Last reviewed 24 April 2018
Alan Field explores the benchmarking landscape and the different ways it can be used.
Benchmarking is not a new business tool, neither does it have one single meaning. Benchmarking has been around in various applications for many years and is really a series of tools that may be strategic or tactical depending on the goal to be achieved.
In broad terms, benchmarking is an approach to compare the performance of business processes and products with the best practice or performance, either within the industry or outside it. It may involve two or more organisations. Alternatively, benchmarking can refer more to energy management and building performance rather than purely organisational performance. In other words, it is not always straightforward and proposals for benchmarking need to be clearly understood.
For some, benchmarking is seen in terms of comparing best practice or other objective criteria, so that different organisations can identify the most cost-effective way to deliver a product or service or, perhaps, to achieve wider staff development. This means specific organisations need to share information with one another, contrasting and comparing commonly agreed metrics. Another way of structuring goes further, so that organisations allow each other’s employees to observe their workplaces or take part in live processes. These organisations may be entirely unconnected or, have an existing or past business relationship, ie the decision to take part in benchmarking needs to be carefully considered in terms of what the organisation wants to achieve from such an exercise.
So, benchmarking is based on the premise that all organisations can benefit from seeing how it is done elsewhere. This is still common practice in some parts of the public sector, either to deliver consistent levels of service or to find the most cost-effective way of delivery — be this through systems or by providing shared services or outsourcing arrangements across a number of public bodies.
In the private sector, benchmarking can also be used by organisations to compare delivery with trusted partners or even competitors where it could lead to cost-effective benefits for the whole sector rather than being seen as a risk to competitive advantage — this could be anything from design methodologies to the use of new technologies in customer delivery.
Through the back door?
A point sometimes forgotten is that some new business tools within the built environment sector — while not technically benchmarking — do tend to give greater visibility across project design partners as to each other’s approaches to both design and project management. Indeed, in the longer term, the protection of intellectual property rights may evolve as an issue on collaborative working and the various design tools within the Building Information Modelling (BIM) arena, for example, are even more sophisticated. In other words, even if an organisation doesn’t wish to intentionally take part in benchmarking, to some extent it is already being done in terms of sharing design concepts and other data.
Another area within facilities management where benchmarking can happen informally without the “b” word being used is with regard to outsourcing, eg where the facilities management is part of a wider team of hard and soft services contractors. This can lead to sharing of a variety of experiences and good practice. A good manager of outsourcers knows that the contractors’ way of doing things isn’t necessarily inferior to that of the principal. Equally, proving that performance measures are being met through reporting tools can also demonstrate the exact way these are being achieved, as well as whether they are simply being met. Ongoing audits of contractor processes, such as health and safety or employment law compliance — can often present information on the way things are done within that organisation, so that there is an element of comparison as well as analysis, when considering the audit findings across the different contractors being sampled.
Not all benchmarking involves direct comparisons between organisations. An increasingly important meaning of the word within the facilities management sector is benchmarking physical assets — typically individual buildings or estates.
The metrics involved typically refer to carbon management and are usually more focused on energy consumption and how that energy was generated. Also, as was reported by the British Institute of Facilities Management (BIFM) in relation to its Sustainability Survey 2017, if there were an industry-wide definition of social value it would encourage wider engagement and collaboration so, eventually, this might mean more than just looking at carbon management.
The BIFM also reported in the same survey that: “A lack of real life data and the ability to learn from this information is hampering efforts to achieve the Government targets for energy efficiency.” This means that the limitations of individual buildings to ever perform to certain targets need to be clearly understood. However, benchmarking against known metrics can identify potential improvements assuming accurate data collection is being undertaken.
Accurate data is not just consistent calculations. For example, two identical buildings with different Building Management Systems (BMS) may produce different energy usage. Equally, even with the same type of BMS there may be different levels of competence in the use of it, ie benchmarking against another building’s findings may suggest that further training or better use of technologies is needed. So, even a building’s limitation in carbon management may still show potential areas in improvement without significant upgrades.
Some would argue energy benchmarking can assist in future investment decisions. However, this would need careful analysis to ensure accurate, consistent datasets and clear understanding of other aspects of the buildings being compared. Also, benchmarking of comparable buildings would not necessarily take into account the future tenant marketplace for such locations or the evolving regulatory framework in terms of investment insights.
Benchmarking has several different meanings. Ensure all parties to any such arrangement have a common understanding of what it means to them and any limitations the particular benchmarking exercise will have.
The sharing of data, and particularly design data, through BIM and other systems means there is now much indirect benchmarking — good practice can be discerned through analysing other design partners’ inputs (while, of course, ensuring that any intellectual property rights are respected).
Working with outsourcers and sub-contractors can, on occasions, lead to indirect benchmarking — good practice can often be analysed not only for core delivery of services but sometimes in support functions too, eg HR processes.
Accept that benchmarking may mean some loss of confidentiality in return for the potential for competitive advantage — right at the outset boundaries need to be set and fully understood by all participants.
Where benchmarking refers to energy performance or other building lifecycle issues, the limitations of individual buildings to ever perform to certain targets need to be clearly understood.
The way that metrics are calculated and presented needs to be fully understood in any benchmarking exercise, eg incomplete collection or analysis of data can lead to wider inaccuracies in a benchmarking data. Equally, the way that BMS are programmed and set can lead to different outcomes — it isn’t just metrics but technical parameters that need to be understood.
Where benchmarking is used as a tool to aid investment decisions for particular buildings a longer term view needs to be taken as to what the tenant marketplace and/or regulatory framework will be in the future.