Impact of Measuring Operational-Level Planning Reliability on Management-Level Project Performance

Abstract

The earned value management system (EVMS) and the last planner system (LPS) have been widely used as effective performance measurement tools for construction managers and production units at construction projects. While the EVMS measures project-level costs and scheduling performances, the LPS measures the percent plan complete (PPC), which indicates the level of planning reliability. This paper investigates the relationship between planning reliability at the operational level and project performance at the management level (i.e., the success or failure of a project). Analyzing the empirical data of 23 residential projects of a large construction company, the authors find that, while the production plan in the weekly schedule is correlated rigidly with the daily plan in successful projects, such a rigid correlation is not observed in unsuccessful projects. To understand this finding, the authors further conducted interviews with project stakeholders. Taken together, this study suggests that an emphasis on LPS indices causes subcontractors to engage in myopic behaviors such as modifying operational-level indices. Consequently, management-level production plan rigidity is at risk. The findings in this paper offer valuable insights and help project stakeholders understand the attributes of operational-level and management-level indices and their relationships.