Understanding metrics and KPIs for improved decision-making
Quantifying the intangibles of your workplace—efficiency, productivity, organisation—puts facility managers on track to a highly optimised workplace. KPIs and the metrics that define them help facilitate major improvements that can lower costs, improve operations, raise employee morale, and enhance workplace governance.
As companies become more cost-conscious, facility managers will rely more heavily on management metrics to generate important insights. And, from these insights, they can provide key decision-makers with the right information to drive changes that keep their company competitive.
Facilities are complicated, with multiple dimensions (the categorical buckets that can be used to segment, filter or group data, such as space or cost) that can be analysed using different measures and metrics. Because it takes time and effort to collect and report data, it’s important to understand the facility metrics that matter to us, so we know what to measure on and what to report.
Too often, organisations take an approach of flying blind [no measures or reporting] or blind themselves by assuming that the more metrics and more Key Performance Indicators (KPIs) they have, the better their organisational performance will be.
Because it takes time and effort to collect and report data, it’s important to understand the facility metrics that matter to us, so we know what to measure on and what to report.
The Difference Between Facility Metrics and Key Performance Indicators
Sometimes organisations confuse metrics with KPIs, which can lead to having too much information and too much data to maintain. Defining metrics appropriately is the key to understanding how they contribute to your KPIs and how those KPIs affect your workplace. In the worst cases, some organisations focus on “ego measures”: statistics that look good on paper but lack any real importance.
Before KPIs and metrics can start to be used to achieve and assess business performance, it’s important to have a clear understanding of what each means. So let’s take a look.
KPI: A KPI is a value that determines how well an organisation is meeting it’s business objectives, and is usually evaluated over a certain timeframe. KPIs target critical areas of performance. A Key Performance Question, or KPQ, is the ideal partner for determining KPIs. A KPQ clarifies the information needs that the KPIs will then help you to address.
For example, A work order backlog of 4 weeks can be a KPI for the question of “Do we have the right resources to deliver our workload?”
Metric: A metric is a quantifiable measure that is used to track and assess the status of a specific process. Metrics are broad in scope (they come from all areas of an organisation) and are generally made up of two or more measures.
Measure: In a data context, measures are the numbers or values that can be summed and/or averaged, such as total count of work orders or if equipment reliability is within a defined range. When two or more are put together, they provide the business metrics that should be tracked.
Example: If your business goal is to reduce utility costs by four percent next quarter, then your KPI may be to track total utility costs. The metrics used could be each individual utility cost, or consumption amounts. The measures that make up the metrics would be all the quantifiable data points you can capture.
The metrics and KPIs you choose to use should drive the desired behaviours and actions that can improve how you do your business and the overall performance of your assets.
Objectives Before Metrics
Before measuring anything, it’s critical to understand the objectives of your business and how you contribute to them.
Making the effort to track measures and metrics that aren’t aligned with your business goals will only lead to wasted effort and flawed decision making.
Different parts of an organisation will want to know different information at different frequencies. Executive quarterly and annual reporting requires different reporting and decision-making criteria compared to our day to day operational activities; but they are all measuring aspects from the same asset base.
Build Business Strategy-Focused KPIs
It’s hard to make informed decision with inadequate data. But what data do you need? To determine what data you need, you should understand the decisions you need to make. It’s been said many times before: always start with the end in mind to help make the right choices.
- What are you trying to achieve as an organisation? These are your business outcomes.
- How do these relate to your facilities or assets? This determines your facility/asset management objectives.
- How will you know that they have been achieved? Determine your performance indicators.
- What do you measure to generate these indicators? This is the vital data that you need to consider.
Are there any other considerations? Who needs to make decisions with the information you’re giving them? Is it a strategic business decision, a facility/asset planning decision, or operational?
Building a List of Facility Management Metrics that Matter
Facility Management Metrics are the foundation of facility management because many are performance indicators that reflect a performance measure per unit.
Lagging metrics are useful to tell how well our facility performed while Leading Metrics are useful to forecast the likely trend (or to set goals for performance). Metrics are also used for facility benchmarking because they can be used to make normalised comparisons between different facilities and organisations.
Metrics are also specific to the user’s role. Even metrics within the same dimension are likely to be framed differently based upon how the information is used or impacted by the user.
An example of metrics by role:
- Facility Director – Scheduled Maintenance completed within service level agreement (SLA) boundaries
- Facility Manager – % Work Orders completed on time by trade or building
- Trades Team – # Assigned Work Orders Due this Week
List by role
This exercise will not just help you build your list of metrics; it will also help you identify where you have misalignment in the organisation.
- Start with the Key Performance Questions (KPQs) at the top level of your organisation and the Key Performance Indicators (KPIs) that answer those questions.
- Then have each functional area identify the associated KPQ and KPI within their area of operations. Continue down to the lowest level function.
Alternatively: each function can build their own list independently and then you can combine them.y
- Once you have a list of KPQs and KPIs, identify the associated metrics or measures you will need and define how you will measure and calculate them. You could consider adding the data source, any critical success factors, and frequency of measurement.
- Consider both metrics that show how you have done (lagging) and ones that suggest how you are trending (leading).
When you build a list like this, it will become apparent which of your facility systems will be the key source for each measure, and how much effort it may take to assemble your metrics, so you can start to prioritise each.
|Goal/Objective||Success Measure||KPI||Comment||Target range||How Calculated|
|Assets are maintained to perform at the optimum balance of cost and risk during their lifecycle to affordably reduce service disruptions and outages due to failure||Identify when continued maintenance
expenditure is still a cost-effective strategy
|Maintenance Index||Corrective and preventative maintenance costs will be used to
determine when an asset’s maintenance costs outweigh the cost of replacement based on international benchmarks
|4 to 8%||Maintenance Expenditure / Asset Replacement Value|