Better-Measurement-Better-Management

Better measurement – better management

Procurement | Estates | SustainabilityThe Property Benchmarking Service

www.ogc.gov.uk

http://www.ogc.gov.uk/


The Property Benchmarking Service2

Managing an estate, whatever the economic climate, requires vigilant attention to detail to ensure that costs are understood and that resources and space are not wasted. To maintain this on a consistent basis over the long term, occupiers and their estates managers need a robust process which allows for continuous measurement of all estate management variables.

That process is benchmarking. For occupiers, benchmarking enables comparisons of cost, space, resources and environmental performance over time. It can also be used to establish peer and wider industry comparisons. The variables which affect estate management need to be counted, measured and compared on a like-for-like basis to understand where opportunities may exist for efficiency gains and improvements in effectiveness.

The term ‘benchmark’ comes from surveying where a notch or mark was made to represent a given altitude against which other heights could be calibrated or ‘benchmarked’. It has since come to mean any standard against which something is compared. Benchmarking, as referred to in this document, involves learning, sharing information and adopting best practice to bring about a step change in performance.

Better Measurement, Better Management: How do you measure up? sets out the benefits of property benchmarking; how it works in practice for the public sector; and whether benchmarking is right for your organisation.

Contents

Why benchmark?

Delivering benefits in the Public Sector

The Property Benchmarking Service

Performance framework

Reporting

Are you ready to meet the performance challenge?

Beyond offices

Extending the benefits: the Property Benchmarking Framework

Further information

Efficient management is dependent on the availability of good information and the ability to interpret it meaningfully and use it effectively. In the case of property management, good data would inform senior management, and help ensure that property is given due consideration at a strategic level

Lord Carter of Coles Operational Efficiency Programme, 2009


3

Why benchmark?

For the public sector it is essential that all resources are managed as efficiently as possible to minimise any adverse impact on frontline services. Indeed, in any organisation, monitoring and measuring performance is fundamental to improving the management of important resources. Property is one such key resource; a hugely valuable asset of which all organisations must make the best use. Buildings must support core business operations, so occupiers must ensure they are at their most efficient, effective and environmentally sustainable. Collecting relevant data is one thing but transforming it into meaningful metrics suitable for comparing performance with others, is another. Getting that right provides the basis for effective and informed decisions that should deliver solid business benefit, realise efficiency savings and improve and communicate property performance.

Benchmarking involves looking outside the organisation to examine how others achieve their performance levels and therefore helps explain the processes behind excellent performance.

When the lessons learnt from benchmarking are applied appropriately, they can facilitate improved performance in critical functions within a building or inform the development of a strategy across an estate. Benchmarks seldom remain static, and benchmarking should not be seen as a one-off exercise. To be effective, it must become an ongoing, integral part of a continuous improvement process with the goal of keeping abreast of ever-improving best practice.

Benchmarking of a building or property portfolio brings a number of benefits. It:

n enables the like-for-like comparison of buildings and estates

n facilitates a better understanding of how an estate is performing

n identifies where the greatest savings can be made

n enables an organisation to set and monitor realistic targets

n assists legislative and regulatory compliance n allows an organisation to assess its impact on

the environment of an individual building and across an estate.

KnowReliable data is critical to delivering meaningful analysis

ComparePerformance and quality can be compared, exposing strengths and weaknesses relative to others

UnderstandBreaks down costs for the building to understand how they are structured and identify inefficiencies

DecideWith understanding comes evidence-based decisions for cost reduction and improvement

ImproveDecisive, targeted improvement action can be taken on cost and performance


Understand

Know

Compare

Decide

Improve

Source: HouseMark

The benchmarking process



Delivering benefits in the Public Sector

A key element of the Government’s programme to transform asset management in central Government through the High Performing Property (HPP) programme, is the need for departments to have information that is accurate, complete and readily accessible to decision makers across the business. OGC has put in place the methodology for benchmarking the performance of administrative offices across the central Government estate – the Property Benchmarking Service. This is structured around a set of related key performance indicators (KPIs) which allow for the measurement of efficiency, effectiveness and the environmental sustainability performance of individual buildings, and for comparison against private sector benchmarks.

Implemented as a pathfinder programme in 2005, property benchmarking has become pivotal in supporting Government departments in delivering best value from the civil estate. It has informed the establishment of standards for workspace efficiency that challenge organisations to be more imaginative about the way they use space. Through benchmarking, it becomes obvious where workspace falls short of these standards, and increasingly decision makers are taking notice – realising a progressive reduction from over 17m2/FTE (full time equivalent) in 2006, to where central Government and the private sector now meet at around 13m²/FTE. Such substantial progress in delivering efficient, effective and sustainable property solutions is built on high-quality information about performance and on consistent and meaningful interpretation.

High Performing PropertyThe HPP initiative is a major change programme that challenges Government to bring about a significantly smaller, more sustainable and agile central civil estate which delivers value for the citizen. Under HPP, Government accommodation will be acquired on the basis of whole-life value to meet the well-defined business needs.

The HPP programme sets out the framework and direction for improving strategic Property Asset Management (PAM) in central Government through to 2013 with key actions, milestones and objectives. Outcomes and benefits include:

n a rationalised ‘fit-for-purpose’ estate n PAM positioned as a strategic arm of

business delivery n hard-edged performance data driving

continuous improvement n improved stewardship and accountability n 20% annual efficiency savings.

Driving workspace efficiency improvement

18

16

14

12

10

8

Key

2006 2007/08 2008/09

Space per FTE (m2)

With year on year improvement, benchmarking is contributing to delivering strong property asset management on the Civil Estate.


The Property Benchmarking Service 5

The Operational Efficiency ProgrammeThe 2009 Operational Efficiency Programme (OEP) recommended the collection of benchmarking data as the key to making the transformational change required to deliver savings. This provides the opportunity to gather detailed cost information on all back-office activity including property. Data will be gathered and published annually, increasing the transparency and accountability of public bodies.

This programme is the first step towards capturing the cost and performance information that will help identify savings and improve performance across the whole public sector. Successive benchmarking exercises will improve the quality of available information and therefore will contribute to better management of operational activities.

The Property Benchmarking Service is an integral part of the OEP benchmarking programme and provides a route to gauging progress, understanding performance, and improving the management information available for decision-making.

The results of the first annual benchmarking exercise across central government; the largest exercise of its kind in central government and a recommendation of the Operational Efficiency Programme review.




The Property Benchmarking Service was developed to establish the performance of central Government office buildings measured against independent and validated private sector benchmarks; and against Government targets and standards, where these have been set.

Each year, departments, and their arms’ length bodies, are required to measure the efficiency, effectiveness and environmental sustainability of their administrative office occupations over 500m2. The performance of each building is reported through consistent and independently validated metrics against benchmarks derived from comparable buildings in the private sector and industry best practice. Increasingly, information from this process is being used across Government to inform strategic decisions about buildings and their impact on service delivery.

The Property Benchmarking Service is managed by OGC. IPD Occupiers are OGC’s specialist supply partner, providing the detailed analysis of the data supplied by participating organisations.

The practical stages cover start-point data, including surveys of building managers and occupants, through to high-end, reliable benchmark analysis, which is used to drive through cost, space and environmental efficiencies as well as building effectiveness. There are four main steps:

n the collection of defined data to create KPIsn independent validation and checking of data

to ensure reliability of the KPI outputsn the development of independent, robust

industry-standard benchmarksn the assessment of individual building performance

which leads to decisions which will underpin the development of PAM planning.

KPIsThe Property Benchmarking Service has adopted a framework for property cost categorisation, with robust definitions for each data element, derived from the IPD Cost Code. This provides the consistency essential to effective internal and external benchmarking, enabling reliable and like-for-like comparison between and across buildings and organisational property portfolios.

Property performance is established through a set of KPIs supported by a mandatory dataset. These are grouped into three areas of analysis:

Key findings are presented in The State of the Estate, an annual report to Parliament.

Efficiency

n Cost per person n Space per workstation

n Cost per square metre (rent, rates, other costs)

n Workstations per person

n Space per person

Environmental sustainability

n CO2 per person/per square metre

n Non-recycled waste per person

n Water consumption per person

n Management practice score

Effectiveness

n Facilities score n Compliance and flexibility score

n Workplace environment score

n Health and Safety score

n Functional suitability score



The IPD Cost Code provides the framework for the collection, measurement and analysis of property cost information. A copy of the Cost Code can be downloaded at www.ipdoccupiers.com/costcode

Data requirements and assembling dataCollecting accurate, consistently defined and verifiable data is at the heart of any robust benchmarking process. However, data in isolation can be of limited value and without meaning. Meaning is given by transforming it into information by creating a relationship between the various elements. This combining of data into KPIs such as £/FTE or CO2/m2 adds considerable value to the data, but it will still only become truly significant to the business if it is supported by knowledge of relative performance:

“Is this good or bad?” “How do we compare to others?” Effective benchmarking will provide this understanding by identifying opportunities and areas for action.

Benchmarking can often be a difficult and resource-intensive exercise requiring time and commitment. The Property Benchmarking Service has started by adopting a simple, graduated approach but with the ambition to build up complexity as the appetite for understanding of buildings and property portfolios grows.

Data collection is facilitated by ePIMS. The system currently has the capacity to collect and record significantly more data than is currently benchmarked and this provides the flexibility for the inclusion of additional metrics in future. To provide a level playing field for comparison, the core data set used for the Property Benchmarking Service is focused on a basket of data elements; all of which should be readily available for all buildings. This provides a good balance between improving performance and seeking increasingly sophisticated ways of measuring it.

The IPD Cost CodeTo support the central role which information plays in understanding and shaping the future Government estate, common standards and definitions are essential. The IPD Cost Code has been adopted and implemented as the basis for OGC cost categorisation and provides a robust foundation for defining data elements on the Government’s electronic Property Information Mapping Service (ePIMS).

The IPD Cost Code is an internationally acknowledged framework for property cost categorisation with clear definitions to provide the consistency essential to effective internal and external benchmarking. This consistency, coupled with an emphasis on the value of data in effective management, has enabled reliable and like-for-like comparison between and across buildings and estates on the civil estate. Gathering and structuring clearly defined cost data has:

n promoted and facilitated knowledge exchange between departments and their arms’ length bodies

n supported the communication of cost data and information through credible and trusted reporting

n increased the value and potential of data through its effective use in property benchmarking.

http://www.ipdoccupiers.com/costcode



Building name Rental equivalent (freehold only)

Town Unitary charges (£) (PFI only)

Postcode Service charge (£)

Business location Internal repair & maintenance cost (£)

GO region Security cost (£)

Tenure type Cleaning costs (£)

Property use Water and sewerage costs (£)

Air conditioned Total energy costs (£)

Vacant Net Internal Area (m2) Total water consumption (m³)

Building occupied Net Internal Area(m2) Total segregated recycled waste (tonne)

Total office-based staff & contractors (FTE) Total waste (tonne)

Number of workstations Natural gas (Kilowatt hours)

Rent (£) (leasehold only) Total electricity consumption (Kilowatt hours)

Rates (£)

From data to wisdom

Spreadsheets databases

Mandatory data items

Data

Information

Knowledge

WisdomPerformance

indicators

Benchmarking

Low value High value

Source: R L Ackoff 1989

Understanding

Co

nn

ecte

dn

ess

Understanding relations, patterns and comparing with others helps move from data to information, from information to knowledge, and finally from knowledge to wisdom.

How is performance assessed?A balanced view of relative building performance is illustrated through the presentation of a standardised performance model. The model captures various levels of KPIs to provide an independent, fact-based and comparative assessment of building efficiency, environmental sustainability and building effectiveness. To provide critical context, all KPI results are clearly set alongside average private sector benchmark performances, appropriate target levels and Government standards.

The model presents performance for each KPI scored relative to a benchmark index score of 100. The underlying benchmark is derived from data held on equivalent private sector buildings in the dataset used by the Property Benchmarking Service and/or good practice or industry standards.

The performance framework model alerts the user to differences in results for buildings, groups of buildings or an entire estate and their appropriate benchmarks. It also shows how the relationship between cost and space influences overall efficiency.



ePIMSOGC has developed ePIMS as the Government’s central property information database. Since 2005, its use has been mandatory for all departments and their arms’ length bodies. The system has been progressively developed so that today, ePIMS supports and provides a centralised reporting database with a comprehensive dataset covering all central Government property holdings.

To support the central role which information plays in understanding and shaping the future Government estate, common standards and definitions are essential. The IPD Cost Code has been adopted and implemented as the basis for OGC cost categorisation and provides a robust foundation for defining data elements on ePIMS.

The Performance Framework Model

Efficiency

Effectiveness

Environmental sustainability

Cost efficiency

Workplace productivity

Environmental impact

Rent, rates, other costs

Facilities, environment, functional suitability

Energy, water, waste

Space efficiency

Condition, compliance, flexibility

Management practices

Workstation density, capacity utilisation

The 3 EsThe Property Benchmarking Service focuses on three key components of assessing property performance: efficiency, effectiveness and environmental sustainability.

Efficiency metrics are well established and understood but, in parallel, performance-driven organisations must also consider workplace effectiveness. Workplace performance is assessed using:

n key measures of building effectivenessn surveys of building occupants and building

managersn quantitative and qualitative survey data on

workplace productivity, compliance and management practice.

No assessment of building performance is complete without metrics of environmental sustainability performance. These provide a consistent and essential assessment of the building’s overall environmental impact.

The performance framework model alerts the user to differences in results for buildings, groups of buildings or an entire estate and their appropriate benchmarks.



Performance framework

Consistent KPIs and standardised reporting provide a basis for clear, objective communication of property performance issues.

The Property Benchmarking Service uses a hierarchy model to explain the performance of a building or a portfolio of buildings against benchmarks in a clear and systematic style. High-level results are shown at Level A; Levels B and C show the components driving the Level A results.

Efficiency The relative efficiency of property should prompt justification and challenge. A score of 98 tells the user that the overall £/FTE of £7,006 is aligned to private sector performance for equivalent buildings in that location.

Action: Review contributions of each building, review level B KPIs to understand if good performance in one area masks poor performance in another; justify and manage.

Effectiveness A score of 69 exposes a possible risk in a building. Lower Level C scores for both workplace environment and facilities may help focus future plans for improvement.

Environmental sustainability The score value of 58 exposes real issues with this building/estate. All measures of environmental impact have relatively low scores.

Action: Is environmental data robust? It needs to be. Are there some real performance issues highlighted here? Investigate and understand what is driving performance.

£/m² The score value of 114 shows straight away that £/m² (£435) is lower than the private sector benchmark. This appears to reflect good value.

Action: Aim to strategically manage £/m² through location, building selection and cost management, report Level C KPIs to help uncover quick-win opportunities – all with consideration to the future business requirements.



Efficiency £/FTE £7,006 98

Level A

£/m2

£435 114

m2/FTE16.1m2

81

Level B

124 75102

£221 £100 £114

KPI Score

Effectiveness 69

Workplace productivity43

Condition, compliance, flexibility 107

Environmental sustainability 58

Environmental impact 42

Management practices 120

Rent/m2

Rates/m2

Other costs/m2

m2/workstationWorkstations/FTE

Level C

Functional suitability Workplace environment Facilities

Condition & flexibility Compliance

Carbon/FTE m3 water/FTENon-recycled waste/FTE

Management practices

12.9m2

1.3

50 3 18

30 5

4.06 tn 18.1m3

1.43 tn

12

85 90

90 8 31

119 90

45 80 0

120

Overall performanceLevel A scores in the example below show that £/ FTE is broadly aligned to the benchmark but that effectiveness and environmental sustainability are performing less well.

Performance drivers Level B scores drive the performance reported at the top level. This example shows that whilst £/ m² is lower than the benchmark, m²/FTE (16.1m²) still offers scope for significant improvement.

Uncovering performanceLevel C Key Performance Indicators (KPIs) help users understand the basis of performance reported at the higher levels within the model.

Performance scores For each metric, a score of between 0 (low) and 200 (high) is given to reflect how results compare to a benchmark index score of 100. The underlying benchmark is derived from data held on equivalent private sector buildings and/or good practice or industry standards.



Reporting

Reports present all key metrics at varying levels, and as such highlight performance, expose opportunity and clearly summarise results. Reports are produced as standardised, hard-copy with graphics and tables. All results at building level are also available as a spreadsheet to allow active and flexible use of the information.

Report Features

Key performance indicators set in the context of the private sector

Benchmarked results Trend analysis Ranked performances

Highlights change in year on year performance

Exposes opportunity and weakness at building and portfolio levels

Explanation of the metrics

Interpretive text Consistent scoringBuilding level performance

Easy to understand and consistent approach

Performance model presents clear report for each building



Are you ready to meet the performance challenge?

Standard outputsData validation report: This report targets data improvement and, as such, draws attention to data refinement and revision. Pointers and guidance help expose errant and inconsistent data. The outputs can be usefully used as a basis for a property data improvement programme.

Performance report: This report consolidates building-level data into a single summary of portfolio performance. Reports can be aggregated and presented at varying levels to meet the needs of strategic property management and business-specific reporting requirements of both large multi-building operations and individual building occupiers.

Benchmarking will not be successful unless the organisation is prepared to commit appropriate resources to the initiative. It is therefore crucial to have the buy-in of staff and those senior stakeholders who will need to allocate resources from their teams and potentially make changes to their mode of operation over time. So the benefits and imperatives must be clear, and the commitment of the senior sponsor must be strong.

First and foremost, effective asset management and the benchmarking of its performance depends on data. However, this is of value only if it is current and complete; poor-quality data can be misleading and therefore is potentially worse than no data at all. Given such a wide range and potentially large volume of data, organisations need to have in place an appropriate management structure to ensure that the data is properly defined, managed and maintained.

Key questions include:

1. Do you have a central property/estates/facilities team which handles all asset management and property services?

2. Do you have an up-to-date asset register for all buildings within the estate?

3. Do you have a central property database/system which holds all key property information in your estate?

4. Are you familiar with the different areas within your organisation where all property data is held?

Transparency of results helps to expose opportunity, challenge performance and so raise understanding.



Beyond offices

Performance assessment needs to be comprehensive. Organisations should aim to capture data and report metrics to reflect their entire portfolio. For many, this presents a challenge as data is often hard to access and metrics may not have been developed. The reality is that many public sector estates comprise of a variety of asset types.

Plans are advanced for analysis to extend beyond back-office administrative buildings into more operational and specialist property portfolios. In taking this forward, it will be important to have a good understanding of the purpose and use of different property types. The absence of standard taxonomy to classify different property types is a barrier at present. OGC is therefore investigating

the establishment of a common system that would be the first step towards meaningful analysis of the relative cost and efficiency of different types of offices, laboratories, public caller offices, courts and so on.



Extending the benefits: the property benchmarking framework

The Property Benchmarking Service is operated under a four-year single-supplier framework with OGC’s supply partner, IPD Occupiers. This was established around provision of the ‘Core Service’ – the requirement to deliver the annual analysis of the performance of those buildings on the central Government office estate over 500m2. This is centrally funded to facilitate property performance measurement by departments and their arms’ length bodies.

The framework allows for organisations already engaged in the Core Service to contract for additional services as their appetite for performance measurement expands. Importantly the systems and processes developed to support the Core Service

are readily applicable across the public sector and the framework has been constructed to provide related services to other UK public sector contracting authorities beyond central Government. This includes:

n additional or more detailed analysis of buildings covered by the Core Service

n provision of the Core Service to organisations which are not central Government departments

n provision of the Core Service for non-office properties

n provision of the Core Service for office buildings under 500m2.

Please contact IPD Occupiers for further details and to discuss your specific needs.

For more information please contact:

Richard Graham Project Sponsor Office of Government Commerce T: +44 (0)20 7271 2713 E: [email protected]

David Pike IPD Occupiers, Project Manager T: +44 (0)20 7336 9654 E: [email protected]

Elspeth Webster IPD Occupiers, Government – Senior Client Manager T: +44 (0)20 7336 9200 E: [email protected]

Websites: www.ogc.gov.uk/estates_property_benchmarking.asp www.ipdoccupiers.com

Further information

Photo credit – P14 Richard Bryant/Arcaid.co.uk

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