Technical Note Balanced Framework for Measuring Performance of Supply Chains in House Building Johannes I. M. Halman 1 and Johannes T. Voordijk 2 Abstract: Despite its importance, performance measurement of supply chains of house building firms has not received much attention yet in academic literature. The objective of this study is to develop a framework to measure this performance. In a first step, a comprehensive framework is developed composed of five primary perspectives on the performance of supply chains in house building (i.e., financial, cus- tomer, internal business, external business, and innovation) with 35 corresponding performance indicators. In the second step, the practical value of the proposed supply chain performance indicators is evaluated on its level of clarity, measurability, and relative importance based on the feedback of senior purchasing managers of construction firms active in house building. The evaluation shows that the framework and its intended use are highly supported by these managers. In the final step, the management team of a medium-sized construction firm active in house building used the framework to assess the firm supply chain performance relative to their competitors. It was concluded that the tool was easily filled in and very helpful for gaining insights in the supply chain performance of the firm. DOI: 10.1061/(ASCE)CO.1943-7862 .0000553. © 2012 American Society of Civil Engineers. CE Database subject headings: Supply chain management; Construction management; Residential buildings; Measurement. Author keywords: Performance measurement; House building; Supply chain management. Introduction Increasing competition, a growing demand for variety, and high inhabitant mobility are some of the forces that make house-building firms start looking for ways to improve operational performance of their supply chains (Veenstra et al. 2006). Empirical evidence also suggests that there is potential to make significant improvements in construction supply chain performance (Dainty et al. 2001). Despite its potential importance, frameworks focusing on measur- ing the performance of supply chains of house-building firms have not yet received much attention from either the building sector or from academics. As Dainty et al. (2001) pointed out, the focus in the construction industry has so far been on the client—contractor relationship as opposed to the contractor—supplier relationship. Through a growing industrialization, house-building firms in- creasingly utilize processes similar to manufacturing. Using Hill’ s (2000) typology, in general the house-building industry can be classified as batch production with medium volumes and several different products, when considering a different house type as a different product. To achieve ambitious performance targets, Egan (1998) also recommended the adoption of methods used success- fully by the manufacturing sector, such as partnering, the use of integrated production teams, and continual monitoring of the effect of performance improvement measures (Dainty et al. 2001). Therefore, lessons can be learned from the manufacturing industry when focusing on performance measurement frameworks. The objective of this study is to develop a framework to measure performance of supply chains of house-building firms. This new framework is not only based on the existing literature about supply chain performance measurement in general (e.g., Gunasekaran et al. 2001, 2004; Lohman et al. 2004; Ramdas and Spekman 2000) but also takes into account the specific characteristics of the deliv- ery process of building materials from suppliers to house-building firms. The focal firm of our supply chain performance framework is the construction firm. Research Methodology This section describes the three steps that were followed to develop and test the performance framework for supply chains of house- building firms. Step 1: Design of a Performance Framework for Supply Chains in House Building In the first step, the focus is on comprehensive studies that are directed towards measuring supply chain performance to draw a first draft of generic key performance indicators (KPIs) to measure construction chain performance. Based on this literature review, a comprehensive performance framework for supply chains of house building firms was developed based on the Balanced Scorecard (BSC)—a worldwide acknowledged performance measurement framework (Kaplan and Norton 1992, 2000, 2004). This frame- work consists of five different perspectives on the performance of these supply chains: financial, customer, internal business pro- cess, external business process, and innovation. House-building companies can adopt this framework to measure, control, and improve their supply chain performance. 1 Professor, Univ. of Twente, Construction Management and Engineer- ing, P.O. Box 217, 7500 AE Enschede, The Netherlands. E-mail: j.i.m .halman@utwente.nl 2 Associate Professor, Univ. of Twente, Construction Management and Engineering, P.O. Box 217, 7500 AE Enschede, The Netherlands (corre- sponding author). E-mail: j.t.voordijk@utwente.nl Note. This manuscript was submitted on January 4, 2011; approved on March 5, 2012; published online on March 7, 2012. Discussion period open until May 1, 2013; separate discussions must be submitted for individual papers. This technical note is part of the Journal of Construction Engi- neering and Management, Vol. 138, No. 12, December 1, 2012. © ASCE, ISSN 0733-9364/2012/12-1444-1450/$25.00. 1444 / JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / DECEMBER 2012 J. Constr. Eng. Manage. 2012.138:1444-1450. Downloaded from ascelibrary.org by Universiteit Twente on 12/10/12. Copyright ASCE. For personal use only; all rights reserved.