Management Performance Evaluation Model of Korean Construction Firms

Donghoon Lee, Manki Kim, Sunkuk Kim

Department of Architectural Engineering, Kyung Hee University, Seoul, Republic of Korea.

DOI: 10.4236/jbcpr.2013.12005                

Abstract

Corporate management performance evaluation currently focuses on financial aspects; however, it is necessary to identify and manage elements that contribute to increased economic values in the long run. When it comes to construction firms, most previous research did not cover weighting and estimation approaches for non-financial elements that ultimately influence financial status. In this research, the objective is to develop a management performance evaluation model for Korean construction firms. The model includes financial factors and non-financial factors. This research investigated actual data from Korean construction firmsandclassifiedtheir characteristics. This study is performed in two steps. First, this study derives KPIs for performance measurement techniques and weights the KPIs. And then, it applies the performance data of construction firms to the technique. The findings of this study show that Korean construction firms consider customers to be the foremost priority, converse to previous research which argued that the internal business process was the top priority. The performance measurement results can be fed back into strategies and plans to shed light on issues, reflect on management plans for subsequent years and modify mid to long-term strategies. Therefore, the developed model can help decision-makers effectively revise their management plans.

Keywords

Management Performance Evaluation; Key Performance Indicators; Balanced Scorecard; AHP; Fuzzy

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	P. F. Drucker, “The Information Executives Truly Need,” Harvard Business Review, Vol. 73, No. 1, 1995, pp. 54-62.
[2]	E. K. Zavadskas, Z. Turskis and J. Tamosaitiene, “Risk Assessment of Construction Projects,” Journal of Civil Engineering and Management, Vol. 16, No. 1, 2010, pp. 33-46. doi:10.3846/jcem.2010.03
[3]	C. D. Ittner and D. F. Larcker, “Innovations in Performance Measurement: Trends and Research Implications,” Journal of Management Accounting Research, Vol. 10, No. 2004, pp. 205-238.
[4]	R. F. Cox, R. R. A. Issa and D. Ahren, “Management’s Perception of Key Performance Indicators for Construction,” Journal of Construction Engineering and Management, Vol. 129, No. 2, 2003, pp. 142-151. doi:10.1061/(ASCE)0733-9364(2003)129:2(142)
[5]	M. Kagioglou, R. Cooper and G. Aouad, “Performance Management in Construction: A Conceptual Framework,” Construction Management and Economics, Vol. 19, No. 2001, pp. 93-106.
[6]	H. S. Cha and T. K. Kim, “Developing Measurement System for Key Performance Indicators on Building Construction Projects,” Korea Institute of Construction Engi- neering and Management, Vol. 9, No. 4, 2008, pp. 120- 131.
[7]	I. H. Yu, K. R. Kim, Y. Jung and S. Chin, “Analysis of Quantified Characteristics of the Performance Indicators for Construction Companies,” Korea Institute of Construction Engineering and Management, Vol. 7, No. 4, 2006, pp. 154-164.
[8]	K. H. Kim, I. H. Yu, D. W. Shin and K.R. Kim, “Evaluation of Performance Measurement System Alternatives for the Construction Companies,” Architectural Institute of Korea, Vol. 21, No. 6, 2005, pp. 97-105.
[9]	R. S. Kaplan and D. P. Norton, “The Balanced Scorecard—Measures That Drive Performance,” Harvard Busi- ness Review, Vol. 70, No. 1, 1992, pp. 71-79.
[10]	W. J. Jung, I. H. Yu, K. R. Kim and D. W. Shin, “Analysis of the Weights of Performance Measurement Index According to the Size of Construction Companies,” Architectural Institute of Korea, Vol. 21, No. 8, 2005, pp. 121-129.
[11]	A. J. Shrnhur, O. Levy and D. Dvir, “Mapping the Dimensions of Project Success,” Project Management Journal, Vol. 28, No. 2, 1997, pp. 5-13.
[12]	C. S. Lim and M. Z. Mohamed, “Criteria of Project Success and Exploratory Re-Examination,” International Journal of Project Management, Vol. 17, No. 4, 1999, pp. 243- 248. doi:10.1016/S0263-7863(98)00040-4
[13]	R. Atkinson, “Project Management: Cost, Time and Quality, Two Best Guesses and a Phenomenon, Its Time to Accept Other Success Criteria,” International Journal of Project Management, Vol. 17, No. 6, 1999, pp. 337-342. doi:10.1016/S0263-7863(98)00069-6
[14]	M. Kagioglou, R. Cooper and G. Aouad, “Performance Management in Construction: A Conceptual Framework,” Construction Management and Economics, Vol. 19, No. 1, 2001, pp. 85-95. doi:10.1080/01446190010003425
[15]	D. H. Lee, S. K. Kim and D. H. Shin, “A Correlation Ana- lysis between the Change of Managerial Environment and the Business Performance of Domestic Construction Firms.” Journal of the Korea Institute of Building Con- struction, Vol. 9, No. 1, 2009, pp. 111-121. doi:10.5345/JKIC.2009.9.1.111
[16]	S. O. Ogunlana1, H. Li and F. A. Sukhera, “System Dynamics Approach to Exploring Performance Enhancement in a Construction Organization,” Journal of Construction Engineering and Management, Vol. 129, No. 5, 2003, pp. 528-536. doi:10.1061/(ASCE)0733-9364(2003)129:5(528)
[17]	A. Brown and J. Adams, “Measuring the Effect of Project Management on Construction Outpus: A New Approach,” International Journal of Project Management, Vol. 18, No. 5, 2000, pp. 327-335.
[18]	Y. C. Liu, “Application of the Fuzzy Delphi Analytic Hie- rarchy Process on Rock Mass Classification,” National Cheng Kung University, Tainan City, 2002.
[19]	H. A. Bassioni, A. D. F. Price and T. M. Hassan, “Build- ing a Conceptual Framework for Measuring Business Performance in Construction: An Empirical Evaluation,” Construction Management and Economics, Vol. 23, No. 5, 2005, pp. 495-507.
[20]	S. H. Chen and H. T. Lee, “Performance Evaluation Model for Project Managers Using Managerial Practices,” International Journal of Project Management, Vol. 25, No. 6, 2007, pp. 543-551.
[21]	C. Chiu, “A Case-Based Customer Classification Approach for Direct Marketing,” Expert Systems with Ap- plication, Vol. 22, No. 2, 2002, pp. 163-168.
[22]	V. T. Luu, S. Y. Kim and T. A. Huynh, “Improving Project Management Performance of Large Contractors Using Benchmarking Approach,” International Journal of Project Management, Vol. 26, No. 7, 2008, pp. 758-769.
[23]	R. A. Stewart and S. Mohamed, “Utilizing the Balanced Scorecard for IT/IS Performance Evaluation in Construction,” Construction Innovation, Vol. 1, No. 3, 2001, pp. 147-163.
[24]	N. K. Acharya, Y. D. Lee and J. K. Kim, “Critical Construction Conflicting Factors Identification Using Analytical Hierachy Process,” KSCE Journal of Civil Engineering, Vol. 10, No. 3, 2006, pp. 165-174. doi:10.1007/BF02824057
[25]	D. Wood, “Corporate Social Performance Revisited,” The Academy of Management Review, Vol. 16, No. 4, 1991, pp. 34-42.