BENCHMARKING - HOW DO YOU COMPARE?

Benchmarking is determining the best measurable performance in an activity, such as cost, service, time or quality. This best performance establishes a point of reference, or standard, to which to compare or aspire - a benchmark.

Managers of multi-tenant investment buildings compare their operating expenses to industry standards, such as the experience exchange reports published annually by BOMA and IREM. Managers of corporate facilities attempt to adapt the statistics of BOMA and IREM, while recognizing the difficulties of making apples to apples comparisons. These investment property managers and corporate facility managers continue to look for ways to assess the performance of the buildings under their stewardship. These are forms of benchmarking.

The experience exchange statistics published by BOMA and IREM are averages. Benchmarking seeks the best performance in a category. Facilities managers call this best in class. Studies of performance among similar properties are summarized into a hypothetical best - in - class property. Such a best - in - class property is helpful in identifying the areas of greatest potential for improvement. However, they do not necessarily show the level of performance another property can attain, because of variables from property to property.

For example, multi-tenant investment office buildings have few variables to create differences in cost performance from one property to another. The primary variable is geographic location. Corporate facilities have significantly more variables.

Comparability

Each of the following characteristics affects the comparability of operating costs from one facility to another:

  • age
  • location
  • use
  • hours of operation
  • service specifications
  • labor
  • physical layout
  • density of use

The challenge is compiling valid data to compare the performance of one property to another, while ensuring each of these characteristics is considered to maintain an apples to apples comparison. Benchmarking demands attention to comparability of data and those characteristics that affect comparability. Benchmarking operating costs also must focus on performance. Effective benchmarking must continually recognize a specification or standard of performance, or quality may fall along with cost.