Management Training Tips:
Project Management - Benchmarking
Jul 27th 2009
From Economist.com
Benchmarking is a project management way of determining how well
a business unit or organisation is performing compared with other
units elsewhere. It sets a business’s measures of its own project
management in a broad context and gives it an idea of what is "best
practice". In "The Benchmarking Book", Michael Spendolini defined
benchmarking as a "continuous systematic process for evaluating the
products, services or work processes of organisations that are
recognised as representing the best practices for the purposes of
project management".
Historically, measures of corporate performance have been
compared with previous measures from the same organisation at
different times. Although this gives a good indication of the rate
of improvement within the organisation, it gives no indication of
where the performance stands in absolute terms. The organisation
could be getting better and better; but if its competitors are
improving even more, then better and better is not enough.
In their book "Benchmarking: A Tool for Continuous Improvement",
C.J. McNair and H.J. Liebfried describe four different types of
benchmarking:
- Internal benchmarking. This is a bit like the process of
quality project management, an internal checking of the
organisation’s standards to see if there is further potential to cut
waste and improve efficiency.
- Competitive benchmarking. This is the comparison of one
company’s standards with those of another (rival) company.
- Industry benchmarking. Here the comparison is between a
company’s standards and those of the industry to which it belongs.
- Best-in-class benchmarking. This is a comparison of a
company’s level of achievement with the best anywhere in the world,
regardless of industry or national market. The Japanese have a word
for it, dantotsu, which means "being the best of the best".
Benchmarking is a fluid project management concept which
recognises that the relative importance of different processes
changes over time as a business changes. For example, a retailer
that shifts from selling through stores to selling over the internet
suddenly becomes less concerned about customer parking facilities
and more concerned about the performance of its fleet of delivery
vans. The importance of benchmarking these respective project
management activities changes similarly.
The process of project management benchmarking often requires
that companies put their measures into some sort of public arena
where others can use them for comparison. This is usually carried
out by a third party, who puts the data in order and then discloses
it in a way that does not reveal the identity of any individual data
provider. Firms can, of course, recognise their own data and judge
where they stand in the pecking order.
The enthusiasm for benchmarking has been fuelled by two things in
particular:
- The Japanese development of total quality management and
the idea of kaizen, of continuous improvement. This was a system
built on careful measurement of industrial activities, followed by
close monitoring of those measures. It not only forced managers to
make such measurements; it made their competitors do so too.
- The work of Michael Porter on competitive advantage.
This forced firms to think more about their competitors and where
they stood in relation to them rather than where they stood in terms
of their own history.
http://www.economist.com/businessfinance/management/displaystory.cfm?story_id=14116203
Subject: Project Management
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