How to Use KPIs in Contracts

for Effective Road Construction Project Management



By Yuanmiao Wang

SKEMA Business School

China and Paris, France




In the management process of the road construction project, the effective reporting and the performance evaluation of the project outcome throughout the life cycle of the project. In the project performance measurement process, clarifying the KPIs attributes that meet the requirement of both two parties is the key to ensure the results can be successfully reported and assessed, which is a complicated and critical step. In order to help contractors and managers to manage projects more effectively, it is necessary to find an alternative dashboard and the corresponding KPIs that best match the attributes of the road construction project.

This paper uses Multi-Attribute Decision-making techniques (MADM) to define and prioritize several dashboards that are required for performance measurement, and to help users understand which are the most critical attributes that should be selected. The paper concludes by recommending alternative solution and providing effective references for the management of road construction projects.

Key words: Key performance indicators, Road construction project, KPIs dashboard, Contract management, Effective project management, Performance metrics and measurement


As contract management becomes a more and more critical success factor in the Road construction industry, the strategic requirements of contract management are getting stronger, and the complexity of the clauses in the contract is higher and higher. The KPIs in dashboard for project performance measurement in the contract also contains a large amount of information and management strategies, which makes the risk of project management in the Road construction industry even greater. Inefficient project management represents a large amount of capital loss, time cost, space idle cost and waste of labor costs. Based on the statistic indicating, ”70% of all the projects are behind their schedule and over budget, while 52% of the projects finished at 189% of their initial financial budge t.”[1]

In the project contracting industry, contract is used as a vehicle for managers to measure projects, monitor processes, and required periodic reports for deliverables that including detailed of the contractor’s contributions and accomplishments. However, most of contract administration lacks a tangible tool that presents a clear and operational measurement systems. It enables all the stakeholders to visually capture the performance of the earned value and other values in the project. In addition, this tool can also act as one of the leading indicators, which leads and directs the project to move forward. The tool is called Key performance indicators (KPIs), which is essentially a “dashboard” that is comprised with the relevant standards that the owner and contractor will measure. According to Eckerson’s definition: “The KPIs is a metric to measure how excellent the organization or an individual performs tactical, operational, or strategic activities that is critical for the success of the organization now or in the future.” [2] It should be noted that this paper will focus on the specific field that how to use “KPI” in contract rather than use “metric”, because the “metric” is generic, however the “KPI” is specific for different project types and scopes.

Contract management is one of the pillars to ensure the success of the Road construction project. KPIs in contract are pragmatic scorecards to measure whether a project is progressing toward predefined project targets or not. However, it can be found that KPIs in Road construction dashboard are complex, there are many factors should be taken into account. Therefore, before creating thesis and statement of purpose, it is necessary to create a Root Cause Analysis (RCA) of the problem. The idea of Root Cause Analysis is to sort out the root cause of KPIs’ defect in performance measure dashboard, which led to the ineffective road construction project management. According to the figure (Figure 1) below, the assignment of this thesis is to fully consider all necessary KPI clauses in contract management and to seek a flexible and feasible method to achieve effective Road construction project management.


To read entire paper, click here


Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.

How to cite this paper: Wang, Y. (2019). How to Use KPIs in Contracts for Effective Road Construction Project Management, PM World Journal, Vol. VIII, Issue X, November.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Wang-how-to-use-KPIs-in-contracts-for-road-construction.pdf



About the Author

Yuanmiao WANG

Paris, France



Yuanmiao Wang is Chinese, 24 years old, majoring in Project and Programme Management & Business Development (PPMBD) at SKEMA Business School in Paris, France. She graduated from Guangdong University of Finance and Economic in China and held a Management Bachelor diploma. From 2015-2016 she has established a startup project as the founder, which focus on products manufacturing and delivering processes optimization. At the end of 2015, she designed an innovative business model that combines online and offline and use her Business Plan won the 1st Prize of the 3rd Canton Youth Entrepreneurship Competition by conducting a commercial roadshow as a key speaker. In September 2016, she established her own company: Guangzhou Simple Life Semi-Finished Food Co. LLC., and won the 1st Prize of College Students ‘Internet+’ Innovation Entrepreneurship Competition and the 8th Canton Students’ Entrepreneurship Competition. In addition, she also has internship experience related to project management of import and export trading company. Yuanmiao WANG has good project management experience during the time that she operated her own entrepreneurial projects and internships in project management positions. She has the potential to become a competitive project manager.

Yuanmiao lives in Paris, France now and can be contacted at wangyuanmiao2018@gmail.com and https://www.linkedin.com/in/yuanmiao-wang-61a6b3127/


[1] Measuring Contract Performance Using Earned Value Management (2018, March). Retrieved from https://pmworldlibrary.net/wp-content/uploads/2018/03/pmwj68-Mar2018-Yang-measuring-contract-performance-using-evm-student-paper.pdf

[2]  Performance dashboards: Measuring, monitoring, and managing your business (2013). Hoboken, NJ: Wiley.