Benchmarking, performances measurement and sharingthe reward resulting from improved performance
IntroductionWhat is Benchmarking?What is a Benchmark?What is a Key Performance Indicator (KPI)?
Using a Key Performance IndicatorIn order to define the KPI’s throughout the life cycle of a project,five key stages have been identified.Stage 2: Commit to Construct – the point at which the client authorises the projectteam to start the construction project Stage 3: Available for Use – the point at which the project is available for substantialoccupancy or use. This may be in advance of the completion of the project Stage 4: End of the Defects Liability Period – the point at which the period within theconstruction contract during which the contractor is obliged to rectify defect ends(often 12 months from stage 3) Stage 5: End of Lifetime of Project – the point at which the period over which theproject is employed in it’s original or near original purpose ends. As this is usuallymany years after the project’s completion, this is a theoretical point over which suchconcepts as whole life costing can be applied
Types of benchmarkingBenchmarking can take the form of several different types: Internal benchmarking– a comparison of internal operations such asone site (or project team) against another within the same company.Competitive benchmarking – a comparison against a specificcompetitor for the product, service or function of interest.Generic benchmarking – a comparison of business functions orprocesses that are the same, regardless of industry or country .
The Benefits of Benchmarking in the Construction IndustryBenefits include: • Better performance in meeting customer needs &requirements.• Establishing effective business goals and objectives.• Measuring true productivity.• Becoming competitive• Identifying & implementing best practice in businessprocesses
What does successful benchmarking require?In practice, the main requirements for success are:• A strong and active commitment from senior management to lead andimplement the benchmarking process• A willingness to change and adapt based on the benchmarkingfindings.∀• A realisation that the competition is constantly changing.∀• An openness to new ideas, creativity and innovativeness in theirapplication to existing processes. • A continuous benchmarking effort.∀• A willingness to share information with benchmarking partners (e.g.other organisations)
Business Process ImprovementCommonly accepted factors of measuring businessexcellence: • Leadership• Policy & strategy• People management• People satisfaction• Resource management• Business Process• Customer satisfaction• Business results
What are the side effects to successful benchmarking?Benchmarking has some inadequacies which must be clearly recognised andunderstood before continuing the exercise: • Dont try and benchmark too many things to begin with. Select two or three key areas, and then gradually add others over time.• Dont waste time benchmarking things that are just "nice to know".Every benchmark should aim to improve performance in an area thatcontributes to profits or customer satisfaction. • Be precise in defining what is to be measured. A lack of clarity canlead o confusing an inappropriate benchmarks • Test the benchmarks internally before consulting with outsidecompanies. • Remember that your organisations priorities may change with time, and so your benchmarks should be regularly reviewed (and changed if necessary) to reflect this.
5 steps to successful benchmarking The five key steps in the benchmarking process are: Plan: Clearly establish what needs to be improved – make sure it isimportant to you and your customers – and determine the datacollection methodology to be used (including any KPIs).Analysis: Gather the data and determine the current performance gap- against a competitor, the industry or internally – and identify thereasons for the difference. Action: Develop and implement improvement plans & performancetargets.Review: Monitor performance against the performance targets.Repeat: Repeat the whole process – benchmarking needs to becomea habit if you are serious about improving your performance.