Performance anxiety

Over the six years of Key Performance Indicators (KPIs), there has been a gradual increase in the percentage of clients working regularly with m&e contractors. This has been matched by a gradual decline in the percentage of contractors being used for the first time. Is this evidence of a greater interest in building working relationships?

In the latest KPI survey, clients were asked to appraise the m&e contractor with whom they had worked on their most recent construction project. While 38% of clients reported working with their preferred m&e contractor, 33% had only worked with their contractor occasionally and 29% had no prior experience with the m&e contractor being appraised.

The question is whether this shift has made a difference to the outcome of projects. The answer is a resounding yes.

Client satisfaction

Overall, the performance rating by clients for satisfaction with service shows that 66% of m&e contractors scored eight or more on their completed projects in 2005 (a score of eight out of ten is considered a good project outcome).

The headline data masks the fact that the scores were 80% in those projects where the client and m&e contractor had worked regularly, but were as low as 49% where there had been no prior working relationship. Figure 1 illustrates this divergence in performance. It is important to note that this is no one-off anomaly. This variance in client satisfaction is typical of all previous KPIs.

There has also been a trend away from procurement on a lowest price basis (31% in 2001 to 16% in 2006) and greater evidence of negotiated contracts (from 22% in 2001 to 36% in 2006). In 2006, the remaining 48% of clients selected their m&e contractor on a price or quality basis, suggesting price remains the dominant selection criterion (64% of cases).

Poor payment practice

At the other end of the scale, the extent of dissatisfaction is clear, with 37% of m&e contractors awarding just one out of ten – the worst possible score for satisfaction with timely release of retention monies (figure 2). The m&e contractors believe that the practice of assigning retentions is unfair and a financial burden. One m&e contractor wrote: “Retention is very difficult to collect. Clients very rarely voluntarily pay retention money. It has to be continually chased, involving time and phone calls.”

Even so, there is clear evidence that levels of client satisfaction with service in projects procured on a price-only basis are far lower (32% scoring eight or more) compared with those that are negotiated (70% scoring eight or more). It is likely that client expectations are higher in these arrangements, so the improvement is doubly impressive.

At a headline level, the greatest improvement is in design. The percentage of contractors scoring eight or more for design services has increased from 37% to 63%.

Can this improvement in performance be sustained? The latest KPI data reveals that, while 82% of clients had assigned retentions, the timeliness of release of retention monies is the worst KPI measured by BSRIA. Only seven percent of m&e contractors (those asked to appraise the payment terms on their most recent project in 2005) gave satisfaction scores of eight or more.

All aspects of payment demonstrate great dissatisfaction. Although only one percent of respondents gave the worst score of one for accuracy of interim payments, only 26% of m&e contractors scored eight or more on their latest completed project.

Constructing Excellence and Accelerating Change challenged the industry to get closer to construction clients, to benchmark performance and to raise standards. Perhaps it’s time for clients to reciprocate. Improving payment terms would be a great place to start.

Gerry Samuelsson-Brown is principal research consultant in BSRIA’s Construction Business Improvement team – call 01344 465600.