Applying global benchmarking within the context of property and the higher education sectors

1. Applying Global Benchmarks to
Facility Management & Services
Alan Masterton
Director, Operations Performance
Aug 2008

2. Agenda
Identifying the need for change
1.
Applying appropriate benchmarks
2.
Implementing improvement programs
3.
Sustaining the gains
4.
Case Study:
University of Sydney:
achieving world class service

3. Outcomes
Achieving service excellence
Understanding the behavioural factors
in improvement programs
Practical advice on benchmarking

4. Benchmarking: definition
The search for industry best practices that
lead to superior performance
An ongoing activity to continually challenge
current practices
For FM and Property Services:
◦ Typically seeking efficiency and effectiveness in
service inputs and outputs

5. Superior Performance: efficiency
Production of outcomes via efficient
combinations of:
Costs
Staff (numbers & skills)
Technology & Processes
Outsourcing

6. Superior Performance: effectiveness
Achieving service satisfaction via
effective delivery that meets:
Needs
Priorities
Customer Value

7. Efficiency & Effectiveness
The Hackett Group: “enabling world class performance”

8. 1. Identifying the Need for Change

9. Your Need to Change?
Opportunities:
◦ market growth, new customers?
Weaknesses:
◦ poor service, low margins?
Threats:
losing clients, new competitors?

10. What to Improve?
Objective:
◦ input efficiency + outcome effectiveness
Improvement Frameworks:
◦ Financial Models:
examination of performance ratios
◦ Business Excellence Models:
examination of performance drivers

11. Financial Models
ROI
Net
Profits
Assets
Sales Expenses Fixed Working
assets capital
Property Stock
Plant Debtors
Price Volume Cost Usage Equipment Cash
Existing Labour
& new Materials
services Overheads
Reid & Middleton: “The Meaning of Company Accounts”

12. Business Excellence Models
“Baldrige Criteria for Performance Excellence”: Baldrige
National Quality Program

13. Benchmark Comparisons:
Objective:
◦ new methods, ideas and approaches; and
◦ demonstrating that they work elsewhere
Select leaders in:
◦ your sector and/or
◦ your functions requiring change

14. Benchmarks: information sources
Industry Associations:
◦ including BOMA, PCA, IFMA, APPA
Professional Associations:
◦ including RICS, API, IREM
Benchmarking Services:
◦ property advisory; incl. JLL, Colliers, RLB, DLA
◦ benchmarking advisory; incl. Hackett Group,
Corporate Board

15. Identifying the Need for Change
Your need to change?
What to improve?
Who to benchmark?

16. 2. Applying Appropriate Benchmarks

17. Determining Performance Gaps
Sample measures: Services
◦ Clients: satisfaction, perceived value
◦ Financial: unit costs, cost ratios
◦ Productivity: service volume, throughput
◦ Time: time to respond, time to serve
◦ Technology: utilisation, concentration
◦ Resource mix: in-house v. outsourced
◦ Staffing: staff numbers, staff skill levels

18. Determining Performance Gaps
Sample measures: Facility Mgt
◦ Clients: satisfaction ratings
◦ Financial: operating expenditure, capital
renewal expenditure, costs per sq m
◦ Internal Processes: staff per sq m,
response times
◦ Skills Development: training time &
investment

19. Determining Performance Gaps
Sample comparators:
◦ Sector Leaders:
General: Dow Jones REIT
Specific: Tishman Speyer, Westfield, ING, etc
◦ Functional Leaders:
General: Dow Jones Industrials, FTSE 100
Specific: AT&T, Deutsche, GE, HP, Pfizer, etc

20. Determining Performance Gaps
Agreed
benchmark
Performance Gap Agree:
1. What to measure
2. Best practice
Your
comparator
current
performance 3. Current performance

21. Understanding the Gaps
Performance gap: Current Performance
Customer Focus
◦ Lack of attention?
◦ Lack of knowledge? Information Management
◦ Lack of investment? Process Efficiency
◦ Complex processes? Workforce Skills
◦ Lower skills?
Future Performance

22. Setting Priorities
Choose the targets which are:
◦ easiest to implement
◦ provide the greatest benefit
Take account of:
◦ alignment to business strategy
◦ business impact & payback
◦ cultural & technical environment
◦ risk

23. Agreeing Performance Targets
Best Practice:
◦ may not be achievable easily
◦ acknowledge the limiting factors
Limiting Factors:
◦ available funds
◦ available time
◦ ability or willingness to change

24. Agreeing Performance Targets
Reaching agreement:
◦ agree the future operating “vision”
◦ apply the “SMART” test to the targets:
◦ Specific
◦ Measurable
◦ Achievable
◦ Realistic
◦ Timely

25. 2. Applying Appropriate Benchmarks
Performance gaps determined?
Priorities established?
Performance targets agreed?

26. 3. Implementing Improvement Programs

27. Choices
Implementation: line management v.
program management
Resources: internal v. external
Leadership & communication:
maintaining commitment to improve

28. Implementation
Line Management:
◦ staff understand the process
◦ easiest for single dept. efficiency programs
Program Management
◦ additional resources
◦ good for cross-dept improvements
Hybrid:
◦ mix internal project teams with PMO co-ordination

29. PMO & Project Teams
Approvals &
Team / PMO Board / Sponsors
implementation
recommendations
PMO
(co-ordination)
Cross-functional Cross-functional Cross-functional
team 1 team 2 team 3
Existing Business Units
(agreed benchmarks)

30. Resources
Often another limiting factor:
Internal resources:
◦ may not have sufficient implementation skills
◦ transfer can impact core business
External resources:
◦ application of specialist skills
◦ often more expensive; be clear on their scope

31. Leadership & Commitment
Leadership:
◦ sufficient, credible participants
◦ acknowledged expertise and authority
◦ commitment to long term success
Communication:
◦ clear message of “what, when, how and why”
◦ don’t rely on one big announcement
◦ ongoing progress and achievements

32. Implementing Improvement Programs
Agreement on implementation?
Agreement on resources?
Committed leadership?

33. 4. Sustaining the Gains

34. Sustaining the Gains
Meeting the benchmark targets and
integrating the new practices requires:
◦ correct structures, skills and motivation
◦ systems for comprehensive measurement
◦ embedding continuous improvement

35. Structures, Skills & Motivation
Targets
Defined roles &
responsibilities Organisational Job Design
Structure
Skills & capabilities
Incentives Training
Rewards &
consequences
Results

36. Measurement Systems
Measuring results
Corrective Target
Action Setting
Assessing
performance
Adjusting the Performance
Interpret
business model
Feedback
Results

37. Continuous Improvement
Ongoing
benchmarking Bench-
mark
Feed into planning
& budgeting Improve
Re-calibrate
Plan Budget
targets and
improvements

38. Sustaining the Gains
Structures and skills?
Comprehensive measures?
Continuous improvement?

39. Case Study
University of Sydney:
achieving world class service

40. Situation
◦ Need for “world class service” (from FM, Finance,
IT, HR, Procurement, etc) to support the academic,
core business
◦ Service provided via 11 business units, almost
3,000 staff, A$300m p.a. spend
◦ Historically, no agreed service standards and no
benchmarks to measure against
◦ Fragmented service structure

41. Benchmarking Need
Poor service Long term University’s
reputation
goals Strategic Plan
Need for targets
Service targets “World Class
Need for
Service”
objectivity
Independent, External
authoritative Benchmarks
advice

42. Example: resources & time
Staff Time Allocation by Process Groups
Resource Allocation
43.5
12%
37.2
27.9
24.0 23.8
53%
15.0
31%
6.8
1.3 0.9
4%
GA
Ta
Bu
M
Tr
Co
Pl
Ca
Re
gm
an
ea
x
m
si
sh
ve
Transaction Processing
an
M
ni
su
ne
pl
ta
nu
Di
gm
d
ng
ian
ss
ry
nd
e
Re
sb
Control and Risk Management
t
Cy
ce
Mg
An
ur
Ad
po
cle
se
m
M
aly
rti
Planning and Strategy
m
t
gm
m
ng
in
si
en
s
t
Management and Administration FTEs = 180.4
ts
Sample data only

43. Example: cost & FTEs
Functional Cost as a Percent of FTEs per Billion of Revenue
Revenue
1.22% 103.6
1.180%
0.07%
0.13%
0.06%
86.5
0.03%
0.23%
0.10%
0.610%
0.06%
1.06% 0.08%
43.6
0.05%
0.72%
0.42%
Univ of Sydney Peer Group World-Class
Labor Outsourcing Technology Other Univ of Sydney Peer Group World-Class
Sample data only

44. Benchmarking Program
Use of external External, Hackett Group
benchmarking
functional advisory
benchmarks programs
service; Hackett
2nd / 3rd quartile Performance Benchmarking
performance gaps identified x 11 business
units
$30m to $40m of
productivity gains Targets & Agreed future
gains performance

45. Benchmarking Program: next steps
Program Management Office
Client satisfaction surveys
(effectiveness)
External resources
Budgets and timing

46. Applying Global Benchmarks to
Facility Management & Services
Questions?

47. Applying Global Benchmarks to
Facility Management & Services
Thank you