarking in
manufacturing and other service industries. The successful implementation of
benchmarking is reflected in the large number of publications which address
the concept, application and limitations of benchmarking[1-4]. As
manufacturing has been a reference point and source of innovations in
construction over the years, it is no wonder that construction researchers looked
to the benchmarking tool for guidance to measure construction performance.
Investigating and verifying the applicability of manufacturing production
and managerial concepts to construction has always been a challenge. Typical
examples are concurrent engineering, lean production, total quality
management, quality function deployment, computer integration, automation,
and many more. These concepts have been imported from manufacturing with
a view to implementation in construction[5-8]. While some of these concepts
have enjoyed a reasonable degree of success in construction, many others have
not. This is mainly dependent on how effective the concept under investigation
is in accommodating existing differences in manufacturing and construction
operating environments. The benchmarking concept is no exception. In the first
instance, it is quite an appealing tool for measuring and improving the
construction performance. However, the industry seems to be reluctant to adopt
it. This is attributable to the following:
Misunderstanding of the benchmarking concept; for many practitioners
it simply means measuring everything.
Confusion surrounding what is required to take up a benchmarking
exercise: what to measure? how is it measured? against what should
these measurements be compared?

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Unavailability of data mainly because the structure of the construction

process does not allow data associated with field-based operations, to be
collected readily.
Application of benchmarking seems to require radical changes in the
way information is handled and documented.
Lack of relevant conceptual models to support and guide data collection.
The above demonstrates that considerable work is required to fully utilize the
benchmarking concept into construction. This paper is an attempt to introduce
some guidelines on the application of benchmarking to construction. It presents
and discusses a three-level framework for improving construction productivity
through benchmarking. It should be noted that this paper is not intended to
produce a working framework which can be used to benchmark the
performance of a construction organization or project. Rather the emphasis is
on understanding how the benchmarking concept can be related and adapted to
the unique working environment of the construction industry.
Benchmarking construction
The focus of benchmarking in manufacturing is the ability to meet customer
requirements and to adopt innovative practices regardless of their source. Data
availability has a major contribution to the success of benchmarking in
manufacturing. Over the years, manufacturing organizations have developed
measures to assess their performance. Typical measures usually involved time
as the measuring basis. In so doing, organizations collected data regarding the
different procedures performed to deliver the output to be measured. In some
cases, and to account for any data unavailability, data was obtained from other
organizations with common process steps[4].
In construction, however, benchmarking is not a straightforward task due to
both the very nature of the industry which lacks solid data gathering and the
remarkable fluctuation in productivity. Benchmarking attempts in construction
is bound to face certain difficulties such as incomplete or non-existent data.
Even if data is well recorded and retrievable, it would be highly dependent on
the special characteristics of the project, e.g. size, type and budget. Therefore, it
is difficult to use it effectively as a basis for comparison. The structure of the
industry with its temporary nature in organizing the construction process,
where a number of organizations get involved in designing and constructing a
single project, adds to the complexity of the benchmarking task.
Benchmarking only works if consistent methods of measuring the
performance of operations can be developed and introduced. Currently, such
methods do not exist in the construction industry. The majority of the relatively
limited number of studies devoted to construction productivity and
performance measurement is concerned with identification of sources of delays,
rather than with analysis of measuring systems and techniques[9].
In the face of the absence of data and measuring methods, it becomes clear
that another dimension has to be given to the benchmarking form, as currently

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applied in manufacturing, before it can be applicable to construction. This

dimension is presented and discussed in this paper, in the form of the following:
Internal benchmarking where a construction organization aims
towards identifying improvement areas within its structure through
comparing its business operations with those of others who do it better,
thus setting new targets to meet.
Project benchmarking where a construction organization assesses the
performance of projects in which it is involved with an aim to meet
customer requirements, measure productivity rates, validate and
maintain its estimating databases.
External benchmarking where the industry as a whole attempts to
increase its productivity through making tools and techniques,
developed and successfully used by other industries, applicable to
construction.
Internal benchmarking
Internal benchmarking is the examination of an individual organizations
current processes and practices. Naturally, performance indicators depend on
the organizations line of business, but useful indicators can include: customer
perspective (service, cost, quality), business evaluation (market share,
successful/failed tenders, conflicts), and financial stability (turnover, backlog).
These measurements can be used in identifying the organizations strengths
and weaknesses before proceeding with the comparison of its performance to
that of other direct competitors.
An organization launches its benchmarking campaign to improve its
performance and business competitiveness. As in any business process, there
would be a number of non-value-adding activities embedded within the process,
i.e. activities that consume time and/or cost, without adding value to the
process. Through benchmarking, these activities can be identified and, at a later
stage, eliminated, leading the way to a more efficient business practice.
Processes targeted by the internal benchmarking exercise must be in line with
the organizations overall strategic business objectives to avoid wasting
benchmarking efforts.
A critical prerequisite to successful benchmarking is the commitment to the
exercise from all levels of the organization, especially the top management level
who have the authority to implement and integrate the benchmarking results
into the organization. Other levels have to be flexible in the preparation for
changes in job functions and resources allocation. Those most affected by the
benchmarking results must be empowered to use these results as a positive
change agent[10]. This is a necessary step to achieve an essential change to
processes and optimum performance improvement.
This level of benchmarking represents a major step towards establishing
well-defined measures and measuring systems within the organization to better
understand its own processes, resources (human and technical) and functions
(operational). The main elements of internal benchmarking are shown in Figure 1.

Preparation
Ensure management
commitment and staff
flexibility

Process
selection

Process
description

Has to be a value-adding
process and in line with
overall strategy

Understand input resources

work sequence and output

Process
modification

Process
comparison

Process
improvement

Reduce the share of nonvalue-adding activities

Compare output against

who does it better

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Continuous improvement cycle

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Once these measures are established, the organization embarks upon the second
phase of benchmarking the comparison phase.
After determining where the areas for greatest improvement are, the issue of
selecting a best-practice organization becomes the target; who is best and
what do they do? At this stage, ultimate care should be taken to account for the
differences in operating environments, levels and quality of service between
organizations. This is a fundamental point to avoid being overwhelmed, if the
organization taking up benchmarking does not enjoy a high calibre of
performance on the national level.

Implement changes and

monitor output

For those organizations which are considered to be the national industry leaders,
they have to measure their performance against world-class competitive
standards. Otherwise, any chance of improving national industry standards will
diminish. These organizations usually have a reasonably effective system that
can guide and support the benchmarking exercise. Nevertheless, the system
must be maintained in a way that allows for continuous benchmarking, thus
ensuring the organizations competitive advantage.
The road to best practice is not a short one. It starts with the organization
exploring its operating system. Then it proceeds to benchmark its performance
against that of another organization who does it best, in order to generate
improvement opportunities to increase the organizations productivity and
competitiveness. A more advanced stage along this road is identifying
innovative practices which can secure an organizations place amongst the bestpractice forum.
Project benchmarking
The second level of benchmarking is the measurement of performance of
projects in which the organization is involved. This level reflects the uniqueness

Figure 1.
Main elements of
internal benchmarking

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of the construction working environment where different organizations are

temporarily joined together to form what can be best described as an
informal project team for the duration of a construction project. Traditionally,
performance measurements have been in terms of complying with completion
time and allocated budget. This benchmarking exercise is desirable, but is,
however, highly dependent on the project characteristics, e.g. degree of
complexity, performance of other key participants, and most importantly, the
trends of the industry, i.e. the performance of the industry as a whole.
Current Australian attempts at benchmarking construction have focused on
measuring the time performance of projects. Walker[11] identified useful
indicators for benchmark measures and major factors that affect construction
time performance while the Construction Industry Institute Australia (CIIA)
focused its benchmarking efforts towards the preconstruction phase. The
CIIA[12] found that project management team and project communication are
the most important aspects that determine performance.
The above two research studies laid out the foundations for benchmarking
construction performance. However, they did not provide any practical
measuring systems by which organizations can compare and assess their own
performance as well as the overall project performance. The need for such
systems is clear to achieve the desired benefits of project benchmarking. For an
efficient project benchmarking process, these systems have to be developed and
introduced to capture the project performance at selected stages of its lifetime
and independently of its size, budget, type, location, etc.
The process of project benchmarking is essential for supporting the
organizations internal benchmarking exercise; the performance
measurement(s) carried out throughout the lifetime of various projects would
serve as an effective gauge for the success/failure of the actions taken in the
light of the internal benchmarking recommendations.
Irrespective of its line of business, what should a construction organization
consider when taking up project benchmarking? To answer this question, let us
assume that the organization under investigation has been awarded a contract
for a project that aligns with its overall strategy. Throughout the different
stages of the project, the organization attempts to perform a twofold task: first,
to carry out the assigned to be done work to meet customer expectations as
well as contract specifications (being on schedule, on budget, etc.); and second,
to deliver the already done work while meeting its own profit goals and
without the need for pursuing legal claims after the completion of the project.
For a proper benchmarking of the organizations performance during the
execution of the first part of the task, each value-adding activity within the
process has to have a well-defined customer, i.e. the next user, who sets the
measures for the process performance. For each selected activity, relevant
customer requirements must be clearly identified at the earliest possible stage
so that sub-activities can be designed, managed and performed with the aim of
satisfying these requirements. Once the customer is satisfied with the outcome,
work then proceeds to the next activity.

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Adopting such a sequence will not only ensure systematic customer

involvement, but will substantially simplify the task of project benchmarking
as it will give rise to simple and clear measures for the organization to meet.
Whenever practical, these measures should cover both quantitative and
qualitative issues. For example, and in addition to the well-known time, cost and
quality measures, there can also be additional measures such as the number of
queries raised by the customer, technical changes after final submission, design
variations to suit site conditions or disputes at the hand-over stage.
Efficiency of site operations is a good example for project benchmarking
from the design teams perspective. The more construction knowledge and
contractor experience that is implemented into the design stage, the higher the
designers performance rate is. Therefore, performing a constructability
analysis can be used in benchmarking the designers performance against the
measurements/criteria specified by the next user, i.e. the contractor.
To benchmark the second part of the task, the organization should establish
a set of project benchmarking measures to trace the performance against its
own expectations and initial estimations. Provided the organization carried out
its pre-contract estimations correctly, extra care should be taken to detect any
holes that may arise during execution resulting in the reduction of the
assumed profit margin. One of the most common holes that exists in
construction practice is reworking incomplete tasks; redoing activities. This
undesirable feature puts considerable pressure on the organization in the form
of direct additional costs and lost time, which could have been avoided if things
were done correctly in the first place.
Any designed set of measures, as required and needed by the organizations
discipline, should be simple enough to be built-in within the process allowing
accurate and representative measurements to be taken. These measures would
initially help detect the errors leading to rework and ultimately lead to their
prevention in similar future projects. It is worth noting that a proper quality
assurance (QA) application in construction does help reduce design and
construction errors. However, it does not allow for performance measurements
to be taken. To illustrate this type of benchmarking, the size of the rework cycle
experienced in current practice, as well as the role of design and construction
teams in its detection, measurement and correction, are discussed below.
As far as it is known, there has never been any systematic attempt to observe
rework cycles in construction. Sources of quality deviations have been
investigated by Burati et al.[13] who indicated that rework cost is a significant
portion of the total project cost. Cooper[14] reported that the design of large
construction projects may require up to two and a half cycles of rework to get
it right. These findings clearly give an indication of the large amount of time
and cost associated with rework in construction.
Furthermore, it is widely believed that current quality measures are not
adequately implemented within construction organizations. Consultants and
contractors who use inspection to achieve desirable project outcomes, aim at
detecting and correcting deficient results. Inspection not only consumes
resources and time but also does not improve working procedures. Therefore,

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inspection can be seen as a non-value-adding activity which ideally should be

eliminated from the construction flow process[5].
Design and construction professionals (e.g. architects, engineers, project
managers, etc.) have a thorough understanding of the technical, managerial and
operational aspects related to their project areas. The basis of their judgement,
during the project lifetime, is highly dependent on their personal knowledge
and past experience. This experience is rarely being captured as it happens or
documented into the organization records for future use. That is where project
benchmarking should come in recording the performance in terms of
productivity rates, allocated resources and cost analysis.
A feedback link should be established by the organization undertaking
benchmarking to examine how the actual performance-cost rates compare to
what was actually assumed at the estimating/planning phase. This is an
essential link for assessing current performance during construction, thus
enabling the organization to decide on effective actions to be performed to
maintain the planned schedule and cash flow. This proposed link would also
provide invaluable information to the estimators/planners.
The above discussion highlights the deficiency in current understanding of
project benchmarking. It demonstrates that project benchmarking should not
be merely focused on investigating the project progress and then comparing it
to the planned schedule and allocated budget, as widely believed and practised
by many researchers in this area. However, it calls for construction
organizations to take the initiative in monitoring their own performance during
the time of their involvement in the projects, in both a quantitative and
qualitative sense so that a true performance picture can be obtained.
External benchmarking
This level of benchmarking is mainly concerned with the selection and
implementation of managerial and technological breakthroughs, developed by
other industries, to generate significant improvement in construction
productivity. Although external benchmarking may not provide construction
organizations with immediate benefits, it is still considered an important tool
for identifying improvement areas in performance standards that constitute the
organizations business framework. In external benchmarking, there is an
obvious benefit in introducing innovative processes into traditionallyperformed operations.
Productivity is the most important issue in any industry. In the last decade,
industries like manufacturing and electronics have achieved remarkably high
productivity through integrating design and production processes. Approaches
such as simultaneous engineering, team design and rapid prototyping proved to
be successful in linking both processes together[15]. To a large extent, design
and construction processes are still carried out in what can be described as the
way they have always been with noticeable disunity between them. In the
majority of construction projects, engineers are consulted once the architectural
plans are completed while contractors become involved after most of the
drawing details and specifications are set. The temporary relationship between

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the client and architect extends to a large degree covering other project key
players. This type of short-lived relationship does not help create a stimulating
environment for increasing productivity and enhancing value[16].
By comparison, other industries have succeeded in establishing a much
healthier and more competitive environment in which companies endeavour to
produce what seems to exceed customer requirements. These companies also
strive to optimize their production activities to gain a larger share in the market.
Thus it is clear that there is a need to benchmark other industries in an attempt
to incorporate, subject to practicality, the best in the construction industry.
Construction practitioners and researchers should select tools and techniques
that have potential to be adaptable to the construction working environment.
On the selection of a tool or technique, its implementation should be
investigated under the current features of construction practice to determine its
impact on productivity. Impact assessment in an assumed perfect
environment will almost certainly receive a negative reaction from the industry,
especially when the implemented tool or technique requires major changes in
the associated features of the process. Gable et al.[17] state that practitioners
tend to be more receptive to new ideas and their adoption when these ideas do
not originate in their own industry.
Nevertheless, the well-demonstrated effectiveness of such tools in other
industries necessitates external benchmarking. An appropriate level of external
benchmarking is bound to give rise to effective tools that may solve, or at least,
ease some of the inherent problems the construction industry is facing.
Conclusion
The success of benchmarking in manufacturing and service industries has
drawn the attention of construction practitioners and researchers to its merits
in measuring and ultimately improving the industrys performance. In order to
improve the construction performance, it is essential to have accurate and
representative measurements reflecting current practice, trends and
productivity. This paper has examined the application of benchmarking
concept to construction on three levels internal, project and external.
On the road to imitate best practice, construction organizations should be
effectively taking up internal benchmarking to gain a thorough understanding
of how they do business and how their customers evaluate their services. For
efficient internal benchmarking, allowance has to be made for the differences in
operating environments, levels and quality of service to avoid wasting effort.
Organizations are urged to be actively involved in project benchmarking to
assess their performance, measure their productivity rates and validate their
cost-estimation databases. Also, organizations have to be more open to
benchmark what has been successful in other industries and assess if it is
adaptable to construction.
Finally, benchmarking should be seen as an integrated part of an ongoing
process aiming at improving construction productivity. A fully implemented
benchmarking environment within the industry, as suggested herein, will

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significantly improve the quality of decision making related to design and

construction processes.
References
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Performance, ASQC-Quality Press, Milwaukee, WI, 1989.
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New York, NY, 1992.
3. McNair, C.J. and Leibfried, K.H.J., Benchmarking: a Tool for Continuous Improvement,
Harper Business, New York, NY, 1992.
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Enterprises to World Best Practice, Longman Business and Professional, Australia, 1994.
5. Koskela, L., Application of the New Production Philosophy to Construction, technical report
No. 72, Center for Integrated Facility Engineering, Department of Civil Engineering,
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6. Parfitt, M.K., Syal, M.G., Khalvati, M. and Bhatia, S., Computer-integrated design
drawings and construction project plans, ASCE Journal of Construction Engineering and
Management, Vol. 119 No. 4, 1993, pp. 729-42.
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York, NY, 1994.
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