In 1998 Egan set overall goals for theimprovement of the construction industry inthe UK. The improvements proposed have notbeen met. It is necessary to the identify thereasons by which the construction Industryis unable to achieve these goals, in order toimplement the relevant measures to ensurethe UK meets international performancestandards and achieves its potential.This paper critically analyses currentuse of KPIs within different contextsand identifies reasons as to why theyserve purposes for which they werenot intended. Building upon it, thispaper applies System Dynamics theoryin order to explain underachievement.Finally, recommendations and KPIs areproposed.Key words: construction industry, system dynamics, KPIs.