The need for performance measurement in construction strategy development: A current scenario

Performance measurement has become more important to the construction sector as an additional way of improving and sustaining business in the long-term. Most large construction organisations in the United Kingdom (UK) practice performance measurement because they believe it gives a positive impact to their businesses in the long-term. Performance measurement is seen as an important way of keeping an organisation on track in achieving the organisation's objectives and strategy. However, there are still construction sector organisations that believe performance measurement do not aid in creating and developing appropriate strategies for their organisations. This paper explores the current approaches to performance measurement with a particular focus on the connection between performance measurement and strategy development. It reports on semi-structured interviews with performance measurement directors and managers in large UK construction companies. Semi-structured interviews revealed that performance measurement is being practised in organisations either directly or indirectly to help improve businesses and profits. All organisations agreed that the financial aspects such as profit margins and growth, as well as non-financial aspects such as health and safety and customer satisfaction are the important criteria to be measured and will be accounted in creating an organisation's strategy. The interviews also revealed that performance measurement has a direct relationship with the strategy development. These findings suggest that the best way to create an organisation's strategy is by understanding the performance measurement process of organisations and identifying the appropriate criteria which need to be measured to improve business, identify strengths and opportunities which, in turn, can create a way to maximise profits for an organisation. This is expected to lead to the development of a migration path, which would help organisations target relevant performance measures and embed them in their organisation strategy in a structured step by the manner.