Performance measures for contracting companies: a study of the Arab Contractors Company

In today's worldwide competitive environment, contracting companies are competing in terms of product quality, delivery, reliability and customer satisfaction. In current literature, models of performance measures for contracting companies and construction projects have limitations and shortcomings. They depend mainly on financial measures. These are no longer sufficient to ensure survival and continued profitability in time of change. New measures of performance at the different levels of contracting companies are, therefore, needed. The relatively new performance measurement technique of benchmarking has been widely applied as a powerful performance management concept. However, current published literature does not provide satisfactory proof of its successful implementation in contracting companies. This research addresses these two major weaknesses. Firstly, a methodology using Nominal Group Technique and Delphi Technique was explained and applied to obtain consensus performance measures for construction projects. New performance measures appropriate to construction projects, together with each element's relative importance, were developed. The consensus covers project managers, senior managers and top management. Secondly, quality measures appropriate to construction projects, together with each measure's relative importance, were developed. Thirdly, new performance measures appropriate to contracting organizations were developed. The development of these measures and the determination of their relative importance depend upon: the strategic direction of the organization which reflects the current business and market conditions; the type of construction work; the organization structure; and the development of the management staff within the organization. Fourthly, the implementation of the new performance measures using benchmarking as a management tool for performance measurement and improvement was carried out in one of the largest contracting organizations in the Middle East, the Arab Contractors, Osman A. Osman & Co. The implementation was carried out over a period of five years. Sixteen company branches implemented the measurement system. Each branch was considered as an independent contracting company. The results showed that the use of the new performance measures and the implementation of benchmarking in the company were very effective and led to successful and improved performance.