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Benchmarking A Stepping Stone to Excellence

No Architects/Engineers/Construction Firm, regardless of its success, can afford to ignore benchmarking if it wants to maintain or improve its competitive position. To remain competitive, a firm needs to be receptive to new ideas. Benchmarking provides a way to compare a firm’s strategies with those of the industry’s leaders.

Benchmarking simply means looking inside and outside your firm to evaluate common business functions and practices, often referred to as metrics. It is an ongoing analytical process of measuring the business practices of companies recognized as the best in the class for the purpose of improving your own firm. By comparing your firm’s functions and practices with those of established firms, you can add to your overall problem-solving process and keep aware of the latest trends and state-of-the-art practices. You can also use benchmarking for strategic planning, forecasting, developing new ideas, and goal setting. The benchmarking process, however, must begin with a clear objective.

What To Benchmark

Just about anything that can be observed or measured can be benchmarked. The key is to focus on defined critical success factors. These include processes, functions and items that can improve your firm’s bottom line in the short run and lead to greater organizational efficiency in the long run (for examples, see "Critical Success Factors for Benchmarking" below).

When determining what to benchmark, ask yourself the following:

• What critical factors are key to the firm’s success?
• What factors are the toughest for the firm to control?
• What items indicate a dissatisfied owner?
• What are the firm’s top 10 cost categories?
• What functions show the greatest room for improvement?

The Benefits of Team Participation

Although benchmarking can be conducted by individuals, most of the activities are team-oriented. Working committees or teams have their disadvantages, but spreading the tasks around can be beneficial.

Further, those involved have the satisfaction of knowing that they played a part in the process. Plus, combining team members from various disciplines within the business (i.e., project management, scheduling, estimating, accounting, information systems and human resources) gives them insight into parts of the firm with which they might be unfamiliar.

Before You Draw Conclusions

Assemble the best practices data and compare it to those of your firm. Before you draw any conclusions, identify any pattern, misinformation or omissions in the data to ensure its validity. Also, be cautious of benchmarking information in the form of averages or median scores. Consideration must be given to the events and factors that influence your firm’s performance that may be unique to your firm, such as its size and geographic location.

Take Action!

When communicating the results of your analysis, be sensitive about how and what you communicate. Tailor your communication method to your firm, and direct it to those who can make a difference.

But don’t stop there -- you must institute and monitor the change to achieve results that will move your firm to the best of your class or, at least, maintain your position within this group. You can also ensure an effective benchmarking effort by following these steps:

• Be open to new ideas. Look beyond your firm’s geographic market and the A/E/C industry for new ideas.
• Improve your firm’s practices. Don’t fixate on the numbers or other measurements of operations because these items are often static. A process focus produces results that may not be that directly quantifiable by numbers or other measures.
• Be disciplined. Be thorough and aggressive in the process. If you shortcut the process, be aware of its impact down the road.
  
• Consider the required resources. These include the people, their time and the cost. Include the brightest people in the process and reward them for participating. Make sure they have time in their schedule so they can make a difference.

If you take the proper steps in your benchmarking analysis, there should be no surprises regarding the things you need to change in your firm.

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