Why Key Performance Indicators for Electrical Contractors Matter

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Key Performance Measures (KPIs) are essential for measuring the current and future success of an electrical contractor and go beyond simply looking at company revenue. On day two of NECA 2021, Dan Doyan, Director of Maxim Consulting Group, and Greg Padalecki, Master Electrician and President of Alterman, Inc., delivered a presentation titled “Key Performance Metrics – Increasing Margin and Reducing Risk” on how KPI metrics can be improved or implemented for electrical contractors and why.

First, Doyan defines a KPI as a metric that can be used to define and measure success or failure. “This is information you probably already have that you may not have correlated to find trends or compare yourself to industry peers,” he says. Additionally, there are leading indicators that allow an organization to predict its success or failure, while lagging indicators tell the story and can lead to better projections.

Next, Doyan explains that KPIs can be measured in all areas of an organization, including business development, estimating, prefabrication, purchasing, operations, equipment, labor cost, and financial controls. . In fact, he says there are over 80 types of KPIs ranging in complexity from low, medium to high.

While it’s impossible to fit every single one of these metrics into a business, Doyan and Padalecki share examples of mostly uncomplicated KPIs within the various departments of an electrical contracting business that can be easily implemented and help CEs better understand what works. and what is not. Some of the examples they provide are:

  • Total sales: A low complexity business development KPI that can be measured and defined as the total dollar amount of sales over a period.
  • Cost per estimate: Low complexity estimate KPI which is calculated by the sum of all costs divided by the number of estimates.
  • Transit time per assembly unit: A medium complexity prefabrication KPI that measures the sum of a company’s processing time, QA inspection time, travel time and waiting time).
  • Office/land ratio: A low-complexity operational KPI that measures the number of office workers versus field workers.
  • Percentage of use: A medium complexity equipment KPI that calculates the percentage of workdays the equipment is used out of the total number of workdays.

Using these and other KPIs can allow CEs to better predict or show their success against a set of goals and allows companies to see trends over time and measure performance. “KPIs define things so that we can talk about them in a coherent way,” concludes Padalecki.

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