HUMAN RESOURCE PERFORMANCE MEASUREMENT FRAMEWORK FOR CONSTRUCTION PROJECTS AND COMPANIES

Transcription

1 Z. Stoadnovć, D. Marnkovć, B. Ivkovć Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke HUMAN RESOURCE PERFORMANCE MEASUREMENT FRAMEWORK FOR CONSTRUCTION PROJECTS AND COMPANIES Zoran Stoadnovć, Dean Marnkovć, Branslav Ivkovć ISSN (Prnt), ISSN (Onlne) UDC/UDK /.3:624 Orgnal scentfc paper A new approach for measurng the performance of employees n constructon companes s presented. Two dfferent methods are proposed. For employees drectly engaged on a proect, performance s measured by usng dfferent Key Performance Indcators on four dfferent organsaton levels. For employees not drectly engaged on a proect, performance s measured by usng Responsblty Assgnment Matrces that are quantfed usng the Qualty Functon Deployment methodology. In both cases the system returns non-dmensonal evaluatons for employees, whch can be used as a management tool for effcent human resource management. The presented framework s desgned for cvl constructon proects and companes but t s applcable to any ndustry. Keywords: human resource management, KPI, OBS, performance measurement, QFD, RAM Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke Izvorn znanstven članak U ovom radu prkazan e nov prstup za merene učnka zaposlenh u građevnskm tvrtkama. Dve razlčte metode su predložene. Za zaposlene ko su zravno angažran na proektma, učnak se mer pomoću razlčth "Key Performance Indcators" na četr razlčte razne organzace. Za zaposlenke ko ne sudeluu zravno na proektu, učnak se mer pomoću "Responsblty Assgnment Matrx" koa e kvantfcrana pomoću "Qualty Functon Deployment" metodologe. U oba slučaa dobvau se bezdmenzske ocene za zaposlenke, koe se mogu korstt kao alat za učnkovto upravlane ludskm resursma. Sustav e dzanran za građevnske proekte tvrtke, al se može prment u drugm gospodarskm granama. Klučne reč: KPI, merene učnka, OBS, QFD, RAM, upravlane ludskm resursma Introducton Employee performance measurement n constructon companes s an mportant part of human resource management, because t allows makng obectve and tmely management decsons. Performance measurement s a bass for performance based rewardng, whch s one of the key components of strategc human resource management. The frst step of performance measurement s to determne whch obs ndvduals perform and to defne measures that best represent the performance on these obs (what to measure for whch ob). The second step s to defne ways to quantfy ob performance measures (how to measure). The focus of ths research s on the frst step: to establsh a framework that enables performance measurement for varous obs for all employees n a balanced and comparable way. Such a framework can then be used for performance based rewardng. Detaled analyss of quantfyng measures s not the prmary goal of ths work: ths task s a topc for further research. When t comes to the nature of performed work, there are two dfferent groups of employees n every constructon company: employees who are drectly engaged on proects and employees who perform tasks unrelated drectly to specfc proects. For the frst group, one of possble methods to measure and evaluate performance s to use Key Performance Indcators (KPIs). By selectng the approprate set of KPIs t s possble to evaluate a wde varety of dfferent obs on proects, whch makes them sutable for use n ths study. The problem wth usng KPIs, despte numerous studes, s the unsatsfactory level of obectve metrcs that s assocated wth the real on ste performance []. Relable metrcs s a prerequste for obectve, unbased and comparable performance measurement. Ths knd of performance measurement would be benefcal for any company whch mplements t. Besdes ntroducng approprate metrcs, t s mportant to establsh a vald relatonshp between dfferent KPIs and dfferent knds of the work performed by the varous proect partcpants, all n accordance wth the proect Organzaton Breakdown Structure (OBS). Establshng ths relatonshp s one of the goals of ths research. Performance of the second group of employees, the ones not drectly assocated wth the proect, s, most often, not clearly measurable, and KPIs cannot be used drectly. Ths paper nvestgates the possblty of usng a quantfed Responsblty Assgnment Matrx (RAM) n accordance wth the Qualty Functon Deployment (QFD) methodology. 2 Lterature overvew 2. KPI and OBS There are numerous separate studes n the feld of proect organzaton and the feld of proect success evaluaton conducted usng KPIs. However, the connecton between these two areas and the potental that t offers n terms of employee performance measurement s not nvestgated enough. Research n the feld of KPIs s manly related to proposng a representatve set of KPIs that can be used for obectve assessment of proect success. A common method of fndng a representatve set of KPIs s ntervewng experts and professonals usng the Delph technque. In ths method, relatve mportance of the chosen KPIs s determned based on survey results. Over Tehnčk vesnk 2, (204),

2 Human resource performance measurement framework for constructon proects and companes Z. Stoadnovć, D. Marnkovć, B. Ivkovć 20 dfferent KPIs can be found n related research [2, 3, 4, 5]. We analysed the followng examples. The frst study relates to the research carred out n Australa [2] wth the purpose of selectng relevant KPIs that can be appled on constructon proects. Twenty fve KPIs were dentfed and dvded nto four groups dependng on the nature of KPIs (performance or relatonshps) and the qualty of the evaluaton (obectve or subectve). The result of the study s a set of KPIs and a set of proposed measures for them. In the second study, conducted n the USA [3], ffteen KPIs were dvded nto two groups dependng on ther nature (quanttatve and qualtatve). Measures for assessng KPIs were not presented, except for a few selected KPIs wthn a case study. In studes conducted n Hong Kong [4] and Vetnam [5], KPIs are not grouped but measures are determned. Measures are obectve (quanttatve) and subectve (descrptve). A comparson of the results of these four studes s shown n Tab., and the KPIs selected n each study are hghlghted. Table Comparatve results of four studes of KPIs and ther measures KPI CATEGORY AUSTRALIA [2] USA [3] HONG KONG [4] VIETNAM [5] Cost performance $/unt Varaton actual/agreed Varaton actual/estmated Proft & fnancal Materal management - Total Cost Cost mprovement COST obectves subectve scale Productvty Resource Management Subectve scale Earned Man-Hours Tme performance Unts/ManHour Varaton actual/agreed Varaton actual/ (%) estmated (%) TIME On-Tme Completon Tme mprovement Percent Complete Subectve scale Lost Tme Accountng Qualty performance Qualty Control/Rework Rectfyng defects (%) Subectve scale Number of nonconformance reports Scope of rework Punch Lst QUALITY Number of nonconformance reports End users satsfacton scores LTIFR mllon workng Safety Subectve scale hours SAFETY& Envronmental ENVIRONMENT performance INNOVATION COMMUNICATION SATISFACTION TRUST Polluton occurrence Innovaton and mprovement Subectve scale Effectve communcatons Harmonous workng relatonshp Long-term busness relatonshp Introducton of facltated workshop Subectve scale Clent s satsfacton subectve Customer s satsfacton Professonal mage establshment Average duraton for settlng var. orders Ltgaton, dspute, clam occurrence and magntude Trust and respect Cost savngs Number of nnovaton ntatves Subectve scale Reducton of wrtten communcaton Varaton of number of letters, emals etc. Subectve scale Top management commtment Average duraton of settlng var. orders Frequency of meetng others expectatons Subectve scale Pro. team performance - subectve scale Subectve scale Change management - subectve scale The PMBOK Gude [6] defnes the organzaton chart as any graphc dsplay of proect reportng relatonshps. It may be formal or nformal, hghly detaled or broadly framed, based on the needs of the proect. An Organzatonal Breakdown Structure (OBS) s a specfc type of organzaton chart that shows responsblty of organzatonal unts for dfferent work tems. The organzaton chart s one of the three outputs of organzatonal plannng. We found vrtually no nvestgaton of the relatonshp between OBS and KPIs n current lterature. An excepton s presented n [7], where a Performance Management Support System (PMSS) was developed. It s a system for measurng employee performance based on the organzatonal chart of the proect. It serves as a 70 Techncal Gazette 2, (204), 69-78

3 Z. Stoadnovć, D. Marnkovć, B. Ivkovć Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke support for the qualty management system and management decson-makng. The system measures performance of the proect staff n three categores: cost, tme and qualty. The measure s estmated/performed for each category, multpled by the weghtng factor (values not lsted n [7]). Each employee receves a Performance Factor (PF) grade, whch depends on ndvdual s performance (APF) and performance of the team the ndvdual manages. Therefore, the organzatonal structure s taken nto account for evaluatng employee performance. The system s well desgned and allows for varous applcatons. The opportunty for mprovng the system les n the fact that the performance measure s smplfed (only cost, tme and qualty). Other categores (safety, nnovaton, communcaton...) are gnored. 2.2 RAM and QFD Separate studes can be found regardng the Responsblty Assgnment Matrx (RAM) and the applcaton of QFD methodology n constructon. However, the connecton between these two areas and the potental that t offers n terms of employee performance measurement s not nvestgated enough. RAM s one of the standard tools for proect management. The PMBOK [6] descrbes RAM as one of the three maor outputs from organzatonal plannng process. RAM s used for assgnng roles and responsbltes to proect partcpants. The studes n ths area relate more to descrbng RAM as a management tool, and less to advanced applcatons on constructon proects. For example, n one study that nvestgates proect management practce n varous companes RAM s mentoned as one of the tools that are rarely used n practce [8]. Elsewhere, RAM has been descrbed as one of the ffteen possble vews of the process model [9]. One exempton s a study that proposes an ncentve pay system for the proect management team [0]. The system represents an ntegrated use of RAM, fuzzy lngustc varables, and fve proect management process groups (ntatng, plannng, executng, montorng and closng). Responsblty and performance are quantfed ether by crsp numbers (0, 7, 5, 3, and ) or fuzzy ntervals. Four models are dscussed (wth or wthout performance, crsp or fuzzy numbers, wth or wthout weghtng for process groups). The system has been appled to a practcal case wth 5 members of the proect management team. The feedback ndcated effcency and effectveness of the proposed methodology. It has been concluded that the choce between four dscussed models depends on the specfc stuaton and nature of work. The system s desgned to dstrbute rewards wthn a group, but t could potentally be used for more complex purposes. Performance s evaluated n the nterval (0 ), whch does not allow for performance to be over 00 %. Ths paper researches the possblty of the wder applcaton of ths concept whle usng slghtly dfferent formulas to measure performance. QFD has been defned by ts orgnator Yo Akao [] as "a method for developng a desgn qualty amed at satsfyng the customer and then translatng the customer s demands nto desgn targets and maor qualty assurance ponts to be used throughout the producton phase". It s a hghly effectve and structured plannng tool. QFD s usually used at early stages of a proect, but usng the same methodology as a decson-makng tool at later stages also may be benefcal. QFD methodology has been appled n the constructon ndustry n many dfferent ways. For example, Lee et al. [2], developed an automated system (SQFD) for measurng qualty performance of the desgn/buld contractor. In the same paper authors present an overvew of QFD applcaton n other areas of plannng, desgn and tenderng. QFD methodology can be used for the purpose of mult crtera choce of supplers, takng nto account cost and subectve factors and AHP method [3]. Another example s the model for the selecton of contractors for specfc renovaton proects, whch combnes fuzzy theory and QFD methodology [4]. 3 The proposed performance measurement framework Investgatons n the feld of KPIs are certanly useful as ther goal s adoptng a standard set of KPIs, whch could then be unversally appled to all constructon proects. In ths way performance measurement can successfully be developed at the proect level as a whole. However, the queston s to what extent the proposed KPIs can be appled to assessng the performance of ndvduals. The problem s that the proposed KPIs are not equally related to all employees on a typcal proect. Proect manager s not drectly responsble for the physcal executon of ndvdual actvtes (tme, cost, qualty), and workers do not partcpate drectly n communcaton and nnovaton. The mssng lnk s the relatonshp between the ndvdual KPIs and the performance measurement for dfferent ndvduals and teams assgned to dfferent obs at dfferent organzatonal levels. Another problem s the performance measurement for employees n a constructon company who are not drectly engaged on a proect (procurement, legslatve, qualty staff, planners etc.). Therefore, proect KPIs cannot be drectly used for the evaluaton of ther work. Instead of KPIs, the use of the RAM s recommended, wth a modfcaton that, n accordance wth QFD methodology, numbers are used nstead of symbols to ndcate the level of responsblty. The employee performance measurement framework, proposed heren, conssts of two modules: MODULE for employees drectly engaged on proects. Performance s measured on separate organsatonal levels usng KPIs. MODULE 2 for employees not drectly engaged on proects. Performance s measured usng the RAM and calculatons based on QFD methodology. 3. Module - employees drectly engaged on proects A revew of four KPI-related studes shows that there s a common sub-set of KPIs hghlghted n Tab.. Based on ths level of consensus, the proposed model uses those common KPIs. In order to obectvely evaluate the performance of all human resources on a proect, a balanced use of KPIs n lne wth the organzatonal chart Tehnčk vesnk 2, (204),

4 Human resource performance measurement framework for constructon proects and companes Z. Stoadnovć, D. Marnkovć, B. Ivkovć of the proect s proposed. Dfferent sets of KPIs are defned for each level n the organzatonal chart, accordng to the dfferent nature of work beng carred out at each level. The proposed module conssts of four organzatonal levels: LEVEL A - PROJECT MANAGER LEVEL B - ENGINEERS (responsble for work packages and subcontractors) LEVEL C - FOREMEN (techncans) LEVEL D - CREWS (workers). The proposed four levels are common for constructon proects n Serba, but more or fewer levels can be used as needed. A smlar breakdown has been used n [5], where a competence based personnel selecton method s dscussed. Fg. shows the organzaton chart, performance measurement levels and correspondng KPIs. The proposed performance measurement sequence s D-C-B-A because evaluaton conssts of two categores: performance evaluaton of own work and performance evaluaton of the managed teams from the lower level. Both evaluatons are accompaned wth matchng weghts (shown n Tab. 3). A PROJECT MANAGER: KPI: communcaton, trust, satsfacton + evaluaton from levels below Proect manager B ENGINNERS: n KPI: nnovaton + evaluaton from levels below Engneer Engneer 2 Engneer 3 C FOREMEN: m KPI: safety + evaluaton from levels below Foreman Foreman 2 Foreman 3 Foreman 4 D CREWS: k KPI: cost, qualty, tme Crew Crew 2 Crew 3 Crew 4 Crew 5 Crew 5 Fgure OBS (segment), performance measurement levels and KPIs for Module Table 2 Organzaton levels, KPIs and measures Level KPI Measure name KPI measures (g) expressed as a percentage Cost gc Estmated/actual cost D Tme gt Estmated/actual tme Qualty gq (Cost of rework/estmated cost) C Safety gs (Lost hours/estmated hours) B Innovaton g + (Cost savngs/estmated cost) Communcaton gcom Subectve scale ( 0): performed/planned A Clent satsfacton gsat Subectve scale ( 0): performed/planned Trust gtru Average tme for settlng dsputes: performed/planned Table 3 Recalculaton of weghts for each level KPI Weghts names Weghts - w Proect D C B A Cost wc 0,3 0,339 Tme wt 0,20 0,324 wd Qualty wq 0,30 0,337 0,757 wc Safety ws 0,24 0,243 0,829 wb Innovaton w 0,05 0,7 0,65 Satsfacton wsat 0,5 0,5 Communcaton wcom 0,24 0,24 Trust wtru 0,0 0,0 Performance measurement starts from the lowest organzatonal level D that represents workers organsed n crews. For constructon work team performance s more mportant than ndvdual performance, so performance s measured on crew level. That way, the mportance of teamwork s emphassed (another mportant component of human resource management). For crews, three aspects of performance are measured: cost, tme and qualty. The next level, C, represents the foremen who manage the crews. Evaluaton of crew performance s a part of overall evaluaton of foremen. Ths s very mportant because t prevents the possblty that foremen receve (good) evaluatons regardless of the performance of ther crews. Ths way, the foremen are automatcally motvated to rase the performance of the crews they manage. Part of the foremen evaluaton that relates to safety, s assgned regardless of the team. The next level, B, represents the engneers who are responsble for work packages and subcontractors. Besdes the evaluaton from lower levels, performance s measured n the feld of 72 Techncal Gazette 2, (204), 69-78

5 Z. Stoadnovć, D. Marnkovć, B. Ivkovć Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke nnovaton (savngs). Fnally, the performance of the proect manager s measured on level A. In addton to performance measurement of all subordnates, the proect manager s evaluated n the areas of communcaton, clent satsfacton and trust. Level D k crews C m foremen B n engneers A proect manager Table 4 Formulas for performance measurement for all levels Formulas GD = wc gc + wq gq + wt gt wc + wq + wt = 0, , , 32 = GD GC = ws gs + wd GD GD =, m n() GD - average evaluaton of foreman crews n() - number of crews for foreman ws + wd = 0, , 76 = = w g + wc GC GC GC = n n() GB, GC - average evaluaton of engneer foremen n() - number of foremen for engneer wn + wc = 0,7 + 0,83 = GB GA = wcom gcom + wtru gtru + wsat gsat + wb n wcom + wtru + wsat + wb = 0, 2 + 0, + 05, + 0, 62 = =, crew( ) = k crew() s the set of crews for foreman = foreman( ) foreman() s the set of foremen for engneer =, n Fgure 2 Employee evaluaton procedure for Module The emphass of ths study s the classfcaton of KPIs n accordance wth the nature of work and the organzatonal chart of the proect. KPI measures are taken from prevously mentoned studes wth certan adustments, although the defnton of KPI measures s an mportant area of research that deserves specal attenton. KPI measures n ths research are expressed as a percentage n order to be comparable (00 % - planned performance; over 00 % - better performance). It s mportant to emphasze that the qualty of a performance Tehnčk vesnk 2, (204),

6 Human resource performance measurement framework for constructon proects and companes Z. Stoadnovć, D. Marnkovć, B. Ivkovć measurement system drectly depends on (successful) KPI quantfcaton. In order to make the system more unbased descrptve marks (e.g. 0) should be avoded n favour of numercal measures that can be obtaned drectly from executed works. There s also the possblty to defne more than one measure for any KPI, wth approprate weghts. Combnng more measures for KPIs would make performance measurement more realstc. For example, a measure "estmated/actual spent hours" could be used for the tme KPI n addton to the "estmated/actual tme" measure. Tab. 2 shows the KPIs for each organzatonal level and the correspondng measures. Ths lst can be adusted n relaton to specfc proect or company condtons. Weghts (w ) for KPIs were also taken from one of the studes [2]. They are used to arrange the mportance of dfferent KPIs. Weghts must be recalculated on each level by usng proportons so the sum of weghts s on each level. Tab. 3 shows ths recalculaton. Tab. 4 shows formulas for performance evaluaton for all levels. GD s an average evaluaton factor for crews whch are managed by foreman. Values Xd, Yd return the ordnal number of crews. Smlar defntons apply for GC, Xc and Yc. Fg. 3 shows an mplementaton example (only a part of an organzaton chart s presented). Ths example shows: 5 crews (D:D5), two foremen (C leads 3 crews, C2 leads 2 crews), 5 engneers (B3 leads C and C2) and one proect manager (A). Fg. 3 shows how ndvdual evaluatons effect fnal performance measurement. The poor performance of crew D led to bad evaluaton of ther foreman C. The proect manager receved a good evaluaton n spte of hs own bad performance, because of the good performance of the engneers. In order to obectvely measure performance of proect staff, t s necessary to ntroduce another coeffcent that evaluates the fulflment of necessary precondtons for each level (PA:PD). The purpose of ths precondton coeffcent s to ensure that employees can receve a good evaluaton n the case when hgher-level managers dd not provde the necessary condtons to accomplsh the planned tasks. Coeffcent (P) s between 0 and (-all precondtons provded). At level D, PD represents the exstence of all desgn detals, materals, tools, free workspace etc. At level C, PC shows the lack of precse contract and desgn arrangements, adequate work force (number and composton), safety precondtons etc. At level B, PB quantfes nfluences from the proect envronment (qualty of desgn, contract, permts, ste space, traffc condtons, cooperaton wth the engneer and other authortes etc.). Coeffcent PA quantfes aggravatng crcumstances on proect level and enables comparng results acheved on proects of dfferent complexty. Aggravatng crcumstances can be: poor desgn, poor fnancng, extreme weather and/or other condtons, poorly contracted proect, and smlar categores. The mathematcal nterpretaton follows the same logc as the performance evaluaton process. For crew level D, precondtons depend on the same KPIs (cost, qualty and tme. The general formula s (): PD = wc PDc + wq PDq + wt PDt. () Fgure 3 Implementaton example Fg. 2 shows the complete employee evaluaton procedure for Module. For each level, KPIs and correspondng weghts are predetermned, n accordance wth Tabs. 2 and 3. OBS provdes the number of crews or ndvduals on each level (numbers k, m and n). Performance measurement s quantfed usng KPI measures (g) lsted n Table 2. GD s an evaluaton factor for each crew. Shaded areas mark performance factors taken from lower levels (m foremen manage k crews, n engneers manage m foremen, proect manager manages n engneers). For example, PDt s the measure for tme precondtons. It combnes the precondton ratos for desgn detals (avalable/total), free workspace (avalable/needed) and crew composton (-optmal; 0,85-suboptmal; 0,7-not optmal) wth approprate weghts. Smlar formulas are used for levels C, B and A. The mathematcal nterpretaton of measures for partal precondton coeffcents needs to be carefuly developed so that t obectvly resembles the realty of constructon proects. Precondton coeffcents can change over tme. Fnal performance evaluaton factors are calculated by usng the followng formula (2): GX' = GX PX ; X ( D,C,B, A). (2) For each company KPIs, weghtng sets and precondton coeffcents can be modfed after testng, accordng to specfc crcumstances. 74 Techncal Gazette 2, (204), 69-78

7 Z. Stoadnovć, D. Marnkovć, B. Ivkovć Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke 3.2 Module 2 - employees not drectly engaged on proects Module 2 captures the performance of employees not drectly engaged on proects. Ths group of employees perform a varety of dfferent obs. Performance measurement must be desgned dfferently (wthout KPIs) because measurement cannot be drectly lnked to outcomes of proect actvtes. We propose to use a Responsblty Assgnment Matrx (RAM), where the RAM axes represent obs and employees. In order to be used for performance measurement, RAM must be quantfed n a certan way. Module 2 concept conssts of quantfyng responsbltes and quantfyng ob mportance. That way, usng calculatons based on QFD methodology, employee performance can be converted nto ponts. Ths procedure can be carred out as follows:. Job dentfcaton s the frst step n ths module. If ob systematzaton and a qualty management system exst n a company, ob dentfcaton s easy. If that s not the case, ob dentfcaton can be carred out n a few teratons (for example: employees fll out forms, data s systematzed and harmonzed at company level). 2. Creatng the responsblty assgnment matrx s the next step. The matrx s flled out wth dfferent symbols that defne the level of responsblty for partcular obs. A Responsblty, Accountable, Consultant, and Inform (RACI) format s often used to accomplsh ths task [9]. In ths paper we wll use the followng three-step format: full responsblty, partal responsblty, and partcpaton wthout responsblty. 3. Quantfyng the responsblty assgnment matrx s the key step because t enables convertng employee performance nto ponts. Quantfyng the responsblty assgnment matrx conssts of transformng ob responsblty nto ponts and transformng the mportance of obs (for the company) nto ponts. 3a. Quantfcaton of responsblty means assgnng numercal values to each symbol used n the scheme. For example: Full responsblty: r = 9 Partal responsblty: r = 3 Partcpaton wthout responsblty: r = 3b. Quantfcaton (rankng) of obs means assgnng mportance of partcular obs for the company (w) to each ob n a separate column. For example, the scale for ob mportance can be {, 2, 3, 4, and 5}. 4. Ponts calculaton s a 3-step procedure: calculaton of maxmum (Gmax), planned (Gplan) and performed (Gper) ponts. The frst step s calculatng Gmax that stands for the sum of ponts for all obs an employee can perform, gven the ob mportance and ob responsblty ("capacty of an employee"). The number Gmax (and the percentage rato p) shows how much s each ndvdual mportant for the company. Gmax can be used to determne the level of the base salary (hgher score means greater sgnfcance of ndvduals for the company). Practcally, a certan number of ponts (and salary level), employees can collect by performng a small number of sgnfcant obs for whch they are fully responsble, or a greater number of less sgnfcant obs wth reduced responsbltes. At ths level, the valdty of Gmax scores should be checked. For example: check f employees can really perform all assgned tasks, or check for employees wth a low number of ponts for the salary they receve. The good sde of the proposed system s that, ust by ntroducng scorng, t provdes nternal farness when determnng salary levels. Fg. 4 shows the data structure of RAM for calculatng Gmax. Fgure 4 Data structure of RAM for calculatng Gmax The formulas for calculatng Gmax and p for each employee are: m G max = ( w r ), (3) = Gmax p =. (4) Gmax Accordng to the nature of the constructon ndustry, the workload s dstrbuted unevenly n tme and scope. So, Gmax s a theoretcal maxmum of ponts that employees would receve for performng all obs at the same tme. Realstcally employees wll perform only a part of these actvtes n a tme nterval. Therefore, the assessment cannot be made on the bass of Gmax, but n relaton to Gplan, whch s a reduced number of ponts over the plannng perod (usually one month). To determne the planned number of ponts Gplan, the procedure s repeated n an dentcal manner wth the same formulas, but only for the planned actvtes for the next month. A useful ndcator for the company management s the rato ΣGplan/ΣGmax that drectly shows the overall level of employment of the company (all employees) n each month. After that, performance can be evaluated for each ob an employee performs (g ), compared to 00 % (00 % - planned performance). Measures for evaluatng performance (g ) are hard to defne explctly (as n Module ) because employees perform a large number of dfferent obs. Wherever possble, t s desrable to lnk the evaluaton wth KPIs and the performance on constructon ste. For example: The plannng processes and bd preparaton may be lnked to KPIs (cost, tme). The measures are smlar to those n Module and they actually reflect the valdty of plannng. Qualty management tasks can be lnked to KPIs (qualty, communcaton, satsfacton). Legal department tasks can be drectly lnked to KPI (trust).). Tehnčk vesnk 2, (204),

8 Human resource performance measurement framework for constructon proects and companes Z. Stoadnovć, D. Marnkovć, B. Ivkovć The work of the procurement department can be partally lnked to KPI (cost, tme). For obs that cannot be drectly lnked to the proects, subectve assessment should be used (n relaton to 00 %). Evaluaton by mmedate supervsor s most common. Snce these departments are usually engaged on more than proect, t s necessary to calculate weghted evaluatons. For that purpose the "proect factor" (PA n Module ) can be used. The formula for calculatng weghted evaluatons (for any measure g, n case of n proects) s: scorng s obectve and credble, the system should be tested for several months before mplementaton. Fg. 7 shows an example of a quantfed RAM (year) from a case study. The frst column shows the mportance of each work for the company. For responsblty quantfcaton, a (, 3, 9) scale was used. Maxmum number of ponts Gmax, and rato p are shown at the bottom of the table. In ths example, t s clear that two employees carry out 85 % of total work. After the quantfcaton of RAM, the salary system n ths company was reconstructed. g = * n n = g. PA (5) After determnng all g evaluatons (w and r reman the same as n the prevous matrx), employees receve an overall monthly performance factor Gper. The Gper factor should be vewed n relaton to the monthly planned number of ponts Gplan. Fg. 5 shows RAM wth g performance evaluatons: Fgure 6 Performance evaluaton procedure for Module 2 Fgure 5 RAM wth g evaluatons The formulas for calculatng Gper and q for each employee are: m G per = ( g w r ), (6) = Gper q =. (7) Gplan Based on rato q, performance based rewardng can be mplemented. There s a clear analogy between the descrbed procedure and the QFD methodology. The dfference s that there s no mutual dependency among employees who perform ther tasks. Dependence can be ntroduced at the level of ndvduals (for example, through assstants) but t s better to solve such relatons by formng ndependent teams for dfferent tasks. Fg. 6 shows the complete performance evaluaton procedure for Module Connectng ponts wth salares s the fnal step of Module 2. Ths s the most senstve segment of the performance measurement system, and t should be approached wth cauton. In order to make sure that Fgure 7 Case study of a quantfed RAM 4 Conclusons, benefts and further research topcs The man beneft for a constructon company s an obectve performance measurement system for all employees. The framework proposed n ths study s a way to perform such performance measurements. Company management can use the proposed framework as a management tool for allocatng obs or for mplementng performance-based rewardng. Measurements are performed n real tme, so t s possble 76 Techncal Gazette 2, (204), 69-78

9 Z. Stoadnovć, D. Marnkovć, B. Ivkovć Sustav za merene učnka ludskh resursa za građevnske proekte tvrtke to mmedately ntervene wth correctve measures, rewards/penaltes or other control mechansms. Performance-based rewardng can be easly mplemented because evaluaton factors are non-dmensonal. Fnal evaluaton can be lnked to the base salares and bonuses (postve or negatve). More benefts are acheved through hgher motvaton of employees. In the frst cycle, the company makes a hgher proft because employees are motvated (fnancally) to perform better than t was planned when preparng bds. Substantal benefts are ganed n the second cycle. New bds are prepared wth hgher work standards so the company makes hgher proft because of lowered costs (labour, rework, tme, etc.). Ths way, the compettveness of companes s ncreased, whch s one of the man goals of strategc human resource management. Ths process tends asymptotcally to optmal values when t s not possble to further mprove performance. At some pont, the performance standards cannot be further enhanced due to physcal lmtatons. But at ths stage, the company fully optmzed ts performance. Another sgnfcant beneft for the company s a consderable ncrease n the qualty of data obtaned from completed proects. Evaluaton of proect staff leads to an evaluaton of the proect tself (GA factor from module ). Unlke proect evaluaton through KPIs ( 5 range), the proposed framework evaluates proect success relatvely n relaton to planned values from the bd. Proect evaluaton s compared to number (more than, a better result than planned). Ths knd of nformaton s very useful for company management for negotatng new proects Addtonal benefts for the company are: Identfcaton of crtcal areas (for tranng, staff relocaton, lettng go etc.). Problematc or satsfactory areas easly come to lght. Increased motvaton through tangble and ntangble rewards (bonuses or penaltes), promoton of the best. Promoton of teamwork on proects (proect staff evaluaton s based on ste performance). Creatng a postve compettve sprt between crews, managers and proects. Evaluaton s based on obectve performance measurement, wthout subectvsm. The system s n lne wth maor HR trends (strategc HR management, performance measurement, motvaton and focus on people). Improved mage of the company (top trends appled n practce). The framework s desgned for cvl constructon proects and companes that perform such proects, but t s applcable to any ndustry. In Module, the KPIs set should be adusted to the nature of the ndustry n queston. Module 2 can be mplemented unversally as t s proposed. The performance evaluaton s fully comparable between modules because measures are nondmensonal. But the polcy of bonuses should be developed and customzed by every company n accordance wth the nature and mportance of ndvdual obs n queston. The most mportant drecton for further research s detaled quantfcaton of varous KPI measures and precondton coeffcents, because assgnng obectve and unbased evaluatons to employees n both modules s crucal for the overall qualty of the proposed framework. Developng an approprate software tool for the mplementaton of the proposed framework n practce s the next planned research step. 5 References [] Costa, D. B.; Formoso, C. T. Gudelnes for concepton, mplementaton and use of performance measurement systems n constructon companes. // th Annual Conference of Lean Constructon, Blacksburg, Vrgna, [2] Yeung, J. F. Y.; Chan, A. P. C.; Chan, D. W. M. Developng a Performance Index for Relatonshp-Based Constructon Proects n Australa: Delph Study. // Journal of Management n Engneerng, aprl 2009, pp [3] Cox, R. F.; Issa, R. R. A.; Ahrens, D. Management s Percepton of Key Performance Indcators for Constructon. // Journal of Constructon Engneerng and Management, march/aprl 2003, pp [4] Yeung, J. F. Y.; Chan, A. P. C.; Chan, D. W. M. A computerzed model for measurng and benchmarkng the partnerng performance of constructon proects. // Automaton n Constructon, 8, (2009), pp [5] Luu, V.T.; Km, S.Y.; Huynh, T.A. Improvng proect management performance of large contractors usng benchmarkng approach. // Internatonal Journal of Proect Management, 26, (2008), pp [6] Proect Management Insttute (PMI). A gude to the proect management body of knowledge - PMBOK Gude (4th ed.). Newtown Square, PA: Proect Management Insttute, [7] Rezae, A. R. et al. Performance measurement n a qualty management system. // Scenta Iranca, Transactons E: Industral Engneerng, 8, (20), pp [8] Turner, R. et al. Proect management n small to medumszed enterprses: Matchng processes to the nature of the frm. // Internatonal Journal of Proect Management, 28, (200), pp [9] Brownng, T. R. On the algnment of the purposes and vews of process models n proect management. // Journal of Operatons Management, 28, (200), pp [0] Yang, T.; Chen, C. W. An ncentve pay system for proect management based on responsblty assgnment matrx and fuzzy lngustc varables. // Expert Systems wth Applcatons, 36, 0(2009), pp [] Akao, R. Qualty functon deployment: ntegratng customer requrements nto product desgn. // Productvty Press, Cambrdge, 992. [2] Lee, D. E. et al. Automated stochastc qualty functon deployment system for measurng the qualty performance of desgn/buld contractors. // Automaton n Constructon 8, (2009), pp [3] Bhattacharya, A. et al. Suppler selecton paradgm: An ntegrated herarchcal QFD methodology under multplecrtera envronment. // Appled Soft Computng, 0, (200), pp [4] Juan, Y. K. et al. Housng refurbshment contractors selecton based on a hybrd fuzzy-qfd approach. // Automaton n Constructon, 8, (2009), pp [5] Shahhossen, V.; Sebt, M. H. Competency-based selecton and assgnment of human resources to constructon proects. // Scenta Iranca, Transactons A: Cvl Engneerng, 8, (20), pp Tehnčk vesnk 2, (204),

10 Human resource performance measurement framework for constructon proects and companes Z. Stoadnovć, D. Marnkovć, B. Ivkovć Authors' addresses Zoran Stoadnovć, Ph.D., Assstant Professor Faculty of Cvl Engneerng, Unversty of Belgrade, Bul. krala Aleksandra 73, 000 Belgrade, Serba (correspondng author) E-mal: Dean Marnkovć, Ph.D., Teachng Fellow Faculty of Cvl Engneerng, Unversty of Belgrade, Bul. krala Aleksandra 73, 000 Belgrade, Serba E-mal: Branslav Ivkovć, Ph.D., Professor Faculty of Cvl Engneerng, Unversty of Belgrade, Bul. krala Aleksandra 73, 000 Belgrade, Serba E-mal: 78 Techncal Gazette 2, (204), 69-78