Best Practices for Benchmarking Occupancy and Operating Costs

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Best Practices for BenchmarkingOccupancy and
Operating Costs

• INFM-6
• Feb 20-22, 2006
• Courtesy
• Guthrie Research Group

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Session Outline

• Benchmarking Costs
• Benchmarking Efficiency, Quality, and
  Satisfaction
• Definitions -- The Key to Good Benchmarks
• Methodology Control
• Analysis -- Tools for Decision Making

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Why Benchmark Costs?

• Comparing your costs to others to see where you
  stand
• Looking for ways to reduce costs
• Trying to determine where to concentrate
  management/control efforts
• Forecasting, goal setting, strategic planning

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Performance Metrics -- Costs

• Cost Metrics Drive Performance
• Process Improvement
• Cost Savings or Reductions
• Alignment with Business Strategy
• Cultural Changes
• Supplier Performance
• Meeting Customer Requirements in terms of cost

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Using Cost Benchmarks to Set Goals

• Benchmarking confirms that goals are
  directionally correct
• May drive a change in emphasis on which goals are
  important
• Absolute value of goals metric is changed

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Menu Of Most Useful Cost Items

• Examples will follow
• Real Data is Used to illustrate these examples
• Costs Metrics
• Per square foot
• Per person
• Per acre
• Charts illustrate methodologies used in
  benchmarking

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Maintenance Costs

• Per Gross Sq. Ft
• Median 2.10
• 25th Percentile 2.37

• Reinvestment in the Building Ratio
• Median 1.29
• 25th Percentile 1.93

Other Cost Metrics Wage Rates, Maintenance
Per Person, for User Services, for HVAC
Maintenance
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A Variety of Other Metrics Are Also Needed

• Quality
• Productivity
• Efficiency
• Customer Satisfaction
• Turn-around Time
• Down Time
• Rework Rates
• Background Metrics

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Performance Measures
Non-Cost Items

• What are the critical success factors of my
  organization?
• What are the key elements that tell me how well
  my department is doing?

• What are the most important things I do for my
  customers?

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Examples of Useful Non-Cost Metrics

• Unlimited possibilities
• Following are some examples
• Data for samples comes from actual studies

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Utilities Usage in BTUs An Efficiency Metric

• BTUs Per Building GSF
• Median 210,000
• 20th Percentile 109,000
• n84

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Area Cleaned per Custodian -- Sq. Ft. Per Person
from Highest Productivity to LowestA
Productivity Metric

• Percentiles
• 10th 46,000 sq. ft.
• 20th 35,000 sq. ft.
• 30th 32,000 sq. ft.
• 40th 29,000 sq. ft.
• 50th 27,000 sq. ft
• 60th 24,000 sq. ft.
• 70th 20,000 sq. ft.
• 80th 18,000 sq. ft.
• 90th 16,000 sq. ft.

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Office Density -- A Quality MetricSq. Ft. of
Office Office Support Space Per Person

• Median is 187 Sq. Ft.
• 25th Percentile is 158
• Other metrics
• Office churn rates
• of occupants per office
• Office Vacancy Rates
• Office size standards

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Satisfaction Metrics

• Many companies consider as important as cost
  metrics
• One possible indicator of the quality of service
• For benchmarking, all companies need to use the
  same satisfaction survey
• You can measure the satisfaction of your
  occupants in every area

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Satisfaction with Building Cleanliness

• We use a 5 pt. satisfaction scale with a
  corresponding importance scale
• 5 is highest satisfaction, 1 is dissatisfied

• Percentile Ratings
• 10th 4.3
• 20th 3.9
• 50th 3.5
• 80th 3.1
• Ratings are the mean scores from all respondents
  to survey

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Proactive vs. Reactive Maintenance Levels - A
Quality Metric
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Accurate data on site space is critical
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DEFINITIONS

• You cant benchmark without good definitions.
• No such thing as apple to apple comparisons when
  it comes to facilities.

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Compiling the Data

• Spreadsheets
• Databases
• Focus on easy to understand
• Clear explanations of data items
• Important to be able to review charts and refer
  back to data in tables

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Control Considerations

• Must have Management Support
• Consider the Time Involved to Complete
  Benchmarking Project
• from 25 to 100 hours to complete survey

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Data Collection Tips

• Assign each section of the survey to match your
  organization chart
• Record the sources of your data for future years
• Assign data collection with sufficient lead time

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Data Collection Tips

• Have one person responsible for collecting the
  survey segments, reviewing the data and verifying
  consistency of the data

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Data Consistency Checks

• Verify total cost by requesting major elements
  separately
• Verify labor costs by obtaining wage rates FTEs

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Data Consistency Checks

• Verify FTE by reviewing labor data
• Examine relationship of labor, expenses
  contracts

• Check all arithmetic
• Avoid leaving blanks in survey, use Not Known or
  Not Done

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Benchmark Data Does Not Require Accounting
Accuracy

• Estimates are acceptable
• No two organizations collect costs the same way
• Looking for significant differences

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Benchmark DataWhat weve learned thus far

• Is Directional
• Is Not of Accounting Accuracy
• No Two Organizations, Sites, Processes are the
  Same
• Data is a Tool for Comparison
• Getting the Data is Only the Halfway Mark
• Getting the Data Takes Considerable Time, Effort
  Resources

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Analysis of the DataTools for Decision Making
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Analysis involves examining the interplay between
variables

• For example
• between cost and satisfaction
• between frequencies and costs
• between background data and costs
• between costs and turn-around time
• between cost and efficiency
• etc.

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Analyzing the Relationship Between Costs and
Other Metrics Makes the Data Even More Useful
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You might want to normalize data during analysis

• Normalize only for specific reasons
• to make my numbers look better not good enough
• what would my costs look like if I werent
  unionized

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Gap Analysis -- a key benchmarking analysis
technique

• The competitive gap is a measure of the
  difference between your organizations
  performance and that of the best in the benchmark
  study.
• Negative Gap External practices may be superior.
• Positive Gap Internal practices are superior.

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Gap Analysis is used to answer the question,
Where should we set our operating cost targets?

• Previously many companies set their goals at the
  lowest cost level. They wanted to be best in
  class which they equated to lowest cost.
• Today companies set their targets based on the
  values held by the company, their view of the
  future, their industry competition, customer
  satisfaction, etc.

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• Most companies no longer want to be lowest cost
  but rather have set goals to be economical and
  efficient while providing the highest possible
  levels of service.
• In terms most facility mangers indicate this
  means they want to be between the median (50th
  percentile) and the 25th percentile.
• The closer you can get to the 25th percentile
  without compromising service is seen as an
  achievable ideal.

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Using Benchmarks To Improve

• Must look behind the metrics
• Look at similarities and differences in sites,
  processes, etc.
• Find Best Practices
• Meetings
• Site Visits

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Recognizing Best Practices

• The Practice is Clearly Superior
• The Quantified Opportunity is Large
• Expert Judgement
• The Same Practice Recurs
• Practice Will Work In Varying Situations

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Conclusions

• Benchmark what is important to your organization
• Match data to your corporate goals, strategies
  and mgmt. demands
• Benchmarking requires self assessment.
• Focus on areas in your operation that need
  improvement

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Final Conclusion Benchmarking is Only As Useful
as You Make It

• Use the results
• Set goals
• Implement