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Construction companies develop and use composite indicators to evaluate their overall project performance. However, the conventional methodology of composite indicator development causes “the indiscrimination problem”, a low degree of performance discrimination due to low resolution of measurement, and “the redundancy problem”, an incorrect evaluation caused by interrelation among sub-indicators. To address these problems, we propose a novel methodology that uses fuzzy theories. The proposed methodology includes the utility function for normalizing, the fuzzy measure for weighting, and the fuzzy integral for aggregating. A retrospective case study on 52 real projects shows that our proposed methodology can help alleviate the indiscrimination and redundancy problems: the proposed methodology significantly improved the degree of performance discrimination (0.29 to 0.92) and changed ranks of under- or overestimated projects by taking the interactions of sub-indicators into account. Our methodology can contribute more accurate evaluation of overall project performance with higher degrees of performance discrimination.