INDUSTRY LEADING PRACTICE
An Exploratory Analysis
Prepared for the National Property Management Association
By Dr. Douglas N. Goetz, CPPM, CF
Outline of Presentation
• The Emergence of the Concept of Industry Leading Practice
• Compiled and Comparative Definitions
• Theoretical Construct for Defining an Industry Leading Practice • Future Applications for Industry Leading Practices
A NEW PARADIGM
• With the rewrite and publication of the new Federal Acquisition Regulation (FAR) Part 45 and its associated clauses in 2007 a new and different requirement was imposed upon contractors doing business with the United States Government. • The Government Property (GP) Clause of FAR 52.245‐1 introduced a few “new” terms to our Property Vocabulary
What has the FAR GP Clause Introduced?
• Mandates that:
– the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective control of Government property, consistent with voluntary consensus standards and/or industry‐
leading practices and standards
– FAR 52.245‐1
What has the FAR GP Clause Introduced?
• Where the “Old” version of the FAR GP clause was “prescriptive” in nature, i.e., telling the contractor what and how to do a task…
• The New version places new responsibility on the contractor to research, select and apply either:
– voluntary consensus standards and/or – industry‐leading practices and standards
Compiled and Comparative Definitions
• Voluntary Consensus Standards was and is the easy term to define.
• Multiple Equivalent definitions are found in Statute, regulation and literature
– Public Law 104‐113, the National Technology Transfer and Advancement Act of 1995, – OMB Circular A‐119, http://www.whitehouse.gov/omb/rewrite/circulars
/a119/a119.html
– NPMA Library of Articles found at WWW.NPMA.ORG
• Access by members only
Compiled and Comparative Definitions
• What is an Industry Leading Practice???
– There was and is no Statutory or Regulatory definition of Industry Leading Practice
– There is no “Official” FAR definition of an Industry Leading Practice
• Note – that is correct, even the Government does not define every term it uses in a regulation – as there are some terms that are ASSUMED to have a general meaning. In this presentation we will
discover that the term Industry Leading Practice DOES NOT have a
universal definition!
– In point of fact, after doing an exhaustive web search of the term it was discovered that the term is used most often as a “BUZZ WORD” in advertising to establish legitimacy for one’s application or product. – So, since no “official” definition exists it is important to note that we can “BORROW” or appropriate from OTHER applications or bodies of knowledge.
Compiled and Comparative Definitions
• Before we define an INDUSTRY LEADING PRACTICE it might be wise to define the INTENT of using the phrase. – There are numerous INDUSTRIES, TYPES OF INDUSTRIES, that use Property.
– As such, rhetorically, should they all be doing everything the same way?
• Quite clearly, NO!
– Different Industries may and probably WILL do things differently – though on the other hand some may do things the same way
Compiled and Comparative Definitions
• So think… for Property Management
– Would an Industry that builds and fabricates AIRCRAFT use the same ILPs as an industry engaged with baking bread or bakery products?
– Would an industry that fabricate detailed integrated circuits use the same ILPs as an steel foundry?
– Would an industry that processes Nuclear Materials use the same ILPs as a routine maintenance service provider?
• It would appear to make sense that the ILP used should be related to the INDUSTRY from which it emerged or was created.
SO LET’S LOOK AT SOME DEFINITIONS OF THE TERM
INDUSTRY LEADING PRACTICE
Compiled and Comparative Definitions
• Voeller (2009) defines an ILP as, • “A practice that goes above and beyond Best Practice by implementing something new which is recognized by professional associations trade publications and technical journals as a significant improvement over past performance.”*
– NPMA Presentation http://losangeles.npma.org/files/Industry%20Leading
%20Practices%20Feb%202009%20Voeller%20v2.pdf
*No cite for definition
Compiled and Comparative Definitions
• Voeller’s definition of an ILP introduces another term, i.e., a “BEST PRACTICE.”
• Can a “Best Practice” be differentiated from an Industry Leading Practice?
• As an Opinion ‐‐ Quite clearly – yes!
– Voeller states that an ILP goes “Above and beyond a Best Practice.”
• Let’s look at another definition!
Compiled and Comparative Definitions
• Ruckdaschel (2004) provides a very early introduction to “Leading Practices” and “Best Practices”
– Leading Practices: “Strategies and processes that are both quantifiably and qualitatively demonstrated to be top performing.”*
– Best Practices: “The marriage of applied behavior and knowledge—that have been demonstrated and validated to yield a competitive advantage for organizations that employ them.”*
• http://www.acq.osd.mil/dpap/UID/FAR‐publicmeeting‐
2004‐04‐13.pdf
*No cite for definition
Compiled and Comparative Definitions
• Frenette (2008) provides yet another definition of “Best Practice”
– a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method, process, etc. – with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. – the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people.*
• https://acc.dau.mil/GetAttachment.aspx?id=244311&pname=file&
aid=39048&lang=en‐US
*No cite for definition
Compiled and Comparative Definitions
•
The search for a definition of “Best Practice” was much more fruitful. Try these on for size:
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A technique or methodology that, through experience and research, has proven to reliably lead to a desired result.
www.tjiss.net/glossary_b.html
The winning strategies, approaches, and processes that produce superior performance in an organization. A best practice is a by‐product of a successful end‐result.
www.portfoliostep.com/390.1TerminologyDefinitions.htm
An activity or procedure that has produced outstanding results in another situation and could be adapted to improve effectiveness, efficiency, ecology, and/or innovativeness in another situation.
www.ichnet.org/glossary.htm
Recommendations regarding processes or techniques for the use or implementation of products or services.
www.msdnaa.net/curriculum/glossary.aspx
A way or method of accomplishing a business function or process that is considered to be superior to all other known methods.
www.qaproject.org/methods/resglossary.html
programs, initiatives or activities which are considered leading edge, or exceptional models for others to follow.
www.sbed.gov.bc.ca/SportBranch/Glossary.htm
Examples of field‐based activities, operational procedures or capacity building approaches that are successful and sustainable in social and environmental terms and can be readily adopted by other individuals or organizations.
www.compass‐malawi.com/cglossary.htm
Processes and activities that have been shown in practice to be the most effective.
it.csumb.edu/departments/data/glossary.html
The procedures and policies that allow a business to outperform all other in a particular business process.
www.crfonline.org/orc/glossary/b.html
Compiled and Comparative Definitions
• Though the ASTM Voluntary Consensus Standards for Property provide us a WEALTH of information – even these do not provide us a definition of an ILP – BUT… they do provide a definition for “best‐in‐class” – a related term.
– ASTM 2379‐04 defines “best‐in‐class” as,
• Adj – documented strategies and tactics used by highly admired agencies, companies and institutions.”
– WWW.ASTM.ORG
Compiled and Comparative Definitions
• Thompson (2008) provides a brief definition of an ILP. He provides a definition of ILP as,
• “Strategies and processes that are both quantifiably and qualitatively demonstrated to be top performing.”*
• http://northwest.npma.org/files/2.3.8.PowerPoint.pdf
*No cite for definition
Compiled and Comparative Definitions
One More Definition!
• Kathy McFarland (2009) presenting to the National Property Management Association discussed The Aerospace Industries Association, Inc. (AIA) “AIA Industry Leading Practices & Best Practices Survey.”
• Within the Presentation is a definition for ILP created by the AIA Committee.
(Unpublished Presentation ‐
No Citation Available)
Compiled and Comparative Definitions
• AIA’s Definition is one of the most complete. It states,
– “Industry Leading Practices and Best Practices are methods, processes, or practices about which one or more of the following pertain:
• It produces desired results; • It leads to exceptional performance; • It is recognized by an industry expert or group of industry experts; • It is deemed so by an organization's customers; and/or • It is clearly a new or innovative use of personnel, resources, or technology.”
Compiled and Comparative Definitions
• BOTTOM LINE:
– There are numerous rich and robust definitions for Industry Leading Practice
– Unfortunately, there is no consensus for the term.
Theoretical Construct for Defining an Industry Leading Practice So how SHOULD we define an ILP?
• Voellmer (200?) provides these key characteristics/attributes. An ILP must be:
– Well Defined
• Documented, Measureable, Verifiable
– Reliable
• Consistent, Repeatable, Accurate
– Valid
• Meaningful, Significant, Industry Relevant
– Dynamic
• Continuous Improvement & Change
– Value Added
• Improves Productivity, Performance, Growth, Customer Satisfaction
Theoretical Construct for Defining an Industry Leading Practice The most complex and complete definition* comes from an unpublished Department of Defense Document cited in an article by Goetz:
• Industry leading practices (ILP) are generally accepted processes, including best practices, that have been proven throughout related businesses, to be managerially and economically effective, efficient, and successful at meeting particular objectives of a contractor’s management system, and where specified, in compliance with the required Government Outcomes. • Unpublished version of DoD 4161.2‐M
In the Writer’s Humble Opinion!
Sorry – just a touch of humor….
Theoretical Construct for Defining an Industry Leading Practice NOTE – this definition was developed by a Team of DoD and NASA Employees as part of the efforts to rewrite the DOD Property Manual.
Theoretical Construct for Defining an Industry Leading Practice • Analysis of this (or any) definition is necessary. So let’s break this definitions down into smaller parts:
– generally accepted processes, including best practices, • An ILP needs to be generally accepted – and may include best practices
– that have been proven throughout related businesses, • Though in emerging professions it is acceptable to “steal” or “appropriate” knowledge from OTHER professions, they should be related to the specified business. [Note – there are always exceptions!]
Theoretical Construct for Defining an Industry Leading Practice • Analysis of definition continued:
– to be managerially and economically effective, efficient, and successful at meeting particular objectives • We do Property Management – does this ILP help with the MANAGEMENT of that Property?
• Is it ECONOMICALLY Effective? • Does it meet specific PERFORMANCE OBJECTIVES?
– of a contractor’s management system, and where specified, in compliance with the required Government Outcomes.
• This part is not appropriate if we go BEYOND the concept of Government Property in the possession of contractors.
• It might be wise to rephrase and broaden it for any LEGAL requirements
Theoretical Construct for Defining an Industry Leading Practice • Analysis of definition continued:
– The ILP should be based on empirical research, evidence and literature pertaining to that business practice, product or system as a “leading” practice. • We really need to start asking what EMPIRICAL EVIDENCE do we have that SUPPORTS this ILP as an ILP?
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QUANTIFIABLE EVIDENCE
METRICS
DATA
Evidence of Cost Savings or Cost Avoidance
– In order for a process to become an ILP, it should be widely used. • Widely used… How do we know something is widely used?
Theoretical Construct for Defining an Industry Leading Practice • Analysis of definition continued:
– Generally, there should be supporting historical data from an accepted source, e.g., trade publications, literature, etc., to support that process as being repeatable, efficient, measurable, and verifiable.
• Maybe we, the NPMA MEMBERSHIP, should be writing more articles about ILPs to establish this supporting evidence?
• Maybe we, the NPMA, or some component within the NPMA should be collecting and compiling DATA as to the USE of ILPs?
Theoretical Construct for Defining an Industry Leading Practice • So, today – do we have all of this evidence? No!
• One Cautionary note ‐‐ Be Careful about “Specious”
representations of data as an Industry Leading Practice, i.e.,
– First – what does the word SPECIOUS MEAN?
• “an appearance of truth that is false or deceptive; seeming plausibility’
• Just because everyone is “doing it” does not make a practice an Industry Leading Practice.
– For Example
– On many Interstate Highway Systems if we were to collect data on the speed of all cars – and the data reflect that everyone is speeding – would speeding be an Industry Leading Practice?
Theoretical Construct for Defining an Industry Leading Practice • Well, if we know what is NOT an ILP ‐‐ What could be viewed AS an example of an ILP?
– GAO REPORT ‐ EXECUTIVE GUIDE ‐ Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property, GAO‐02‐447G
• http://www.gao.gov/new.items/d02447g.pdf
– Why?
• Because it meets that requirements cited by Voeller
and Goetz from the literature, i.e., best practice, proven throughout related businesses, economically effective and efficient, supported by data, etc.
Theoretical Construct for Defining an Industry Leading Practice • As a Property Professionals we need to engage in “CRITICAL THINKING” about those items presented as:
– BEST PRACTICES
– LEADING PRACTICES and – INDUSTRY LEADING PRACTICES
• In other words we should not just accept a statement that process “X” is an ILP without SUPPORTING EVIDENCE. Theoretical Construct for Defining an Industry Leading Practice • In other words we should not just accept a statement that process “X” is an ILP. – Why is it considered and ILP?
– What “DATA” supports the contention that it is an ILP?
• Note – we do not have this same problem with VCSes because of the requirements imposed on a VCS Body in the creation of a VCS.
– A VCS MUST go through a defined process, prescribed by the VCS Body, which creates a degree of validation that the subject item passes muster/scrutiny.
APPLICABILITY to PROPERTY MANAGEMENT OUTSIDE of the CONTRACT PROPERTY ARENA
• If we are Property Professionals, not bound by a CONTRACTUAL REQUIREMENT, ‐‐ CAN or SHOULD we use ILPs outside of the Contract Property Management Arena?
– YES!!!
• The better question would be “WHY NOT USE ILPs for the Management of ALL types of Property under all environments?”
– Note – the same holds true for VCSes (Which I believe is the ultimate direction of VCSes!).
Future Applications for Industry Leading Practices
• As we have seen throughout this presentation the definition and conceptualization of an Industry Leading Practice has NOT reached a point of Maturation or universal agreement. • Therefore, it is imperative that for us to move on from this point we need to clearly define the term, submit it for refinement, and then standardize its definition.
• How?
Future Applications for Industry Leading Practices
• How?
– Point #1 – Since the Federal Acquisition Regulation started the ball rolling ‐‐‐ it would seem to be a good term to add to FAR Part 2 under Definitions.
– POINT #2 ‐ Hmmmm, if the FAR won’t do it, it would seem to be a good term to add to the ASTM E‐2135‐
07, Standard Terminology for Property and Asset Management
– WWW.ASTM.ORG
Future Applications for Industry Leading Practices
• So, what was the intent of the FAR Rewrite in injecting the concept of ILPs?
• To achieve greater economies, efficiencies, use new technologies to achieve cost savings?
– Yes, No, Maybe?
• If so – have we ACHIEVED this goal today?
• NO!!! We are only BEGINNING THE PROCESS of DEFINING ILPs and then QUANTITATIVELY MEASURING OUTCOMES of ILPs!
– An Example of Quantifiable Outcomes, See Bob McFarland’s Value Based Asset Management Series of Articles on the NPMA website
• WWW.NPMA.ORG
DISCUSSION
• So, what are YOUR ideas regarding the – TERM, – CONCEPT,
– IDEAS regarding ILPs…
– And their application in today’s world of Property and Asset Management?