KPI Project Preformance
When developing the right key performance indicators (KPIs) for project performance, it’s important to understand the best approaches for measurement while also using various data sources.
“With respect to KPIs, our view in the past several years is they are not necessarily representative of the value of project execution,” said Tom Jefferson, head of project management and engineering for Covestro. “They’re representative of the health of the engineering organization and the project in general. We had to take a process and an organizational view of how we are going to address a project, such as how we’re staffing the project, planning the project and how we’re working with the business.”
Jefferson was part of a recent panel discussion at the Petrochemical Engineering & Construction Conference and Expo in New Orleans. Owners discussed how they quantify cost, schedule and other tradeoffs in benchmarking projects, how they set appropriate targets based on business needs and how they understand early warning signs of trouble ahead. According to Jefferson, it’s the owner company’s responsibility to select the project at the right time and execute it the right way.
“Our KPIs are slanted a little bit in that direction, because it’s one thing to see how an individual project performs, but you really need to understand the root of where it’s coming from,” he said. “We have the traditional KPIs such as safety, cost, schedule and scope, but we also have the team KPIs such as how we’re building strategy in the system, the improving practices and bare-bones reviews. You have to be proactive instead of reactive with the analyses on a site. For example, we have control limits in each of our major categories. If the estimate doesn’t come out and it’s outside the limits of what we expected, then we have an issue we have to address ahead of the game.
“Estimating is crucial, and it is what keeps me up at night. Companies want to and are making decisions faster. In a lot of cases, the pressure put on project teams is the compression between what is causal driven and the timely approval of projects. If we have better estimates, we have better confidence with the business, we have quicker decisions, and we take the pressure off the engineering. This leads to better packages all the way around and obviously impacts construction.”
Jefferson explained Covestro is using a process called a CNR, or change notification request, which deals with the scope of projects. “We track every CNR,” Jefferson said.
“We properly configure the concept of that project upfront.” When it comes to aligning owner and contractor objectives, LyondellBasell Project Manager Scott Gordon explained the owner must do pre-planning and not simply “throw” the project to the contractor.
“In the words of former President Dwight D. Eisenhower, ‘Plans are useless, but planning is indispensable,’” Gordon said. “The owner and the contractor need to rely on an execution approach, sequence of events and schedule. It’s not about dictating a schedule to the contractor; it should be more about negotiating a schedule.”
Jefferson stated Covestro involves procurement and construction management personnel very early on in the process of developing a contract strategy, constructability perspective and a plan.
“Our contract and engineering folks are also involved in the process very early on, and that translates to helping the contractor,” he said. “We try to get as many people involved upfront as possible.”
