Construction business performance measurement: the SPM alternative

Construction business performance measurement (BPM) is myopic, most often being project-specific, profit-orientated, and neglecting broader `̀ stakeholder'' issues. If construction organizations are to remain competitive in the longer term, they need to develop and better understand their relations with their customers, suppliers, employees, lenders and the wider community. Hence, performance measurement must embrace these broader business characteristics. The need for a shift in `̀ orthodox'' (BPM) beliefs from `̀ basic'' performance measurement, to an alternative `̀ stakeholder perspective measurement'' (SPM), is underlined. SPM will adequately consider relations with customers, suppliers, employees, financiers, and the wider community; all being critical for a business's long-term viability. The paper goes on to advocate that construction organizations should reject this myopic strategic thinking, and better consider the interests of their stakeholders, both economically and morally. The latter calls for development of a serious stakeholder perspective to business performance measurement, so that construction organizations can be monitored and judged in a socially acceptable manner. Introduction To sustain competitiveness, indeed, in order to survive in national and international markets requires that construction businesses properly understand how they are currently performing, and how they need to perform in the future. In an increasingly competitive and shrinking global marketplace, never before have these demands been more important. To ignore this requirement results in short-termism and `̀ blinkered'' management strategies, with concomitant risks arising from those better organized and `̀ slicker'' businesses encroaching onto previously safe markets. To use a simile, it really has become `̀ survival of the fittest''. Underlining this point is the fact that the past 20 years have witnessed many construction business takeovers and amalgamations, resulting in firms of conglomerates now dominating the UK construction sector (Mbugua et al., 1999). This situation calls for effective business performance measurement (BPM), effective in the sense that it should enable a construction company to evaluate and establish its position with respect to its business environment. However, construction BPM tends to rely on `̀ traditional'' (bottom-line) performance measures, such as efficiency, return on capital employed, and profitability. These measures have been justifiably criticized by a number of commentators, mainly because they: The current issue and full text archive of this journal is available at http://www.emerald-library.com