Benchmarking

bench*mark*ing
\’bench-märk-iŋ\ n,

a continuous, systematic process for evaluating the products, services, and work processes of organisations that are recognised as representing best practices for the purpose of organisational improvement.

Michael J. Spendolini
The Benchmarking Book

Benchmarking reduces organisational risk caused by uncertainty and plays an increasing role in the acquisition of business intelligence to inform strategy and decision-making in organisations. Through benchmarking , organisations are able to understand where they sit relevant to market leaders, and leading practice in comparison to those with similar organisational functions.

High performing organisations and improving companies recognise and value the challenge of accessing accurate, credible benchmarking data. Whilst benchmarking is a powerful way to inform strategy, it is also a tremendously valuable tool to understand an organisation’s ability to execute that strategy and delivery capability.

This white paper explores the benefits and intrinsic strategic advantage of benchmarking Project, Program and Portfolio Management (PPPM), and Organisational Project Management (OPM).

What is Benchmarking?

Since Xerox pioneered benchmarking in the 1970s, organisations have widely adopted this concept to improve their performance. Benchmarking is the process whereby an organisation captures specific data related to its performance — i.e., the baseline, or the current state of an organisation—and then evaluates this performance data against those from some other organisation (which constitutes the actual benchmarking). Because benchmarking pinpoints the differences between organisations, it can significantly upgrade project management capabilities.

Organisations conduct three types of benchmarking. They can be involved in (i) performance benchmarking to compare performance metrics of other organisations and improve their own capabilities; (ii) process benchmarking to assesses and integrate best processes of other organisations; and (iii) strategic benchmarking to collect information on strategy positions of others and improve strategy delivery. Although benchmarking is often used externally — to compare an organisation with another company or the composite average of a group of organisations — it can also be used internally by comparing performance of organisations that operate in several countries, or with multiple operating units and divisions.

While Spendolini’s definition of benchmarking focuses on external comparators, many organisations also find value using internal benchmarking programs to improve performance across geographic sites, business lines and functional units.

Because internal benchmarking can easily access information about projects delivered within an organisation and often lacks the cultural and descriptive issues (unless the organisation is dispersed in different countries), which are often the source of validity disputes, it may be superior to external benchmarking.  When a top performer emerges internally, its practices then can be adopted and leveraged across the enterprise.

External benchmarking, on the other hand, can offer different solutions to organisational problems, as it allows organisations to look beyond their internal processes. By benchmarking outside of the organisation, the company can constructively assess its competition, and integrate the practices of leading organisations to improve its own performance.

Benchmarks may be very specific and narrow in scope, focusing on a discrete segment of OPM, e.g. Benefits Management or broad enough to consider all aspects influencing Project Portfolio and Program Management (PPPM) beyond the functional, e.g. culture.

Broader scope assessment models will inevitably provide more data points but beware – be a considerate purchaser. Ensure the model is robust enough to align the measures for true comparability. Scrutinise these offerings to ensure long-term validation of the model, its data and the results delivered.