In the highly competitive architecture/engineering/construction (A/E/C) market, it’s critical that firms achieve best-in-class performance in order to meet their growth and profitability goals.  But how can you actually ensure that you’re focused on the right strategies and whether or not you’re on track to meet these goals?

Monitoring Key Performance Indicators (KPIs) can provide critical insight into how your firm is performing across all dimensions of your business. They’re called “key” because they should be relevant to each firm based on its specific goals. For example, if a goal of your firm is to win a higher percentage of your bids, you should track your bid-to-win ratio as a KPI. If a goal is to generate higher profits for your shareholders, you should track some version of net income or operating profit.

Tracking KPIs offers a number of benefits. They can help you see trends in the market that may impact your business, can help establish accountability since you have tangible numbers around which to track performance, and can give you the context you need to make informed changes to structural aspects of your business or processes that impact the profitability and cash flow of your firm.

While there are dozens of KPIs that are relevant in the A/E/C industry, some of the more commonly used KPIs include:

• Proposal Bid-to-Win Ratio

• Backlog

• Revenue (and Revenue Growth)

• Operating Profit (EBITDA)

• AR Days Sales Outstanding (DSO)

• Target vs. Achieved Multiplier

• Headcount

• Staff Turnover (Attrition)

• Revenue per Employee

• Billable Utilization

So where should your firm begin on its KPI journey? Here’s a high-level roadmap to get you started:

• Define your firm’s specific business goals over the next 3 to 5 years.

• Identify key metrics that will help you monitor the firm’s performance toward these goals.

• Determine which of these metrics you’re capturing today, and which ones you need to begin capturing moving forward.

• Evaluate whether your key business systems are capable of reporting these metrics. If not, come up with a strategy to get there.

• Measure, measure, measure - this must be a consistent focus!

• Disseminate this data to your stakeholders in an automated, visible manner.

This article provides just a small primer on a much wider KPI discussion. For those of you attending the PSMJ THRIVE 2016 - THE A/E/C INDUSTRY SUMMIT in Nashville, please stop by our session Killer KPIs that High-Performing Firms Live By on Thursday, October 13th at 1:30PM for much more detail around these KPIs, including benchmarks for how your industry peers are performing.

About the Author: Andy Yeomans is U.S. Director of Business Development for SAGlobal, a Microsoft consultancy focused on helping A/E/C firms optimize their performance through the implementation of the Microsoft Dynamics AX ERP system. Andy has 20 years of IT industry experience in a variety of sales, marketing, corporate development, and leadership roles. Over the course of his career, Andy has helped hundreds of organizations evaluate and implement enterprise software applications. Andy was instrumental in the creation of SAGlobal’s industry strategy, and since 2008 has worked exclusively with A/E/C firms and other project-driven organizations to help drive performance improvement initiatives through the implementation of Microsoft Dynamics AX.

About SAGlobal: SAGlobal is the leading global provider of Microsoft’s Dynamics™ AX ERP solutions and services for project-driven organizations, and the world’s largest specialist Microsoft Dynamics AX consultancy. SAGlobal has over 500 employees on 6 continents worldwide, providing their global client base with a complete set of Microsoft Dynamics AX ERP evaluation, implementation, and support services.  

You can also meet with SAGlobal at THRIVE 2016 - THE A/E/C INDUSTRY SUMMIT!  They are a sponsor and exhibitor at the event to be held October 12-14 in Nashville. This is just one of the many reasons why you should join us in Nashville!  Over the years, CEOs, CFOs, COOs, and other senior-level A/E/C firm leaders from around the world have made sure they don’t miss out on this unique two-day event.  In fact, we see many firm leaders come with five, ten, or more members of their leadership team to absorb all that the conference has to offer.