Article – Benchmarking, An Infantile Disorder?

We hope to provide you with lots of resources here at Making Performance Meaningful, the G&W Consulting Blog, to help you in improving your management of services and service contracts.  Our first White Paper has been written by Geoff Edmundson, a G&W Director. Its presents a   provocative view of benchmarking particularly as it relates to the Facilities Management industry.  You will find a link to the White Paper at our White Papers and Other Resources page and we would very much welcome your views and comments. Here is what Geoff has to say about it in summary.

“Benchmarking has become associated with an ‘everything-can-be-measured and costed’ approach that can deliver a quick-fix from providing competition advantage to breakthroughs-in-thinking, changing culture, etc and represents a view that knows the cost of everything and the value of nothing. Benchmarking is becoming what statistically can be called ‘data sampling’ and ‘inference’, where data is purchased second and third-hand or is captured by proprietary software and then warehoused for some future use? What reliability can be ascribed to data, when it is analysed in the abstract without knowledge or understanding of the organisation and processes that have generated it or where little credence is given to its shelf-life?”


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One response to “Article – Benchmarking, An Infantile Disorder?

  1. Here is a comment that I just posted to a LinkedIn discussion regarding this paper:

    Geoff Edmundson in his paper raises some interesting and valid points regarding potential problems with benchmarking used for facilities managers. I believe that the problems with benchmarking, in a nutshell, come when one becomes totally dependent on the data, uses it to draw conclusions, and does not take into account other facts that may have bearing on the situation — I will explain those below — but for now, I will just say that data is not valuable until it is turned into information. And that becomes a shortcoming of much benchmarking done today.

    Before I continue, I wish to state that I am a principal of FM BENCHMARKING (www.fmbenchmarking.com), which is an online subscription-based service to enable facilities managers to benchmark their operating expenses and sustainability measures. I say this only because the previous comments are those that we had heard from many engineering professionals and FMs, and what led us to spending a year-and-a-half to put together a very different type of tool. Our perspective is that the key to successful benchmarking is to go beyond the basic data: first one needs much more than cost metrics, and second, one needs to add intelligence to the data.

    Here, in our minds, is the process of what one must do to go beyond the basic data:
    1. You must be able to track (and compare) all the data critical to your type of facility.
    2. You must be able to filter the buildings so only those relevant to your situation are being compared — for example, very few doing benchmarking take into account whether the hours of a facility are 12-hours-a-day for 5-days-a-week versus 24/7, even though this metric could have an obvious bearing on operating expenses. Similarly, there are many different standards for measuring square area (even rentable square area), so unless the benchmarking tool clearly identifies which method is being used, any metric such as cost per square foot can be different by as much as 30% for the same space, just depending on how it was measured. There could easily be as many as 50 filters that may apply to some buildings to make comparisons relevant.
    3. Once the appropriate data and filters are selected, one has a knowledge of whether something costs more or less than in a comparable building. But that doesn’t tell you what to do about it. Most benchmarking tools fall short here. This critical next step should allow one to compare the RELEVANT (to the metric) best practices that are being followed by the subject building to those of other buildings that are out-performing the subject building.
    4. Once one has identified the relevant best practices that better-performing buildings are following, one then needs to apply expertise (often through a consultant) to see (a) whether each best practice is applicable to the subject building, and (b) which of the identified best practices would be cost effective to implement.

    Without conducting these four steps, benchmarking will not be effective. But
    if one has done all this, FM benchmarking can be a very valuable tool.

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