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Benchmarking
• Used to identify standards that are critical to a company’s success
• Used to compare:– Actual Performance– Determination of gaps
in performance– Implementation of
improvements
• External benchmarks are typically best practice
External Benchmarking
Productivity Measures• Productivity- ratio of outputs achieved to inputs into
production
• Objectives of Productivity Measures:– Were all inputs used needed to produce the actual
output?– Was the best mix of inputs used?
Productivity Ratios• Total Productivity Ratios
(TPRs) Reflect the value of all
output relative to the value of all input.
• Consider all inputs and the prices of the inputs
• Calculation: Quantity of output produced/cost of inputs
• Partial Productivity Ratios (PPRs)
Reflect the value of all outputs as compared to the value of major categories of input.
• Concerned only with the quantity of a single output and not the price of input
• Calculation:Quantity of output produced/quantity of the single input used
How to Externally Benchmark
• BOMA (Building Owners and Managers Association International)
• IMFA (International Facility Management Association)
• It’s good practice to compare “apples to apples”
• Common Benchmarks:– Safety, Security, and Workplace Standards– Cost Per Person, Gross Square Feet Per Person
Internal Benchmarking
Monitoring & Investigative Techniques:
1. Control Charts
2. Pareto Diagrams
3. Cause & Effect (Fishbone) Diagram
Internal Benchmarking
1. Control Chartsa. 3 Basic Componentsb. Common Cause, “noise”c. Special Cause, “signal”
Internal Benchmarking3. Cause and Effect Diagram• “Fishbone Diagram”
1. Machinery2. Method3. Materials4. Manpower5. Measurements6. Environment
Process Improvements & Activity-Based Management
1. Activity Based Costing
a. Allocating Costs
b. Identifying Necessary Activities
c. Process
d. Determining Driving Costs
e. Companies with Multiple Products
f. Pricing and Outsourcing Decisions
Process Improvements & Activity-Based Management
2. Activity Based Management
Using ABC to determine…
a. Where are Overhead Costs Allocated?
b. Should we Outsource Processes?
c. Should Prices Change?
Process Improvements & Activity-Based Management
3. Cost Identification
a. Value Adding vs. Non-Value Adding Activities
b. Exact Costs of Each Unit
c. Cost Data by Activity