FM Industry Standards & Legislation
Commercial & Contracts
Statutory Compliance & H&S
Estates Maintenance (Hard FM)
What is Benchmarking?
Benchmarking is the process of comparing the performance and price of facilities or services against industry prices, standards, or practices. The goal of benchmarking is to ascertain the level of current performance against the market.
In facilities management, and particularly on PFI contracts, Benchmarking is contractually required and is the process by which the Project Company compares either its own costs or the costs of its subcontractors against the market price of equivalent services (Operational Task Note 1). The aim is to ensure the price paid for the services is in line with the market, and consequently, changes to the Unitary Charge (FM Service fee) may be required. Where a service price is outside of an acceptable range of the market price, a market test may be contractually required.
Although mostly used to compare service prices, Benchmarking can involve various types of performance indicators, such as cost, quality, efficiency, and customer satisfaction. For example, a facilities manager might benchmark the energy usage of a building against industry standards to identify areas where energy efficiency can be improved. Similarly, a facilities manager might benchmark the responsiveness of maintenance teams against industry good practices to identify areas where service delivery can be improved.
Benchmarking can be carried out internally within an organisation, comparing the performance of different facilities or service teams or externally against other organisations or industry standards. External benchmarking is often a contractual requirement and, in addition to Value for Money, can provide insights into industry good practice and can help to identify areas where an organisation's facilities management practices are falling behind industry standards.
Overall, benchmarking is a valuable tool for facilities management because it helps identify areas for improvement and develop strategies for achieving higher performance levels. It can also help demonstrate the value of facilities management to senior management and stakeholders by showing how performance is improved over time. Where Benchmarking is a contractual requirement, it allows for both parties to reach a fair and equitable agreement on pricing for the next benchmark period, typically 5 years.