In the seminal book The Balanced Scorecard: Translating Strategy Into Action, authors Robert S. Kaplan and David P. Norton emphasize a critical, but in many cases overlooked, point from the internal business process perspective. Kaplan and Norton highlight that “…the process of deriving objectives and measures for the internal-business-process represents one of the sharpest distinctions between the Balanced Scorecard and traditional performance measurement systems…” On one hand, generally, traditional performance measurement systems only address improvement of existing processes, with a limiting set of existing measurements, such as month-to-month variance analysis reports, versus revealing new processes. On the other hand, the balanced scorecard approach aims to create game-changing opportunities for new business processes, such as construction Enterprise Quality Management (EQM) coupled with mobile-enabled construction field operations.
Emerging from the explicit strategies of EQM, new construction field processes are sequential, from the top-down at the home office or head office, as opposed to from the bottom-up at the project or job level, in the construction industry. In many cases, in traditional construction management organizational structures, construction projects operate as semi-autonomous business units and independent profit-and-loss (P&L) centers, somewhat disconnected from the home office or head office from both geographical and operational perspectives. Quality, yield, throughput and cycle time processes and measurements may be engineered to a limited degree at the project level with the aim to improve the quality of the work put in place, to conform to the contract documents and specifications, to minimize rework –work put in place incorrectly the first time, and to reduce cycle and turnaround times to complete or correct non-conformant or deficient work.
Regrettably, traditional performance measurement systems aim to improve performance in a piecemeal fashion, project by project, process by process, trade by trade, as opposed to an integrated business process approach, across projects, processes and trades or scopes of work. As part of the EQM methodology, quality assurance and quality control connects to both upstream and downstream processes in the integrated construction operations value system, with materials management, field reporting, issue tracking, work listing, punchlisting and commissioning, as some examples. Again, performance measures on existing processes, or re-engineered processes, generally cause local improvements only, limited in duration and in scope to the project-level only. After all, the construction industry is project-centric.
Performance measures and re-engineered processes for one project only may or may not be ported from one project to the next, after the fact. In turn, performance measures and re-engineered processes for one project only may not be completely relevant, as contract requirements, trade contractors and vendors generally change from project to project. Document-centric information is locked in file folders at the project level, and cannot be leveraged as knowledge across projects and at the corporate level.
An integrated approach at the corporate level is critical for construction EQM, to measure performance and optimize processes. Kaplan and Noton assert, through the balanced scorecard methodology, that financial and non-financial performance measures for existing business processes will not lead to major improvements in overall performance. Creating new business processes, such as mobile-enabled construction field operations, is a key to shaping overall success. Success translates to differentiating service offerings, gaining a competitive advantage, and driving owner and client satisfaction and retention for follow-on projects in the future.
Now, with data driven construction management, as opposed to the traditional and outmoded document driven construction management, Enterprise Quality Management (EQM) enables construction managers, directors and executives to leverage new construction field operations to measure operational performance at the point of construction, across the distributed environments of the job sites. Analytical reporting in right-time, via web-based dashboards, charts and graphs, at the corporate level, drives new processes in the field at the project level. Successful construction EQM is an integrated approach at the corporate level, crossing the traditional boundaries in construction of project-centric units and connecting its parallel but sometimes divergent field processes.