Turner & Townsend Management Solutions BIFM Retail Sector Forum 30 November 2004 Benchmarking, KPI’s & Measuring Supplier Performance.

Turner & TownsendManagement Solutions

BIFM Retail Sector ForumBIFM Retail Sector Forum30 November 200430 November 2004

Benchmarking, Benchmarking,

KPI’s &KPI’s &

Measuring Supplier Measuring Supplier PerformancePerformance

making the difference

IntroductionsIntroductions

• Tim Leech - Associate Director Tim Leech - Associate Director Turner & Townsend Management SolutionsTurner & Townsend Management Solutions

• Turner & TownsendTurner & Townsend

• BenchmarkingBenchmarking

• KPI’sKPI’s

• Measuring Supplier PerformanceMeasuring Supplier Performance

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Turner & Townsend Turner & Townsend GroupGroup

• Over 50 Years ExperienceOver 50 Years Experience

• 34 Permanent Offices & 7 34 Permanent Offices & 7 Associated Offices Associated Offices World-wide World-wide

• Over £75m TurnoverOver £75m Turnover

• Approximately 1350 StaffApproximately 1350 Staff

Teesside

Edinburgh

Sheffield

LondonBristol

Glasgow

Leeds

Birmingham

Aberdeen

Manchester

Newcastle

Nottingham

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Turner & Townsend UK

Limited

Turner & Townsend Group Limited

Turner & Townsend International Limited

Turner & Townsend Africa

Turner & Townsend Asia Pacific

Turner & Townsend Europe Ltd

Turner & Townsend USA Ltd

Turner & Townsend International Engineering & Mining

Pace Project Services Ltd

Siemens Industrial Building Consultants GmbH

Project Management

Cost Management

Contract Services

Management Consultancy

PPP Consultancy

Value Improvement

Risk Management

Training

Facilities Management Consultancy

Health, Safety, Quality & Environmental Consultancy

Core Services

Turner & Townsend Project Management Ltd

Turner & Townsend Cost Management

Turner & Townsend Management Solutions Ltd

Turner & Townsend Contract Services Ltd

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BENCHMARKINGBENCHMARKING

What does it mean?What does it mean?

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Loads of definitions ……..Loads of definitions ……..

• ““Improving ourselves by learning from others”Improving ourselves by learning from others” The Cabinet The Cabinet OfficeOffice

• ““Benchmarking is simply about making comparisons Benchmarking is simply about making comparisons with other organisations and then learning the lessons with other organisations and then learning the lessons that those comparisons throw up”that those comparisons throw up” The European Benchmarking Code of The European Benchmarking Code of ConductConduct

• ““Benchmarking is the continuous process of measuring Benchmarking is the continuous process of measuring products, services and practices against the toughest products, services and practices against the toughest competitors or those companies as industry leaders competitors or those companies as industry leaders (best in class)”(best in class)” The Xerox CorporationThe Xerox Corporation

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It’s notIt’s not

• Just competitor Just competitor analysisanalysis

• Finding out where Finding out where we are in “self” we are in “self” created league created league tablestables

• A one offA one off

• The only answerThe only answer

• To be used in To be used in isolationisolation

• A reason to stop A reason to stop the essential the essential process of review, process of review, change and change and improvementimprovement

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Different types of BenchmarksDifferent types of Benchmarks

• StrategicStrategic

• Performance or CompetitivePerformance or Competitive

• ProcessProcess

• Functional or GenericFunctional or Generic

• InternalInternal

• ExternalExternal

• InternationalInternational

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Some things to considerSome things to consider

• Objectives and aspects to be reviewedObjectives and aspects to be reviewed– Clarity, Scope of services, what is the real Clarity, Scope of services, what is the real

purpose purpose

• Time & resource availableTime & resource available– Deadlines, importance of information, people and Deadlines, importance of information, people and

fundingfunding

• Level of experienceLevel of experience– in benchmarking (internal v external)in benchmarking (internal v external)

• Likely sourcesLikely sources – where / who is information going to come fromwhere / who is information going to come from

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KPI’s KPI’s &&

Measuring Supplier Measuring Supplier performanceperformance

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Will use extracts from a Will use extracts from a Commission in the Retail Commission in the Retail SectorSector

HBOSHBOS

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•Provides objective, quantitative measure of supplier & Provides objective, quantitative measure of supplier & consultant performanceconsultant performance

•Covers individual projects and a range of projects over time.Covers individual projects and a range of projects over time.

•Will form part of the decision making process for awarding Will form part of the decision making process for awarding

future work future work

– Feeds into the publication of quarterly ‘league tables’ ofFeeds into the publication of quarterly ‘league tables’ of performance.performance.

•Aimed at developing an environment of continuous Aimed at developing an environment of continuous

improvementimprovement Provides early warning system, highlighting Provides early warning system, highlighting

specific areas that may require corrective actionspecific areas that may require corrective action

•Highlight areas of particularly good (and bad!) performanceHighlight areas of particularly good (and bad!) performance

•Underpins the new contracting framework with a robust Underpins the new contracting framework with a robust

measurement systemmeasurement system

Purpose of KPI’s

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•• 27 questions in total for Majors (27 questions in total for Majors (MTMsMTMs/new branches have slightly less)/new branches have slightly less)

•• Questions are split into 7 separate categories/5 main ‘scored’ areasQuestions are split into 7 separate categories/5 main ‘scored’ areas•• ProgrammeProgramme•• DocumentationDocumentation•• ImplementationImplementation•• FinancialFinancial•• M&EM&E

•• Quality and Safety have separate questions/categoriesQuality and Safety have separate questions/categories Negative score for injuries, no score for zero accidentsNegative score for injuries, no score for zero accidents No penalty for failing to achieve zero defects, though if it is a bonus mark willNo penalty for failing to achieve zero defects, though if it is a bonus mark will

be awardedbe awarded

•• There are 3 scores registered

Maximum PossibleMaximum Possible HBoS BenchmarkHBoS Benchmark ActualActual

KPI Template - Scoring Mechanism

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0Major

Scoring

30

Max Weightedscore

5

10 153 5

BenchmarkWeighted

score

Weighting HBOSBenchmark

10None

Max scoreOptions

Minor

Mid-Term / MajorApplies to

This question relates to disruption outside that which was ‘planned’ whichThis question relates to disruption outside that which was ‘planned’ whichhas an adverse impact upon the branch and/or the project programme.has an adverse impact upon the branch and/or the project programme.This question is also scored separately as part of the PIR undertaken by theThis question is also scored separately as part of the PIR undertaken by thebranch manager 4 weeks after Completion.branch manager 4 weeks after Completion.

Explanation / Advice

Pre-ConstructionPhase

ProgrammeCategory

How much unprogrammed disruption was there to the branch clientoperations during this phase?

Question 12

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0Unacceptable

Scoring

50

Max Weightedscore

5

10 5005 10

BenchmarkWeighted

score

Weighting HBOSBenchmark

10Yes, at all times

Max scoreOptions

Majority of the time

Mid-Term / MajorApplies to

Good practice in relation to the ‘housekeeping’ of the site will ensure that theGood practice in relation to the ‘housekeeping’ of the site will ensure that thesite is kept clean and tidy for the duration of the works. It is expected that thesite is kept clean and tidy for the duration of the works. It is expected that thebranches facilities (e.g. toilets, refreshment facilities etc) will NOT be used bybranches facilities (e.g. toilets, refreshment facilities etc) will NOT be used bythe contractor during the course of his works. This question is also scoredthe contractor during the course of his works. This question is also scoredseparately as part of the PIR undertaken by the branch manager 4 weeks afterseparately as part of the PIR undertaken by the branch manager 4 weeks afterCompletion.Completion.

Explanation / Advice

ConstructionPhase

ImplementationCategory

Was the branch kept clean and safe for colleagues and customers at all times?Question 14

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Total (Contractor Score)

0%

20%

40%

60%

80%

100%Programme

Documentation

ImplementationFinancial

M&E

HBOS - BenchmarkMajor

Actual Score

Minor Injury Occurred

Construction (Contractor Score)

0

20

40

60

80

100

Programme Documentation Implementation M&E

Max Possible Score

HBOS - Benchmark

Actual Score

Radar Chart - easy / quick indication ofthe overall score in relation to the HBOS

benchmark score.

As can be seen from this example projectthe contractor in question has achieved orexceeded the benchmark in all areas apart

from documentation.

The ‘boxes’ to the left of the chart will autofill in the event of scoring relating toinjuries that may have occurred or theachievement of zero defects.

This graph provides more detail for a particular phase of thethe project than the radar chart shown above. This exampleshows contractors scoring for the construction phase of theproject, broken down into the categories that occur during this

phase.

As can be seen the bars indicate Maximum score possible,benchmark and actual score.

In this case the contractor has matched / exceeded thebenchmark in all cases with the exception of implementation.

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Understand the business need

We recognise that our clients business need is

central to the KPI ’s which are established. We

therefore place an emphasis on understanding and

exploring this need early in the life of the

commission. This enables us to:

Fully understand our clients commercial, politicaland stakeholder values;

Identify the relevant business drivers;

Maximise the effectiveness of the KPI solution.

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Quantification of business drivers

Having identified the business drivers we are

able to quantify these into subjective and

objective performance categories before

establishing the most appropriate

performance monitoring system. Through

understanding your organisation, we are able

to provide total KPI advice focusing on whole

life issues, in addition to the capital cost of the

specific projects.

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Monitoring and reporting

By developing a KPI system which focuses on your

objectives we will work with you to implement a

monitoring and reporting mechanism which is easy to

operate and captures the critical information you are

seeking. We will populate the system with collected

information and roll out the operation of the system to

your employees. Alternatively we can provide a

strategic service and undertake the KPI assessment role

from a consultancy appointment.