by Aanchal Singh, Frost & Sullivan Energy & Environment Research Analyst — During the competitive era of the 1970s, Rank Xerox, a pioneer in the field of benchmarking, defined the concept as “the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders” (Camp R.C. 1989). Taking this definition as a departure point, we can easily say that organizational efficiency and performance improvement are significant characteristics of facilities management.
The success of any facility’s operations depends on how well the above characteristics are measured and achieved. In recent years, there have been growing pressures to build high performance buildings and systems that can track energy consumption, cost and usage in order to create more efficient facilities. The keyword here is “measurement,” which is best achieved through benchmarking. Stretching the boundaries a bit, this tool has managed to outlive its contemporaries, becoming a favored resource for building performance that allows a building to attain high level data comparisons pertaining to performance, opportunities, gaps, and implementing the outcomes successfully.
These outcomes are assessed keeping in mind that a facility’s energy performance has a significant impact on its bottom line. Overall financial performance will most likely suffer if resources and money are wasted due to energy inefficiency. There are certain favorable circumstances in which it makes sense to compare similar facilities within different industries (functional benchmarking) in order to estimate the potential for improvement that may not exist otherwise. Going above and beyond the ‘apple to apple’ measurement strategy can help evaluate historical performance, establish trends and plan future activities beyond portfolios.
What should facilities measure? How does benchmarking work?
Rising energy costs are one driver behind the adoption of benchmarking tools, as are the quest for best practices and growing popularity of LEED (Leadership in Energy and Environmental Design) and BOMA (Building Owners Managers Association) certifications. The benchmarking process requires internal evaluation of key performance indicators (KPIs). With the help of these KPIs, facility managers can compare performance of their facilities with best-in-class companies. Evaluation of these KPIs will yield maximum results when critical business environment is identified by benchmarking the internal data against the qualitative or quantitative variables of the external companies in the key areas of performance. Some external qualitative key variables are products and services, customer satisfaction, marketing/sales, processing and facilities’ capacity.
The graph below describes the benchmarking process that the facilities can follow in order to improve their performance. The required data input will comprise general internal information of the facilities such as address, gross floor area, energy and water usage for the last 12 consecutive months1 compared against the performance of the benchmark facilities. Consequently, monitoring variables in real time as well as over the period of time will help facilities identify gaps in energy operations and maintenance.
For more than a decade now, performance improvement has become more and more prevalent due to rising operational costs, structure of management and fulfilling needs of occupants. This has spurred the demand for conducting a comparative analysis of processes and performance in order to attain best-in-class status. Sometimes, however, benchmarking is too often seen as a one-time event. Continuous benchmarking will not only capture performance at a particular point in time, but how quickly the facilities you are comparing yourself against are changing.
This pursuit of performance is based on continuous quality improvement, also known as CQI, in many sectors and facilities along with the involvement of all members of the institutional framework. Take, for example, the Bank of America Fifth Avenue Place facility, which after measuring and continuously benchmarking the building’s energy performance, lowered energy use by 15%. The facility tracked its energy use in real time and managed the building’s HVAC system pre-start time which helped building owners save energy usage and dollars. This outcome was entirely the result of continuous annual data analysis.
Moving on to, ‘innovative strategy,’ change and innovation are keys to success. Benchmarking and innovation are interlinked from the very start and the latter is required for performance improvement and enhanced value of any facility. The important question is what innovative strategy to follow? Facilities should go above and beyond the concept of quantitative measurements and tap more into qualitative measurements.
Some of these qualitative measurements are:
- Building efficiency opportunities: Developing a strategy revolving around greenhouse gas (GHG) emission reduction, energy audits, retrofits, and maintenance. Through benchmarking, we can target the best opportunities for GHG reduction and then track energy over time. In 2010, studies show that by accentuating the monitoring and implementation of qualitative benchmarks, 52% of the New York City’s municipal buildings performed above the national average energy efficiency. (Plan NYC, 2011)
- Training Projects: According to the US department of Energy, other than simply focusing on benchmarks such as repairing or maintaining old and existing buildings, it is equally important to benchmark internal and external data pertaining to training, outreach and management oversight. This is essential in order to improve skills and raise occupant awareness by organizing training and instructions to staff. Occupant behavior and awareness regarding careful energy use can effectively reduce energy usage by 10-15% per year effectively eliminating significant amounts of GHG.
- Energy retrofits Programs: Benchmarking can play a key role in the selection of retrofit programs and projects. A substantial reduction in energy use and GHG is expected to come from retrofitting existing buildings. Therefore, by identifying and measuring the electrical components, HVAC and entire building envelope along with occupants’ space we can easily determine which cost-effective retrofit measures are implemented.
For facility managers looking for an alternative way to prioritize energy efficiency projects and monitor building performance, the benchmarking process will most definitely produce results. The essence of benchmarking is a continuous, unending improvement in facility management context enabling decision-makers to comprehend exactly how many qualitative and quantitative improvements are needed to achieve and sustain superior performance.
Sources: Camp R.C. 1989. Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. Milwaukee: American Society for Quality Control, Quality Press
EPA, Energy Start Ratings for US facilities.
Plan NYC, 2011. Energy Benchmarking Report for New York City Municipal Buildings. NYC.
US Department of Energy, 2011
1 EPA Discussion on Energy Star