03/26/2003

From Benchmarking to Best Practices

The Benefits (and Pitfalls) of Benchmarking

Contributors: James Earl  
 

Moving Ahead

Help is available. Following is a list of associations and organizations that can help you in your benchmarking endeavors:

Building Owners and Managers Association (BOMA) International, Washington, D.C. BOMA’s Experience Exchange Report provides income and expense data that can help you operate a more effective office building. This annual report also includes a Pro Forma Worksheet to help you utilize data in the report to make comparisons and draw conclusions about how your property is measuring up (www.boma.org).

BOMI Institute (BOMI), Arnold, MD. BOMI Institute offers courses for facilities managers, property managers, and systems maintenance technicians and engineers. Learn about benchmarking and so much more with the professional training BOMI offers (www.bomi-edu.org).

Institute of Real Estate Management (IREM), Chicago. IREM has published its 2002 Income/

Expense Analysis reports. Private-sector office buildings, multi-family properties, community associations, federally assisted properties, and shopping centers are the focus of the reports, which include detailed break-outs on rent, maintenance, taxes, and vacancies in top U.S. and Canadian metropolitan areas. IREM also offers flexible, accessible options to help real estate professionals meet their education needs (www.irem.org).

International Facility Management Association (IFMA), Houston. IFMA’s annual research report titled Project Management Benchmarks is available. The report delves into such statistics as square footage per occupant, space planning, move management, and more (www.ifma.org).

Commercial building professionals have long since mastered the art of comparison, but never before has it been more important to prove building performance. A tight economy has many of you doing more with less, finding ways to work smarter – not harder, and run operations with a tighter grasp on expenditures. While two Tylenols might get rid of those headaches, only a healthy dose of benchmarking can remedy the ills associated with not measuring up.

Historically, the word benchmark refers to a surveyor’s mark. Today, benchmarking is a word that instills curiosity, interest, and confusion while winning the rave reviews of management and development executives who vehemently believe in its usefulness. Defined loosely, the term refers to using data and statistics for comparison purposes, with the ultimate goal of improving or validating performance, spending, or service. “I think everybody now is looking to have some very specific and objective measurement of performance. It’s one thing to think you’re doing a good job, but I think it’s very important to demonstrate that you’re doing a good job – vis-à-vis the marketplace and your peers,” says David L. Pogue, executive vice president of ownership services, Western Region, Insignia/ESG, San Jose, CA.

The success that results from benchmarking is more than a simple comparison – it is an outcome that is arrived at by interpreting and analyzing quantifiable data to improve practices. “The only way to get best practices, in my opinion, is to find out what others are doing,” explains Paul W. See, senior vice president, Trammell Crow Co., Juno Beach, FL.

Different Approaches

Benchmarking can be an excellent measurement tool when comparing one facility to others in your portfolio. This type of internal benchmarking can help set company standards for performance and raise expectations through shared best practices. At Insignia/ESG, the results of surveys help the company benchmark facilities against one another to measure tenant satisfaction and the level of service being provided to clients. “It’s important for us to routinely be … making certain that the people that occupy the buildings we manage are happy with our performance and the properties. Right now, in this environment, tenant retention is probably the most important thing in an office or industrial building,” says Pogue.

Obtaining data from properties owned and managed by other companies can be a good way to troubleshoot areas of weakness and learn from best-in-class companies and facilities. When See noticed difficulty with some of the 600 motorized gate operators at Florida Power & Light facilities, he used benchmarking to determine if the number of failures was normal and how the problem could be minimized. After obtaining data from other companies, it was clear that the failure rate of Florida Power & Light operators was higher than those at companies benchmarked. “We probably would not have known that if we had not benchmarked to get some statistical data,” he says. Future investigation into the cause of this high rate of failure revealed that, according to See, “we really didn’t have the right manufacturer or right product for the application.” Retrofit products and all future operators have been (or will be) purchased from a different manufacturer and See indicates that the failure rate is already dropping.

Benchmarking Keys to Success

Turning benchmarks into best practices requires careful scrutiny. As performance indicators, benchmarks (both your own and the facility or company you are measuring against) must be precise. “Get good, accurate, and appropriate data. I think that’s the first thing and that’s the hardest thing,” Pogue advises.

Conduct an in-depth analysis of the data. According to Arnold, MD-based BOMI Institute’s Fundamentals of Facilities Management, “benchmarking’s greatest value is to understand why your benchmarks differ.” This is what See calls a gap analysis.

The next step in benchmarking is to determine the cause of these differences, or root cause, according to See. The Houston-based International Facility Management Association (IFMA) cautions in its Project Management Benchmarks: Research Report #23 against novice benchmarkers who too often stop the process when they discover that their performance is ahead of other companies. Whether a comparison yields positive or negative information, it remains important to follow through with an analysis and appropriate action. No one ever won a race by quitting when they were ahead.

If corrective actions are necessary, develop appropriate plans and procedures. Once an effective plan has been developed and implemented, measure its progress. Turn this process into a best practice and disseminate information to others that can benefit. Trammell Crow uses the company Intranet as a forum to share experiences, lessons learned, and best practices.

At Insignia/ESG, best practices on a CD-Rom are shared company-wide. From the vast collection of best practices, the company has distilled a set of core standards, which are audited yearly. “We have an internal quality assurance team that is either in-person or through a mail-in audit system, and [we audit] a fair portion of our assets every year to make certain that we are in fact meeting our own best practices and core standards,” explains Pogue.

Words of Caution

Benchmarking can be an excellent way to understand how your performance stacks up to others; however, the rewards can only be reaped if it’s done right. Benchmarking takes time and money, so it’s important that you get buy-in from upper management to proceed. However, time and money together do not equal a formula for success. Quite possibly the most important thing to realize before benchmarking is that people must be open to change. Best practices are only as effective as their implementation.

If anything can be learned from the experiences of others, it’s the importance of understanding what is behind the data you are benchmarking against. “It’s a difficult thing to get an apples-to-apples comparison when people don’t understand what’s in their numbers,” says See. As an example, he explains that if you are looking at landscaping expenses, you need to know whether interior plants and snow removal are included in other facilities’ expense data. These expenses could skew your analysis, making it difficult to accurately benchmark landscaping costs. You might also want to investigate how the numbers reported were obtained (were they self-reported, what was the sample size, etc.).

The more likeness between your facility and the facilities it is being benchmarked against, the more beneficial benchmarking will be. “Every building is different. Every region is different. But to truly implement an improved process, you have to understand [the data] to the Nth degree before you can make any changes that will add significant value,” See explains. Operating expenses in a 75-year-old New Jersey office building will differ significantly from a two-year-old San Jose warehouse. “When you start getting broader than [regional benchmarks], I think the numbers get a little more suspect because of regional differences and variations in the market,” says Pogue.

Don’t forget that benchmarking is for more than just the cost of facility operations. It’s a measurement tool that can help you determine standards for office size, move management, and quality. Take Pogue’s advice: “There is also a standard of care and standard of daily management practice that you’ll also need to benchmark to.”

Jana J. Madsen (jana.madsen@buildings.com) is senior editor at Buildings magazine.

 


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