Indexing Your Building Portfolio’s Performance

An easy and valuable tool for both occupiers (facilities managers) and service providers

Many FM’s manage large portfolios where indexing their overall performance may be appropriate. This would allow FMs and CREs to see how their portfolio compares with others, without the need to benchmark each building. Indexing is considerably different from benchmarking, but it is common in almost every other industry. Without thinking about it you use index information for numerous business and personal issues:

  • New car purchases: you’ll see a fuel mileage comparison index
  • Fortune 500 stock index
  • Unemployment index
  • Airline on time arrival index

Facility portfolios are an important part of the cost performance for any business and should be indexed as much as any other component. This should be an easy process for anyone managing a large portfolio. Some key performance indicators to index would be:

  • Area per person
  • Energy usage and cost per unit area
  • Water consumption and cost per unit area
  • Maintenance cost and staff per unit area (see Figure 1)
  • Security cost per unit area and per occupant
  • Janitorial cost per unit cleanable area

Figure 1 — Each company in the Facility Benchmark Index is represented by a different bar. In this example, Your Company (yellow bar) is in Quartile One. Provided Courtesy of FM BENCHMARKING.
Filters: Large buildings (greater than 600,000 sq. ft.); office buildings only.

Providing the inputs needed for Figure 1, which is an example of a type of company-wide index from FM BENCHMARKING, should be easy for any FM or CRE who manages a large portfolio. All that are needed are:

  • Total maintenance cost for the portfolio
  • Total gross area of the portfolio

These inputs should be readily available in most companies, as most know how many square feet are in their portfolio and how much they are spending on maintenance, even if costs aren’t broken down by building in a central database.

In Figure 1 the difference between your company and the median company is $0.47 per sq. ft. The graph thus enables you to show your management that you are saving your company for each building in its portfolio at least $282,000 per year in maintenance costs over the median building [(600,000 sq. ft.) x (47 cents per sq. ft.)”>. If you have just ten buildings, that’s $2.8 million!

Conversely, if one of the metrics shows your facility portfolio to be underperforming (e.g., energy consumption per sq. ft.), then you know that you may very likely be able to find ways to improve your building performance. In the previous paragraph, you saw how just a few cents per sq. ft. could lead to significant savings. In most cases, this will enough to justify the cost to make an improvement and recoup that cost in just one-to-two years. So indexing can be used to justify an improvement.

Some indexes incorporate best practices, so you may, for example, discover that most of the companies performing better than you have implemented occupancy sensors in the restrooms. But what if there is nothing obvious to improve your building performance? In these cases, you may need to benchmark a few individual facilities, so you can see what some better-performing ones did that yours didn’t do. You’re simply troubleshooting a problem, digging into it one step deeper at a time, until an answer surfaces.

Indexing for service providers

Indexing for service providers offers excellent value to these organizations. By indexing the key components of your operation you will be able to:

  • Improve your Business Development opportunities. You will be able to support with Index charts the marketing claims that you are best in class.
  • Justify pricing to clients. All organizations have a need to support or prove that that their costs are reasonable. By indexing you can show your results directly and may even avoid having to re-bid a project.
  • Provide evidence-based rationales that should result in C-Suite support for FM budget.
  • Improve performance where your metrics are not as strong as you’d like them to be. For example, you may be a top performer on all metrics but one; indexing will identify that metric for you, and then you can figure out what you will have to do to improve performance there, if you want to do so.

Indexes for outsourcing companies have a very similar appearance to those for the occupiers, such as the one shown in Figure 1. The main difference is that instead of having different occupier-companies represented by each bar in the chart, each bar represents all clients for each outsourcing company participating in the index.

The service provider can then use an occupier index to break down the different companies represented in the service provider’s bar. The provider can then see which clients are doing well, and which need some attention. The provider can then approach the one needing attention and have the back-up numbers to provide the rationale to make improvements. Sometimes, these can generate additional revenues for the service provider.

As you can see from this discussion, whether you are on occupier or a service provider, indexing is a very valuable tool to see where you stand, and show others, in a very quick and easy manner. Three of the most compelling reasons that support the use of indexing:

a) Indexes are easy to find the necessary data to populate the index.

b) They generate reports that are easily understandable and wanted by executives outside of the facilities and CRE organizations.

c) They show at a glance where you are outshining others, and justify where you will need to spend to improve your portfolio performance.

Last, indexing is compatible with comprehensive benchmarking of buildings so that if one needs to examine portfolio performance in more depth (e.g., the individual building level), there should be a path there to make the migration easy.

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.