As evidenced by the latest InEight Global Capital Projects Outlook report, contractors who use benchmarking simply perform better. Where we see the use of historical data and industry benchmarks it has a markedly positive impact on project certainty. However, over half of the industry still has not yet integrated this information into project planning and/or execution, leaving the tremendous value of greater operational awareness on the table. The solution? Benchmarking for the real world.
Whenever I speak with people in the construction industry about the topic of benchmarking, the reasons why they can’t benchmark abound. Any of this sound familiar?
“This is something we should have started years ago.”
“No two jobs are alike.”
“We can’t ask the field to capture any more detail than they’re already tracking.”
“We would need to wind up with an endless coding structure for that to work for us.”
There are plenty more, but they all seem to fall along the same lines. Basically, that it’s too big of an issue to grapple with right now. But is it really? They say that when solving any problem, it’s often best to begin at the beginning. Let’s get started.
What Is a Benchmark?
The term benchmarking originates from the mid 1800’s, when ammunition transitioned from muzzle-loaded black powder and a bullet to mass produced cartridges.
Manufacturers and end users alike wanted to know the best ammunition to pair with a specific firearm to achieve the most accurate and predictable outcomes.
Rather than rely on the variability of individual marksmen to test the ammunition, the process they used was to secure the weapon to a bench, and then study the marks left on the target.
This approach allowed for detailed analysis from the numerous tests performed, and provided a means of comparison and improved performance as further tests were conducted.
Overall then, benchmarking is used to measure a specific process or operation, and compare the measurements against history, or “best practice” standards, with the goal of understanding the likelihood of certain outcomes in the future.
Benchmarking is common in numerous industries. Manufacturing firms rely on benchmarks to monitor production, control costs and quality and evaluate sales and marketing performance. In agriculture, benchmarks are used to measure crop yields, effectiveness of resources, and sustainability. Real estate benchmarks, better known as “comps” or comparable sales prices of neighboring homes, are used by realtors to weigh value via similar attributes, like square footage, proximity to schools, etc.
How comfortable would you be defining an asking price for your home if you had little to compare it to? Probably about as comfortable as you would be having nothing to compare your construction bids and forecasts to as you began planning a new project.
So where does that leave construction companies that really want to measure and improve their performance, but just don’t know how to get moving in that direction without disrupting day to day operations? Here’s a straightforward, pragmatic way to begin today.
Develop and Implement a Coding Strategy to Get Started
Creating a coding structure that works for your company does not require reinventing the wheel. There are many industry-standard coding structures already in use in construction. There is MasterFormat, a material-based organization of building content (scope of work), and UniFormat, a systems-based organization of building content (building elements).
Many companies use the skeletons of these coding structures to build out their own codes to be more aligned with their specific business operations.
Along with these codes, you’ll want to take into consideration how things are measured. A best practice is to have a consistent list of units of measure (SF vs. Square Feet vs. SqFt, for example) and to quantify work as much as possible. By quantifying the work, apples can be compared to apples and unit costs and productivities can be easily calculated.
Coding structures can grow with your business over time as well and need not be terribly complex. Think that you need to have all of this plotted out before you can begin to benefit from collecting and leveraging your organizational history? Maybe, but maybe not.
Use the 80/20 Rule 100% of the Time
Of all the work performed by your organization, there are probably 20% of your tasks that you perform 80% of the time. This would be an intuitive place to start capturing data in a normalized, structured format. The other 80% of what you do can be added incrementally as you go.
This approach also allows you to continually refine how you capture data going forward.
But in terms of legacy historical data, don’t fall into the trap of waiting to migrate all that data forward to begin using benchmarks.
Pick a few historic projects, get those aligned with the agreed-upon coding structure and pull those forward. The rest can be done incrementally. Migrating all legacy data should not be a pre-condition to start benchmarking. Why?
Because it’s far more strategic to begin capturing “clean” data today than it is to go back in time to retrieve history, especially if older data has been collected in an inconsistent or unstructured manner.
In addition, consistent use of a standard process for classifying work and recording progress is key to any benchmarking system.
The right technology will allow coding attributes to be assigned to work tasks “in the background” keeping field personnel free from having to memorize or apply codes to work they’re performing in the field.
This also streamlines operations, as field personnel can focus on the work at hand and let the systems and technology crunch the numbers and produce the desired benchmarking analysis.
The Time to Start is Now
I remember something a gentleman named Pastor Mark once said that really stuck with me. As I was sitting in church one Sunday morning, he said, “The best time to plant a shade tree is fifteen years ago. Or today.”
Though his message was referring to something more transcendent than collecting and organizing construction data to be leveraged in the future, his point still rings true.
Even if we didn’t get something started fifteen years ago, why can’t we begin now?
We need to get the benchmarking tree planted in the ground, so to speak, give it a consistent supply of water and nourishment, and let it begin growing.
Because if not now, when?
Ready to take a deeper dive? Schedule a one-on-one consultation to find out how InEight can help you succeed in your construction management journey.
Sign up for our monthly blog newsletter today and stay up to date on the latest industry news.
