Development of a Benchmarking and Metrics Model for Electrical Contracting Firms
Despite its noticeable growth and positive future expectations, the electrical contracting industry is facing a number of unique and complex challenges that are creating fierce competition and driving major change. In response, contractors are required to understand the impact of this change on their businesses, study their performance as compared to the industry, be proactive, and continuously identify and seize growth opportunities. Here comes the role of benchmarking which originates as a continuous and systematic way of measuring a firm’s performance and comparing it accordingly with the highest performing in the field, as means to identify opportunities for improvement and growth. Despite their significance, performance measurement and benchmarking are still not widely adopted by construction firms. A number of construction benchmarking initiatives have been developed in the past; however, most of them share common shortcomings with respect to either being project specific and not measuring the overall performance of a company, being purely financial with all studied metrics being financial ratios, or not measuring the impact of the firm’s management and technological practices on its long-term overall performance. This research fills the missing gap by introducing a benchmarking model for the electrical contracting industry that includes a combination of both financial and non-financial benchmarks. The model can be used by electrical contracting companies to identify areas of weakness, highlight areas of strength, and isolate root opportunities for performance improvement. A literature review on the previous and current construction benchmarking models, along with interviews with industry experts, was done to identify the metrics to be included in this benchmarking study. A data-collection questionnaire was developed and used to gather quantitative and qualitative performance data from electrical contracting companies. The analysis and development of benchmarks were then based on a database of twenty-eight electrical contracting firms providing company performance data across the years 2011 through 2018. Furthermore, the qualitative data collected from participating companies was used to identify the best managerial, operational, technological practices of the highest performing electrical contracting companies. The best practices were identified by statistically analyzing the differences in the net profit percentage between companies implementing a particular practice and those not implementing it. Results of the analysis identify thirteen best practices across five categories, namely prefabrication, technology use, labor management, quality management and evaluation, and productivity and management practices. Finally, this research presents an interactive online benchmarking tool that was developed to provide electrical contractors with an easy, accessible, and automated way to track industry trends and perform a comprehensive self-performance assessment through a secure and confidential environment.