Performance Tracking 101: How to Measure What Actually Matters for Your Business

For a business with a growth plan, tracking performance is integral. If leaders don't have reliable data, they make decisions on the basis of assumptions. The performance tracking system provides a solid foundation to identify what is working, where resources are being wasted, and how to enhance performance over time.

It is not "more data" that is the challenge. Most businesses already have reports, dashboards, spreadsheets, and software platforms. The actual work isn't so difficult; it's picking up the right metrics and linking them to business objectives. The danger is that too many numbers will bury insight, and too few too many can cover risk or opportunity.

Why Performance Tracking Fails Before It Even Starts

There's one simple reason why most performance tracking efforts fail: they begin with data and not the decision. Teams use any number that is convenient to them: Hours logged, tasks finished, number of emails sent, and they call it a reporting system. But it is not progressing; it is merely an activity.

This calls for a unique way of managing projects with EPC initiatives. Rather than asking "what can we measure?" It is more important to ask, "what decisions do we need to make and what information do we need to make sound decisions? This change has implications for all aspects of the construction of a tracking system.

Start With Outcomes, Not Outputs

The biggest error in performance measurement is taking outputs for outcomes. Outputs are anything that your team delivers reports filed, milestones crossed, drawings delivered. Outcomes are the outcomes of those outputs, a project completed on time, or a client relationship that's improved, a budget that's kept.

For instance, one of the performance measures for an EPC firm could be "number of change orders processed." So, the number itself is not a good indicator. The key is if it is moving fast enough to not cause any schedule slippage, and if it is increasing or decreasing throughout the project. This is a different interpretation of the same data, from the perspective of outcomes.

When creating tracking framework, start by taking a step back from your business goals:

• What are the signs of success for this project?

• What are the signs that we have before our eyes if we are going to be on time or off?

• What would be the metrics that would cause our next decision to be different if they moved?

If it doesn't matter if a metric doesn't change a decision, then it's not really that important to track closely.

The Core Metrics That Matter Across Most Businesses

In every industry, there are certain categories of metrics that are important in almost every instance.

1. Schedule performance. Are goals and objectives met on time? Has the difference between the planned and actual completion dates increased or decreased? Schedule variance is usually the first indicator that something is amiss in EPC project lifecycle management; it can be the shortage of resources, procurement delays or scope creep.

2. Cost performance. Tracking budgets should be more than just "are we over or under." Think in terms of trends rather than merely "snapshot" costs. A project that is on budget today, but climbing upward each month is a different story than a project that is on budget and is flatlining.

3. Quality and rework rates. How many times should a job be done? Rework rates are usually a warning sign of problems upstream in the design, communication, or specifications and can be much more expensive to correct later than early.

4. Resource utilization. Are people and equipment efficient, or are there any bottlenecks and idle periods? This is of special importance for expensive projects that involve equipment that costs actual money to keep idle.

5. Satisfaction of stakeholders and clients. Relationship health can't be summed up in numbers. Ongoing structured feedback from clients and partners can also identify problems ahead of time that aren't apparent in the hard data.

Build Reporting Around Decisions, Not Just Dashboards

If there are no changes in behavior because of charts displayed on a dashboard, then it is decoration. The rhythm of decisions is the basis of good reporting:

• Daily or weekly reports to be about operational tweaks, staffing, and immediate risks.

• Monthly reports should feature a zoom out and show the trends of whether performance is getting better or worse over time.

• Periodic or milestone reporting should be linked to strategic measures. Are we still on track to deliver strategic outcomes that are important to leadership and clients?

This multi-layered approach is particularly useful for turnkey EPC solutions, which can take many years to complete and involve a multitude of stakeholders. If there isn't a definite and regular reporting schedule based on real decisions, then it's easy to overlook little problems until they become big problems.

Common Pitfalls to Avoid

There are well known issues with well-intentioned tracking systems:

• Tracking too much. The more the merrier, unless it's more noise. Do not track a lot of irrelevant metrics that you have no control over.

• Lagging indicators only. If each metric indicates what has already occurred, then you don't have an early warning system. Take into account lagging indicators (Cost variance, milestones completed) and leading indicators (Procurement lead times, open risk items).

• Inconsistent definitions. Your reports will never line up if on schedule isn't the same to your project managers as it is to your finance team. Make consistent definitions within departments.

• No ownership. Each metric should have an owner act on it. Data is nothing more than a report if it doesn't have accountability.

Turning Insight into Action

It's not enough to measure the right things; you must measure them right. The other half is the knowledge to understand that information properly and to use it to make more effective decisions. Many businesses, particularly those with complex, multi-phase projects, can find advantages in hiring extra manpower.

When it comes to enhancing your organization's performance tracking, EPC project lifecycle management or delivering accurate and reliable turnkey EPC solutions, expert advice can make a tangible impact.

Alga Processing LLC provides professional consulting services to help businesses configure performance tracking and reporting systems that lead to results, not paperwork. They can help you choose the right metrics for your projects and the correct reporting structure to effectively proceed with the action.

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Alga Processing LLC is an organization that helps your business in operations and management. Its people come from various backgrounds of knowledge and experience that promote a healthy environment for your personnel. Your organization will benefit from ensuring you and your team members are there every day to give the time and talent to yield productivity to its maximum. Contact us for more information on how to help your business grow.