Benchmarking as a tool of value management

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
of Facilities in Large Estates’
held at
The Royal Institution of Chartered Surveyors
14th June 2013
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
costs –
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
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?
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?
Informal group
Facilitated group
Compare to published data-set
Compare to ‘normalised’ data-set
‘Normalised’ Data-set
Facilities Cost Prediction and Benchmarking Tool
• Intelligent decision-making tool
• Benchmark whole estates accurately using categories of
• Isolate individual buildings as required
• Bespoke site-specific benchmarking
• 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.
• 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.