KPIs in Internal Business perspective cover all stages of the project life cycle (see Figure 4.2). In which, I2.1 PM Competency has very high weight factor since it reflects the project-based nature of a contractor and competency of project management is the crucial determinant of the company’s success. Finally, KPIs in Learning & Growth perspective specify the quality of workforce – the fundamental drivers of performance outcomes in the three upper perspectives. They include both qualitative indicators (L2.1 Employee attitude, L1.1 Employee competency) and quantitative indicators (L2.2 Key staff turnover rate, L3.1 Employee productivity).
When comparing the BSC model of
CBM JSC in this particular case with theories, the following can be drawn:
- The core of the BSC, as we’ve known, is
strategic planning. According to Warszawski (1996), the appropriate strategy
for smaller companies is “focus” strategy. This matter is partly true in the
case of CBM JSC. The company has chosen a certain type of customers (foreign
investors of small-medium scale) to focus on, finding out their particular
needs, and then trying to acquire advantages by satisfying these focused
customers.
- Kaplan and Norton (2000) pointed out three
generic differentiators of the value proposition in Customer perspective:
operational excellence, customer intimacy and product leaderships. CBM JSC has
opted for customer intimacy since it is the strong point of the company
comparing with the other two. SMEs usually do not have an excellent management
system and high technologies to pursue operational excellence and product leaderships.
Furthermore, as indicated earlier, construction industry is to sell directly to
individual customers, not to massive market. This nature stresses the
importance of customer relationships and customized services.
- To prepare the Internal Business perspective,
companies should specify their internal-process value chain, and measures
should be formulated for all phases (Kaplan and Norton 1993, 2000). It can be
seen that KPIs in this perspective of CBM JSC would cover all stages of its
value chain, here is project life cycle:
(i) Identify
customer needs: extensive services rate;
(ii) Offer
services & win (tender):
tender winning rate, tender price
index;
(iii) Prepare
and perform: PM competency index, change order rate,
committed cost rate;
(iv) Closeout: payment
& close-out cycle.
It
can be concluded that no enterprise is too small for strategic planning.
Conversely, strategic planning must be the backbone of any enterprise. The BSC
can be entirely exerted in construction SMEs and it provides a framework for
strategic management. In order to conduct strategic planning,
managers must have a profound understanding of current situation of the enterprise,
and from that critical issues and solutions should be pointed out. Strategic
planning and a management system is a vital choice, a guarantee to stable
growth and future success for enterprises; no matter they are small or large.
Recommendations
Now when this study comes to the
final section, some recommendations can be obtained:
- Due to the limitations of the study framework,
not all the details of the company’s BSC have been clarified. In order to
launch this BSC to real use, a further elaborate study is needed and it must be
a collective effort of BSC development team. For examples, KPIs must be more
in-depth with respect to setting targets for each KPI, designing survey forms,
making up assessment and scoring criteria system, assigning responsibilities,
setting procedures for collecting and computing data, and so on.
- BSC approach can be recommended to any kind of
company. However, the BSC model in this study is proposed for the particular
case of CBM JSC. Different companies will have different demands, problems and
circumstances, and thus lead to different strategies and objectives. There is
no common BSC for all. Moreover, the BSC theory was originally created for
large and mega enterprises. Companies should adapt the concepts and develop the
most suitable BSC for them. They should not force themselves to adopt a
Harvard’s mould.
- BSC should be continuously monitored and reviewed
to ensure the fitness for the company. Some adjustments and modification could
be made. Besides, even if the company succeeds in deploying the BSC and
develops stably, strategies should be still revised after 3 – 5 years. The
rapid increase in the company’s size (in case of success) and changes in
business environment will create new requirements and demands to be assessed
and dealt with.
The last words of this study are
to convey the message of Alan Fell, a famous BSC specialist,
Small and medium-sized enterprises not thinking of strategy will be
small and medium for ever and will always be in the situation of struggling for
survival.
On the contrary, enterprises with in-depth strategic planning will get
giant leaps and will attain great achievements, and Balanced Scorecard is the
very means.
His thesis abstract is copied and
posted.
Abstract
Originated in the
early-1990s, the Balanced Scorecard (BSC) has now evolved as one of the most
widely used models of strategic management all over the world. Made up from a
balanced and coherent set of Key
performance indicators (KPIs), the BSC provides a holistic and
comprehensive view of the organization’s performance from four perspectives:
Financial, Customer, Internal Business and Learning & Growth. Moreover, the BSC turns strategic planning
into the backbone of any organization. It helps to translate vision and
strategies into concretized objectives and targets to monitor and
control the strategic execution.
Although the
prominent benefits of the BSC system have been taken for granted worldwide for
the last two decades, yet it still seems to be rather a nascent concept in
Vietnam. The application of the BSC is very rare especially as far as small
& medium-sized construction contractors are concerned. There is still an ambivalent
attitude towards such a strategic management system among small & medium-sized enterprises (SMEs)
due to their nature of flexibility and limited resources.
The aim of this
study is to explore the possibility of BSC adoption in small & medium-sized contractors in
Vietnam. A typical medium-sized contractor was selected for the case study. The
procedure of BSC development consisted of five steps as following: First, an
in-depth survey of business environment and company’s performance was
conducted, which leaded to second step - strategy formulation. Mission, vision
and strategies were set up. Third, strategic objectives and strategy map, which
transformed the vision and strategies into specific terms, were built based on
four perspectives. Fourth, a set of KPIs was established to measure and track the progress toward strategic objectives.
And in the last step, initiatives and programs needed to realize strategic
objectives were put forward. Finally, the study would be accomplished by
proposing a process of BSC deployment, which is necessary to launch the BSC
into real use, and discussing potential benefits of the BSC for the particular
case of this study.
