We are a growing construction mgmt company that historically has done mostly residential.
The way we evaluate residential construction is just payroll of the residential department divided by the total square feet completed in the year. So cost per square foot, which works really well since we just make copies of the same few models of house and townhomes over and over again.
The thing is that we are currently doing a lot more commercial construction, to the point we created a new department, and I'm now running it. I do not think that the cost/sf KPI is fair, and my previous boss agrees. Commercial construction is just infinitely more complex, a 1,500 sf restaurant is miles ahead of a 1,500 sf family home, but we evaluate them the same at the end of the year.
I've been thinking about using payroll divided by market cap of the delivered square footage, or payroll divided by the market cap minus the cost to construct as good options.
Just wanted some input, and I figure I would ask here, I've also asked in a few other subs.
Thank you!