A set of evaluation criteria for performance measurement

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Journal of Financial Management of Property and ConstructionVolume 9, Number 2, pp91-1 0 1,August 2004

Printed in Great Britain

A set of evaluation criteria for performance measurement systemsin the construction industry

DAYANA BASTOS COSTA and CARLOS TORRES FORMOSABuilding Innovation Research Unit (.7VORIE),Federal University od Rio do SuI (UFRGS), Av.Osvaldo Aranha, 99 - 3 andar, Porto Alegre - RS CEp, 90035-I 90,Brazil

Summary

. Construction companiesusually have difficulaty in identifying and selecting adquateperfonnance measures related to their strategies and critical processes. In general, theyarc aware of the importance of measurement systems for monitoring and controllingtheir perfonnance, but these are seldom well established.. This paper proposes and discusses a set of evaluation criteria for perfonnancemeasurement systems in construction companies. The proposed criteria have been dividedinto categories: a) measure definition; b) alignement of measures to strategies; c) insertionof measures into the company routine; an d) learning achievement through measurement.. This study was based on five case studies carried out in medium and small sizedcompanies from the South of Brazil.

Keywords: perfonnance measurement, company strategy, process management, bestpractices

Introduction

Several authors have stated that business perfonnancecan be enhanced by devising and implementing abalanced set of measures. Perfonnance measurement

provides the necessary infonnation for process control,enables the establishment of challenging and feasiblegoals, and improves communication between differentmanagerial levels (Hall et aI., 1991;Neely et aI., 1996).It also helps focusingpeople and resources onparticularaspects of a business (Kaplan and Norton, 1992) andincrease process transparency by making visible someof the invisible process attributes (Koskela, 1992).

A perfonnance measurement system consists of aset of metrics (or indicators) that quantify the efficiencyor effectiveness of processes and organisations. Itshould contain several key elements, including: (a) aset of procedures for collecting and processing data;(b) timetables andprotocols for distributinginfonnationabout performance to users within and outside theorganisation; (c) a learning approach to identify whatactions can be taken to further. . improve perfonnance;"and (d) a review process which ensures that theperfonnance measurement system is regularly updated

@ Glasgow Caledonian University

(Neely et aI., 1996).The design of a perfonnance measurement system

involves not only the selection and definition of anappropriate and practical set of measures. It also entailsan effort to integrate them with one another and withthe organisational environment. The process ofestablishinga set of perfonnance measuresusually startsby choosing the processes to be measured based on thecritical factors of success (Annitage and Atkinson,1990).

Multiple measures are usually necessary, since thecomplexity of managing an organisation or a projectrequires managers to be able to view perfonnance inseveral areas simultaneously. At a higher level,measures must be used to guide and evaluate theimplementation of the main project objectives andstrategies that must be disseminated downwards. Abalanced picture of the project must be provided byboth financial and non-financial measures (Kaplan andNorton, 1992).At the operational level, a much largerset of measures should reflect the perfonnance ofindividual processes. They provide infonnation for thepeople directly involved in each process about theirperfonnance and the identification of root causes of

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92 D. B. Costa and C. T. Formoso

problems (Armitage and Atkinson, 1990). Theoperational measures must be related in some way tothe general project measures, and be consistent withthe firm's business strategies (Berliner and Brinsom,1988).

Armitage and Atkinson (1990) pointed out that theemployees should be involved in the definition of theperformance measures related to their work, since thistends to increase the acceptance of operationalmeasures. These should support the learning processat the operational level, by helping the employees tosee, how they are performing, rather than simply tofeedback data for the central control function (Grief,1991).

When devising a performance measurement systemit is also important to avoid information overload, bylimiting the number of measures to be used (Kaplan-andNorton, 1992).An excessive proliferation of newmeasures not only increases excessively the cost ofdata collection and analysis, but it also generatesinformation that does not add value to the decision

making process.After being designed and implemented,performance

measurement systemsneed to be evaluatedand updatedperiodically, due to internal adjustments or to changesin the business environment. Existing measures losepurpose and validity after some time and must bereplaced or supplemented by new measures (Waggoneret aI., 1999).

Despite its importance, performance measurementis poorly explored in many companies: managers tendto make their decisions mostly based on their intuitionand common sense. Performance measurement is oftenlimited to traditional broad financial measures, whichhave been strongly criticised for being out of step withrecent changes in industry (Kaplan and Norton, 1992).Among other problems, those measures tend to bebackward focused, do not make it easy to traceoperational costs, and fail to monitor the benefits of newinvestments (Berliner and Brimson, 1988). Moreover,existing performance measurement systems are oftenused for imposingcentralisedcontrol (Senge, 1999)andfor that reason are often rejected by employees.

The lack of performance measurement is a problemthat also affects the construction industry. Devising aperformance measurement system in this sector isparticularly difficult due to the fact that construction isaproject-orientedindustry.Theproduct isusuallyuniquein terms of design and site conditions and a temporaryorganisation needs to be creatkd for each project.Moreover, construction projects tend to be relatively

complex. There is a wide variety of materials andcomponents involved, many different agents take partin the process, and the final product has a large numberof performanceattributes. .

A common approach is to evaluate projectperformance on the extent to which the client objectivesin termsof cost, time and quality are achieved.Althoughthese measures provide an indication of success orfailure at the end of a project, they do not provide abalanced and comprehensive view of projectperformance during its execution (Dainty et aI., 2003;Kagioglou et aI., 2001). In the current businessenvironment, a wider range of performance measuresis required to evaluate project success, including somethat enable real-time control.

In some countries, there have been initiatives aimingto devise performance measurement system forbenchmarking and to allow performance comparisonbetween companies. That is the case of the KPIWorking Group (2000) in the UK, the Corporacion deDesarrollo Tecno16gico (2002) in Chile, and theConstruction Industry Institute (2004) Benchmarkingand Metrics Initiative in the USA. Those initiativestypically propose a broader range of metrics that canbe used for benchniarking and for comparing theperformance of different companies and projects.Kagioglouetal. (2001)pointedout thata major limitationof such initiatives is the fact that there is no mechanism

to understand the relationship between the differentmeasures from a holistic viewpoint.

Besides, implementing performance measurementsystems is not simply a matter of selecting the rightmeasures, but it also implies a much deeper change onthe way decisions are made. Two previous ,studiescarried out in Brazil (Formoso and Lantelme, 2000; andLantelme and Formoso, 2000) have indicated that thereare both organisational and behavioural barriers for thesuccessful implementation of performancemeasurement systems in the Construction industry:(a) Construction managers tend to look for short-time

results when collecting data, and do not perceive thebenefits of a performance measurement system thattakes a relatively long time to be fully developed(b) Due to the lack of resources for data collection andprocessing,someconstructioncompaniestend to choosemeasures that are easy to collect, rather than the onesthat provide the most valuable information. This canpotentiallyresult inmeasuresthat donot supportdecisionmaking properly, since they are not related to thecompany strategies and to its critical processes(c) Aligning measures and strate~ic objectives is made

@ GCU Journal of Financial Management of Property and Construction, 9 (2)

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.-'A set of evaluation criteria for perfonnance measurement systems

difficult by the fact that several companies do not haveexplicit and well-defined strategies.(d) Some managers tend to look for whom or what is toblame for the existing problems, instead of thinkingsystemically about the process that generated the resultsand what could have been done to improve them.

This article proposes a set of evaluation criteria forperfonnance measurement systems in the constructionindustry, emphasising the need to establish a link betweenperfonnance measurement and the finn strategy, as wellas to introduce measures into the management of criticalprocesses.

This investigation was based on five case studiescarried out in medium and small sized companies fromthe Metropolitan Region ofPorto Alegre, State of RioGrande do SuI, Brazil. It identifies some best practicesin the conception and implementation of perfonnancemeasurement systems, and potential improvementopportunities for construction companies. This projectis part of a long-term research and developmentprogram, carried out at the Building Innovation ResearchUnit (NORIE) of the Federal University of Rio Grandedo SuI, named SISIND (System of Quality andProductivity Indicators for the Construction Industry).

Models to supportthe developmentof perform--ance measurement systems

Several models and approaches have been proposed tosupport the development of perfonnance measurementsystems, focussing mostly on establishing a balance setof measures. For example, Lynch and Cross (1995)devised a pyramid of measures that integratesperformance measurement throughout the hierarchy ofthe organisation, Neely et al. (1996) proposed aframework for specifying perfonnance measures, andMaskell and Baggaley (2004) propose a set of guidelinesfor devising and implementing performancemeasurement in lean production systems.

Kaplan and Norton (1992) proposed a perfonnancemeasurement framework, named Bal'!llced Scorecard,which has received favourable support by academiaand industry. It has four main measurement perspectives- customer perspective, internal business processes,learning and growth, and financial - and attempts toevaluate whether a business is moving toward itsstrategic goals. The Balanced Scorecard has also beencriticised for not providing a mechanism for maintainingthe relevance of defined measu.tes (Hudson et al., 200 I),and for not making any attempt to identify the relation--ship between the measures developed for certain goals,

assuming that each measure is specific to a particulargoal (Kagioglou et aI., 2001). Finally, the BalancedScorecard does not address the integration between thetop level and operational level measures, which canpotentially make the implementation of the strategyproblematic (Hudson et aI., 2001).

All those models and approaches are usually multi-dimensional, in the sense that they focus on a broad setof both financial and non-financial measures and are

concernedwithdifferentmanageriallevels.Theyprovidemechanisms to facilitate the alignment ofperfonnanceindicators to both the company strategic objectives aswell as to link them to key managerial processes.However, very little has been published 0;; theeffectiveness of such models. Besides, none of themconsider the needs of project-based industries, such asthe construction industry.

Research method

The selection of the five companies involved in theresearch (Table 1) was based on three requirements:(a) the company had a fairly good performancemeasurement system; (b) there were favourableconditions to make the company strategy explicit; and(c) the company was interested in participating in thisresearch study.

Each case study was divided into two main phases:(a) the evaluation of the company existing perfonnancemeasurement system, and (b) the proposal ofimprovements in the measurement system. Theevaluation of the perfonnance measurement systeminvolvedthe discussionandformalisationof thecompanystrategy,the identificationofthe performancemeasuresused by the company and the critical analysis of theperformance measurement system using a set ofevaluation criteria.

The data were analysed in two stages. In the firstone, each case was analysedindependently(within-caseanalysis), seeking to describe what happened with eachone and to organise the existing data. In the secondstage, the case studieswere compared (cross-casestudyanalysis), aimingto identifysimilaror differentpatternsbetween them.

FORMALISATION OF COMPANY STRATEGIES

Between three and five meetings involving the top man--agers were carried out in each company, aiming todiscuss and fonnalise its corporate strategy. Thosemeetings were approximately two hours in duration and


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94 D. B. Costa and C. T. Fonnoso

Table 1: Description of the companies involved in the case studies

-egies. The use of strategy mapping as a tool to capturedata related company's strategy is similar to the strategycharting method described by Barnes (2001). Accordingto that author, when created in a team meeting, astrategy chart becomes a record of strategic actionsand intentions, representing the collective realities ofthose that construct it.

were facilitated by the research team. The fonnalisedstrategy was a combination of the strategy that thecompany has been implementing (the realised strategy)and what the top managers would like the company tobe (the intended strategy).

A fairly simple tool named strategymapping (Figure1) was used in the meetings. The first step is to definethe strategic objectives of the company. These arerelated to the necessary strategic actions, which aregrouped into five functionalstrategies: fmancial,humanresource, manufacturing, design and marketing. Afunctional strategy specifies how that function willsupport the desired competitive advantage and how itwill complement the other functional strategies(Wheelwright, 1984).

By using strategymapping, the relationshipsbetweenthe functional strategiesand the co.rporatestrategyweremade explicit. It was also possibfe to establish a clearlink between the perfol1J1ancemeasures to such strat-

Constructs for evaluating performancemeasurement systems

Four main constructs were established for the critical

analysis of perfonnance measurement systems: (a)measure definition; (b) alignment of measures tostrategies; (c) insertion of measures into the companyroutine; and (d) learning achievementthroughmeasure-ment. Each construct was decomposed into sub-criteriain order to make it easy to analysed data (see Table 2).The definition of each constructjs depicted below.

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Company Main Activities Main Characteristics People involvedin the study

Development and Small company. All labour subcontracted.construction of low income ISO 9002 certification. Performance Three top

Ahouse-building and industrial measurement system started in 1997, and it managers and abuilding projects, has been linked to the employee reward corporate strategyconstruction of commercial program and critical processes. There was a consultant

buildings for private clients previously formalised strategic plan

Development andSmall family company. All labour

construction of residential subcontracted. Received several Quality The quality

B buildings for higher-middleAwards since 1996. Competitive strategy management

class in Porto Alegrewas previously formalised. Performance director

measures were linked to strategies.

Development of residentialVery small company. Started two years ago.No formal strategic plan. Performance The company top

C building projects for higher-measurement system had only financial and manager

middle class in Porta Alegreproduction control measures.

Development and Small family company. Most labour is Two top managersconstruction of residential subcontracted. ISO 9002 certification. and the quality

Dbuildings for higher-middle Performance measurement system started in managementclass in Porto Alegre 2000, due to employee reward program. co-ordinator

Medium sized company. All labour The finance

Development and subcontracted. ISO 9002 certification. director, theconstruction of commercial Performance measurement system started in quality

E and industrial buildings for 2000, strongly related to the production management co-private clients planning and control system. There was a ordinator, and a

formalised strategic plan. project manager

lA set of evaluation criteria for performance measurement systems 95

0 Strategicobjective

Increasenumberofprojects

Increasedegreeofusersatisfaction

Figure 1: Example of a strategy map

MEASURE DEFINITION

The definition of a measure involves the establishment of

data collection procedures, formulae, data source andduration ofthe control cycle, and the definition of the peoplein charge of data collection and analysis. It must considerthe objective of the measure and the need for informationfrom the people involved in the process. Therefore, it isnecessary to have (a) well defined data collection,processing and analysis procedures, as well as (b)consistency between the objective of the measure and theinformation provided. The measure must be (c) easy tocollect and understand, and (d) the team responsible fordata collection, processing and analysis must be clearlydefmed.

ALIGNMENT OF MEASURES TO STRATEGIES

According to Sink and Tuttle (1993) and Schiemannand Lingle (1999), the development of a measurementsystem linked to the company targets, objectives andstrategies make those involved in the implementationof the strategies more aware of them. Besides, themeasures also provide information that can be used toevaluate the position of the c~mpany in relation to itsinternal and external environment (COT, 2002).

. MarketingstrategyFinancialstrategy

Getnewprojects

. ResourceHumanstrategy

Increasethemanagement]andemployeetraining

0 Manufacturingstrategy

Maskell (1991) points out that a company mustinitiallychoosea smallsetofkey measuresformonitoringthe business progress, since too many measures maycause confusion and misunderstanding. Due to thecompetitive environment in which most companiesoperate, it is necessary to consider that process changestend to be frequent and continuous improvement mustbe encouraged. Maskell (1991) also suggests that eachmeasure must have feasible and challenging goals.

Therefore, it is necessary to evaluate (a) whetherthe performance measurement system is used tomonitor and controlcriticalprocesses,and (b)to supportstrategic decision-making. Moreover, (c) targets mustbe used for each measure and (d) these must also beused for benchmarking.

INSERTION OF MEASURES INTO COMPANYROUTINE

The insertion of measures into company routine is con--cerned with the implementation and use of theperformance measurement systems.

According to Lantelme and Formoso (2000), one ofthe barriers for the use of a measure is the long periodof time between data collection and analysis. If inform-



Table 2: Evaluation of performance measurement systems

-ation is late it becomes only historical data, causingthe loss of improvement opportunities. Therefore, it isnecessary to expedite data processing and informationdissemination.

The centralisation of the measurement process tendsto make it difficult for the insertion of measures into

company routine and the participad'on of people involvedin the process. Grief (1991) suggests that data process-

-ing should be decentralized and close to the workingplace, in order to improve the visibility of measures andto allow that these are analysed by their users. Thesame author also suggests that the information shouldbe clearly presented, for instance by using patterns,colours, graphs, and symbols, so that communication isfacilitated.

For Schiemann and Lingle (1~99), the managerial


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Constructs Sub-criteria HighRegular

LowSatisfaction Satisfaction

Adequate procedure for data collection, A,B,C,Eprocessing and analysis.

Consistency between the objective of the C,E A,BMeasure indicator and the information provided.definition

Easy data collection and understanding. A,B,C E

Definition of the team responsible for data B,C A,Ecollection, processing and analysis.

Use of measures to monitor and control theA,C,E B

critical process.

Alignment of Use of measures in strategic decision C A Emeasures to making.strategies

Establishment of targets for measures. B A,C,E

Use of measures for benchmarking. B A,C,E

Decentralisation of collection, processing C A,E Band data analysis.

Insertion of Use of measures for middle and lowA,B,C,Emeasures into managerial level decision making.

companyroutine Measure cost-effectiveness C B,E A

Effective communication and disseminationC A,B E

of results.

Improvement in the process through the use A,E,B CLearning

of indicators.

achievementRegular improvement of the measurement

through A,B,C,Emeasures system.

Reflection about results. A B,C,E

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A set of evaluation criteria for performance measurement systems 97

attitudeis themost complexbarrierto the implementationof performance measurement systems because it isrelated to the way that managers perceive the problem,captures, analyses and shares information, involvingissuessuch as leadershipand decision-making.Forthoseauthors, the effectivenessof performance measurementdepends on procedures for sharing information andempowering people in decision-making.

Olve et al. (1999) argue that it is necessary to involveall levels of the organization in performancemeasurement, since the participation of people directlyinvolved in the process makes it possible to discuss andreflect on the influence and contribution of dailyoperations to the achievement of the company strategicobjectives.

Based on these issues, this construct is concernedwith whether the performance measurement system isinserted into the organisational routine. It is depicted infour sub-criteria: (a) the decentralisation of datacollection, processing and analysis, (b) the use ofmeasures for decision-making at the middle and lowermanagerial levels, (c) the analysis of measure cost-benefit, and, finally, (d) the effectiveness ofcommunication and dissemination of results.

LEARNING ACHIEVEMENT THROUGHMEASURES

Manoochehri (1999) and Schiemann and Lingle (1999)pointed out that a performance measurement system islikely to be fully implemented only if the measures arerelevant for the users, and if these are able to understandand interpret the meaning of the information. The aimof a performance measurement system should be toalign strategies and behaviour, and the integration ofthe company performance to self-evaluationmechanisms. According to Bourne et al. (2000; 2002),the effective use of measures depends on whetherpeople develop a critical sense and learning on thepotential of the information provided by measures indecision-making.In this respect,Lantelmeand Formoso(2000) suggests that performance measurement mustassume new roles in the companies, n~t only related tomonitoring and control, but also as a facilitator incommunicationand organisation learning.

Therefore, this construct is concerned with whetherthe company has been using the measures to identifyimprovement opportunities. The use of indicators (a)must be part of the organisation routine and based onthem (b) improvements mus!';be regularly proposed.Also, (c) measures should have an important role in the

company's learning process, and direct people towards

reflecting on the results.

Evaluation of the performance measurementsystem in construction companies

Table 2 presents a general evaluation of theperformance measurement systems from companiesA,B, C and E, based on the proposed constructs. Thisanalysis was not carried out in company D, because itsperformance measurement system was not sufficientlystructured for it.

The mainproblemsfoundin the fourcompanieswere:(a) lack of definition of the team responsible for datacollection, processing and analysis; (b) little use ofmeasures in strategic decision-making; (c) little use ofmeasures for benchmarking; (d) centralisation of datacollection, processing and analysis; (e) lack of cost-effectiveness analysis of the measures; and (f)ineffectivecommunicationand disseminationof results.

These problems are discussed below.Some companies had too many measures, most of

them not related to critical processes. For example,company B had several human resource managementand social accountability measures, mainly due to thedemands from its quality managementprogram. In bothcompanies A and D, the development of an employeerewardprogram had a positiveeffect in the performancemeasurement system. This type of program demandsthe measures that are the basis for rewards to be linked

to strategies and key processes. It also tends to favourthe decentralisation of data collection and processing,since the company employees become more interestedin monitoring and improvingperformance. '

In general, the development of quality managementsystems has also encouraged the companies to developperformance measurement systems - this is a majorrequirement in the IS0900 1:2000 standard and also inmajor quality awards.

Regarding the alignment of measures to strategies,three of the companies had a formalised strategic plan.Both companies A and B had systematically evaluatedwhether their strategies have worked by comparingmeasures to the established targets. By contrast,companyE had formalisedits strategy,but the measureswere not clearly aligned to the strategies. For thatreason, the existing measures did not support strategicdecision-making. This problem was also observed incompaniesC and D, which had only an implicitstrategy.The lackof alignmentof measures to strategiesis bound


98 D. B. Costa and C. 1. Formoso

to happen in many companies from the constructionsector, since most of them have difficulties in clearlystating their strategic objectives. According to BarrosNeto (2002), a major cause for this problem is the factthat construction managers have not been properlytrained for strategic thinking.As far as the insertion of measures into the companyroutine is concerned,the existingperformancemeasure-

-ment systems had several drawbacks. There wereseveral measures that did not provide the necessaryinformation for decision-making about the criticalprocesses. Another problem is that informationwas notavailablewhen it was needed.Therefore,the inadequatedesign of the measures was one of the main problemsidentified in the case studies.


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Table3: Best practices and improvement'opportunities in the five companies

Constructs Best practices Improvement opportunities

. The team responsible for the datacollection and analysis has not been

Most indicators are easy towell defined..

understand. . Lack of consistency between theMeasure . Most indicators have been formalised objective of the indicator and thedefinition (eitherdueto the ISO900I Quality

informationprovided.

System certifcation or to the employee . Too many measures in relation to therewardprogram). organisation structure.. Key performance indicators have not

been properly defined.

. Most measures are not clearly linked. Somemeasuresare linkedto the to strategies.

critical processes. . Targetsfor themeasuresaredifficultAlignmentof

Employeerewardprogramshaveto establish.

measuresto .strategies encouraged the selection of the . Measures are hardly used to strategic

measures and the targets that should decision-making.be achieved.

Few indicators have been used for.benchmarking

. Measures are hardly used to decision-makingat middleandlower. In general, data collection has beenmanageriallevels.

systematic for production control and . Some indicators do not provide theaccounting measures. information that is demanded by

Insertionof . Some production and accountingusers.

measuresintomeasures have been supporting . Data collection has not been

companyroutine decisionmaking. automated.. Most performance measurement . Information Technology is not used tosystems are,decentralised. build an integrated data-base.. Data are not easily available to the

users.

Learning. New indicators have been created or . The use of information to support

achievement proposed decision-making needs to be improvedthrough . Process improvement through the use . Feedback to the users is slowmeasures and..control of measures.,

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A set of evaluation criteria for perfonnance measurement systems 99

Another problem was the very modest use ofinfonnationtechnologyin datacollectionandprocessing.Only company D used information technology toautomate most of the work involved in data collection

and processing. However, there were severalindependent infonnation systems in that company - forinstance, production planning and control, financialcontrol, and customer servicing.

Despite the lack of alignment of measures tostrategies and the limited use of such measures tosupport decision-making, all companies have recentlyattempted to assess whether the measures meet thepeeds of their users. Besides this, they have changedor incorporated new indicators to improve the qualityof infonnation provided. In fact, in all fourcompanies itis necessary to increase the effort related to dataanalysis ,and dissemination, in order to supportmanagers' decisionmaking.

Some of the difficulties in the implementation ofperfonnance measurement were related to the fact thatconstruction is a project-oriented industry. Althoughthere may be several repetitive processes from oneproject to another, each project is unique in tenns ofdesign,siteconditions,organisationstructure,and supplychain. For this reason, some additional problems exist,namely:(a) establishing a project perfonnance measurementsystemand incorporatingthemeasures intothe companyroutine require a fairly intense effort. If the company isinvolved in wide range of different project types, it islikely that a different perfonnance indicator system hasto be designed at the beginning of each project;(b) the responsibilities for data collection, processingand analysis must also be well defined at the beginningof the project;(c) each project usually has a different managerial teamand the use of measures will depend on the capabilitiesand motivation of each manager;(d) due to the large number and variety of stakeholdersand components involved in a project, it is difficult touse the same measures in different projects.

Table 3 presents a summary of the best practicesand improvement opportunities that were identified infive companies involved in the case studies.

Conclusions

This paper presents a contribution to the conception,implementation and use of perfonnance measurementsystem in construction companies, emphasising thealignment of measures to the eompany's strategies and

the insertion of measurement into the management ofcritical process.Some guidelines for devising and implementingperfonnance measurement systems are suggested:(a) understand the company strategies, since theorganisationneeds to define the business objectives andgoals to be pursued, and when the results ought to beachieved;(b) identify the critical processes, since there must be apriority in perfonnance measurement, based on thoseprocesses that are essential for the success of thecompany;(c) clearly define the necessary measures and theirobjectives, based on the understanding of the potentialbenefitsof eachmeasure; ,

(d) devise a framework to evaluate and control theimplementation of the perfonnance measure system,aimingto increasethe use of the infonnation to decisionmaking;(e) develop amongst the staff involved a critical senseregarding the infonnation provided for the measures,identifying the infonnation flow needed for decisionmaking in order to improve the infonnation access andsharing.

The main contribution of this study was theestablishment of a set of criteria for assessingperfonnance measurement systems,based on four mainconstructs. This set of criteria provided a frameworkto compare the perfonnance measurement systems ofdifferent companies and also to identify their bestpractices and improvement opportunities.

The current stage of performance measurem.entobserved in the case studies indicate that, despite theexistence of measurement systems and the interest oftheir managers, these are ineffective to a great extent.First of all, top managers do not have a clearunderstanding of the real meaning and the objective ofmaking explicit the company strategy. This hascontributed to the selection of inappropriate measures,most ofthem not linked to the existing strategies.

Another problem is concerned with the fact that theexistingdata isnot properlyanalysedand,consequently,has not been fully exploited to support decisionmakingfor managers. In fact, the importance of data analysisis not always clear for the companies. One of the maindifficulties by the companies is the lack of a clearinfonnation flow for the perfonnance measurementsystem,includingthe responsibilitiesfor datacollection,processing and analysis.

Therefore,furtherresearch is necessaryto investigatehow to use the infonnation related to perfonnance



measurement and strategies to create knowledge forthe company and to facilitate strategicdecision-making,and, as a consequence, to ensure that the strategiesand indicatorsselectedhavemeaningforpeople involvedand add value for the company.

Acknowledgements

This research project was made possible due to thefinancial support of CAPES (Coordenayao para 0Aperfeiyoamento de Pessoal de Ensino Superior),Ministry of Education, and FINEP (Financiadora deEstudos e Projetos) - Habitare Program, Ministry ofScienceand Technology.The authors also wish to thankthe partner companies that participated in this researchproject.

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A set of evaluation criteria for performance measurement