Project benchmarking can be defined as the ongoing search for Best Practices that produce superior performance when adapted and implemented in one’s organization. The ultimate goal of benchmarking is continuous improvement of capital project systems, individual projects, and targeted functional activities. Benchmarking provides the tools and processes to accept change as constant, inevitable, and good. And it is this ongoing adaption of Best Practices that helps capital project systems to achieve predictability, drive competitiveness, and enable success.
What are the different types of project benchmarking?
Project benchmarking takes several forms:
- Internal benchmarking compares operations across a company’s divisions, regions, or businesses.
- Competitive benchmarking assesses advantages and disadvantages between direct competitors.
- Functional benchmarking allows learning from outside a company’s immediate competitors and instead focuses on functional competitors.
- Generic benchmarking views business functions across industries and provides an opportunity for step-change learnings.
Why is benchmarking project systems so hard?
First, deciding what to measure is not always clear. There is no single measure of project success that can be universally applied as a basis for benchmarking. Second, obtaining reliable competitor data is difficult as these data are typically not publicly available. Identifying the right learnings can also be challenging. Finally, maintaining a benchmarking process requires discipline and resources.
What are the steps of the project benchmarking process?
The benchmarking process has 10 steps:
- Identify what will be benchmarked. This can come from the top down, for example from the company’s mission statement, or existing performance measures can be used.
- Identify comparative companies. This is driven by the type of benchmarking you want to do. For example, a company that wants to benchmark internally (e.g., across regions or divisions) will need different information than a company that wants to see how it stacks up against its competitors. Some immediate considerations for this step include the amount and accuracy of the data, as well as the cost and time needed to obtain the data. Possible sources for the data include internal information, product analysis, company sources, public domain information, consultants, and external experts and studies.
- Determine the data collection method and collect the data.
- Analyze the data to determine performance gaps between current performance and desired performance,
- Project future performance levels. Projecting future performance is important to know if the company’s gap from industry practices will widen, narrow, or stay the same.
- Communicate the benchmarking findings and gain acceptance. Communicating the results to company leadership is a critical step as the identification of performance gaps may lead to skepticism on the validity of the results. Gaining acceptance drives the initiative for change.
- Establish functional goals.
- Develop action plans to meet those goals. Getting stakeholders to buy-in to the action plan is critical to the success of the plan’s implementation and cannot be overlooked.
- Implement specific action and monitor progress.
- Recalibrate the benchmarks to drive continuous improvement.
Although important for the health of a company’s capital projects portfolio, benchmarking is not easy to do with only internal resources. Independent Project Analysis, Inc. (IPA) has collected and studied detailed project data directly from owner organizations for decades, enabling us to determine empirical key performance indicators for our clients and assess their project system performance relative to industry peers. We know what drives capital effectiveness and we translate that knowledge into actionable intelligence that helps our clients improve the performance of their capital project systems, individual projects, and targeted functional activities.
Contact IPA if you would like to discuss benchmarking your capital projects.
 Adapted from Christopher E. Bogan & Michael J. English, Benchmarking for Best Practices: Winning Through Innovative Adaptation, New York: McGraw-Hill, Inc., January 2014, pg. 4.
 Adapted from Robert C. Camp, Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance, Milwaukee, WI: American Society for Quality, May 1989.