Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs) – Contracts Administration Department

Aligned with KSA Construction Standards & Mega Projects Framework

---

1. Contract Compliance Rate (%)

Definition:

Measures the percentage of contracts that fully comply with KSA regulations, FIDIC standards, and BEC Arabia’s internal policies.

Formula:

Contract Compliance Rate (%) = (Number of Fully Compliant Contracts / Total Contracts Reviewed) × 100

Benchmark:

• Industry Standard: 95-100% compliance rate

• BEC Arabia Target: ≥ 98% compliance with KSA regulations

Example Calculation:

If 48 out of 50 contracts comply with KSA standards and company policies: (48 / 50) × 100 = 96% compliance

Improvement Strategies:

• Conduct regular contract compliance audits

• Implement automated compliance checks in Aconex

• Provide legal training for contract managers

---

2. Contract Approval Cycle Time (Days)

Definition:

Measures the average time taken to review, approve, and finalize contracts.

Formula:

Contract Approval Cycle Time = (Total Time Taken for Contract Approvals) / (Total Contracts Approved)

Benchmark:

• Industry Standard: 10-15 days

• BEC Arabia Target: ≤ 12 days

Example Calculation:

If the approval process took 8, 10, 12, 14, and 9 days for five contracts: (8 + 10 + 12 + 14 + 9) / 5 = 10.6 days (Within Target)

Improvement Strategies:

• Implement digital contract workflows to reduce manual processing

• Automate contract approvals using SharePoint/Aconex notifications

• Conduct weekly contract review meetings for quick approvals

---

3. Percentage of Contracts with Variations (%)

Definition:

Measures how often contract variations (change orders, amendments) occur.

Formula:

Contract Variation Rate (%) = (Contracts with Approved Variations / Total Active Contracts) × 100

Benchmark:

• Industry Standard: 20-30%

• BEC Arabia Target: ≤ 25%

Example Calculation:

If 15 out of 50 contracts had variations: (15 / 50) × 100 = 30% variation rate (Needs improvement)

Improvement Strategies:

• Strengthen contract scope definition to reduce frequent amendments

• Implement variation approval thresholds for project managers

• Improve cost forecasting and risk assessment before contract finalization

---

4. Dispute Resolution Efficiency (%)

Definition:

Measures the percentage of disputes resolved within the defined resolution timeframe.

Formula:

Dispute Resolution Efficiency (%) = (Disputes Resolved Within Target Time / Total Disputes Logged) × 100

Benchmark:

• Industry Standard: 80-90% of disputes resolved within contractual timelines

• BEC Arabia Target: ≥ 85%

Example Calculation:

If 17 out of 20 disputes were resolved within the required timeframe: (17 / 20) × 100 = 85% resolution rate (Meets Target)

Improvement Strategies:

• Implement early warning systems for potential disputes

• Conduct monthly contract health checks with project managers

• Use third-party mediation for high-risk disputes

---

5. Percentage of Contracts with Penalties (%)

Definition:

Measures how often contracts result in financial penalties due to delays, non-compliance, or performance failures.

Formula:

Contracts with Penalties (%) = (Contracts with Penalties Applied / Total Contracts) × 100

Benchmark:

• Industry Standard: 5-10%

• BEC Arabia Target: ≤ 5%

Example Calculation:

If 3 out of 60 contracts had penalties applied: (3 / 60) × 100 = 5% penalty rate (Meets Target)

Improvement Strategies:

• Strengthen contract monitoring & milestone tracking

• Improve contractor performance evaluation & penalty enforcement

• Conduct quarterly contract audits to identify recurring penalty causes

---

6. Percentage of Contracts Closed on Time (%)

Definition:

Measures the percentage of contracts that are closed out within the planned project completion timeline.

Formula:

On-Time Contract Closure (%) = (Contracts Closed Within Target Time / Total Contracts Closed) × 100

Benchmark:

• Industry Standard: 85-95%

• BEC Arabia Target: ≥ 90%

Example Calculation:

If 18 out of 20 contracts were closed on time: (18 / 20) × 100 = 90% on-time closure

Improvement Strategies:

• Set automated reminders for contract closeout procedures

• Conduct final contract audits within 30 days of project completion

• Assign dedicated contract closure coordinators for large projects

---

7. Contract Risk Exposure Score

Definition:

Measures the overall risk exposure associated with active contracts, considering financial, operational, and legal risks.

Formula:

Risk Exposure Score = Σ (Likelihood Score × Impact Score) (Scores assigned from 1-5, where 5 = highest risk)

Benchmark:

• Low Risk: ≤ 15

• Moderate Risk: 16-25

• High Risk: 26+

Example Calculation:

Risk Factor	Likelihood (1-5)	Impact (1-5)	Risk Score
Payment Delay Risk	4	5	20
Legal Dispute Risk	3	4	12
Contract Breach Risk	2	3	6
Total Risk Exposure Score	-	-	38 (High Risk)

Improvement Strategies:

• Assign contract risk scores before approval

• Implement contract contingency clauses for high-risk projects

• Conduct quarterly risk mitigation reviews

---

Conclusion

These KPIs ensure that BEC Arabia’s Contracts Administration Department operates efficiently, mitigating risks, maintaining compliance, and optimizing contract performance.

✅ Reduces disputes and contract risks ✅ Ensures compliance with KSA procurement & construction laws ✅ Enhances contract efficiency in large-scale construction projects

🚀 By tracking these KPIs, BEC Arabia ensures optimized contract lifecycle management and better project financial outcomes.