In construction, producing tangible results often overshadows the need to understand the true impact of effort. Yet, focusing solely on outputs — the tangible amount produced — without considering the broader outcomes can leave critical gaps in efficiency, profitability, and strategic growth. This article discusses how leaders can harness data and risk management to prioritize outcomes, ensuring lasting operational success and sustainability.

Why Outcomes Matter

Throughout history, humanity’s greatest achievements stem from understanding and harnessing energy to improve living conditions and create sustainable ecosystems. The transfer of energy from its original form — for instance, from crude oil being processed into fuel for transportation — is based on mastering transformation techniques from chemical to mechanical energy and then into work.

Over centuries, these energy transfer processes have evolved to minimize waste, maximizing efficiency and outcomes. For example, a 2.9-liter engine in the early 1900s produced 20 hp.¹ Today, an engine with two-thirds of the displacement can produce 279 hp² (Exhibit 1), which was accomplished through optimized energy transfer — a principle that also applies in construction.

For instance, if the labor, tools, and equipment are consumed in the production of waste, rework, or out-of-spec buildings, the result is merely output. The true outcome is the part of the construction that meets expectations and specifications.

How might this perspective apply to your company? Do you measure performance based on output or outcome? At critical milestones — whether for a job, month, fiscal year, or strategic plan — understanding whether you are tracking outputs or achieving outcomes can determine your success.

You may know where you stand today, but do you have the visibility to forecast where you’ll land? You want to know, with confidence, how your profits, expenses, and labor hours will align with your goals. Specifically, it’s the outcomes — not just the outputs — that matter.

Recognizing the distinction between output and outcome is critical, and having actionable information is essential. What data do you have at your fingertips, in your spreadsheets, and inside various systems? While you need to track completed work, it’s more important to understand whether those efforts lead to desired outcomes.

Connecting Outputs to Outcomes: A Framework

The source of data for measuring performance outcomes is often hidden or not known. It is easy to blame external factors such as owner changes or a GC’s lack of expertise in resource and schedule management. Similarly, GCs may express frustration with owners or subcontractors. However, external factors can only be held responsible for poor outcomes if we are certain that we have complete control over internal factors.

Research using combined Agent-Based Modeling and Social Network Analysis revealed that nearly 90% of jobsite decisions (internal factors) never reach project managers (PMs) or company executives.³ Internal issues, like absenteeism or missing resources, as well as external factors, such as trade interference and weather, are only under your control if they are properly collected, recorded, interpreted, and acted upon. Complaining without data is futile, and acting on inaccurate data is wasteful and potentially harmful.

To achieve successful project outcomes, planning must take precedence over measuring outputs. Improvising and reacting to issues creates unpredictability and wastes energy. This unpredictability often stems from the skilled tradespeople making localized decisions without considering the broader system’s impact. A lack of visibility into internal factors may lead to misplaced blame on external causes for wasted resources and subpar outcomes.

Performing work (output) does not always result in completed work. Simply stated, work does not equal production.⁴ As a company leader, you must ask: What do we need to know? How do we document and share this knowledge to reduce future risk? As a construction financial professional (CFP) and a team member, consider these questions about financial outcomes:

• Can we increase visibility?
• Can we increase predictability?
• Are we effectively pursuing work that supports our strategic goals?
• Are we using models appropriately to evaluate and learn?
• Can we improve the outcome?
• Do we have a designed approach for responding to lead indicators?

Guiding Your Team to the Outcome

Understanding the levels of risk and their impact at various project stages is essential for distinguishing outputs from outcomes. From estimating to installation, risk types and expected outcomes vary.

For example, while estimating is concerned about the hit ratio, cost, labor mix and units, material prices, and correct understanding of the contractual and job conditions, the project management team worries about the procurement, lead times, technical specs, cut sheets, crew ratios, schedules, and other technical issues.

On the other hand, the field team (which typically gets involved much later in the life cycle of the project) is thinking of integration of material, labor, schedules, GC’s requirements, weather, subcontractors, tools, equipment, and other items that come together before the first piece of material can be installed. These risks can be categorized into three types of risk:

• Business Risk: The probability of differences between expected and actual financial outcomes, including cash flow-related risks.
• Technical Risk: The likelihood of physical failures affecting customer requirements or structural functionality. In construction, it is the expertise and risk required to design, manufacture, or construct and is proportional to the effect of failure mode on the consumer usage of the completed building or structure.
• Integration Risk: Execution-related challenges in coordinating resources, such as labor, materials, and finances to deliver the project on time, within budget, and with expected quality.In construction, producing tangible results often overshadows the need to understand the true impact of effort. Yet, focusing solely on outputs — the tangible amount produced — without considering the broader outcomes can leave critical gaps in efficiency, profitability, and strategic growth. This article discusses how leaders can harness data and risk management to prioritize outcomes, ensuring lasting operational success and sustainability.

Why Outcomes Matter

Throughout history, humanity’s greatest achievements stem from understanding and harnessing energy to improve living conditions and create sustainable ecosystems. The transfer of energy from its original form — for instance, from crude oil being processed into fuel for transportation — is based on mastering transformation techniques from chemical to mechanical energy and then into work.

Over centuries, these energy transfer processes have evolved to minimize waste, maximizing efficiency and outcomes. For example, a 2.9-liter engine in the early 1900s produced 20 hp.¹ Today, an engine with two-thirds of the displacement can produce 279 hp² (Exhibit 1), which was accomplished through optimized energy transfer — a principle that also applies in construction.

For instance, if the labor, tools, and equipment are consumed in the production of waste, rework, or out-of-spec buildings, the result is merely output. The true outcome is the part of the construction that meets expectations and specifications.

How might this perspective apply to your company? Do you measure performance based on output or outcome? At critical milestones — whether for a job, month, fiscal year, or strategic plan — understanding whether you are tracking outputs or achieving outcomes can determine your success.

You may know where you stand today, but do you have the visibility to forecast where you’ll land? You want to know, with confidence, how your profits, expenses, and labor hours will align with your goals. Specifically, it’s the outcomes — not just the outputs — that matter.

Recognizing the distinction between output and outcome is critical, and having actionable information is essential. What data do you have at your fingertips, in your spreadsheets, and inside various systems? While you need to track completed work, it’s more important to understand whether those efforts lead to desired outcomes.

Connecting Outputs to Outcomes: A Framework

The source of data for measuring performance outcomes is often hidden or not known. It is easy to blame external factors such as owner changes or a GC’s lack of expertise in resource and schedule management. Similarly, GCs may express frustration with owners or subcontractors. However, external factors can only be held responsible for poor outcomes if we are certain that we have complete control over internal factors.

Research using combined Agent-Based Modeling and Social Network Analysis revealed that nearly 90% of jobsite decisions (internal factors) never reach project managers (PMs) or company executives.³ Internal issues, like absenteeism or missing resources, as well as external factors, such as trade interference and weather, are only under your control if they are properly collected, recorded, interpreted, and acted upon. Complaining without data is futile, and acting on inaccurate data is wasteful and potentially harmful.

To achieve successful project outcomes, planning must take precedence over measuring outputs. Improvising and reacting to issues creates unpredictability and wastes energy. This unpredictability often stems from the skilled tradespeople making localized decisions without considering the broader system’s impact. A lack of visibility into internal factors may lead to misplaced blame on external causes for wasted resources and subpar outcomes.

Performing work (output) does not always result in completed work. Simply stated, work does not equal production.⁴ As a company leader, you must ask: What do we need to know? How do we document and share this knowledge to reduce future risk? As a construction financial professional (CFP) and a team member, consider these questions about financial outcomes:

• Can we increase visibility?
• Can we increase predictability?
• Are we effectively pursuing work that supports our strategic goals?
• Are we using models appropriately to evaluate and learn?
• Can we improve the outcome?
• Do we have a designed approach for responding to lead indicators?

Guiding Your Team to the Outcome

Understanding the levels of risk and their impact at various project stages is essential for distinguishing outputs from outcomes. From estimating to installation, risk types and expected outcomes vary.

For example, while estimating is concerned about the hit ratio, cost, labor mix and units, material prices, and correct understanding of the contractual and job conditions, the project management team worries about the procurement, lead times, technical specs, cut sheets, crew ratios, schedules, and other technical issues.

On the other hand, the field team (which typically gets involved much later in the life cycle of the project) is thinking of integration of material, labor, schedules, GC’s requirements, weather, subcontractors, tools, equipment, and other items that come together before the first piece of material can be installed. These risks can be categorized into three types of risk:

• Business Risk: The probability of differences between expected and actual financial outcomes, including cash flow-related risks.
• Technical Risk: The likelihood of physical failures affecting customer requirements or structural functionality. In construction, it is the expertise and risk required to design, manufacture, or construct and is proportional to the effect of failure mode on the consumer usage of the completed building or structure.
• Integration Risk: Execution-related challenges in coordinating resources, such as labor, materials, and finances to deliver the project on time, within budget, and with expected quality.