Benchmarking in Construction

Azif A K Mohamed Sameer Joseph George Mehboob Ali Nadaf

[221088] [221098] [221104] [221108]

1. What is Benchmarking?
Comparing and measuring the organization performance against other similar organizations in key business activities, and then using lessons learned from the best ones to introduce breakthrough improvements.

2. Types of Benchmarking
• • INTERNAL - Benchmarking against internal operations. COMPETITVE

- Benchmarking against external direct product competitors. • FUNCTIONAL - Benchmarking against external functional best operations or industry leaders. • GENERIC - Benchmarking a process in one or several unlike organizations.

3. Benchmarking Process
Planning

Improving Practices Analysis

Collecting Data

3.1 Planning
• Determine the purpose and scope of the project • Select the process to be benchmarked • Choose the team • Define the scope • Develop a flow chart for the process • Establish process measures • Identify benchmarking partners

3.2 Collecting Data
• Conduct background research to gain thorough understanding on the process and partnering organizations • Use questionnaires to information necessary benchmarking • Conduct site visits information is needed • Conduct interviews if information is needed if gather for additional detail

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3.3 Analysis
• Analyze quantitative partnering organizations organization data of and your

• Analyze qualitative data of partnering organizations and your organization • Determine the performance gap

3.4 Improving Practices
• Report findings and brief management • Develop an improvement implementation plan • Implement process improvements • Monitor performance measurements and track progress • Recalibrate the process as needed

4. CASE STUDY
• COMPANY - Slovenian company Riko Houses Ltd. • PRODUCT - Solid wood bio-houses RIKO on the basis of widely experienced German patent. • WHAT LEAD TO BENCHMARKING?  Company’s strategy to the enlargement of production scope, improvement of business efficiency and increase of export rate.  Increasing trend of enquiries for prefabricated houses due to changes of the population dwelling habits, especially in Western European countries. • BENCHMARKING PARTNERS- Jelovica Houses Ltd., Marles Houses Ltd. and Riko Houses Ltd.

4.1 Steps involved in benchmarking
1. Selection of benchmarking partners 2. Identification of efficiency keys relevant for prefab house production, namely TIME, PRICE and QUALITY. 3. Selection of indicators specifying productional and economic efficiency 4. Comparison of results in the fourth phase: the benchmarking team has established the importance of gaps in comparison with the best practices in Slovenia and analysed the reasons for these gaps.

Contd…..
5. Propositions for improvement after the comparison with the best prac­tices In this phase of the process the company has prepared an improvement pro­gramme considering the results obtained with the benchmarking method and today this programme has already been taking place. (applied SWOT analysis)

4.2 Efficient Key Components
Scope of production Productivity Operating revenues Labour costs Fixed assets Share of exports Market share in Slovenia Income/fixed assets Net profit Inventories Capital/receivables tie up Economic efficiency Short term indebtedness Quality

Share of material in sales Time Share of labour cost in sales Prices

The improvement plan based on benchmarking suggested following measures • Improvement of technology. • Better exploitation of available potentials (increase in productivity for 30 – 50 %). • Establishment of norms for the purchase of materials, for inventories, capital tie-up, costs. • Pricing policy and prices including cost price planning (structure), differ­ential policy of selling prices (basic price offer, additional offer, differential selling commissions). • Developing of new activities in the domain of marketing.

4.3 Suggestions to Riko Houses Ltd.

4.4 Improvement Proposition
Field of Activities
PURCHASE: - efforts to reduce prices of materials / optimal scope of materials purchase (payment and time) / time limits PRODUCTION: - technological improvements / rise in productivity by x % - rise in economic efficiency/reduction of ASSEMBLY: complaints of assembly hours number / - reduction number improvement of assembly organization / choice of the best subcontractors MARKETING: - development of marketing strategy development of approach to new markets - new selling methods FINANCING: BENCHMARKING: - follow-up of improvement

Office Bearer

Envisage d Effect

5. Conclusions
• The benchmarking process as performed until now in the company Riko Houses Ltd. provides insight, comparison and identification of gaps on the basis of internal and external data. • The selected efficiency keys have pointed out to the important differences between the benchmarking partners. On the other hand the proposed improvement measures can only lead progressively to the efficiency improvement. • The experience gathered until now can only confirm the above mentioned fact that benchmarking is

Contd…
• The company Riko houses has been faced with strategic dilemmas and corre­sponding searching for new opportunities. Therefore, the content of benchmark­ing method as an approach and way of solving problems represents an extremely useful guidance. • Benchmarking is a handy tool for the company to acquire new useful skills. And these new skills will help managers to make better business decisions.

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