As defined in Wikipedia, Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compare the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.
Benchmark project management is the process of continuously comparing the project management practices of your organization with the project management practices of leaders anywhere in the world; its goal is to gain information to help you improve your own performance. The information obtained through benchmarking might be used to help you improve your processes and the way in which those processes are executed, or the information might be used to help your company become more competitive in the marketplace.
Benchmarking is a continuous effort of analysis and evaluation. Care must be taken in deciding what to benchmark. It is impossible and impractical to evaluate every aspect of project management. It is best to decide on those few critical success factors that must go right for your business to flourish.
For project management benchmarking, the critical success factors are usually the key business processes and how they are integrated. If these key success factors do not exist, then the organization's efforts may be hindered.
Deciding what information to benchmark against is usually easier than obtaining that information. Locating some information will require a critical search. Some information may be hard to find. Some information you would find helpful might not be available for release because the organization that has it views it as proprietary. Identifying the target companies against which you should benchmark may not be as easy as you believe.
Benchmarking has become common since it was first popularized by Xerox during the 1980s. Benchmarking is an essential ingredient for those companies that have won the prestigious Malcolm Baldrige Award. Most of these award winners readily share their project management experiences. Unfortunately, there are some truly excellent companies in project management that have not competed for these awards because they do not want their excellence displayed.
Benchmarking for project management can be accomplished through surveys, questionnaires, attending local chapter meetings of the Project Management Institute (PMI), and attending conferences and symposiums. Personal contacts often provide the most valued sources of information. There is a so-called 'Code of Conduct” for benchmarking:
- Keep the benchmarking process legal;
- Do not violate rules of confidentiality;
- Sharing information is a two-way street;
- Be willing to sign a non-disclosure form;
- Do not share any information received with a third party without written permission;
- Emphasize guidelines and checklists but avoid asking for forms that may be highly sensitive.
Benchmarking should not be performed unless your organization is willing to make changes. The changes must be part of a structured process that includes evaluation, applicability, and risk management. Benchmarking is part of the strategic planning process for project management that results in an action plan ready for implementation.
So far we've talked about project benchmarking in terms of comparing a PM practice to competitors in the marketplace.If we look at project management benchmarking from the standpoint of a project management maturity model, or PMMM, then we can understand how the benchmarking fits into the growth and stability of the organization and its internal practices.
Benchmarking, from a PMMM standpoint, is part of Level 4 - this is where the level where the organization realizes that its existing methodology can be improved upon. The complexity rests in figuring out how to achieve that improvement. For project-driven companies, continuous improvement is a means to maintain or improve upon a competitive advantage. Continuous improvement is best accomplished through continuous benchmarking. The company must decide whom to benchmark and what to benchmark.
There are certain characteristics of Level 4:
- The organization must establish a project office (PO) for project management. This is the focal position in the company for project management knowledge;
- The Project Office must be dedicated to the project management improvement process. This is usually accomplished with full-time, dedicated personnel;
- Benchmarking must be made against both similar and non-similar industries. In today's world, a company with five years of experience in project management could easily surpass the capabilities of a company that has used project management for 20 years or more;
- The company should perform both quantitative and qualitative benchmarking. Quantitative benchmarking analyzes processes and methodologies, whereas qualitative benchmarking looks at project management applications.
The Project Office
When companies reach Level 4, they are committed to project managementacross the entire organization. Project management knowledge is now considered as essential for the survival of the firm. To centralize the knowledge on project management, organizations have created a Project Office.
Responsibilities for a Project Office usually include, but are not limited to, the following:
- A strategic planning focal point of project management;
- An organization dedicated to benchmarking for project management;
- An organization dedicated to continuous improvement;
- An organization that provides mentorship for inexperienced project managers;
- A centralized data bank on lessons learned;
- An organization for sharing project management ideas and experiences;
- A 'hot line” for problem-solving that does not automatically inform senior management;
- An organization for creating project management standards;
- A focal point for centralized planning and scheduling activities;
- A focal point for centralized cost control and reporting;
- An organization to assist Human Resources in the creation of a project management career path;
- An organization to assist Human Resources in developing a project management curriculum.
Historically, benchmarking is accomplished by two approaches: competitive benchmarking and process benchmarking. Competitive benchmarking concentrates on deliverables and quantitative critical success factors. Process benchmarking focuses on process performance and functionality. Process benchmarking is most closely aligned to project management. For simplicity's sake, we will consider only process improvement benchmarking. We can break it down into quantitative (i.e. integration) process improvement opportunities and qualitative process improvement opportunities.
Quantitative process improvement opportunities generally center around enhancements due to integration opportunities.
Qualitative process improvement opportunities generally center around applications and further changes to the corporate culture. Included in the qualitative process improvement activities are:
This includes getting the entire organization to accept a singular methodology for managing projects. Pockets of project management support tend to hinder rapid acceptance of project management by the rest of the organization. To obtain corporate acceptance, we must:
- Increase the usage and support of existing users;
- Attract new internal users, those who have been providing resistance to project management;
- Discourage the development of parallel methodologies, which can create further pockets of project management. This is done by showing the added costs of parallelization;
- Emphasize the present and future benefits to the corporation that will result from using a singular methodology.
This is a recognition that the singular methodology can be enhanced further by integrating other existing processes into the singular methodology. Typically, this includes business processes such as capital budgeting, feasibility studies, cost-benefit analyses, and return-on-investment analyses. New processes that could be integrated include supply chain management.
Everyone tends to benchmark against the best within their own industry, but benchmarking against non-similar industries can be just as helpful. An aerospace company spent over ten years benchmarking only against other aerospace companies. During the mid-1990s, the firm began benchmarking against non-aerospace firms and found that these firms had developed outstanding methodologies with capabilities exceeding those of the aerospace firm.
Although off-the-shelf software packages exist, most firms still need some type of customization. This can be done through internal upgrades for customization or by new purchases, with the software vendor developing the customization.
There also exist roadblocks to completing the benchmarking process and moving from Level 4 to Level 5 of the project management maturity model (PMMM). Benchmarking may indicate that improvements can be made. The original architects of a singular methodology may resist change with arguments such as: 'It wasn't invented here,” or 'It does not apply to us.” Another form of resistance is the argument that we have benchmarked against the wrong industry.
People are inherently fearful of change, and benchmarking opens the door for unexpected results to surface. Sooner or later everyone realizes that benchmarking is a necessity for company survival. It is at this junction where a serious commitment to benchmarking occurs.