Copyright: David Lawson – appeared Facilities Business magazine winter 1999Home page
How do you compare apples with oranges? That is the fundamental conundrum facing facilities managers as they come under pressure to bring some sense of financial logic to the wide range of services involved in an even wider range of organisations.
The recession spurred firms to find a method of determining whether they were getting value for money. The clampdown on public spending spread the same message into central and local government. Benchmarking emerged as the magical solution: comparing costs with some universal set of standards.
But like most easy answers, it has a fatal flaw. The cost of running a reception desk in an insurance company may bear no relation to that in a driving test centre. And how can heating a 19th century police station in Snowdonia bear any relation to a slick, modern one in central London?
One solution is to at least try and keep the apples and oranges in different baskets. Local authorities, for instance, share common goals and similar estates, so it seems logical they should band together. Several have set up informal 'clubs' to compare and contrast data.
Logical, perhaps, but not that easy. 'Someone has to do all the hard work,' says Howard Kendall, head of offices at Arun District Council. 'It is not something that usually gets funding and you can end up constantly nagging. It also has to be kept up to date.'
He set up one group by writing to around a dozen councils in Sussex and Kent after coming under pressure to produce a 'best value' report for his chief executive's new audit department. Two years of clubbing has brought its intoxications and hangovers.
Among the highs was the ability to sit before a council committee answering sharp questions on costs while armed with a database of comparable information from other councils. The lows include the occasional pang of doubt whether the information ends up in the back of a filing cabinet rather than at the top of management priorities.
'The main lessons have been that you cannot treated this in a half-hearted way and must not leave it to one person,' says Kendall.
The data also has to be treated with caution. Firstly, it can be difficult to compare like with like even within a close-knit club. It is easy to get information about costs per square foot, but how do you define areas like lighting and management?
'There has to be a level of agreement on how costs are allocated,' says Kendall. Some areas can fall into black holes because they have never been billed by particular councils. Others escape notice because they are the responsibility of other departments. Telephone calls, for instance, may be part of the occupation cost base for individual buildings in one council but allocated in a different way elsewhere - perhaps as part of a wider accounting system. The FM manager never gets a look-in.
Quality is another crucial element, says Kendall. The cheapest cleaning services may not necessarily be the best. 'You must be brave enough to add a subjective element to these figures,' he says.
That does not mean fiddling figures to match the judgement of individual managers - a move that could cast doubt over the value of any comparable data. 'It is like any other operation: you ask the customers,' says Kendall. Staff can be polled about their view of cleaning and catering. The public will probably be more than willing to give their view on the value they get from buildings.
He now hopes to build on these lessons by widening the club. Suggestions about including private sector buildings could be difficult: marble-lined reception areas may not be easy to compare with more utilitarian council offices. But there are common threads such as energy costs which could prove useful. Kendall also believes other local authority clubs might find it useful to compare data, and is keen to hear of their experiences.
Seamus Toland could probably offer a few lessons from a different kind of matchmaking. Ten years ago his consultancy, Seamus Toland Associates, was asked to benchmark for a major bank and quickly realised the problems of comparing apples and oranges.
'They asked everyone if they could work out how much it should cost to run a building. I was the only one to say no,' he says. 'That is probably why I got the job. There is a world of difference between statistics and value for money.'
Since then he has developed a system which has been used extensively for sectors such as the police and courts. Ironically, he admits that differences are the main grit in the machinery of benchmarking because managers can spend lots of time arguing about why a building may cost more to run and looking for excuses such as age or poor condition.
The important thing is not to eat up time seeking excuses. 'You have to work out what you can't control and get on with handling what you can control,' says Toland.
Certain differences which cannot be controlled include location, age and type of business. Others that can be influenced are the standard of services. His technique involves what he calls 'equalizing and adjusting' to meet these differences.
Average figures can be produced across the club but these are also not completely satisfactory. The benchmarking technique involves identifying those premises in the upper quartile of costs and targeting them for site visits to look for the reasons behind the differences.
This has been successful in estates with enormously different uses such as the BBC's TV and radio studios, which were compared with administrative offices, and the court service, where buildings range from monumental central London landmarks to miniature rural Welsh courts.
Even when what Toland calls the 'phobia of differentiation' has been overcome, administering these benchmarking clubs may not be straightforward. Kendall found some councils reluctant to release some information considered sensitive when they were involved in competitive tendering. Toland had to negotiate an inbuilt culture of confidentiality when setting up a club for police forces. Then he had to set up benchmarks both within forces and across the country.
For all its difficulties, the club system of drawing together similar sectors appears to be a fruitful way of overcoming the inherent problems of comparing apples and oranges.