Measuring contractors' business performance : effective use of a balanced scorecard approach.

Johnson, A 2003, Measuring contractors' business performance : effective use of a balanced scorecard approach., Masters by Research, Building and Construction Economics, RMIT University.


Document type: Thesis
Collection: Theses

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Title Measuring contractors' business performance : effective use of a balanced scorecard approach.
Author(s) Johnson, A
Year 2003
Abstract It can be stated that performance measurement is the foundation of performance management in any construction organisation. Traditional financial performance measurement is not capable of capturing the true performance of an organisation. Thus the results of such financial performance measurement can not be used by managers to derive future performance in their organisations. The balanced scorecard (BSC) performance measurement approach used in other industries has been proposed for construction, as it takes into account critical wider perspectives. However, the construction BSC consists of four perspectives that are highly suitable for construction industry, namely business development, stakeholder management, process management, and innovation and learning. The primary objective of the research is to develop a balanced scorecard framework for construction contractors and measu re performance of contractors using that framework. The results of the questionnaire survey carried out and follow-up interviews conducted among 34 senior managers in Melbourne revealed that the above performance measurement framework is appropriate to use in a contracting organisation. The respondents perceive that the process management perspective measurement is more desirable than others. The stakeholder management perspective received moderate rating, while business development and innovation and learning perspectives both received average importance rating by the respondents. An actual performance measurement carried out on seven contractors in Melbourne to illustrate the use of the BSC performance as a strategic performance management tool in construction reveals the following: 1. Contractors' current performance levels in regard to process management and business development are moderately high, while stakeholder management and innovation and learning performance are perceived to be average. The contractors also perceive that performance in regard to stakeholder management is of higher significance for their business success, and 2. Performance with regard to managing employees and launching knowledge management initiatives was found to be low, so there is much room for improvement. Human resource management (HRM) is managing employees to develop and utilise their full potential in alignment with organisational objectives. It is recommended that contractors have to introduce new strategies for HRM. The HRM strategies should focus on recruitment, training and development activities of employees. Apart from HRM, the knowledge management (KM) also needs attention. The KM can be stated as effective use of available resources to increase the level of learning and innovation in the organisation. To enhance performance of KM contractors have to conduct project reviews on completion of every project and document useful information. This would enable managers to discuss company-wide performance at management meetings and further scrutinise this information. Having separate Balanced Scorecards for HRM and KM is expected to bring enormous advantages for a contracting company.
Degree Masters by Research
Institution RMIT University
School, Department or Centre Building and Construction Economics
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Created: Wed, 16 Feb 2011, 16:07:36 EST by Keely Chapman
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