Deng, F; Smyth, HJ; Anvuur, A; (2013) Effects of PMS process quality in construction firms. In: Proceedings of the Engineering Project Organization Conference.

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Abstract

Performance measurement has received significant research interests in the construction industry, but the literature in construction mainly focuses on developing a set of key performance indicators (KPIs) or a conceptual framework (e.g. balanced scorecard). However, little is known about how these KPIs or performance measurement system (PMS) in a much broader scope are designed, implemented, used, reviewed, and updated in a specific organizational context. Thus, the purpose of this paper is to identify structured processes of developing PMS – including organizing, designing, and implementing (follow the literature in operations management) – and to empirically investigate their effects on perceived PMS effectiveness and organizational performance in construction. The hypotheses were tested using partial least squares structural equation modeling (PLS-SEM). The data were collected in the UK construction industry by a web-based questionnaire survey. Consistent with the theory, the results strongly suggest that PMS process quality can be treated as a hierarchical construct including three dimensions: PMS organization quality, PMS design quality, and PMS implementation quality. The results also point out that the more extensive adoption of structured processes (better PMS process quality) leads to higher perceived PMS effectiveness and organizational performance. While perceived PMS effectiveness does not directly lead to the improvement of organizational performance, it partially mediates the effect of PMS process quality on organizational performance. This paper primarily contributes to providing an alternative approach (in comparison with KPI identification) of developing PMS in construction. It also contributes to the provision of empirical evidence on the usefulness of structured processes in general.

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