MCC Construction Zone Important Key Performance Indicators to Watch in 2022 Marty McCarthy, CPA, CCIFP
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t is important for contractors to watch key performance indicators (KPIs) to gauge how well they are doing. Contractors typically look at lagging (historical) indicators by comparing the current time period to the same period in the prior quarter or year. Although this information is valuable, assessing predictive (leading) KPIs to look at what might happen in the future is even more helpful.
Lagging vs. Leading KPIs Lagging KPIs are backward-looking financial measurements where predictive indicators measure progress along the way. Historical KPIs are important indicators on how well a company is being managed and producing results. Predictive KPIs are helpful because they can be used to manage future outcomes. Leading indicators focus on the current situation. Different scenarios can be used to predict outcomes, like what will happen if contracts are cancelled or delayed, or how escalating lumber prices will impact profit margins. Examples of predictive KPIs are: • Percentage of Predictability of Construction – the change between the actual time spent on construction towards the available for use stage and the estimated time projected as a percentage of the estimated time on the contract. McCarthy.CPA
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