Most Important Metrics Builders Need to Keep Track of

As a builder, you're probably no stranger to the importance of tracking your progress and staying on top of your game. One of the most crucial metrics to keep an eye on is labor hours per square foot.

This metric can make or break your project's profitability. For example, if you're consistently under or over budget on labor costs, it can throw off your entire financial plan.

A good rule of thumb is to aim for 10-15 labor hours per square foot for most construction projects. This can vary depending on the specific job requirements, but it's a good starting point for estimating labor costs.

By keeping track of labor hours, you'll be able to identify areas where you can cut costs and improve efficiency. This can lead to significant savings and a better bottom line for your business.

Broaden your view: Why Is Price per Square Foot Important

Financial metrics are the backbone of any business, and for builders, they're crucial for making informed decisions. They reveal the economic reality of your construction business and can act as a warning or affirmation for other metrics.

To track your business's progress, you need to consider financial metrics such as profit margins, which show the amount of revenue earned after expenses. Cash flow is also essential, as it indicates the amount of ready cash flowing in and out of your company.

Here are some key financial metrics to keep track of:

By tracking these metrics over time, you can identify patterns and challenges that might lie ahead, helping you make better financial decisions.

Liquidity is a crucial financial metric that construction financial professionals need to evaluate. They must be able to assess an organization's overall liquidity to make informed decisions.

Organizations with sufficient liquidity can meet their short-term financial obligations. This is essential for maintaining a positive cash flow and avoiding financial distress.

Construction financial professionals should be able to drill down to the project level to determine which projects are providing liquidity and which ones are consuming it. This requires analyzing project cash flows and identifying potential liquidity risks.

Understanding liquidity is essential for construction companies to manage their cash flows effectively. By doing so, they can ensure that they have enough funds to complete projects on time and within budget.

Curious to learn more? Check out: Why Is Ethical Hacking Important Explained by Professionals

Project cash flow is a crucial financial metric that helps track whether individual projects are generating or consuming cash. It's a key indicator of a company's financial health.

Construction financial professionals use the project cash flow KPI to identify execution successes and failures on projects and adjust accordingly. This allows them to make informed decisions and avoid costly mistakes.

A company can use project cash flow to determine which projects are providing liquidity and which ones are consuming it. This helps them allocate resources more effectively and make strategic decisions.

Project cash flow can help contractors and project owners recognize any slips to the budget right away, allowing them to plan and manage projects more strategically. This is particularly important for long-term projects, where rising material prices and labor shortages can have a significant impact on costs.

If this caught your attention, see: The Most Important Aspect S of a Company's Business Strategy

Tracking where your sales are coming from is crucial to understanding where to spend your marketing efforts and money. This helps you optimize your marketing and sales strategy.

Here's an interesting read: What Are the Most Important Skills in Sales

The ultimate measurement of sales success is the number of signed contracts generated. Establishing good data takes time, but it's worth it in the long run.

Measuring the right things is key to building a successful home builder marketing process. It's like the old saying "measure twice and cut once" when building a house – you want to get it right from the start.

On a similar theme: When Communicating It's Important to

Safety metrics are of great importance in the construction industry, more than in most others, due to the inherently dangerous nature of the work.

Construction work often involves heavy machinery and hazardous materials in adverse conditions, sometimes at great heights or underground.

The Occupational Safety and Health Administration (OSHA) sets and enforces safety standards for construction sites, conducting inspections, investigating accidents, and levying penalties for code violations.

Federal regulations require companies with more than ten employees in high-risk categories to submit records about serious illnesses and work-related injuries, and publicly post this information.

Curious to learn more? Check out: Important Safety Information for Iphone

This information can be automatically tracked and stored, saving time and money, but monitoring incidents is only the starting point of smart safety tracking in construction.

Studying visual comparisons of time lost due to accidents against time spent in training, seasonal changes, job type, and hours on the job can yield valuable data about preventing future injuries and employee downtime.

A strong workplace safety culture is the outcome of many different factors, and tracking several data points is essential to gain an accurate picture of these.

The combination of raw data, analysis, and collection of employee input is vital to preventing accidents and achieving better safety on site.

See what others are reading: Why Is Retention Important

As a contractor, you're likely no stranger to the importance of tracking key performance indicators, or KPIs. KPIs are critical metrics that help you evaluate how things are going and make informed decisions.

At the project level, it's essential to monitor five key areas: safety, schedule, budget, defect-free work, and getting it right the first time. These areas are driven by client demands and will help you stay on track.

You might enjoy: A Private Key Is Important

To ensure you're meeting these demands, you should be monitoring the following at the project level:

At the company level, you should be monitoring a few key areas at any moment, including cash flow, workload, labor productivity, and profit margin.

People metrics are essential for a business's success, and the top 7 to track are employee turnover rate, time-to-hire, time-to-fill, employee satisfaction, employee engagement, diversity and inclusion metrics, and retention metrics.

Tracking employee turnover rate is crucial, as it can help identify underlying issues within the company.

Knowing your time-to-hire and time-to-fill metrics can help you optimize your hiring process and reduce costs.

Employee satisfaction and employee engagement metrics are also vital, as they can indicate whether your employees feel valued and motivated.

For more insights, see: Why Is Customer Engagement Important

Labor productivity is a crucial metric to track, as slight improvements can send profits soaring while slight decreases can have the opposite effect. Budgeted hours, hours worked, and percent complete are essential components needed to track labor.

Monitoring tasks completed per person or team helps identify the strongest and weakest contributors, allowing for intervention when needed. This is especially important in high-turnover contracting teams, where the impact of a high-performing contractor leaving can be mitigated.

Tracking hourly rates in the budget vs. the actual rate of the staff performing the work can also impact profitability. For example, if the budget for a superintendent is $80 per hour but the actual rate is $85, profitability erodes.

Monitoring the tasks completed per person or team can also help understand risks and dependencies in high-turnover contracting teams. This can help mitigate the impact when a high-performing contractor leaves.

Diversity is another important metric to track, as a diverse workforce is more creative and performs better. To calculate diversity, you need to get the total headcount and then look at factors such as gender, race, or location.

Tracking diversity as a metric can help ensure that the workforce is inclusive and that employees feel valued. This can lead to happier employees and a more productive workforce.

Take a look at this: Why Is Social Impact Important

Tracking the source of your leads is crucial to understanding what's working and what's not in your marketing efforts. This helps you focus on the activities that generate leads and eliminate those that don't.

It's surprising how many businesses don't know where their leads are coming from, making it difficult to optimize their strategies. Knowing the source of your leads helps you do more of what works and less of what doesn't.

Open houses and mailers are two common sources of leads that can be costly if they're not generating results. On the other hand, free downloads from your website and referrals can be highly effective with the right strategy.

Understanding the source of your leads also helps you identify areas for improvement. For example, if blog posts are generating leads, you may want to consider creating more content like that.

Discover more: How Important Is Adding Source for Pardot

Tracking employee satisfaction can be tricky, but one way to get a clear picture is by looking at the Employee Net Promoter Score, or eNPS.

Curious to learn more? Check out: Why Employee Engagement Is Important

The eNPS is a numerical value that measures employees' sentiment towards their employer.

Measuring the eNPS is straightforward: ask employees how likely they are to recommend the organization as a place to work, with a score between 0 and 10.

Employees who score 9 or 10 are the happiest with their job and employer, and are considered promoters.

Those scoring between 0 and 6 are detractors, who are likely to speak negatively about the company.

The eNPS is calculated by subtracting the percentage of detractors from the percentage of promoters.

Consider reading: 10 Most Important Metrics for Web App Monitoring

Replacing employees is costly, with expenses including the hiring process and lost revenue while the position goes unfilled.

Replacing an employee can cost a business a significant amount of money.

The attrition rate is a key metric to track, calculated by dividing the total number of employees who have left the organization by the number of employees at the beginning of the reporting period.

You might like: What Is an Important Number in Computers

A shorter reporting period will result in a smaller attrition rate, which is why many companies calculate the annualized attrition rate.

The annualized attrition rate is obtained by using the formula: 12 x attrition / number of months in the reported period.

To calculate the attrition rate, you need to select a reporting period, such as 12 months.

If this caught your attention, see: Why White Label Seo Reporting Is Important

Tracking the total cost of the workforce is essential for staying competitive. This involves understanding how various business decisions impact your company's future.

The total cost of workforce is calculated by adding HR data, such as headcount, salaries, and benefits. This data is combined with financial data, like workforce overheads, and market data, including salary ranges and unemployment per region.

Being able to navigate the current economic climate and respond to tight labor markets is crucial for success.

Worth a look: Why Is Customer Acquisition Cost Important

Effective time and task management is crucial for builders to stay on top of their projects. Monitoring tasks completed per person or team helps identify the strongest and weakest contributors and intervene as required.

This approach is particularly useful in high-turnover contracting teams, where a high-performing contractor's departure can have a significant impact. By tracking tasks completed, builders can mitigate risks and dependencies associated with team turnover.

Readers also liked: Why Team Communication Is Important

Tracking schedule variance is crucial for delivering projects on time. It's the difference between the original planned completion and the current forecasted completion.

To put this variance into perspective, divide it by the total remaining duration in days. This shows the variance as a percentage, making it easier to evaluate the significance of the impact.

A 3% variance is much more manageable than a 23% variance, making it clear that some variances are more significant than others.

Suggestion: Making Folders and Filing Important Emails

Managing your work backlog is crucial for contractors who want to avoid risk and stay on top of their business. Keeping tabs on backlogged work allows you to estimate future cash flow and adjust business plans accordingly.

By tracking expected gross margins on that work, you can make informed decisions about which projects to prioritize and how to allocate your resources. This knowledge also helps you identify potential cash flow problems before they arise.

Knowing your work backlog gives you a clear picture of what's on the horizon, allowing you to plan for the future and make adjustments as needed.

If this caught your attention, see: Why Is Ai Important to the Future

Monitoring time spent is crucial for any project. It helps you understand how much time each contractor is dedicating to their work.

Tracking time spent allows you to identify contractors who are not meeting their target hours per month. This can help you address the issue before it affects the project's overall progress.

Setting clear targets for contractors is essential to ensure everyone is on the same page. By monitoring time spent, you can quickly identify any discrepancies and make necessary adjustments.

For instance, if a contractor is consistently falling short of their target hours, you can discuss possible solutions with them. This might involve adjusting their workload or providing additional support to help them meet their targets.

Regularly reviewing time spent can also help you identify areas where contractors are excelling. This can be a great opportunity to recognize their hard work and consider rewarding them for their dedication.

Readers also liked: Why Is Project Plan Important

Monitoring tasks completed is a crucial aspect of time and task management. It helps you understand who's getting the job done and who might need a little extra support.

Tracking tasks completed per person or team can reveal the strongest and weakest contributors. This is especially important in high-turnover contracting teams, where a high-performing contractor leaving can have a significant impact.

By monitoring tasks completed, you can identify potential risks and dependencies. This allows you to intervene early and mitigate the consequences of a key team member leaving.

Explore further: Important Team Stats for Games

Monitoring cycle time by phase is crucial to ensure projects stay on track. Set an alert for items in the same status or stage for over three days to prevent delays.

Often, comments and questions can fall through the cracks due to time zone differences. This can lead to misunderstandings and missed deadlines.

To avoid this, track the time contractor work spends in different phases like "In Progress", "Code Review" or “Blocked”. This helps identify potential issues before they become major problems.

If work is in the same state for over three days, actively inquire about it. This proactive approach can prevent delays and keep projects moving forward.

Here are some key phases to monitor:

Breaking down cycle times into active vs. waiting states is crucial for efficient contractor work. It helps you identify if contractors have what they need to progress.

Active time spent by contractors can be quickly identified by setting alerts on items in the same status or stage for over three days. This helps you actively inquire about work that's been stuck for too long.

Increasing wait times at the expense of active work is a red flag that needs attention. It's essential to step in and resolve the issue to prevent delays and frustration.

Monitoring active vs. waiting times helps you ensure contractors have the necessary resources to complete their tasks efficiently. This proactive approach can prevent problems from escalating.

Discover more: Urgent versus Important

Effective time and task management involves taking a closer look at the types and sizes of work you're doing. Classify your work as tasks, subtasks, or projects to identify patterns.

If this caught your attention, see: Why Ethics Are Important in the Workplace

Analyzing patterns in your work types can help you understand what's truly important. By comparing work types, you can ensure your backlog mix aligns with priorities.

It's also essential to look at the size of your pull requests over time. This helps you emphasize small, fast increments over large, slow pull requests.

Tracking people metrics is a must if you want to increase performance and productivity in your business.

Taking a data-driven approach to analyzing your workforce will help you avoid mistakes and resolve issues early on.

Headcount is a crucial metric to track, as it helps you understand the size and structure of your team.

Diversity metrics are also essential, as they enable you to evaluate the representation of different groups within your organization.

Attrition rates can be a major issue, and tracking them helps you identify potential problems before they become too severe.

Cost per hire is another important metric, as it helps you understand the efficiency of your recruitment process.

On a similar theme: Why Is Inventory Turns an Important Metric