Setting benchmark in facility management does not come easy. To understand today’s benchmarking it is essential to know the impact of automation on the art and science of benchmarking for facility professionals – a way to reduce operating expenses and improve sustainability. Here is an outline….
Identify the areas: This goal will tell you whether you are doing well or should consider making some changes in your buildings, but it won’t tell you what to do to get better. Many FMs, when they first consider benchmarking, make this the key objective for their benchmarking – they just want to see how they’re doing. They often have not thought through what they will do once they find out the results. So this knowledge can be very helpful for recognizing potential problems, but not identifying the solutions leading to improvement.
Identify actions, to be taken to improve building performance and justify them. This is an extension of the first goal. Once you’ve identified where you may be underperforming, the question becomes, “What are the better-performing buildings doing that my building is not?” Often, this will involve a second level of benchmarking – the benchmarking of best practices. In addition, the benchmarking tool will give you evidence to justify to management their implementation (see the next goal).
Some benchmarking tools benchmark not only physical attributes of buildings, but operating procedures, such as, “do you request a proposal whenever a contract is up for renewal, or do you just glance it over and renew it if everything appears in order?” You may find that for buildings such as yours, companies that re-compete renewals are spending 20% less than you are. Result: Benchmarking can be used not only to make building improvements, but also changes to operating procedures.
Justify the budget: Many FMs are able to identify best practices to implement that will make their facilities run better. But many will be hard-pressed to “prove” the potential benefit of implementing that practice. Without that proof, it may be difficult for the expenditure to be approved. However, through benchmarking, one might find, for example, that the facilities which have implemented occupancy sensors were able to reduce their utility bill by at least “x per square foot.”
When many facility managers who benchmark discover that similar organizations are spending less than they are, they try to find out what the others are doing differently to be better. What is less obvious is the facility manager who discovers that his/her organization is spending much less than others – believe it or not, this can be a negative finding; for example, it can be a sign that one is not doing enough preventive maintenance or is underpaying staff.
Justify the staff: This is a separate goal because staff is so important to the successful facility management.
Know when to outsource: You may find out that all similar buildings have similar budgets for maintenance, but only those who are running these programs with in-house maintenance and janitorial staff. If you, then apply a filter that looks at those who are outsourcing similar buildings and find they are spending less than you; you might consider outsourcing these functions in your buildings.
For contractors, there may be some additional goals:
Demonstrate that your clients are doing better than the norm: If you are a contractor and find your clients are performing in the top half of all buildings, you then will have good, quantifiable data to use in your marketing materials to help attract new clients.
Show your clients how to improve: Conversely, if you discover your clients (or perhaps just certain buildings) are underperforming most similar buildings, through benchmarking, you will be able to identify why and what your buildings may need to do differently to become best-in-class.
Justify your pricing to clients: Many contractors spend a lot of time negotiating with their potential clients. Through benchmarking, a contractor can prove which services being offered are priced competitively and thus save a lot of time in negotiations.
Provide additional services to clients: Many facility clients want to know how their buildings are doing compared to those of other facility professionals. Not only is it likely the contractor has access to the key benchmarking data, but the client may have staff who could input the data and analyze it. If the time becomes extensive, the benchmarking can become a very valuable service for the contractor to offer to clients. The ability to offer this service can become a big differentiator when potential clients are determining which contractor to engage.
10 tips to get the most out of benchmarking your facilities
1. Understand your benchmarking goals. Do you want only to compare facilities or also to improve them?
2. Be sure the way you measure area is the same as others in the benchmarking database.
3. Understand the differences between medians and averages; medians are more meaningful for benchmarking.
4. Identify the types of reports you wish to obtain before selecting a benchmarking tool.
5. Identify the filters to generate comparison reports (age, size, climate, industry, etc).
6. Know when the comparison data was captured and what error-checks were employed.
7. Know how to identify whether the comparison database is large enough, diverse enough and has enough growth potential.
8. Know what to do when there are not enough buildings in the comparison database to generate a meaningful report.
9. Make sure the system is very user friendly and easy to use.
10. Know how to apply judgment and draw accurate conclusions from the data.
Commitment to benchmark a facility
After determining your goals for your organization, your first task will be to identify the metrics you wish to benchmark. This is a one-time task.
For most benchmarking applications, you will need to input year-end data; there will be no need to break it down into monthly or quarterly data.
If you only are doing the Quick Start to Benchmarking, you just need to have your summary data printed on a piece of paper or accessible via a computer screen. If you are using an automated benchmarking tool, you then simply look up what others are doing.
Some tools have been developed by outsourcing companies. In these cases, their reports will be limited somewhat by their own clients’ data. Their value can be quite high when comparing how your building is doing to others managed by that outsourcing company; but that also is their weakness – the comparison set of buildings is limited in quantity, and also to the way in which that company manages its buildings. For example, if a company uses the same subcontractor for much of its work, or does not conduct as much preventive maintenance as many others do, the system will not show it.
Some of these comprehensive benchmarking tools will take facility professionals one step further – they will identify which best practices are being done by the better performing buildings in your comparison set of buildings. You then can see how to improve.
Most of the benchmarking tools tend to specialize in one aspect of buildings. For example, there are some that are designed primarily for leased buildings where comparisons between rental rates can be made. Obviously, this type of benchmarking is not designed to improve your building performance, but to enable you to compare your expenses to those of others.
Some tools focus on real estate. These generally focus on specific markets and submarkets, usually within one country. They often contain vacancy rates and sales data, as well as lists of comparables.
Some tools rely heavily on data extrapolation – these systems have some input, and then a variety of algorithms are applied to enable the systems to project costs in cities for which they may have little or no data. Construction cost and building cost indices frequently are compiled monthly and can be used for projecting building costs. These tools generally do not work as well for facility professionals looking to pinpoint specific costs for a specific building, but can be fine to project costs for building to be constructed or a building to be acquired.
Most tools today are automated, which enable facility professionals to click on a report type and select its filters as desired. Automation also makes it easier for users to input data.
Some systems require data to be input annually; some require monthly data to be input (the monthly data often can be input for an entire year at once); and some are updated only once every few years for each major FM component. Some require you to input data in order to participate; others ask you to volunteer to input data; and others will charge you different amounts depending on whether you input data. The sections below go through these options in more depth as you need to be aware of which type you are looking at before you select a system.
The systems vary not only in whether they track data annually or monthly, but also in when one may input data. Some systems allow one to input data at any time, and then to modify it at any time; others only will have a limited window (usually two or three months) during the year in which you may input data. The former method accommodates those on different fiscal years better, as well as those who may wish to modify data during the year, or who find a need to input data in more depth during the year. The latter makes it easier for the benchmarking company to validate data before it becomes “official;” the former’s benchmarking database is dynamic, providing a snapshot in time that can vary from day to day.
For systems that track data annually, some will allow comparison reports from year-to-year, so you can track your building’s performance over time.
Pricing also will vary considerably between systems, not just in terms of how much they cost, but the basis of the costs. Charges may be based on annual fees, per report accessed, per user and/or per building. A as mentioned previously, some will lower their fees if you contribute data to their system.
The bottom line is that with all these differences between systems, it is critical that you start by establishing your benchmarking goals. This will lead you to the type of system that will work best for you. Then you can select the metrics you wish to track, which filters are most important for you and which reports you will need to run.
Why benchmark and how frequently?
As can be seen, there are a lot of possible metrics to be collected and input. In all likelihood, the level of detail needed for any one facility component (e.g., maintenance, utilities, security) will depend on your benchmarking goals as well as on whether you are underperforming your peers in that area.
If you are underperforming, you will want to know more information. For example, if you are spending more on maintenance, you likely will benefit from knowing what is spent on corrective versus preventive maintenance. If that is in-line with others, you may benefit from breaking out the maintenance tasks. At some point, you hopefully will identify what the culprit is.
So do you need to put in all the data broken down by each craft on day one? If you have time, it only can help and not hurt. But if you don’t have the time (and most facility professionals these days don’t have a lot of this), you probably can wait until the benchmarking comparisons indicate you need a greater breakdown of the data.
Research has shown that facilities that are benchmarked annually will improve each year. This is because benchmarking is considered a continuous improvement process. Until one has a perfect facility, there always will be something that can be improved; benchmarking not only will identify it, but will show which of the improvements will have the most impact on the bottom line. Even if a facility were perfect, each year new technology delivers new tools that can help your facility operate more efficiently. The first year of benchmarking will identify the areas where the greatest improvement is possible (once recommendations are implemented), but there still will be value each and every year that you benchmark.
Some benchmarking tools for utilities enable data to be input monthly. While this can add to the data entry time, it can be helpful when making comparisons to other buildings in your area (with the same microclimate) where you may want to track the impact of local conditions in your building performance. For example, if your building is in an area that has major temperature changes, by tracking how other buildings in your area performed during a month, you’ll be able to see whether the sudden improvement in the month in your building was caused by the improvements you made to your building or because that month happened to be particularly warm.
Do you need to collect and input data?
The system selected will dictate your data entry requirements. Some benchmarking tools give you an option to use them without your having to input data (usually with those systems, if you decide to input data, you would pay less for the tool or not at all). Other tools provide fewer features unless you input data. Others require
you to input data.
Therefore, your first priority is to determine your goals, and let them dictate what system you use. All systems today are quite different, and you likely will find one system that is a better match for you than the others. You then can determine whether that system requires that you input data. All benchmarking systems require data in order to provide value to their users; for facility professionals to take advantage of the tool, they should be willing to input data. No benchmarking system ever can have enough data, so all who benchmark are encouraged to share their data with a benchmarking system where feasible.
There will be times when one is not able to input data. If that becomes the determining factor for you, your choices of systems will be limited and you likely will need to sacrifice some functionality – you either may use a system that doesn’t have all the features you want or not enough data (buildings), or you may end up with a system that doesn’t include best practices analysis, which will prevent you from using benchmarking to identify ways to improve your building performance. Extracted from the whitepaper of IFMA .
Peter S. Kimmel
AIA, IFMA Fellow Principal
FM Benchmarking