Controlling Cost & Quality of
Facilities Across Large Estates
Benchmarking as a Tool
of Value Management
presentation by
Prof. Bernard Williams FRICS
(IFPI Ltd)
to the Breakfast Briefing:
‘State-of-the-art Benchmarking and Cost
Management
of Facilities in Large Estates’
held at
The Royal Institution of Chartered Surveyors
14th June 2013
Contents
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Benchmarking definition
Facilities in context
Purpose of benchmarking
Methods of benchmarking
Cost benchmarking
Value management of facilities
What is Benchmarking?
‘Benchmarking is the process of comparing a
product, service, process - indeed any activity or
object - with other samples from a peer group,
with a view to identifying ‘best buy’ or
‘best practice’ and targeting oneself
to emulate it’
(An Introduction to Benchmarking Facilities – Williams 1992)
Facilities costs in overall context
Overall
Facilities
costs –
15%
Total revenue cost
e.g. Revenue costs p.a. = £50m (profit p.a. = £2.5m / facilities costs p.a. = £7.5m)
The Outsourcing Conundrum
• Facilities Costs are the outsourced contractor’s sole source
of profit
• Constant pressure to reduce costs – from all sides
• Facilities Costs are in reality of comparatively minor
significance to users
• Users’ profits are put at risk by reduced costs of facilities
• Conflicting interests?????
FIG. 2.2.1.A: Three facets The
of cost
3 control
Facets- inter-relationships
of Cost Control
Budgetary
control
Cost
control
Competitive
procurement
Value engineering
Source: Facilities Economics
BWA 1994
Value Engineering
• The process whereby products and services are provided to
the required performance for the least cost.
• Value engineering requires the elimination of any
‘redundant performance’.
• Value Management identifies what performance is
redundant – you need to prove it.
(Facilities Economics – Williams 1994)
Risks to Value Engineering
• Over-Stated Performance Requirements
• Excessive Budget
• Poor Management
• Too Little Time
• Intransigence
• Poor Procurement
• Poor Budgetary Control
• Inaccurate Estimating
Facilities Value Management
‘The process whereby all investment in facilities,
whether capital or revenue expenditure, is
continually and formally evaluated for cost- effectiveness and
cost-efficiency from concept to completion’
(‘Facilities Economics’ - Williams 2000)
Value Management
Why Bother with Benchmarking Facilities?
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Demonstrating efficient purchasing
Justifying levels of quality/performance
Preparing to outsource – understanding what you’ve got
Seeking to optimise value added in the business case
Benchmarking -How?
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Informal group
Facilitated group
Compare to published data-set
Internal/external
Compare to ‘normalised’ data-set
‘Normalised’ Data-set
EstatesMaster
Facilities Cost Prediction and Benchmarking Tool
• Intelligent decision-making tool
• Benchmark whole estates accurately using categories of
buildings
• Isolate individual buildings as required
• Bespoke site-specific benchmarking
Conclusions
• Without a formal, properly substantiated, business case the
provision of any facilities above zero-base performance
levels is totally unacceptable in business terms
• By identifying and benchmarking options you can establish
a business case based on true value for money.
Next….
• Jo Harris of BSRIA will next explain the pros and cons of
the Benchmaking Group run by BSRIA and how BSRIA
used the EstatesMaster normalised database in a highlevel maintenance benchmarking study.