Benchmarking has long been an important tool for any business looking to improve their overall performance. The process itself involves measurement and comparison to certain standards with the goal of supporting systematic improvements in productivity.
It can help construction firms spot hidden best practices, and create realistic goals for adopting them across the organization. It can also create a healthy competitive environment across teams and projects to incentivize better performance. For firms involved in public projects, benchmarking can be useful in the bidding process by making a case for the value delivered to the owner–and the public at large.
While the construction industry is not new to benchmarking, the concept itself is still not widely understood and only a few firms have adopted benchmarking as a standardized practice across their organization.
In order for firms to use benchmarking successfully, they must answer a few key questions.
- First, what are our goals for benchmarking?
- Second, what type of benchmarking will best serve our objectives?
- And finally, do we have access to the right tools and data sets in place to be successful?
Types of Benchmarking in Construction
The most common types of benchmarking today are industry benchmarking and competitive benchmarking.
Industry benchmarking helps firms understand performance levels industry-wide. But in the highly differentiated and fragmented environment that is construction, obtaining transparency is challenging. Some countries, such as the UK, publish national benchmarking data, while firms in the US can contribute to surveys which are then made available to the industry. But these methods make it difficult to deliver a like-for-like comparison as every firm operates with their own underlying characteristics, assumptions, and operating conditions that impact the data they share.
Competitive benchmarking is more targeted. It enables firms to assess performance against competitors and industries, and seeks to answer the question: “How do we stack up to everyone else?” But due to the lack of publicly available data, this is often an exercise in futility. Like industry benchmarking, any firm making a competitive comparison is operating under a set of assumptions about the underlying business considerations within which the competitive data was collected and measured.
Cross-industry benchmarking is a growing area of interest for firms looking to adopt efficiencies used by other industries. Manufacturing productivity is of specific interest to construction, as it represents an established industry that has undergone sweeping change in process and efficiency improvements using the same technology that many construction firms are considering today. Robotics, 3D printing, digitization of data, and advanced visualization techniques all have parallel deployments in manufacturing that we can learn from, not to mention the workflows, processes, and behaviors that support the successful use of new tools and technology.
Internal Benchmarking: A Better Way
Finally, internal benchmarking – while less common – offers firms the best opportunity for identifying internal processes or behaviors that can lead to improved performance. Because it is not reliant on external data, internal benchmarking delivers higher accuracy and control than other forms of benchmarking. Parameters can be customized and defined to align with with a firm’s unique key performance indicators (KPIs) and modeled after a variety of productivity approaches, such as Lean, Six Sigma, or Kaizen. Tangible targets can be set that allow for incremental improvements and ongoing measurement opportunities at regular intervals, which ultimately fuels better progress.
Recently, a multinational construction and development company using Rhumbix for field data collection had a very clear objective in mind. They wanted to understand the difference between a traditional and pre-fab construction of modular room elements.
We worked together with their team to determine what aspects of fabrication needed to be measured to establish reliable benchmarks. We identified two KPI’s: (1) Labor production measured using mobile timekeeping, and (2) time spent at the workface and distance traveled measured with real-time location-based tracking. The combination of data enabled them to create a new benchmark for production based on knowing how far workers had traveled and how that correlated with production.
Taking steps to optimize job site layout to reduce travel drove
substantial performance improvements and set a standard for
their firm to reference moving forward.
Setting up for Success
Once a firm identifies the type of benchmarking they want to do, they must ensure access to the right tools and data sets to be successful. There are six key considerations for firms pursuing successful benchmarking initiatives.
Firms must clearly define the boundaries of what needs to be improved and why, and align objectives with overarching organizational initiatives to ensure buy-in. The most successful benchmarking projects measure behaviors and practices that deliver clear value to their organization and their customers.
A benchmark is only a benchmark if you have a data set you are assessing against. Your firm must have a comparable entity, whether that be your own data, or data available from a publicly available index. Be precise in what is measured to assure the rigor necessary to validate outcomes. If using public data, any external contributing factors that impact the data sets should be clearly understood and communicated.
Carefully consider the means for data collection in terms of the effort required to collect the data, the accuracy and accessibility of the data, and other issues relating to sample size and statistical significance. Traditional, antiquated processes for gathering data that involve paper and a stopwatch are time-consuming, overhead intensive, and subject to human error.
Firms should consider the variety of emerging technology solutions that enable better data collection and analysis. New mobile apps for construction and platform-based approaches offer automated analysis of data and make it available more regularly, empowering the analysis of operations at a more granular level.
With benchmarking data in hand, firms need to create performance improvement plans with clearly defined goals. Action plans should be specific, measurable, achievable, realistic and time-phased (SMART). They should also be reasonably challenging.
Establishing a benchmark is really the beginning of a journey to monitor performance improvements and regularly assess progress towards a desired end-state. What’s measured matters, and constant self-checking and alignment to SMART targets can keep teams and organizations motivated.
Finally, the organization – and especially management – must align around benchmarking efforts. Change does not come easy. The more individuals within the organization recognize benchmarking as an integral part of company operations and not a one-off side project, the higher the likelihood is that it will positively impact the bottom line. Regular opportunities for workers to provide feedback on efforts is critical to engaging them in the process, encouraging organization-wide learning, and maintaining the enthusiasm and morale that contributes to success.
At Rhumbix we provide tools that help companies implement benchmarking, but we’re just one part of the overall effort. If you are interested in understanding how mobile tools can supplement your benchmarking efforts, please feel free to reach out to us here, or learn more about our platform.