PERFORMANCE MEASUREMENT OF RESIDENTIAL PROJECTS IN INDIA: A BALANCED SCORECARD APPROACH

International Journal of Civil Engineering and Technology (IJCIET) Volume 7, Issue 6, November-December 2016, pp. 698 706, Article ID: IJCIET_07_06_077 Available online at http://www.iaeme.com/ijciet/issues.asp?jtype=ijciet&vtype=7&itype=6 ISSN Print: 0976-6308 and ISSN Online: 0976-6316 IAEME Publication PERFORMANCE MEASUREMENT OF RESIDENTIAL PROJECTS IN INDIA: A BALANCED SCORECARD APPROACH S. Gopinath Assistant Professor (O.G), Department of Civil Engineering, SRM University, Kattankulathur Campus, India Boda Sagar Kantilal Graduate Student, M. Tech CEM, SRM University, Kattnakulathur Campus, India S. Sreelakshmi Graduate Student, M. Tech CEM, SRM University, Kattnakulathur Campus, India Mohammed Roshan Graduate Student, M. Tech CEM, SRM University, Kattnakulathur Campus, India ABSTRACT The Balanced Scorecard is a tool for balancing short and long-term objectives of the firm. The balanced scorecard is strategic planning and management system that is used in any business for exploring their strategy. In present days. Balanced scorecard has received considerable attention for all types of industry in the world. This research was carried out to improve the residential project performance management. Statistical analysis has been performed by SPSS with 80 numbers of a sample for an owner, Project manager and engineer designation. This work gives more attention on quality, customer satisfaction and management process through balanced scorecard for a measurement of the performance of residential projects in India. Balanced scorecard used with four perspectives, they are Customer, Business process, Learning & growth and financial. Through the RII (Relative importance index) analysis, it was found that the firm was more inclined towards the customer performance as compared to other three performance perspectives. Balanced scorecard provides benefits of aligning business process with the vision for the current and future project. Based on the level of performance of particular, cause and effect diagram has been generated in this study. Key words: Balanced scorecard, Performance management, questionnaire survey. Cite this Article: S. Gopinath, Boda Sagar Kantilal, S. Sreelakshmi, Mohammed Roshan. Performance Measurement of Residential Projects in India: A Balanced Scorecard Approach. International Journal of Civil Engineering and Technology, 7(6), 2016, pp. 698 706. http://www.iaeme.com/ijciet/issues.asp?jtype=ijciet&vtype=7&itype=6 http://www.iaeme.com/ijciet/index.asp 698 editor@iaeme.com

S. Gopinath, Boda Sagar Kantilal, S. Sreelakshmi, Mohammed Roshan 1. INTRODUCTION The liberalization and globalization of the Indian economy in 1991 brought more changes in the cost of production, market share and the environment was led to the development of advanced technologies. So Indian industry was compelled to adopt contemporary management system to ensure survival and maintain competitive edges. Financial measures are dominated in the performance management, but now a days non-financial measure are growing i.e. on time delivery, quality implementation[1]. For this reason all construction firms introduce a new business strategy and this strategy require a proper measurement. To improve any performance, it s needed to monitor it continuously. Most of the company was introduced balanced scorecard, where intangible assets played a vital role in value creation. Generally, most of the firm used four perspectives to construct balanced scorecard. These four perspectives of performance are: 1. Customer satisfaction (Consider how the firm works to customers); 2. Business process (Concerned with what the firm must excel); 3. Learning & growth (Concerned with actions to improve and create value); 4. Financial (Considers how the firm looks to shareholders) [2] In balanced scorecard financial attribute is lagging indicator and Customer, Internal business, and learning and growth are leading indicators. In term the balanced scorecard, the balanced" means the balance between short and long-term objectives between leading and lagging indicators. In this financial attribute as a leading indicator, which gives information regarding to a result and the decision made in the past. Another three set of attributes which are leading indicators, helps to identify mistakes and wrong strategy for the project goal achievement. This process reduce error in a current project [3]. Balanced scorecard approach is performance measurement tool for balancing between leading and lagging indicators in the system [4]. In other words, the leading indicators deal with the issue that will eventually impact on the financial performance but significantly provide the information before the issues have had time to have any effect. Therefore failure and shortcoming can see and eliminate before that occurrence [5]. In balanced scorecard lagging indicator output oriented with ease to measure but hard to improve and leading indicator input oriented with hard to measure but easy to influence. The strong points of the BSC include like forcing a manager to consider all the important operational issues, communicating vision and strategy to the organization and if implemented properly then check efforts with measures with cost. Balanced scorecard approach is performance measurement tool for consistent cross-functional integration, customersupplier partnership, global scale, continuous improvement and team rather than individual accountability [2]. The balanced scorecard is provided high performance and quality product tool which help in performance management. The aim to build a real indicator of performance in all business functions, there is asperity in purpose, asperity in measurement and asperity in an application. The change in construction era led to, firm require not only financial measure but requires non-financial measure for sustain in the present market and implication of non-financial measure of quality and strategy achievement, this measure has a deep impact on investment and valuation [6]. By this measure, BSC application improved quality and create higher value for a firm. For BSC generation require the involvement of employees, communication approaches need to be well thought out with a various non-financial measure. Review of scorecard success highlights and opportunities has been summarized by an employee to sort manager s needs for nonfinancial measures. This work will guide manager for making investments in employee training, use of Information Technology for innovations, which leads towards internal progress and satisfaction of customers, so ultimately the improved strategic map should be formed according to financial as well as non-financial results [7]. Application of the BSC in the construction industries includes the use of framework for evaluation quality assurance, safety and information management [8].So this research work analyzes the various perspectives of the construction company in a residential project of India. Using the balanced scorecard (BSC) as a performance tool for determining the company s strategy to improved their performance. http://www.iaeme.com/ijciet/index.asp 699 editor@iaeme.com

Performance Measurement of Residential Projects in India: A Balanced Scorecard Approach 2. PROBLEMS IN APPLICATION OF BALANCED SCORECARD After invention of balanced scorecard, it has received favorable support by various industries, but also criticized for its simplicity and not provided complete performance measurement system because for BSC authority takes only critical factor. Some potential mistakes that can happen when implementing BSC i.e. like measuring the wrong things even if they are measured in the right way. For management not to easy find out the most critical factor that affects the performance of the firm[5]. In the previous research BSC strategy was not adopted for residential project with quality, customer and business process for project performance management, in this research BSC strategy was considered to examine the application of balanced, integrated and adopt new performance management tool for residential building. In this research work, balanced indicators for performance management has been set, which are used to measure performance and progress of the residential projects. Based on analysis of data, the performance of the project has been monitored according to system role and systematic management. These all measures will help for the efficient application of management which will improve the performance. 3. DATA COLLECTIONS 3.1. Participants In this work quantitative study approach has been adopted. Questions related to this survey have been distributed among owners, managers, and engineers of a residential project. Survey was done by face to face interview, mail response, and direct observation method. In a purposive sample, the sample elements are randomly selected because it is expected that they can serve the research purpose.[9] 3.2. Questionnaire Construction The questionnaire used in this survey was divided into two sections. Section 1 sought the respondent s demographic information. In section 1 question like Name of a respondent, Name of the firm, Address of firm and Designation of the respondent. Section 2 was composed of 15 questions that sought information on the performance of the organization. These questions were based on four perspectives of the balanced scorecard like financial, customer, business process and learning and growth perspective. All performance questions were found out from the primary sources and secondary sources. Sometime respondent did not give proper answer due to more number of questions. To avoid this problem; it is better to create a short questionnaire as possible [10]. All the questions are close-ended questions with Likert scale. In this, all question are ordinal questions because all individual responses are normally treated as ordinal data[11]. Close-ended question provided easier response process and quicker to answer. The different dimensions of the balanced scorecard were scored on a six (6) point Likert scale with one expressing never and six expressing Very frequently. Likert scale was used because it is relatively easy to construct, makes data easy to collect and analyze. Thereby making them suitable for surveys. The respondents were requested to indicate their score on this range. 3.3. Questionnaire Administration After developing the questionnaire, randomly 90 residential projects among India where distributed survey questionnaire with 30 residential projects have been visited to conduct face to face interview to the project managers, owners and engineers of residential projects. A covering letter was attached to the questionnaires to highlight the purpose of the study. This study also provided the right of anonymity, confidentiality, privacy or non-participation, informed consent and protection from discomfort, harm and victimization was followed [9]. Among 120 projects that were approached for the questionnaire response, from that 80 response was returned from respondent. http://www.iaeme.com/ijciet/index.asp 700 editor@iaeme.com

S. Gopinath, Boda Sagar Kantilal, S. Sreelakshmi, Mohammed Roshan 3.4. Demographic Information The demographic profile of respondent is illustrated in Table 1. Designation Table 1 Demographic information of respondent No. of sample returned No. of sample for this designation sample returned for designation Owner 80 21 27 % Project manager 80 24 30 % Engineer 80 35 44 % A total 80 replies were received, representing a 66.67% response rate. According to table 1 demographic characteristics of respondents reveal that 26.25% (n=21) of respondents were owner, 30.00% (n=24) were project manager and 43.75% (n=35) were engineers. 4. DATA ANALYSIS 4.1. Reliability Test To estimate reliability for the four perspective of balanced scorecard, this study utilized the internal consistency method [12]. Internal consistency of scale was measured using the Cronbach alpha coefficient. All four perspective give high reliability, with 0.932 for customer satisfaction, with 0.979 for learning and growth of business, with 0.957 for financial, and 0.944 for business process. So question scale reliability of all perspective was accepted for this study. The overall reliability of the data is 0.981. So it for all data it is reliable scale. Below table 2 is for Cronbach alpha value Table 2 Reliabilities for the BSC perspective Perspective of BSC Cronbach alpha value Customer satisfaction 0.932 Learning and growth 0.979 Business process 0.944 Financial 0.957 Overall 0.981 SPSS (Statistical package for social survey) also display alpha value if item deleted. It indicates that question deleted then what effect on other question reliability. For all question items deleted alpha value was around 0.97. There is no need for any question removing process. If Cronbach alpha value was more, that means respondent give all question answer with same frequency. 4.2. Relative Importance Index Generally, RII method is used to determine the relative importance of the various causes of delays [13]. The same method was adopted in work for finding out for which attribute they used more frequently at the project formation. RII calculated for various variable as per below equation. = / ( ) (1) Where RII = Relative importance index W = Weighting given to each factor by respondent (1 to 6 here) A = Highest weight (6 in this case) N = Total no. of respondent The RII value always had a range 0 to 1. The higher the RII value means frequently used by the developers. Below Table 3 indicate the RII value of all perspective http://www.iaeme.com/ijciet/index.asp 701 editor@iaeme.com

Performance Measurement of Residential Projects in India: A Balanced Scorecard Approach Table 3 RII values of perspectives Perspective questions Customer perspective Proper feedback for quality of material and performance after delivery 0.625 Adopt regular meeting with customer and project authority 0.645 Provide delivery of building in acceptable time 0.687 Customer query within a time limits with proper reliable service 0.833 Strategic learning and growth perspective Provide quality implementation training and inter departmental training for employee 0.520 Adopt employee suggestion system during planning and execution of the project 0.583 Use employee's awareness system related to quality, design and business process 0.562 Adopt IT application and software used in various process 0.542 Internal business process perspective Use proper expertise available for the various quality issues and different business problem 0.645 Provide early involvement of contractor and sub-contractor 0.750 Implementation of new program or technology for a firm 0.708 Communicate business policies and procedure with employee 0.583 RII Avg. of RII Rank 0.697 1 0.552 3 0.672 2 Financial perspective Financial condition of the project by effective financial control measure 0.666 Provide proper finance for employee training 0.562 Ability to meet financial goal of the project 0.687 0.409 4 For this research work customer perspective relative importance index was 0.69, for strategic learning and growth 0.55, internal business process 0.67 and financial perspective 0.41. This data provided information on which perspective frequently used by the firm. According to above table, customer perspective attributes frequently used by the firm and financial perspective is not that much more frequently used by a firm. 4.3. Cause and Effect Diagram The cause and effect diagram is a tool of root cause analysis. The root cause analysis approach adopted by American society for quality (ASQ), ASQ states that every occurrence, incident or problem is due to previous another event that cause it. All root-cause analysis is use for prevention vs. correction. Root cause analysis strength is in the ability to prevent problems from recurring. Each bone represents a possible source of error or problem. Generally, production and operations manager use this method is analyzing failure or problems in production or operations. For example Construction Company wants to analyze possible problems with not improved area from performance management, Project manager start drawing the individual bones or causes to this effect. The four perspectives with cause and effect is the shown in figure below. http://www.iaeme.com/ijciet/index.asp 702 editor@iaeme.com

S. Gopinath, Boda Sagar Kantilal, S. Sreelakshmi, Mohammed Roshan Figure 1 Cause effect diagram 4.4. Mann-Whitney U test Mann-Whitney U test is the same as the independent sample t-test. Mann-Whitney U test is a nonparametric test that is used to compare two population or designation means that come from the same population. It is used to test whether two population means are equal or not. Mann-Whitney U test is a non-parametric level test, it does not require a special distribution of the dependent variable in the analysis. Thus it is best to compare scores when the dependent variable is not normally distributed and at least of an ordinal scale. For this research work comparison of mean score for the owner and project manager because for balanced scorecard creation this two designation is important for decision taking. Mann-Whitney U test with Hypothesis is H o (Null hypothesis) for there is no significant difference between two score and H A (Alternate hypothesis) for there is significant difference between two score. Below table for Mann Whitney U test for comparing mean score of owner and project manager of Top Five and lowest five RII values http://www.iaeme.com/ijciet/index.asp 703 editor@iaeme.com

Performance Measurement of Residential Projects in India: A Balanced Scorecard Approach Table 4 Mann Whitney U test for Top five RII values Designation with questions Mean Rank Customer query solution within the time limits Owner 25.43 Project manager 20.88 Implementation of new program or technology Owner 23.86 for the firm Project manager 22.25 Able to meet financial goal of the project Owner 24.52 Project manager 21.67 Delivery of a building in acceptable time Owner 24.12 limits Project manager 22.02 Provide early involvement of contractor and Owner 24.38 sub-contractor Project manager 21.79 P value 0.196 0.654 0.433 0.474 0.476 Table 5 Mann Whitney U test for lowest five RII values Designation with questions Use of IT application and software in business process Provide quality implementation training and inter-departmental training for employee Proper finance allocation for employee training Mean Rank Owner 25.26 Project manager 21.02 Owner 25.02 Project manager 21.23 Owner 24.79 Project manager 21.44 Use of employee awareness system in the firm Owner 25.17 Employee suggestion system during various process of the project Project manager 21.10 Owner 25.26 Project manager 21.02 P value 0.264 0.322 0.372 0.285 0.264 5. RESULT AND DISCUSSION 5.1. RII (Relative Importance Index) Based on ranking, mean RII, Ranking of all perspectives, and 15 Questions that affect the performance are shown in The Table 3. According to the ranking of perspective, the factors of each group that contribute most for performance of BSC are discussed below: 5.1.1. Customer (RII = 0.697) The customer-related attributes of BSC was the most important for performance of the project. This way mainly due to factors, customer query solution within time limits (RII = 0.833), Delivery of building within a time limits (RII = 0.687), and regular meeting with customer and project authority (RII = 0.645). 5.1.2. Internal Business Process (RII = 0.672) The second most important attribute was business process related group, whose most significant factors were Involvement of contractor and sub-contractor (RII = 0.750), Implementation of new-program or technology (RII = 0.708), and Availability of expert for the quality issues (RII = 0.645). http://www.iaeme.com/ijciet/index.asp 704 editor@iaeme.com

S. Gopinath, Boda Sagar Kantilal, S. Sreelakshmi, Mohammed Roshan 5.1.3. Learning and Growth (RII = 0.552) Following the internal business process group of factors, the learning and growth group of performance factor ranked as the third most important attribute. The notable factors were employee suggestion system (RII= 0.583), Use of employee awareness system (RII = 0.562), and Use of IT application and software (RII = 0.542). 5.1.4. Financial (RII = 0.409) The financial related group of performance factors was the last and least importance attribute. The notable factors were financial control measure (RII = 0.666), meet the financial goal (RII = 0.687), and employee training fund allocation (RII = 0.562). 5.2. Mann-Whitney U Test For this work, this analysis used for the comparing the score of Owner and Project Manager. Based on Table 4 and 5, this work can be inference that all factors P value is more than the 5%, which shows that Null hypothesis (H o ) is true for all factors and Alternate hypothesis (H A ) is wrong for the factors. This indicates that there is no significant score difference between Owner and Project Manager. Mean rank value of Owner is more than the Project Manager that means Owner provided High scale of answer than the Project Manager, which indirectly indicates that Owner provided more frequent answer then the Project Manager. 6. CONCLUSION The purpose of the study was to use a BSC-based questionnaire to measure the performance of the residential project in India. Residential project performance was measured using total number of 15 question with 6 scale that based on the four performance measures of the BSC, namely customer satisfaction, financial performance, internal business process and learning and growth. In this study majority responses on all items on the scale were found around frequently. Among the four BSC performance measures used in study, performance was highest in two aspects, namely customer and internal business process, with performance being the least potent in financial perspective. in terms of individual questionnaire item the most pleasing performance in a several areas such as customer query solution within a time, early involvement of contractor and sub-contractor, implementation of new program or technology in firm and low pleasing performance in quality implementation training, use of IT application and software, a finance allocation for employee training and employee awareness system. These all results were based on the Relative importance index value. So according to RII, it can be seen that the most of the developer s handover the project within the limit as well as within the budget and also gives the proper solution with reliable service to customers and most thing which compromised by the developers was quality implementation training. For this research work Cronbach alpha value is more, this indicates that set of scale for this question is proper. This method used for checking the internal reliability of questions. Mann-Whitney U test is uses to check score difference and mean rank of Owner and Project manager. Here above questions indicate that there is no significant different between score and not more rank value between two different designation of this questions. Mann-Whitney U test indicates that the similarity in the response given by the Owner and Project Manager was comparatively high. 7. LIMITATION OF THIS RESEARCH This research work provided a useful help on the use of the BSC as a tool for performance measurement in a residential project. But several constraints that need to be in sighted so that can eliminate in future work. First, this study was restricted to a small sample size of 80 respondents. Second, it was not possible for the researcher to control how the respondents completed the responses. This response completed their own http://www.iaeme.com/ijciet/index.asp 705 editor@iaeme.com

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