Service providers and outsourcers can benefit from benchmarking in a number of ways:
- Contracts that require benchmarking of key performance indicators (KPIs) to assure that services provided are competitive.
- Internal comparisons to understand how their various contacts are performing.
- Development of proposals for new work.
- Avoiding the need to re-bid work and extend the contract period.
Service providers have the same issues getting started with benchmarking as everyone else. The press of daily issues and problems often keep the benchmarking initiative from beginning. However, without good benchmarking comparisons, service providers may not realize their cost profile is high or low.
The benchmarking task can often look formidable:
- Data may be held by different organizations.
- Information regarding space or headcounts may not be readily available.
- Some benchmarking tools are not user friendly.
These issues easily can be overcome. The benefits to benchmarking usually outweigh the negatives. Here is a suggested approach to help you to get started.
First, focus on what is important! For service providers that’s the services included in your scope of work. Energy management, maintenance and janitorial services are in most service contracts so the KPIs for those services should to be benchmarked. In this article, we will discuss the KPIs for energy utilization. Subsequent articles will cover maintenance and janitorial KPIs for service providers.
Energy usage is compared on a per gross square foot basis. Since for most buildings, the electricity usage is a major component we usually look at electric energy intensity: KWH (Kilo-watt Hours) per Gross Square Foot or KWH per Gross Square Meter.
Good benchmarking comparisons need to be made with a relevant peer group. For a quick analysis, Figure 1 displays a chart showing the KWH/sq. ft. of what we believe is a good peer group. In this example, that is a chart showing the KWH/sq. ft. for office-type facilities.
This allows you to see at a glance how well your facilities are utilizing electricity compared to other office buildings. There are 339 buildings in this peer group with a median KWH utilization of 31.0 KWH/GSF and a first quartile performance of 19.83 KWH/GSF (the border between the first and second quartiles). By looking at and comparing similar types of facilities, you will be able to make intelligent “data driven” decisions.
The usual “next step” is to total the annual KWH consumption and divide by the GSF to determine the annual usage at your facility. Let’s assume the energy intensity is 24 KWH/GSF, which is in the second quartile. This is an opportunity for the service provider to propose some additional energy conservation projects to the owner that would improve the performance and earn additional fees for the service provider; a win-win for both.