Facilities

Facilities performance measurement

Barry J. Varcoe
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Barry J. Varcoe, (1996),"Facilities performance measurement", Facilities, Vol. 14 Iss 10/11 pp. 46 - 51
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Facilities performance
measurement
Barry J. Varcoe
The author
Barry J. Varcoe is International Performance Manager
Downloaded by New York University At 05:53 31 January 2016 (PT)
with Procord, Waterlooville, Hampshire, UK.
Abstract
States that performance measurement is a technique often
used throughout organizations, particularly in manufactur-
ing. However, it is not used that frequently, or particularly
well, throughout facilities management. Seeks to address
this missed opportunity by presenting in outline the
principles and process of performance measurement and
the benefits it can bring when used in an appropriate way.
Sets out some examples of its use in facilities manage-
ment, together with an introduction to the work of the
British Institute of Facilities Management (BIFM) in
establishing a Measurement Protocol.
Facilities
Volume 14 · Number 10/11 · October/November · 1996 · pp. 46–51
MCB University Press · ISSN 0263-2772
46
Introduction
Any discussion embracing the need to mea-
sure performance often, sooner or later, refers
directly or indirectly to the often quoted
words “What gets measured gets done”.
In truth, however, the need to measure
performance is not just to ensure that desired
actions are indeed carried out as intended. Its
significance and potential impact can be far
more fundamental than that. Applying the
disciplines of performance measurement
helps managers and operators alike to deter-
mine firstly those issues that are crucially
important to the overall organization and its
success, and second those issues that similarly
are critical to the successful delivery of the
specific function or operation concerned. As
such the technique focuses on the core infor-
mation sets that are needed to effect reliable
and effective management and operation –
vital knowledge irrespective of whether or not
it is then applied in a performance measure-
ment system of some sort.
The need for this focus, and the benefits
brought about by creative application of the
knowledge in support of objectives, is espe-
cially important in complex areas and compo-
nents of organizations. Any facilities opera-
tion can certainly include itself among these –
it being an area of management responsibility
that embraces many large international indus-
tries in their own right, and seeks to combine
elements of services and products from each
of them to effect one overall service to the
organization.
The principles of performance
measurement
Facilities is no different from any other facet
of an organization in that there can be consid-
ered to be three key performance criteria to
which all measures must relate: namely cus-
tomer satisfaction, flexibility and productivity.
And furthermore they must do so to all three
simultaneously – no one or two of these
dimensions should be allowed to take undue
precedence (unless overall organizational
objectives dictate such). All are important to
a successful and balanced operation. From
such a base dynamic measures that motivate
continuous improvement can be established –
the dynamism being provided by a constant
adjustment of measures to focus on that
 Facilities performance measurement
Barry J. Varcoe
which is vital to the organization – both now
and in the foreseeable future.
It is important to recognize from the outset
that the old-style measures, which seek to
control and cajole rather than encourage, are
past their “sell-by date”. In particular, those
of a financial bias derived from accounting
systems need careful scrutiny. They more
than likely arise from outdated standard
costing systems which are primarily designed
to satisfy external financial reporting purpos-
es, such as auditing and tax requirements, and
the interests of the shareholders, rather than
the needs of continual improvement in inter-
nal operational performance. A good example
of this for all components of an organization,
facilities included, is the requirement to
“performance-measure” budgets. This is
usually achieved through the measurement of
Downloaded by New York University At 05:53 31 January 2016 (PT)
variance, both in terms of deviations from
cashflow/expenditure assumptions and the
end of year total. A one-way quarterly “ratch-
et” is often also introduced as an extra mecha-
nism to drive overall expenditures down. All
of this, however, does nothing for the far more
important concept of addressing the overall
business value obtained from the expenditure,
i.e. what it produces as benefit. It merely seeks
to “account” for what is actually spent as a
pattern against a predicted sequence, with an
overt pressure within that to consume less in
absolute terms than originally intended. It is
important, therefore, that performance mea-
sures seek to identify and provide information
about the beneficial outcomes of actions, as
well as the completion of the action and the
resource inputs it requires. The benefit, after
all, is why it is done.
To address this knowledge void properly,
all facilities operations should embed perfor-
mance measurement within their operations.
The performance measurement process
When starting out on the performance mea-
surement process, it is very important first to
gain or reaffirm a full understanding of the
organization’s direction and its goals and
aims. These must then be converted to a
similar number of directly related facilities
objectives, which can form the basis for the
operational measures. Within the context, as
stated previously, of the overall aims of
addressing customer satisfaction, flexibility
and productivity as business unit objectives, at
the operational level the measures should
47
Facilities
Volume 14 · Number 10/11 · October/November · 1996 · 46–51
relate to such factors as quality (100 per cent
delivery of defect-free products and service),
delivery (the quality and quantity required
delivered when required, too early being as
bad as too late), cycle time (the time neces-
sary to effect the operation) and waste (the
non-value-added activities and resource
expenditures). These must then be integrated
into the marketing and financial focus of the
higher levels of the organization’s manage-
ment process, so that they relate directly to
the aforementioned strategic goals.
‘…Only those measures that are of impor-
tance are analysed, which in itself helps
concentrate attention on the key issues
at all levels. Those measures which are
merely convenient or easy to obtain,
therefore, are given their correct degree
of attention, i.e. little, if any…’
In this way, a defined and accountable perfor-
mance matrix, transcending the strategic and
the operational aspects of the facilities func-
tion, can be constructed to guide and focus
the entire activity. Furthermore, as organiza-
tional needs change, so their consequence
can quickly be assimilated and assessed
through the matrix – determining what new
measures are required for the new objectives
and which can, for the time being at least, be
laid to one side. This dynamic capability
means that only those measures that are of
importance are analysed, which in itself helps
concentrate attention on the key issues at all
levels. Those measures which are merely
convenient or easy to obtain, therefore, are
given their correct degree of attention, i.e.
little, if any.
Target setting
From this rigorous and robust “internal”
base, comparable measures among other peer
organizations can then be sought to assist in
the next fundamental step – the establishment
of considered improvement targets (see [1]).
Application of this approach to premises and
facilities does present a particular problem,
however. Buildings are rarely alike, each and
every one being unique in some way or other
(particularly in the UK). Nor are any two
occupiers alike either; each organization will
use a building in a different way. Specific
performance measure comparisons therefore
 Facilities performance measurement
Barry J. Varcoe
need to be viewed in this context, while to
enable general inter-organization and market
sector comparisons, measured indicators
need to relate in some way at least to common
measures of “buildings” (while reflecting at
the same time the requirements and perfor-
mance achievements of the organization).
The BIFM measurement protocol
The BIFM Council recognized this problem
and set up a Measurement Steering Group,
tasked in the first instance with establishing a
Measurement Protocol, or common basis, for
measuring the effectiveness of any organiz-
ation’s facilities management operation,
particularly from a cost performance perspec-
tive. They decided from the outset that the
first protocol should be constructed with
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office buildings as a focus, given that most
organizations make extensive use of them.
Within this context the initial objectives for
the Group were to create a protocol that:
• provided a standard which will be readily
adopted by the FM profession;
• provided a consistent format to enable
meaningful comparisons of service, cost
and value, for business managers and
facilities management providers.
In meeting these objectives they further rec-
ognized that the protocol would in particular
need to:
• build on existing protocols within the
facilities management and related profes-
sions;
• provide a basis for comparing identified
performance achievements, taking into
account organizational constraints and
characteristics.
As the Steering Group set about drafting,
challenging and refining a protocol, it quickly
became apparent that it was important to
distinguish between a measurement frame-
work (e.g. definitions) and commercial mea-
surement applications of that framework (e.g.
data collection pro forma) – the protocol only
addressing the former. In this way it is to be
hoped that it will stimulate, and be used as the
basis for, many measurement applications
covering many specific needs.
The Protocol draft was completed with a
measurement framework as follows:
• standard units;
• the organization;
• the estate;
48
Facilities
Volume 14 · Number 10/11 · October/November · 1996 · 46–51
• the buildings;
• facilities management;
– operational services/cost centres;
– functional use of space;
– financial performance;
– other performance;
• comparisons.
It was then subjected to extensive field testing
to challenge its robustness and relevance.
This included executive and professional
review, and data collation tests throughout the
UK and mainland Europe.
The Protocol was then presented to the
BIFM Council for their consideration, and
was subsequently unanimously endorsed. It
was formally launched at the BIFM Annual
Conference in autumn 1995, following which
published copies were distributed to BIFM
members and the wider profession.
‘…The BIFM Measurement Protocol should
be seen as the necessary first step in the
development of a facilities manage-
ment performance measurement stan-
dard which needs to be evolved to
embrace wider dimensions of activity
and building types…’
It is to be hoped that the BIFM Measurement
Protocol will provide a common basis and
guide for undertaking the performance mea-
surement of facilities management and ser-
vices. It should also be seen as the necessary
first step in the development of such stan-
dards, which need to be evolved in the future
to embrace wider dimensions of activity and
building types. Closer integration of the
facilities perspective with overall organization-
al objectives will also be valuable.
Facilities measures – some examples
Measures which focus on waste are the most
prevalent within facilities management. The
most obvious of these, and the most widely
used, are cost measures, usually resulting
from the analysis of the cost of each individual
facilities function/cost centre for each individ-
ual building within a defined period, normally
a year. Typically the analysis is undertaken
with respect to the cost per unit area and the
cost per (full-time equivalent) occupant
within the building. Both of these relate the
cost of the service concerned to a measure of
 Facilities performance measurement Facilities
Barry J. Varcoe Volume 14 · Number 10/11 · October/November · 1996 · 46–51

Figure 1 Electricity costs per unit area measure Figure 3 Electricity costs per unit
Cost per ft2 per annum Cost per 1,000 kWh

6.01 5,263
3 100
90
2.5
80
70
2
60
1.5 50
40
1
30
20
0.5
10
0 0
Highest Upper Median Lower Lowest Mean Building Highest Upper Median Lower Lowest Mean Building
quartile quartile quartile quartile
Downloaded by New York University At 05:53 31 January 2016 (PT)

its quantity, but care needs to be taken, as
quality is not inherently reflected. Further-
more, costs per unit area measures do not
communicate any concept of intensity of use.
To take an extreme example, the “best per-
forming” building on a cost per unit area basis
is an empty one. In an operational context, an
increase in the occupancy density, therefore,
will probably lead to an increase in the unit
area cost measure, showing an apparent fall in
performance achievements, whereas only the
cost per capita measure will show the true
effect of the improvements in efficiency
overall.
Cost measures have a more fundamental
shortcoming, however. They do not relate to
why the “facilities” are being provided, only
relating to a perspective of the efficiency with
which that is achieved. They therefore do not
relate to the key strategic and operational
service delivery issues on which organizations
rely, and indeed if viewed in isolation can
prove misleading and ultimately damaging to
that fundamental dimension. The series of
charts included in Figures 1 to 5 serve to
illustrate this. These show various perspec-
tives on the comparative analysis of the elec-
tricity consumption of one office building
against a sample of approximately 30 million
square feet of similar buildings. Figure 1
shows the cost perspective using the cost per
unit area measure. This clearly shows the
subject building to have a very high cost mea-
sure, well above upper quartile levels.

Figure 2 Electricity consumption per unit area measure Figure 4 Electricity costs per head
Cost per head per annum
Kwh per ft2 per annum
90 52,63
1,400
80
70 1,200

60 1,000
50
800
40
30 600

20 400
10
200
0
Highest Upper Median Lower Lowest Mean Building 0
quartile quartile Highest Upper Median Lower Lowest Mean Building
quartile quartile

49
 Facilities performance measurement
Barry J. Varcoe
Figure 5 Electricity consumption (KWh per head)
Kwh per head per annum
63,015
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Highest Upper Median Lower Lowest Mean Building
quartile quartile
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The obvious conclusion from this is that costs
need to be reduced – electricity consumption,
for one reason or another, is too high and is
inefficient. This is apparently confirmed by a
comparative analysis of the consumption
shown in Figure 2. When another cost mea-
sure, that analyses unit costs, is compared
however, the subject building is shown to be
buying its electricity very effectively, as shown
in Figure 3 below lower quartile levels and
approaching the lowest. Furthermore, the
cost per FTE occupant is broadly at average
levels (Figure 4) for an individual average
level of consumption that is comparatively
high (Figure 5).
In fact the business requirements of the
operation within the subject building demand
such a high individual level of consumption,
and the conclusion has to be that the facilities
department are providing that need very
efficiently indeed at best practice levels.
Reflecting back on the initial analysis of
Figure 1, the most prevalent type of measure,
shows clearly the dangers of cost measure-
ment alone, especially when it is superficial. It
is so important to focus primarily on what
needs to be provided, and why.
A useful technique in helping to focus on
these issues from the customer’s perspective is
to use the concept of “a moment of truth”.
This is considered to be any moment of inter-
face the facilities function has with the organ-
ization’s external customers, i.e. the real ones.
This can be quite enlightening.
Consider the first direct contact a potential
customer might have with the organization. It
50
Facilities
Volume 14 · Number 10/11 · October/November · 1996 · 46–51
will probably be by telephone via the tele-
phonists, who are within the facilities man-
agement function. This might be followed up
by a meeting at one of the organization’s
premises, so the customer will be travelling to
the building, seeking to identify it as they near
it, perhaps looking to park a car, enter the
building past a security guard, and be greeted
and helped by a receptionist. All of these
activities make a powerful first impression of
the organization, and all of them are likely to
be the responsibility of the facilities manage-
ment function. Furthermore, in the context of
the overall facilities budget they probably are
not that significant. In the context of the fact
that there is only one opportunity to make a
first impression, however, clearly all of these
areas of activity ought to warrant service
delivery related measures in most facilities
operations.
An example of how significant such
measures can be was provided recently by a
high street bank. They ran an advertising
campaign promising to answer any incoming
telephone call within four seconds – the
achievement of a simple facilities performance
measurement standard being used as a core
business differentiator.
‘…Whatever routes are taken to measure
performance and establish improve-
ment goals, it is worth re-emphasizing
the importance of having a clear under-
standing of the underlying issues and
organizational demands related to
them…’
Other performance measures include a whole
range of analysis options with respect to
space use. These can focus on specific fac-
tors, such as average workstation areas for
each identified job function, or can relate to
more general ratios of organizational space
use, e.g. the ratio of net department (usable)
space available relative to the net internal
(lettable) area, on which the rental charge is
calculated. The “bottom line” for such per-
formance measurement is the total cost of
providing a working environment for each
and every member of staff. The significance
of this perspective is emphasized by consider-
ing a wastepaper basket, which costs about
£10 to buy, but can cost £80 each year to
place on the floor somewhere.
 Facilities performance measurement Facilities
Barry J. Varcoe Volume 14 · Number 10/11 · October/November · 1996 · 46–51

Measure to improve performance in the Used in this context performance measure-

organizational context
Whatever routes are taken to measure per-
formance and establish improvement goals, it
is worth re-emphasizing the importance of
having a clear understanding of the underly-
ing issues and organizational demands relat-
ed to them. There must be clarity in linking
operations to strategic goals, with a focus on
business activities in the context of customers
and their requirements. It is only from the
firm basis of a clear understanding of the
overall organizational performance equation
that business decisions and value-based rec-
ommendations for improvements, supported
by performance measurement, can be made
in the proper context of true organizational
Downloaded by New York University At 05:53 31 January 2016 (PT)
ment that is embedded in the everyday man-
agement and operation of the facilities func-
tion not only makes sure that the correct
actions and standards are being achieved, but
it helps to determine what those actions
should be. Furthermore it not only provides
information as a spur to improve
performance, it defines and provides the
essential information necessary for all facets
of management.
Performance measurement clearly has a lot
to offer truly performing facilities manage-
ment.
Reference
1 Varcoe, B.J., “Business-driven facilities benchmark-
ing”, Facilities, Vol. 14 Nos 3/4, March/April 1996, pp.

need. 42-48.

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