Benchmarking for Contractors, and how both the Contractors and their Clients will benefit

Last month we reviewed some examples for showing why benchmarking janitorial services would be beneficial for contractors. This month we will continue that same theme and show why benchmarking maintenance services also would help contractors and their clients.

Contractors often need to provide benchmarking data on the performance of their maintenance contracts to their clients. They have the same issues getting started with benchmarking as CREs and FMs. Here are some of the often listed problems with beginning to benchmark:

  • Everyone is busy—getting just the urgent work requests completed often keeps the benchmarking initiative from beginning.
  • Benchmarking appears to be a complex process, and many contractors have the perception that it may take a lot of time.
  • Data may be held by different organizations and, when working for a client, some information regarding space or headcounts may not be readily available.
  • Many benchmarking forms are not user friendly so no one usually volunteers to “benchmark” unless they can see the benefits.

The unfortunate fact is that without good benchmarking comparisons, contractors may not realize their cost profile is high or low, and they may lose work before understanding their cost position. All of these issues can be overcome easily, and the benefits to benchmarking certainly outweigh the negatives.

Here is a suggested approach to help you to get started. We have used examples from the online service FM BENCHMARKING to illustrate how easy the process should be; this approach will allow you obtain the key output reports in the minimum amount of time.

First of all, contractors need to focus on what is important! For contractors, what is important are the services included in your scope of work. If someone asks you to benchmark security costs and that isn’t in your scope of work, don’t do it. Energy management, maintenance and janitorial services are often provided by contractors operating under service contracts so the KPIs for those services need to be benchmarked. In this follow-up article, we discuss the KPIs for maintenance services. Subsequent articles will cover maintenance and security services.

Maintenance services are compared on a cost per area basis. Since, for most maintenance contacts, the labor utilization is a major component, usually between 70 and 85 percent, we usually look at labor utilization or FTE (full time equivalents) normalized against the facility area. An example of this comparison is provided below.

Comparing your maintenance cost per area may give you the wrong perspective on your performance unless the comparisons are made with a relevant peer group. For a quick analysis we can utilize FM BENCHMARKING LITE to create a chart showing the maintenance cost per area of a good peer group. Figure 1 is a chart showing the maintenance cost per area for office facilities.

Figure 1 — Maintenance Cost per GSF Provided courtesy of FM BENCHMARKING. Filters: Type of facility (Office).

Figure 1 you to see at a glance how your facilities compare with other office buildings. There are 319 buildings in this peer group with a median cost per area maintained of $2.14 per sq. ft. and a first quartile performance of $1.67 per sq. ft. By looking at and comparing similar types of facilities, you will be able to make intelligent “data driven” decisions. The contractor for this example has totaled his annual maintenance costs and divided by the gross square footage to determine the annual cost of $2.50, which is in the low fourth quartile near the median (shown in Figure 1). This is an opportunity for the contractor to propose some changes to the owner that would improve the cost performance and possibly improve the profitability for the contractor: a win-win for both. But maybe a good benchmarking tool could provide some “decision support” for the proposed changes.

Using FM BENCHMARKING LITE gives the contractor an idea of the performance of a good peer group but it doesn’t directly show their building’s performance or provide a table of the implemented best practices by quartile. For that we use the full version of FM BENCHMARKING (see Figure 2).

Figure 2 shows at a glance how your facility compares with your peer group for maintenance costs. There are 361 buildings in this peer group with the same distribution as in Figure 1. The difference is that we readily can see our building’s performance. It is the one in yellow, just at the beginning of the second quartile.

Figure 2 — Maintenance Cost per GSF Provided courtesy of FM BENCHMARKING. Filters: Primary Use: Office.

To reach first quartile you could just start reducing costs by reducing staff and limiting the purchase of new parts and equipment. However, this usually isn’t too effective. Usually the quality of the services will decline and you will start receiving more complaints.

A much better approach would be to develop a plan to reach 2nd quartile performance in a set period of time and then continue to implement more best practices until the organization is at 1st quartile performance. An important step is to evaluate what best practices other organizations in this peer group have implemented to reach the 2nd quartile. The table below shows some of the best practices you have implemented in our sample building, what has been implemented by the peer group in your quartile and the next better-performing quartile. This is only a partial list from FM BENCHMARKING, there are about 30 best practices overall.

Figure 3 — Maintenance Best Practices Provided courtesy of FM BENCHMARKING. Filters: Primary Use: Office.

Using the results from this table, the service provider can make proven recommendations for maintenance services that would help achieve first quartile performance. Again, this is win-win for both the contractor and the owner. The owner will achieve cost savings from the maintenance improvements and improved levels of service; the contractor will improve its profitability by more effectively utilizing its workforce, and there will be improved occupant satisfaction, which benefits everyone.

Articles are based on data from FM BENCHMARKING, which until the pandemic had been the online benchmarking tool for facility managers and CREs. Data tracked by FM BENCHMARKING includes cost and labor data as well as best practices for more than 95% of typical facility costs. For questions about benchmarking, please contact Peter Kimmel on LinkedIn. Peter was one of the principals of FM BENCHMARKING and now is consulting in the industry.