This document discusses the need for performance measurement systems in facilities management and identifies problems with current approaches. It proposes a conceptual framework for facilities management performance measurement that is based on existing theory. Key elements of the framework include linking measurement to organizational strategy, promoting integration across departments, ensuring the system is dynamic and can adapt to changes, and making measures transparent and focused on improvement. The framework is intended to address issues like a lack of strategic focus, difficulty implementing measures, and an overemphasis on financial metrics in current approaches.

1. A conceptual
framework
171
Property Management
Vol. 21 No. 2, 2003
pp. 171-189
# MCB UP Limited
0263-7472
DOI 10.1108/02637470310478909
A conceptual framework to
measure facilities
management performance
Dilanthi Amaratunga and David Baldry
School of Construction and Property Management,
The University of Salford, Salford, UK
Keywords Facilities management, Performance measurement
Abstract This paper concerns the measurement of facilities management performance.
Empirical research carried out indicates that facilities management appears to utilise a wide
range of measures ± not only traditional financial accounting measures, but also indicators of
managerial behaviour as well as various other measures of effectiveness. Considers the basis for
measurement of performance in facilities management with reference to a conceptual framework
identified by taking into consideration the advantages and some of the drawbacks with current
performance measurement systems.
The need for performance measurement systems in facilities
management
Through supporting one or more of the measurement functions, a performance
measurement system may contribute to better goal attainment by an
organisation. It has been widely accepted that performance measurement could
contribute to more effective control through giving insights as to whether, and
if so which, control mechanisms to chose (Neely, 1998). Several authors have
discussed different measurement procedures in more detail, and attempted to
structure them in a taxonomy of performance measurement functions (Kaplan
and Norton, 1996; Lynch and Cross, 1995; Ghalayini and Noble, 1996;
Kennerley and Neely, 2000; Dixon et al., 1990; Pritchard 1990; Fitzgerald et al.,
1991; Bititci et al., 2000).
The contribution made by facilities management (FM) will be judged by an
organisation's stakeholders over a wide range of performance criteria including
the hard metrics of finance and economics. FM is seen to be able to contribute to
performance of organisations in many ways, including strategy, culture,
control of resources, service delivery, supply chain management and, perhaps
most importantly, the management of change. Quality, value and the
management of risk emerge as significant factors. Thus, the broad
management need for performance measurement can be interpreted in an FM
context.
There has been a growing interest in performance measurement throughout
FM. For the economic health of the organisation, the senior management at the
core of the business will want to know the performance of facilities. Much work
has been done to measure FM performance, but it often ignores the influences
of erratic patterns of reinvestment in building fabric and components which
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-7472.htm

2. PM
21,2
172
can add as much as 25 per cent to the cost of running a building (Kincaid,
1994a). Alexander (1996) identifies measurement of performance as one of
``three essential issues for the effective implementation of a facilities strategy''.
Many writers have mentioned that they were still struggling with the issues
of what are actually the most meaningful measures and how to measure them
(Hinks and McNay, 1999; Douglas, 1994; Williams, 1999). For example,
Waddell, Managing Director of the Corporate FM Resources in Melbourne,
noted:
. . . that there are three key issues which FM in all parts of the world must address. These
issues are: the impact of global service provision and global contracts, the future of
outsourcing, and the practice of performance measurement.
Findings by Varcoe (1993; 1996a, b; 1998), based on opportunities of
performance measurement within FM, corroborate this comment, both with
respect to the growing necessity of performance measurement and the limited
knowledge in this area. FM processes are pressurised and becoming more and
more complex, and FM managers are at the same time required by senior
managers to become more accountable for FM's contribution to business
results. Thus performance measurement is becoming increasingly important,
both for reasons of justification to general management and to support
management and practice within the FM organisation. However, a large
majority of academic papers reported that currently, within their FM group,
knowledge of FM performance measurement is limited (Varcoe, 1996a, b;
Simpson, 1998; Then, 1996; Barrett, 1995).
Requirements of a performance measurement system
Performance measurement has already been described as a process of
assessing progress towards achieving pre-determined goals, including
information on the efficiency by which resources are transformed into goods
and services, the quality of those outputs and outcomes, and the effectiveness
of organisational operations in terms of their specific contributions to
organisational objectives. The measurement of performance is one of the most
prominent features of modern life, extending as it does through politics,
economics, business, education and sport (Kincaid, 1994b). Allied to this has
been a more widespread desire amongst organisations to know that their
facilities provide a value-for-money working environment. In 1991, Eccles
predicted:
Within the next five years, every organisation will have to redesign how it measures its
business performance (Eccles, 1991).
Given the current levels of activity in the field, it appears that Eccles's assertion
was fair.
The need for information to stimulate appropriate action and organisational
learning at the right level of the organisation and stage of the decision-making
process emphasises the need for effective performance measurement (Brignall
and Ballantine, 1996). It was emphasised that in a competitive environment

3. A conceptual
framework
173
management-by-exception may suffice so interactive systems may not be
needed. In general, professional services face more volatile and uncertain
external environments than mass services, and are therefore more likely to
need interactive performance measurements.
The growing acceptance of a need to measure FM performance is in contrast
to a lack of a systematic process for determining appropriate measurements. In
contrast, FM is too complex a subject for a few measurements to satisfy all
needs. However, if FM is viewed as a process, performance measurement can
be effectively determined (Amaratunga and Baldry, 2000).
Problems with current performance measurement systems
In the last decade, there has been growing criticism of traditional performance
measures as too narrowly focused on financial measures (Olve et al., 1999). The
reason is that conditions today are no longer the same as when traditional
management control emerged. An attempt has been made below to summarise
some of the views advanced in this debate:
. Criticism of traditional management control (Brown and Laverick, 1994;
Stone, 1996; Letza, 1996; Rangone, 1997; Neely, 1998).
. Need to represent non-financial measures (Olve et al., 1999; Ernst &
Young, 1998).
. Lack of prescription on how to implement the measures (Olve et al., 1999;
McFadzean, 1995).
. Lack of strategic focus (Hally, 1994).
Furthermore, Holloway et al. (1999) highlight some key problem themes:
. The priority areas of strategic importance to the organisation to target
for performance measurement systems may be strongly contested.
. Selecting relevant and valid approaches that are so culturally and
politically acceptable to the organisation can be highly problematic.
. The provision of resources for systematic implementation can be
resisted from above and below.
. What works well in some organisations may fail to deliver in apparently
similar ones.
. Evaluation of performance measurement activities is often constrained
by a lack of understanding of causal links between performance
measurement and performance improvement.
These issues are rarely acknowledged in literature (Holloway, 2000). Choosing
appropriate approaches to performance measurement for the needs of the
organisation, implementing them systematically, and evaluating their impacts
are some of the processes that managers have to grapple with while being
under increasing pressure to deliver optimum performance.

4. PM
21,2
174
In this context, in addressing performance measurement issues in FM
environments, it is necessary to incorporate measures so that above mentioned
drawbacks may be capable of being addressed.
Possible direction of facilities management performance
measurement systems
This section encourages a more theoretically-informed approach to
performance measurement in FM research based on the above identified
problems. In this context, this section identifies some priority areas to be
considered.
The relationship between a strategy and a measurement system
Performance measurement has been already described as a process of
assessing the progress towards achieving pre-determined goals, including
information on the efficiency with which resources are transformed into goods
and services, the quality of those outputs and outcomes, and the effectiveness
of organisational operations in terms of their specific contributions to
organisational objectives.
Performance management on the other hand describes the use of
performance measurement information to effect positive change in
organisational cultures, systems and processes, by helping to set agreed
performance goals, allocating and prioritising resources, informing managers
either to confirm or change current policy or directions to meet those goals, and
sharing results of performance in pursuing goals, thus emphasising the
relationship between the strategy and the measurement system (Procurement
Executives' Association, 1998). A leading-edge organisation seeks to create an
efficient and effective performance management system to (Procurement
Executives' Association, 1998):
. translate organisational vision into clear measurable outcomes that
define success, and that are shared throughout the organisation and
with customers and stakeholders;
. provide a tool for assessing, managing and improving the overall health
and success of business systems;
. continue to shift from perspective, audit and compliance-based
oversight to an ongoing, forward-looking strategic partnership;
. include measures of quality, cost, speed, customer service, and employee
alignment, motivation, and skills to provide an in-depth, predictive
performance management system; and
. replace existing assessment models with a consistent approach to
performance management.
Leading organisations agree on the need for a performance management
system, which is a structured methodology for using performance

5. A conceptual
framework
175
measurement information to help set agreed-upon performance goals, allocate
and prioritise resources, inform managers either to confirm or change correct
policy or programme direction to meet those goals, and report on the success in
meeting those goals, thereby creating links between the organisational strategy
and its measurement system.
The need for integration
Integration refers to the ability of the performance measurement system to
promote integration between various areas of the business (Bititci et al., 1997).
Therefore, the FM organisation as the player of the supporting role for the core
business needs to identify how it could be integrated with other departments
within the core organisation. Lawrence and Lorsch (1967), in their research to
study differentiation and integration in organisations, measured the
effectiveness of integration by asking respondents for their evaluation of the
state of interdepartmental relations. Kehoe et al. (1992) discuss the
measurement of integration and focus on the information systems. The work
described considers the quality of information systems as a key aspect of
integration. By referring to the above ideas, integration in the field of FM has to
address the following two key areas:
(1) A best practice performance measurement framework should represent/
stipulate the criteria the FM organisation should fulfil to be fully
integrated with the rest of the organisation.
(2) The measurement framework should represent the core organisation's
position and therefore progress towards organisation-wide integration.
Need for a dynamic performance measurement system
The performance of FM is only of relevance to an organisation if it is viewed
within the context of the overall achievement and success of the core business.
The criteria by which the performance of the organisation is judged by its
stakeholders are ultimately the criteria by which the contribution of FM will be
judged.
Bititci et al. (2000) identify that the performance measurement system needs
to be dynamic by:
. being sensitive to changes in the external and internal environment of
the organisation;
. reviewing and reprioritising internal objectives when the changes in the
external and internal environment are significant enough;
. deploying the changes to internal objectives and priorities to critical
parts of the organisation, thus ensuring alignment at all times; and
. ensuring that gains achieved through improvement programmes are
maintained.

6. PM
21,2
176
Other relevant issues
Lea and Parker (1989), Hall et al. (1991), and Atkinson and Brown (2001),
suggest that performance should be transparent and should:
. be simple to understand;
. should have visual impact;
. be focused on improvement rather than variance; and
. be visible to all.
Globerson (1985) recommends that measures should:
. be derived from strategy;
. provide timely and accurate feedback;
. relate to specific, stretching, but achievable goals (targets);
. be based on quantities that can be influenced, or controlled, by the user
alone or the user in co-operation with others; and
. be clearly defined.
With reference to issues needed to be considered in developing theory in
performance measurement issues relating to FM organisations, the following
could be identified as some of the important issues:
. Performance measurement in FM should be based upon how useful FM
is to the business.
. The measurement of the whole of the FM function should be involved
rather than merely summing the parts.
. The challenge of measuring what is really important and not continuing
the mistake of placing the emphasis on the importance of measurement.
Developing new theories in facilities management performance
measurement ± is there a necessity to bring in existing theory?
According to Nieto and Perez (2000), the theoretical framework of any research
undertaken should be taken into consideration for two reasons:
(1) the study should benefit from previous scientific contributions; and
(2) the starting point of the empirical research is going to be an initial
combination of factors and its assumed relationship with the
phenomenon studied, resulting in a wide bibliographical revision.
The first reason implies the need for an in-depth bibliographical revision that
makes clear the current state of art, as well as the contribution and gaps,
suggestions, recommendations etc. In accordance with the second idea,
Eisenhardt (1989), points out that when the objective of an investigation is to
generate theory, it is very useful to have a previous combination of variables or
elements. In this way, if these elements contribute significantly through
developing new theories addressing performance measurement issues in FM,

7. A conceptual
framework
177
the empirical base of resulting theory will grow. In this sense, previous studies
as a resource of suggestions for the elaboration of the elements will be the
starting point of the analysis. Figure 1 outlines this concept (adapted from
Eisenhardt, 1989).
According to Santos (1999), an explicit ``theoretical framework'' is the logic
and necessary steps used in making sense of integrating and re-arranging the
ideas. Without such a framework, it is virtually impossible to codify existing
knowledge in the field in a coherent manner. According to Litchfield (1956,
cited in Santos, 1999), a theoretical framework can help the researcher discern
the gaps between existing knowledge and ongoing research or their own
individual needs. It is particularly important to identify such theoretical
concepts because of the growing volume of cross-field/national/international
research. Globalisation has brought a strong need for common theoretical
terms, definitions and a coherent structure in order to allow better
communication, and the more precise detection of gaps within the existing
knowledge of the performance measurement theory and practice across regions
and nations.
One of the major problems with conventional performance measurement is
the ease with which organisational totalities are carved up, and their
interactions with their environments (Holloway, 2000). This reductionism is
associated with some of the problems experienced by managers when they seek
to improve performance. Stepping back and viewing organisational
performance in a more integrated way would seem intrinsically desirable and
potentially useful to practitioners. Many bodies of theory have a contribution to
make and some examples are presented above. Issues already raised with
reference to bringing in a theoretical framework in this research could be
summarised as follows:
. Owing to the above identified problems associated with performance
measurements, bringing in theory is appropriate to use as the basis for
building up the required concepts.
Figure 1.
The role of the
theoretical framework

8. PM
21,2
178
. To explain experiences in performance measurement.
. To explore effectiveness of performance measurement.
. To improve efficient use of resources.
. To increase the benefits of performance measurement for stakeholders.
The conceptual framework
There has been much discussion about the amount of conceptual content or
structure used to guide the initial stages of an investigation in question
(Eisenhardt, 1989; Strauss and Corbin, 1990; Glaser, 1992; Miles and Huberman,
1994). There are two extreme positions (Strauss and Corbin, 1990):
(1) Effectiveness, where pre-conceived notions are minimised and the
researcher is maximally sensitive to concepts arising purely from the
data; this implies a research design with little pre-defined structure.
(2) Efficiency, where pre-conceived notions are used to focus the research
and maximum benefit is gained from scarce research resources; this
implies a research design with some kind of pre-defined structure.
An effective research approach may involve prolonged periods in the field
collecting huge amounts of data (Strauss and Corbin, 1990; Glaser, 1992). On
the other hand, an efficient approach may limit the researcher's ability to
respond flexibly to themes and insights that emerge from the data.
Accordingly, a researcher should strive to reach a balance between these two
extremes (Marshall and Rossman, 1995), which is the theme behind identifying
a theoretical framework for the research under consideration in this thesis.
How to bring in theory
It is necessary to articulate an overall theory in order to set up a ``theoretical
framework'' to represent the best practice in performance measurement in FM.
According to Remenyi et al. (1998), without the discipline of a theory this can
easily degenerate into an anecdotal story. In this context, a detailed theoretical
framework is initiated from the outset of the empirical work. The literature
review supporting this theoretical framework coves the performance
measurement field in general, with a particular focus on the FM-related
material. The theoretical framework evolves alongside the data collection since
the observation of practice drives the researcher to bring it closer to the kind of
problems encountered in practice. Issues under consideration relating to ``how
to bring in theory'' could be summarised as listed below:
. examine existing frameworks;
. study practices;
. look for theoretical explanations; and
. identify potentially useful theories and compare them with practice.

9. A conceptual
framework
179
Setting up a theoretical structure based on existing literature and knowledge is
a challenging task if it takes fully into consideration the complexity and eclectic
content of existing performance measurement theories. Therefore, the strategy
adopted in this context in understanding and developing the theoretical
framework has been the classification and structuring of the core ideas
underpinning the current performance measurement theories. The next section
describes this strategy in some detail.
Positioning the theoretical framework
Making a set of observations leads to the development of new concepts or a
new theory (De Vaus, 1991). Any attempt to make sense of a set of observations
will often use existing concepts and theories. If concepts and theories developed
by others seem like reasonable summaries or accounts of what the research is
looking for, then such concepts could be used as a basis for carrying out the
research. A major problem in using existing theories is that the researcher may
not be open to equally plausible interpretations of the observations. The
problem is not so much in using existing concepts but in the level of
commitment to them and in failing to examine whether they are the most
appropriate ones. When committed to a model, a researcher might ignore
equally plausible alternative explanations and see everything as yet further
evidence for the model. This is very much against the spirit of the theory
construction approach where the aim is to let the concepts and ideas emerge
from observations (De Vaus, 1991). Therefore, it is important to consider the
commitments, biases and values when the observations are interpreted. Based
on these arguments, the following section presents the core concepts that will
be used as the driving force behind the theory development.
Introduction to core concepts
Based on the detailed literature review carried out in performance
measurement in general together with its associated problems, and particularly
with reference to FM, this research identifies the following concepts as the
leader in performance measurement and management in an attempt to identify
an assessment methodology for FM organisational processes. As described in
the preceding sections, these concepts identify critical success factors for
improving organisational processes, and develop performance measures within
their boundaries.
The four principles chosen for this purpose are among the most frequently-
mentioned in the performance measurement literature and they seem to be
more directly connected with the key problems faced within FM organisations.
Furthermore, the amount of literature available covering these principles
suggests the existence of a reasonable theoretical maturity. In addition, these
principles seem to be strongly independent, which could make the integration
of practices more interesting.
The approach described in this paper was built around the theoretical
concepts identified below and was built on theory and practice by combining

10. PM
21,2
180
concepts such as Kaplan and Norton's (1996) ``balanced scorecard'', Neely et al.'s
(2000) ``performance prism'', etc. The close links that the performance
measurement theory developed for FM has with these different types of well-
used performance measurement systems, particularly with the Balanced
Scorecard concept, increased the validity of the suggested theoretical
framework.
Measurements of customer relations
Description
In the past, organisations could concentrate on their internal capabilities,
emphasising product performance and technology innovation (Kaplan and
Norton, 1996). But organisations that did not understand their customers' needs
eventually found that competitors could make inroads by offering products or
services better aligned to their customers' preferences.
Many FM organisations today have a mission focused on the customer, and
how the organisation is performing in the light of its customers' perspective
has become a priority for senior management (adapted from Kaplan and
Norton, 1996). Kaplan and Norton's balanced scorecard emphasises this
requirement. How the FM organisation is performing through the eyes of its
customers has therefore become a priority issue for facilities managers. This
captures the ability of the organisation to provide quality goods and services,
the effectiveness of their delivery, and overall customer service and satisfaction
(Procurement Executives' Association, 1998). It places importance on the
organisation's ability to achieve its vision, and how it wants to be seen by its
customers.
Practical implications
Customer-related performance measures describe the way in which value may
be created for customers and how customer demand for this value is to be
satisfied. As already noted, customer relations represents a significant area of
concern for facilities managers and indicates a need for performance
measures that can adequately reflect important customer-oriented factors.
Customers' concerns tend to fall into four categories: time, quality,
performance and service (Kaplan and Norton, 1992) and consist of measures
relating to the most desired customer requirements. This part of the process is
considered as the heart of the organisation. If the organisation fails to deliver
the right products and services for cost effectively satisfying customer needs
on the both short- and long-term, revenue will not be generated, and the
business will wither and die.
Discussion
Facilities managers should have a clear idea of their customer and business
segments, and should select a set of core outcome measurements for those
targeted segments. These outcome measures should represent the targets for
an FM organisation's product and service development process.

11. A conceptual
framework
181
Measurements of facilities management internal processes
Description
The internal processes report on the efficiency of internal organisational
processes and procedures, and reflect the organisation's core skills and the
critical technology involved in adding value to the business. This perspective is
primarily an analysis of the organisation's internal processes, which focuses on
the internal business results that lead to financial success and the satisfaction
of customers' expectations (Olve et al., 1999). This involves describing all
organisational processes from the analysis of customer needs through delivery
of the product/service and identification of the resources and capabilities which
the organisation needs to upgrade. These can include both short-term and long-
term objectives as well as incorporating innovative process development in
order to stimulate improvement.
The critical internal business processes enable the FM organisation to
satisfy stakeholder expectations, including excellent financial returns.
Therefore, the measures should be focused on the internal processes that will
have the greatest impact on customer satisfaction and achieve the
organisation's financial objectives.
Internal process measurements reveal two fundamental differences
between the ``traditional'' and ``measures incorporating non-financial
elements'' approach to performance measurement. Traditional approaches,
attempt to monitor and improve existing business processes, whereas an
approach incorporating business process measurements will usually identify
entirely new processes at which the organisation must excell to meet
customer and financial objectives. Thus internal business process objectives
highlight the processes most critical for the organisation's strategy to
succeed.
Practical implications
Customer-based measures are important, but they must be translated into
measures of what the organisation must do internally to meet its customers'
expectations. Therefore, managers need to focus on those critical internal
business operations that enable them to satisfy customer needs (Kaplan and
Norton, 1996). Key processes are monitored to ensure that outcomes will be
satisfactory. Organisations should decide which processes and competencies
they must excell at and specify measures for each.
Discussion
Conventional performance measurement systems focus only on monitoring and
improving cost, quality, and time-based measures of existing business
processes. In contrast, there is a need for an approach to measure performance,
which enables demand for internal process performance to be derived from the
expectations of specific external constituencies. Managers need to decide which
operations, processes, competencies and skills their organisations must excell
at if customer demands are to be met adequately. Moreover, it is essential that

12. PM
21,2
182
such internal measures relate to those areas which are most likely to have the
greatest impact on customer satisfaction.
Measurements relating to learning and growth
Description
Learning and growth issues identify the infrastructure that the organisation
must build to create long-term growth and improvement (Kaplan and Norton,
1996). This looks at the ability of employees, the quality of information
systems, and the effects of organisational alignment in supporting
accomplishment of organisational goals (Procurement Executives' Association,
1998), and enables the organisation to ensure its capacity for long-term
renewal, a prerequisite for survival in the long-run. Accordingly, the FM
organisation should consider not only what it must do to maintain and develop
the know-how required for understanding the customer needs, but also how it
can sustain the necessary efficiency and productivity of the processes.
Practical implications
Managers in several FM organisations have noted that when they were
evaluated solely on short-term financial performance, they often found it
difficult to sustain investments to enhance the capability of their people,
systems, and organisational processes. The predominant element within
learning and growth issues is whether FM organisations can continue to
improve and create future value for their stakeholders. Expenditures on such
investments are treated as period expenses by the financial accounting model
so that cutbacks in these investments are an easy way to produce incremental
short-term earnings (Kaplan and Norton, 1996). The adverse long-term
consequences of consistent failure to enhance employee, systems, and
organisational capabilities will not show up in the short run, and when they do,
these managers reason, it may be on somebody else's ``watch'' (Kaplan and
Norton, 1996).
Therefore, process will only succeed if adequately skilled and motivated
employees, supplied with accurate and timely information, are driving them
(Procurement Executives' Association, 1998). This takes on increased
importance in organisations that are undergoing radical change, like FM. The
organisational learning and growth comes from three sources: people, systems
and organisational procedures. It is this structure within which long-term
growth and improvement reside.
Discussion
Ultimately, the ability to meet ambitious targets for financial, customer, and
internal process objectives depends on the organisational capabilities for
learning and growth. The customer and internal processes will have focused on
the organisation's current competitive position. Issues relating to learning and
growth are required in order to recognise that this is constantly changing.
Intense global competition requires that organisations make continual

13. A conceptual
framework
183
improvements to their existing processes and have the ability to introduce
entirely new processes with expanded capabilities (Kaplan and Norton, 1996).
Strategies for superior performance will generally require significant
investment in people, systems, and processes that build organisational
capabilities. The organisation, its management, and all of its employees must
continually seek to learn, to innovate and to improve every aspect of the
organisation and its business just to maintain their competitive situation, let
alone to improve it in the future.
If FM organisations are to be successful ± and, it is to be hoped, remain
successful ± they must continually make improvements both to their existing
services and to their operations and processes, as well as developing and
introducing new ones. It is only by this continual process of improvement and
innovation that FM organisations can grow.
Measurement of financial implications
Description
The financial performance measures define the long-term objectives of the
business unit (Kaplan and Norton, 1992) and provide superior returns based on
the capital invested (Kaplan and Norton, 1996). They indicate whether the
organisation's strategy, implementation, and execution are contributing to
bottom-line improvement. A well-designed financial control system can
actually enhance an organisation's management system. The measures chosen
will represent the relevant stage in the product or service life cycle as
summarised by Kaplan and Norton (1996), and enable senior executives of
business units to specify not only the metric by which the long-term success of
the enterprise will be evaluated, but also the variables considered most
important to create and to drive the long-term outcome objectives (Kaplan and
Norton, 1996).
Practical implications
In the government or non-governmental arena, the ``financial'' considerations
differ from those of the traditional private sector (Procurement Executives'
Association, 1998). Private sector financial objectives generally represent clear
long-range targets for profit-seeking organisations, operating in a purely
commercial environment. Financial considerations for public organisations
have an enabling or a constraining role, but will rarely be the primary objective
for business systems. Success for public organisations should therefore be
measured by how effectively and efficiently they meet the needs of their
constituencies.
Discussion
Many have criticised financial measures because of their inability to reflect
contemporary value creating actions (Olve et al., 1999). Some critics go much
further in their indictment of financial measures. They argue that the terms of
competition have changed over time and that traditional financial measures do

14. PM
21,2
184
not improve customer satisfaction, quality, timeliness and employee
motivation. In their view, financial performance is the result of operational
actions, and financial success should be the logical consequence of doing the
fundamentals well. While most organisations will emphasise profitability
objectives, other financial objectives are also possible. A well-designed
financial control system can actually enhance management planning, control
and decision-making. Moreover, they can serve to remind the management that
any changes they seek to make ± for instance in service quality ± will only
ultimately benefit their organisation if they lead to improvements in the overall
``bottom-line'' view of their organisation.
Strategic performance measurement ± linking measurements to
strategy
Description
Over 90 per cent of organisations have not effectively aligned their strategy at
all levels of the organisation (Fortune Magazine, 1997). The result represents an
organisation that is not operating at maximum efficiency, typically leading to
less than optimal performance as well as missed opportunities. Therefore,
performance measurement in general should attempt to address a key
management issue: that organisations often fail to turn strategy into action
(Neely, 1998). The objective of any performance measurement should be to
motivate all managers and employees to implement successfully the business
unit's strategy (Kaplan and Norton, 1996). Those organisations that can
translate their strategy into their measurement system are far better able to
execute their strategy because they can communicate their objectives and their
targets. This communication focuses managers and employees on the critical
drivers, enabling them to align investments, initiatives, and actions with
accomplishing strategic goals.
Practical implications
A clear, action-oriented understanding of an organisation's strategy could
significantly influence an organisation's success. A major task facing an
organisation in attempting to introduce a balanced performance measurement
system, incorporating both financial and non-financial measures, is how to
devise a set of measures explicitly linked to its strategy. Underlying this need is
the essential condition that the strategy is widely understood and accepted
within the organisation.
Discussion
In Simons' (1990) criticism of strategic control systems, he relies on the
definitions put forward by Schendel and Hofer (1979) who state that strategic
control ``focuses on whether the strategy is being implemented as planned, and
the results produced by the strategy are those intended'' and by Lorange et al.
(1986) who define a strategic control system as:

15. A conceptual
framework
185
. . . a system to support managers in assessing the relevance of an organisation's strategy to
its progress in the accomplishment of its goals and, where discrepancies exist, to support
areas needing attention.
As Simons (1990) points out, these definitions lead to a perception of strategic
control systems as a process for keeping strategies on track and essentially
parallel strategy formation of planning and strategy implementation with
control.
Further, Simons (1990) argues that top management will place the emphasis
on the particular type of system that:
. . . addresses the critical uncertainties that top managers perceive could threaten the
achievement of their vision for the future.
suggesting that only one of these systems will be the focus of management
attention at any one time. He also stresses the importance of identifying new
ways of planning and control and their relations with strategy. The traditional
view of planning and control and their relations with strategy formation and
implementation with that of the process identified in this thesis are
demonstrated in Figure 2.
The performance measurement systems that will be developed for an FM
organisation based on the concepts identified above, contains elements of a
boundary control system in that it evolves from the vision, mission and
strategic goals of the organisation. Its theoretical concepts depict limits in the
organisation as it encourages employees to focus their attention on the key
aspects of the business.
Prospects of the theoretical framework
In an attempt to promote a more holistic interpretation and view of facilities
performance, the theoretical framework identified in previous sections affords a
number of perspectives that go beyond the hard metrics of finance, economics,
market share, and productivity, which head the agenda in so many FM
Figure 2.
A comparison of the
traditional view of the
relationship between
strategy and planning
and control with that of
current research

16. PM
21,2
186
organisations today. The transcendent nature of FM offers opportunities for
facilities performance links to be established at all levels and across the entire
width of the organisation (Madeley, 1996). This profile, which FM occupies
within the organisation, is dependent upon the perceived impact of its
performance and its direct relevance to a particular business. Even those
organisations which are less dependent on facilities for their operation will
benefit to some degree. Therefore, the framework of elements already outlined
in the above sections is proposed as a suitable means by which facilities
performance may be seen to impact directly and indirectly upon the wider
aspects of organisational performance, underpinning sustainable success and
requiring appropriate attention and recognition.
Summary
In order to enable paradigm shifts, it is important to understand concepts
underlying the theory and practice of performance measurement. This section
sets out to examine a range of concepts that may be used to measure the
contribution of FM performance. These concepts were based on the premise
that relationships or links between FM and organisational performance are
seen to be determined by the relevance of facilities to the core business
operations.
The theoretical framework identified in this section acts for the research
rather like a structural steel or reinforced concrete frame used in a building, as
identified by Fellows and Liu (1997). It is essential that theories themselves be
subject to the rigour of analysis. Bodies of theory must be examined and
evaluated to arrive at a theoretical basis or framework appropriate to the
research proposed. It may not be possible to decide the logical body of theory to
use from the description of theory provided, and it will not be possible to weigh
alternative and possibly competing theories (Fellows and Liu, 1997). It is
debatable whether competing theories can constitute basic ``principles and
laws'', or whether they are perspectives and beliefs which give rise to partly-
supported hypotheses. Therefore, the theoretical framework acts as the basic
structural framework to identify and explain facts and the relationships
between them.
The usefulness of the above identified theoretical concepts and their
practical validity need to be tested in real life contexts, in order to understand
their contribution in developing performance measurement theories in FM by
fully addressing the problems associated with current available systems and
possible directions of performance measurement systems in order to address
such associated problems.
References
Alexander, K. (1996), Facilities Management Practice, Centre for Facilities Management,
University of Strathclyde, Strathclyde.
Amaratunga, D. and Baldry, D. (2000), ``Assessment of facilities management performance ±
what next?'', Facilities, Vol. 18 No. 1/2, pp. 66-76.

17. A conceptual
framework
187
Atkinson, H. and Brown, J.B. (2001), ``Rethinking performance measures: assessing progress in
UK hotels'', International Journal of Contemporary Hospitality Management, Vol. 13 No. 3,
pp. 128-35.
Barrett, P. (1995), Facilities Management: Towards Best Practice, Blackwell Science, London.
Bititci, U.S., Carrie, A.S. and Mcdevitt, L. (1997), ``Integrate performance measurement systems: a
development guide'', International Journal of Operations & Production Management, Vol.
17 No. 5, pp. 522-34.
Bititci, U.S., Turner, T. and Begemannc, C. (2000), ``Dynamics of performance measurement
systems'', International Journal of Operations & Production Management, Vol. 20 No. 6,
pp. 692-704.
Brignall, S. and Ballantine, J. (1996), ``Performance measurement in service business revisited'',
International Journal of Service Industry Management, Vol. 7 No. 1, pp. 6-31.
Brown, D.M. and Laverick, S. (1994), ``Measuring corporate performance'', Long Range Planning,
Vol. 27 No. 4, pp. 89-98.
De Vaus, D.A. (1991), Surveys in Social Research, UCL Press, London.
Dixon, J.R., Nani, A.J. and Vollman, T.E. (1990), The New Performance Challenge: Measuring
Operations for World Class Competition, Irwin, Homewood, IL.
Douglas, J. (1994), ``Developments in appraising the total performance of buildings'', Structural
Survey, Vol. 12 No. 6, pp. 10-15.
Eccles, R.D. (1991), ``The performance measurement manifesto'', Harvard Business Review,
January-February, pp. 131-7.
Eisenhardt, K.M. (1989), ``Building theories from case study research'', Academy of Management
Review, Vol. 14 No. 4, pp. 532-55.
Ernst & Young LLP (1998), Measures that Matter, Ernst & Young Centre for Innovation,
London.
Fellows, R. and Liu, A. (1997), Research Methods for Construction, Blackwell Science Limited,
Oxford.
Fitzgerald, L., Jonston, R., Brignall, T.J. and Voss, C. (1991), Performance Measurement in Service
Businesses, CIMA, London.
Fortune Magazine (1997), December.
Ghalayini, A.M. and Noble, J.S. (1996), ``The changing basis of performance measurement'',
International Journal of Operations & Production Management, Vol. 11 No. 8, pp. 63-80.
Glaser, B.G. (1992), Basics of Grounded Theory Analysis, Sowology Press, Mill Valley, CA.
Globerson, S. (1985), ``Issues in developing a performance criteria system for an organisation'',
International Journal of Production Research, Vol. 23 No. 4, pp. 639-46.
Hall, R.W., Johnson, H.T. and Turney, P.B.B. (1991), Measuring Up ± Charting Pathways to
Excellence, Irwin, Homewood, IL.
Hally, D.l. (1994), ``Accounting for the 1990s'', Finance, December, pp. 129-82.
Hinks, J. and McNay, P. (1999), ``The creation of a management-by-variance tool for facilities
management performance assessment'', Facilities, Vol. 17 No. 1/2, pp. 31-53.
Holloway, J.A. (2000), ``Investigating the impact of performance measurement systems'', in Neely,
A. (Ed.), Performance Measurement ± Past, Present and the Future, Centre for Business
Performance, University of Cranfield, Cranfield.
Holloway, J.A., Hinton, M., Francis, G. and Mayle, D. (1999), Identifying Best Practice in
Benchmarking, CIMA, London.
Kaplan, R.S. and Norton, D.P. (1992), ``The balanced scorecard ± measures that drive
performance'', Harvard Business Review, January-February, pp. 171-9.

18. PM
21,2
188
Kaplan, R.S. and Norton, D.P. (1996), The Balanced Score Card, Harvard Business School Press,
Boston, MA.
Kehoe, D., Little, D. and Lyons, A.C. (1992), ``Measuring a company IQ'', paper presented at the
Factory 2000 Conference.
Kennerley, M. and Neely, A. (2000), ``Performance measurement frameworks ± a review'', in
Neely, A. (Ed.), Performance Measurement ± Past, Present and Future, Centre for Business
Performance, Cranfield.
Kincaid, D. (1994a), ``Measuring performance in facilities management'', Facilities, Vol. 12 No. 6,
pp. 17-20.
Kincaid, D. (1994b), ``Integrated facilities management'', Facilities, Vol. 12 No. 8, pp. 20-3.
Lawrence, P.R. and Lorsch, J.W. (1967), ``Differentiation and integration in complex
organisations'', Administrative Science Quarterly, Vol. 12, pp. 1-47.
Lea, R. and Parker, B. (1989), ``The JIT spiral of continuous improvement'', IMDS, Vol. 4, pp. 10-13.
Letza, S.R. (1996), ``The design and implementation of the balanced business scorecard: analysis
of three companies in practice'', Business Process Re-engineering & Management Journal,
Vol. 2 No. 3, pp. 54-76.
Lorange, P., Scott, M.M. and Ghoshal, S. (1986), Strategic Control, West Publishing Company,
St Paul, MN.
Lynch, R.L. and Cross, K.F. (1995), Measure up! How to Measure Corporate Performance,
Blackwell Publishers, Cambridge, MA.
McFadzean, E. (1995), Relating Facilities Management to Organisational Performance, Centre for
Facilities Management, University of Strathclyde, Strathclyde.
Madeley, A. (1996), ``The performance of organisations and facilities management: an exploration
into the opportunities afforded for facilities management to contribute toward corporate
performance'', unpublished MSc dissertation, University of Strathclyde, Strathclyde.
Marshall, C. and Rossman, G.B. (1995), Designing Qualitative Research, Sage Publications,
Thousand Oaks, CA.
Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis, Sage Publications, Thousand
Oaks, CA.
Mooraj, S., Oyon, D. and Hostlettler, D. (1999), ``The balanced scorecard: a necessary good or an
unnecessary evil?'', European Management Journal, Vol. 17 No. 5, pp. 481-91.
Neely, A.D. (1998), Performance Measurement: Why, What and How, Economics Books, London.
Neely, A.D., Adams, C. and Andersen Consulting (2000), Perspectives of Performance: The
Performance Prism, (online), available at: www.som.cranfield.ac.uk/som/cbp
Nieto, M. and Perez, W. (2000), ``The development of the theories from the analysis of the
organisation: case studies by the patterns of behaviour'', Management Decision, Vol. 38
No. 10, pp. 723-33.
Olve, N., Roy, J. and Wetter, M. (1999), Performance Drivers: a Practical Guide to Using the
Balanced Scorecard, John Wiley & Sons, Chichester.
Pritchard, R.D. (1990), Measuring and Improving Organisational Productivity: A Practical Guide,
Praeger Publishers, New York, NY.
Procurement Executives' Association (1998), Guide to a Balanced Scorecard Performance
Management Methodology, Procurement Executives' Association.
Rangone, A. (1997), ``Linking organisational effectiveness, key success factors and performance
measures: an analytical framework'', Management Accounting Research, Vol. 8. pp. 207-19.
Remenyi, D., Williams, B., Money, A., Swartz, E. (1998), Doing Research in Business and
Management, Sage Publications, London.

19. A conceptual
framework
189
Santos, A. (1999), ``Application of production management flow principles in construction sites'',
unpublished PhD thesis, University of Salford, Salford.
Schendel, D. and Hofer, C. (1979), Strategic Management: A New View of Business Policy and
Planning, Little Brown & Company, Boston, MA.
Simons, R. (1990), Rethinking the Role of Systems in Controlling Strategy, Harvard Business
School, Boston, MA.
Simpson, E. (1998), ``Assessment of facilities management performance'', unpublished PhD
thesis, The University of Salford, Salford.
Stone, C.L. (1996), ``Analysing business performance: counting the `soft' issues'', Leadership and
Organisational Development Journal, Vol. 17 No. 4, pp. 21-8.
Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research ± Grounded Theory Procedures
and Techniques, Sage, Newbury Park, CA.
Then, D.S.S. (1996), ``A study of organisational response to the management of operational
property assets and facilities support services as a business resource ± real estate asset
management'', unpublished PhD thesis, Harrot-Watt University, Edinburgh.
Varcoe, B. (1993), ``Facilities performance: achieving value-for-money through performance
measurement and benchmarking'', Property Management, Vol. 11 No. 4.
Varcoe, B. (1996a), ``Facilities performance measurement'', Facilities, Vol. 14 No. 10, pp. 46-51.
Varcoe, B. (1996b), ``Business driven facilities benchmarking'', Facilities, Vol. 14 No. 3/4, pp. 42-8.
Varcoe, B. (1998), ``Not us, surely? Disaster recovery planning for premises'', Facilities, Vol. 16
No. 7, pp. 204-7.
Williams, B. (1999), ``Benchmarking ± Y2K and beyond'', Facilities Management UK, pp. 42-5.