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Guide for Customer-Driven Benchmarking of Maintenance Activities (2004)

Chapter: Chapter 1 - Introduction to Benchmarking

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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
×
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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Suggested Citation:"Chapter 1 - Introduction to Benchmarking." National Academies of Sciences, Engineering, and Medicine. 2004. Guide for Customer-Driven Benchmarking of Maintenance Activities. Washington, DC: The National Academies Press. doi: 10.17226/13720.
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7CHAPTER 1: INTRODUCTION TO BENCHMARKING WHAT IS BENCHMARKING? Benchmarking is a concept that is at least as old as the athletic events of ancient Greece. Ancient athletes realized it was possible to learn and continuously improve by gauging the performance of others: first identifying the “best” performer in their event, then assessing the gap between their own performance and that of the “best,” carefully observing how the “best” performance was achieved, and striving to exceed it. At the root of benchmarking is measurement. When the athletes in ancient Greece gauged the performance of others, they were measuring with a combination of their mind’s eye and the measurements of judges.1 There is a large body of literature that describes the process of benchmarking. The main steps are shown in Figure 1. Figure 1. Steps in the Benchmarking Process During the last 50 years, beginning with the arrival of modern methods of quality improvement, benchmarking has evolved through a number of stages. At first, benchmarking was focused 1 www.upenn.edu/museum/olympics/olympicglossary.html

on internal business processes of an organization. Often, key aspects of industrial processes were measured and compared with those of other firms to speed up and improve the efficiency of production—for example, by increasing productivity of workers and reducing manufacturing defects. By the early 1980s, benchmarking turned its focus outside of organizations. Firms such as Xerox, IBM, and Motorola were routinely benchmarking their performance against other firms in order to gain competitive and strategic advantage. By 1990, it was recognized that benchmarking provides the greatest benefits when it focuses on the customers of an organization. Ultimately, the health—and often the survival—of an organization depends on the satisfaction and value customers receive from an organization’s products and services. Today, management of road maintenance is undergoing a similar transformation from being internally focused on production and resource usage to being externally focused and satisfying customers’ needs and desires. WHAT IS CUSTOMER-DRIVEN BENCHMARKING? Customer-driven benchmarking is a management process to achieve continuous improvement that will eventually delight the customer. Customer-driven benchmarking involves assessing, adopting, and improving upon “best” practices that have been shown through measurement to lead to higher levels of performance—better products and services to customers. These better performances are achieved with the same or fewer resources and are applicable to a particular environmental setting. The central ideas in customer-driven benchmarking are the following: ♦ It is a type of continuous quality improvement. You do not do customer-driven benchmarking once and then you are done. ♦ By improving continuously, you will not merely exceed your current levels of performance or the performance level of others—you will eventually exceed customer Chapter 1: Introduction to Benchmarking 8

expectations. As a result, your customers will be loyal supporters of your maintenance program and commend your accomplishments to other citizens and elected officials. ♦ Customer-driven benchmarking involves thinking more in terms of the attributes of products and services that customers of maintenance are buying, such as smooth and comfortable roads and attractive roadsides. The focus will not be on maintenance activities such as pothole patching, ditch cleaning, and sign repair, nor will it be on outputs or production rates such as number of potholes filled or linear feet of ditches cleaned. ♦ Central to customer-driven benchmarking is measuring the outcomes of maintenance that are important to customers. Outcomes include customer satisfaction and the conditions that result from providing maintenance products and services. ♦ Best performances reflect the best customer outcomes relative to the resources used, given a quantity of work performed and a set of environmental conditions such as weather, terrain, and traffic. ♦ Customer-driven benchmarking involves comparing performances of different organizational units—internal, external, or both—that operate under similar environmental conditions such as weather, terrain, and traffic. ♦ It entails identifying best practices associated with best performers and then implementing practices that lead to equal or better performances. Figure 2 offers another way of thinking about customer-driven benchmarking by making the role of the customer more explicit. You determine customer preferences, expectations, and satisfaction by surveying them. You measure the attributes of the roads that customers care about—for example, smoothness of roads and legibility of signs. You identify practices that best serve customers based on the measured performance of a group of peers. Finally, you adopt improved practices and adjust your maintenance program accordingly. Implicitly, the customer drives the mix of activities that make up the maintenance program. 9

HOW DO YOU RECOGNIZE BEST PERFORMANCES AND PRACTICES? One approach to identifying best performances has been to identify the frontier that represents the best performances that actually have been observed. Figure 3 shows a plot of the results achieved by different organizational units versus the resources applied. Examples of results are customer satisfaction and conditions that are the outcomes of maintenance. Examples of resources are labor, equipment, materials, and costs. Figure 3 shows a series of lines connecting the performances that form a frontier such that no performer is observed to achieve higher results using fewer resources. For any performance below or to the right of the frontier there is a gap between that performance and the frontier that represents the best performances. The gap represents the improvement opportunity. The practices of organizational units that achieve performances on the frontier are called “best practices.” Chapter 1: Introduction to Benchmarking 10 Figure 2. Customer Involvement in the Benchmarking Process Periodic market research allows the agency to evaluate progress in satisfying or exceeding the customers’ desires and expectations.

Once best performances and the improvement opportunity have been identified, a key issue is to identify the practices associated with the best performances that can potentially close the performance gap. Careful investigation and analysis are required to understand the nature of best practices. Typically, these are accomplished via an agreement with benchmarking partners to document and share information about their practices. Documentation involves identifying the environmental conditions under which the best practices occurred; determining the resources that were used (labor, equipment, and material); examining work methods, including how the resources were combined and applied; and documenting each step of the business process. Once an agency has identified best practices, it then must decide whether to adopt and implement them. Among the considerations are the following: ♦ The cost of the practice relative to the benefits that it will produce, ♦ Acceptance of the practice by those who will implement it, ♦ Ability to obtain management approval for implementation, and ♦ Whether to equal or improve upon the practice. 11 Figure 3. Frontier of Best Performances and Improvement Opportunity

WHY BENCHMARK? WHAT ARE THE BENEFITS? Benchmarking can transform your organization or workgroup in many positive ways. You will be more focused on the customer. Resources will be applied where they will do the most good. By systematically measuring your performance in terms of customer-driven outcomes relative to the resources used while controlling for factors outside your ability to influence, you will gain many insights regarding how to improve maintenance operations. The benefits of benchmarking are numerous: ♦ It is the most expedient way to discover and implement better practices that lead to better performance. ♦ You can learn from the observed successes and experiences you want to emulate or improve upon. ♦ You can minimize trial and error and avoid making the mistakes of others. ♦ It leads to continuous improvement. ♦ It stimulates creativity. ♦ Specific customer outcomes will improve: – The value customers receive will increase, – Customer satisfaction will increase, – Condition of assets will improve, – Life-cycle costs will decline, – Traffic delay will decline, – Safety of road users is likely to improve, and – The quality of the environment will be enhanced. ♦ One can deal more effectively with the groups that insist on accountability, such as the legislature. ♦ You will better understand how various factors—labor, equipment, materials, and external factors—affect performance and, therefore, you will be better able to allocate scarce resources. ♦ Job satisfaction of maintenance managers and field personnel increases as a result of serving the customer better and continually doing a better job. Chapter 1: Introduction to Benchmarking 12 There is a great deal of wisdom in the collective experience of the 50 states; 3,000 counties; 19,000 municipalities; and 75 bridge, tunnel, and turnpike authorities. Customer-driven benchmarking is a way to tap the combined experience of the road maintenance organizations within each of these organizations. There is additional wisdom to be found in other industries and in other countries.

♦ If you are striving to reach the frontier representing the best of possible performances, you can take pride in working toward being the best you can be. Benchmarking has greatly benefited private industry. Firms have found that they cannot survive and thrive without being acutely conscious of how well their competitors perform in serving their customers. For the public sector to thrive in an increasingly competitive environment, it too must strive to understand how to best serve its customers. Customer-driven benchmarking is an important tool for accomplishing that goal. PREREQUISITES FOR CUSTOMER-DRIVEN BENCHMARKING There are three prerequisites for successful customer-driven benchmarking: 1. Leadership. Customer-driven benchmarking, in most cases, will require a complete reorientation of the maintenance organization from thinking about maintenance resources, production, and activities to thinking about the maintenance products and services that are important to customers and the efficiency and effectiveness with which those products and services are delivered. This reorientation requires the strongest support from the head of maintenance. Usually the full endorsement of the chief executive officer will also be required. Without the leadership to bring about this change, customer-driven benchmarking will not succeed. Another part of the leadership imperative is to commit the agency to benchmarking. The time, effort, staff resources, and attention to detail required of the organization cannot be underestimated. You need to use the same performance measures as your benchmarking partners, and most likely you will not have the same measures to start with. You will have to work hard to agree on what these measures will be. You need to collect data in accordance with a rigorous plan. You need to document the practices of subunits in your agency and share the practices with your benchmarking partners if they are different from those of your organizational subunits. You need to make a commitment to implement new ideas found elsewhere and to set improvement targets. You will also need to think about 13

whether measured performance and new practices ought to result in a reallocation of resources. 2. Culture. The culture must support the idea of continuous quality improvement. Customer-driven benchmarking requires a culture that is not satisfied with the status quo. Before customer-driven benchmarking begins, the maintenance organization must have made a substantial transformation toward continuous improvement and must be looking to others for better ways to serve its customers. This culture comes from leadership that continually seeks and studies success, is quick to admit failure, and rewards honest improvement and real effort to improve. Chapter 1: Introduction to Benchmarking 14 Culture and Management Responsibilities . . . Changing the Focus from “What’s Wrong” to “What’s Right and Successful” Many organizations have a culture that tends to focus on the lower- performing units in the organization and to fix what is wrong. Benchmarking is different: it focuses on the best-performing units and seeks to understand why they are performing so well. In this new culture, management must want to understand the reasons for success and encourage everyone to recognize the possibility of change and improvement. Management also needs to challenge the organization to overcome the “not invented here” syndrome and to look elsewhere for ways to improve. 3. Agreed-upon measures. Participants in customer-driven benchmarking must agree on the measures they will use. It is much easier to reach agreement on measures if an agency plans to benchmark internally—across districts, areas, or garages—rather than externally—from one state or city to another. Even if an agency chooses to benchmark internally, many organizations do not have suitable customer-driven outcome measures. Many states lack customer survey information that is statistically valid at the county, sub- county, or area level of the organization, and they have few relevant technical measures of performance—for example, reflectivity of pavement markings. When benchmarking externally, it is much more challenging to identify relevant measures in each agency that are the same. Indeed, a major effort will be required by participating organizations to forge agreement on the measures to be used. Unless the measures are the same, there is no basis for reliable benchmarking. It is also critical that data be collected that fits the measures.

SCOPE OF CUSTOMER-DRIVEN BENCHMARKING Customer-driven benchmarking has the following scope: ♦ Products and services. You will be focused on a certain number of products and services. In this guide, you will learn how to define maintenance products and services and to identify their attributes and corresponding customer-oriented outcome measures. It is desirable to concentrate on one or two products or services when doing customer-driven benchmarking for the first time. ♦ Maintenance activities. A specific set of maintenance activities results in an outcome associated with a product or service. One of the things you will have to do when benchmarking is gather labor, equipment, and material data for each relevant maintenance activity. ♦ Internal or external organizational units. If you are doing internal benchmarking, the scope will involve all the organizational units at a certain level within your agency—for example, all the districts or all the garages. Customer-driven benchmarking should occur at a level of the organizational structure where practices vary and the driving public will detect a difference in the service delivered. Types of practices that may vary include planning and scheduling of activities, configurations of labor and equipment, type of material used, training and excellence of execution, and management structure and processes of working with people. ♦ External partners. If you are doing external benchmarking, the scope will include each organization outside yours. Each partner will have to benchmark at a level of the organization that is mutually agreed upon. ♦ Time frame. Most maintenance activities tend to be seasonal, and customers only gain a perspective over time. An appropriate time period for comparing performance and practices is annually. But planning to undertake customer-driven benchmarking for the first time will likely take at least 2 years. The Figure 4 provides a time line for customer-driven benchmarking for organizations that are beginning this activity for the first time. 15 Road maintenance managers and crews like to think for themselves, control their own destinies, figure out how to do a job in the best way that makes them comfortable, and take pride in their ability and their accomplishments. The challenge in government and business alike is to harness the best instincts and motivation of their employees in order to provide the best possible products and service to customers.

Figure 4. Customer-Driven Benchmarking Time Line 3-69. Measure Performance Again 3-98. Implement New Practices 37. Determine Adaptability of Best Performance Practices to Another Unit 2 6. Collect and Each Unit Compare the Units 3 5. Benchmarking Units and Identify the Better Performing Units 3-64. Take Measurements 3-6 3. Get Partnership Agreement on Measures and Protocols for Assessing Performance 3-62. Identify Possible Measures 21. Form a Benchmarking Partnership Range of Required Time Months Activities and Select Changes to Be Made for That Unit Practices of a Set of Better Performing Identify Performances of All Months from Start of the Benchmarking Process 5-----8 8---------14 11--------------------20 14-----------------23 16--------------------25 19-------------------28 22-----------------------------------37 25----------------------------------------43 --2 5 10 15 20 25 30 35 40

WHO IS INVOLVED? All Levels Customer-driven benchmarking of maintenance activities requires the involvement of managers at all levels of the organization. Different levels of management in the maintenance organization have different roles in benchmarking: ♦ Head of maintenance, chief engineer, chief executive officer: Provide leadership, foster the necessary change in culture, facilitate communication among organizations or organizational units participating in benchmarking, approve new performance targets, and allocate resources for improvements. ♦ District, area, and garage managers: Take measurements by collecting data, help document existing practices and share practices with benchmarking partners, assist in implementing improved practices, and help make recommendations for reallocation of resources. ♦ Superintendents and crew leaders: Assist in documenting existing practices, implement improved practices, and provide data on accomplishments and resources used. ♦ Contract managers and inspectors: Work with contractors to identify existing practices, and provide data on accomplishments and expenditures on contractors. Government personnel and contractors who perform road maintenance are on the frontlines in providing safe, efficient, pleasing, and environmentally sensitive highway transportation to the public. Also, road maintenance personnel must also make sure that a transportation agency is a good neighbor to all owners of property along highways and streets. Each level of the maintenance organization will need to fully buy into the benchmarking effort. This includes key maintenance managers in headquarters and the districts, areas, and garages in the geographic areas where benchmarking is likely to occur. In addition, crew leaders who may participate in benchmarking need to be brought along. Any effort that seeks to build support should ask managers for suggestions and ideas about the potential merits of benchmarking, identify challenges and ways to overcome 17

them, get their best ideas on how to proceed, and obtain their commitment. Champions It has been demonstrated repeatedly in many areas that a champion can greatly accelerate the implementation of a new process. A champion serves as an advocate, helps decisions move through the organization, and facilitates implementation. You should look around your organization for a person who has the natural attributes of a champion for benchmarking. The person should be an early advocate, an articulate spokesperson, someone with credibility, a doer, and a facilitator. It is likely that this person is comfortable learning from others, is keen to adopt or exceed best practices wherever they are found, and can motivate others to do likewise. It is wise not to rely on a single champion, but to have several, or at least one backup. Frequently a champion gets promoted or takes a new job elsewhere. If the benchmarking effort depends on the presence of the champion in order to move forward or to succeed and that person leaves, then the undertaking is likely to suffer or fail. Therefore, there should always be at least one other person who also serves as a champion or who can step into the champion’s role and show similar enthusiasm. Unions It is very important for maintenance organizations to involve their union organizations in the benchmarking processes. Benchmarking produces changes in the practices of those who perform maintenance work activities. Unions are very concerned about workers and any management actions that impact workers. Unions may take issue with various aspects of benchmarking, such as the agency enrolling in a benchmarking partnership that might expose the agency to new work methods. Approached properly, unions will buy into benchmarking. They are likely to cooperate with the process once they realize that improved performance from benchmarking activities strengthens the workers’ position and reduces the potential for replacement by private contracting. Chapter 1: Introduction to Benchmarking 18

GETTING STARTED Two important actions are required to begin customer-driven benchmarking. The first is to establish the internal benchmarking team. The second is to explore related management processes within the agency that affect performance measurement. Internal Team To begin, establish the internal team that will be responsible for implementing customer-driven benchmarking. This team will do all that is necessary to establish the agreements, processes, and procedures for customer-driven benchmarking and to inform and support the line organization regarding what is going on. This team may be a task force that will operate under the direction and management of the senior maintenance leader or may consist of several people who already report to the senior maintenance leader. In either case, recognize that this team will be functioning as long as the agency is involved in customer- driven benchmarking. This team must include the most senior maintenance leadership, other maintenance and systems staff, and, if necessary, consultants. Collectively this team requires background and experience in the following: ♦ Defining maintenance practices and managing maintenance work (i.e., the team requires an expert who has credibility with field managers); ♦ Designing, administering, and interpreting costumer surveys and related consumer research; ♦ Collecting and utilizing data for performance measurement; ♦ Inputting, manipulating, and extracting data from the maintenance and related asset management systems; ♦ Inputting, manipulating, and extracting data from the financial management system; ♦ Setting performance targets, budgeting, and allocating resources to field organizations; and 19

♦ Training superintendents, crew leaders, and equipment operators. One person may provide several of these capabilities. This team will work across internal maintenance suborganizations such as districts, counties, areas, and garages. The team will also be the primary coordinating body with partner agencies. Related Management Processes A typical organization, whether public or private, has many related management processes and systems that seek to achieve some of the same goals as customer-driven benchmarking. It is important to be aware of these related management processes, to use relevant data and performance measures from these processes, and to coordinate with them. The following management processes related to benchmarking are found in many organizations: ♦ Asset management, ♦ Outsourcing, ♦ Performance-based planning, and ♦ Public reporting in conformance with the Governmental Accounting Standards Board (GASB). Asset Management With the completion of the Interstate Highway System and the enactment of the Intermodal Surface Transportation Efficiency Act in the early 1990s, national policy regarding roads turned decisively in the direction of preserving the existing investment and making the best use of existing highway capacity. By the end of the 1990s, the thrust to preserve existing investment was folded into the idea of “asset management.” Asset management is a systematic process of maintaining, upgrading, and operating physical assets cost-effectively, although in the broadest sense it can apply also to materials, equipment, and financial resources.2 According to the proceedings of an executive seminar on asset management conducted in 1996, attributes, key components, Chapter 1: Introduction to Benchmarking 20 2 Center for Infrastructure and Transportation Studies at Rensselaer Polytechnic Institute, 21st Century Asset Management, Executive Summary, Proceedings of a workshop sponsored by the American Association of State Highway and Transportation Officials and the Federal Highway Administration, October 1997.

procedures, and outputs of an of asset management system include the following: ♦ A common understanding of performance measures and criteria; ♦ Understandable results in a user-friendly environment; ♦ Customer focus; ♦ A mission-driven orientation (i.e., asset management strives to help the organization achieve its mission); ♦ Accessibility at many levels within the organization; ♦ Linkages to technical analysis, decision making, and budgetary processes; ♦ Inventory information and condition databases; ♦ Life-cycle cost analysis; and ♦ Optimization (i.e., allocates limited funds in order to maximize net benefits or minimize total costs).3 These attributes are strikingly similar to key elements of a customer-driven benchmarking process. Because of the similarity, the likelihood of succeeding in a benchmarking effort can be substantially strengthened by properly coordinating with the asset management program of an agency and by thoroughly understanding the asset management systems that are in place, under development, or being planned. Therefore, at the start of undertaking a benchmarking effort, it is desirable to take an inventory of your agency’s asset management efforts. By doing so, you will be able to identify procedures, performance measures, sources of data and information, and other resources that can help in benchmarking. You are also likely to find increased support for your benchmarking efforts. Those charged with asset management will usually recognize that customer-driven benchmarking can benefit asset management, and vice versa. 21 3 Asset Management, Advancing the State of the Art into the 21st Century Through Public-Private Dialogue, Proceedings of an executive seminar sponsored by the American Association of State Highway and Transportation Officials and the Federal Highway Administration, Washington, DC, October 1997.

There may also be shared recognition of the desirability of integrating benchmarking into the overall asset management program. Outsourcing Nearly all agencies outsource at least some of their maintenance operations. A critical issue in outsourcing is determining which activities to outsource, developing performance specifications for contracting these activities, and evaluating the performance of contractors. In addition, contractors themselves have a compelling need to evaluate their own performance in order to serve their clients effectively and to remain competitive. Doing each of these tasks well depends on having appropriate performance measures. Many of these performance measures are similar to those that might be used for benchmarking. When getting started on benchmarking, it is desirable to determine what type of performance measurement, if any, is being used in conjunction with outsourcing. You should coordinate with those responsible for performance-based outsourcing and, if possible, arrange to share data and results. It is also desirable to contact contractors who must work under performance-based specifications. Contractors may have insights regarding how to establish an effective benchmarking process. Also, contractors may wish to become benchmarking partners. Performance-Based Planning The reinvention of government to make it more responsive to customer needs and more accountable has been going on for a long time and accelerated in the late 1980s. Gradually, and then with increasing speed, public officials and managers in government recognized that establishing customer-oriented performance measures and targets for accomplishments is one of the most effective ways to improve government efficiency and effectiveness. With the enactment of the Government Performance and Results Act, all federal agencies were required to develop a performance- based strategic plan by identifying appropriate input, outcome, and output measures; setting targets; striving to meet the targets; and reporting on their progress. Many states have enacted similar Chapter 1: Introduction to Benchmarking 22

legislation, as have cities and counties. An excellent example of performance reporting is Oregon Benchmarks, which received national recognition. The private sector has also been using performance-based planning. In order to avoid the dangers of relying upon an overly narrow set of performance measures, many private firms (and government agencies) have been developing “balanced scorecards.” The balanced scorecard approach involves performance measurement, goal setting, reporting, and monitoring in four areas: 1. Customer perspective, 2. Internal perspective, 3. Innovative and learning perspective, and 4. Financial perspective. When beginning a benchmarking process, you should determine what types of performance-based planning are occurring in your agency and identify opportunities to cooperate and share information and results. Accountability and the GASB The GASB has played a major role in fostering performance assessment, mainly to foster increased accountability of agencies to their customers and the people who finance and pay for government services. To this end, the GASB carried out a major research program entitled “Service Efforts and Accomplishments Reporting: Its Time Has Come,” which produced a series of reports on performance measurement and reporting, including one on road maintenance.4 An outgrowth of this effort has been Ruling 34 of the GASB, with calls for government transportation agencies to depreciate their assets or report on the condition of assets by using data in an asset management system when they prepare their annual financial reports to the public. Virtually every government agency prepares its financial reports in conformity with GASB 23 4 Hyman, W., R. M. Alfelor and J.A. Allen, Service Efforts and Accomplishment Reporting: Its Time Has Come, Road Maintenance, Governmental Accounting Standards Board, February 1993.

requirements and procedures. The reason the GASB has added the requirement to depreciate assets or report on their condition is to encourage transportation agencies to preserve existing investment and to avoid the unnecessary costs of deferred maintenance. The GASB believes that failure to maintain transportation assets properly wastes financial resources that otherwise could be expended for more productive purposes, including meeting debt payments. Top managers of transportation agencies are developing strategies to comply with the GASB’s public reporting requirements, including customer-driven performance measurement systems. Before getting started on benchmarking, learn what your agency is doing to comply with GASB reporting requirements. Those efforts may produce measures, data, and other information useful for customer-driven benchmarking of maintenance activities. REWARDS AND RECOGNITION Rewards and recognition help an organization realize its potential to continually perform at the best possible level. Management needs to recognize and reward positive changes in performance that are achieved through benchmarking. Recognition and rewards in benchmarking should focus on changes in performance of individual units and work groups rather than on the highest levels of performance achieved. Benchmarking is all about improvement, regardless of the starting point. Individual units and work groups with low levels of performance may have the greatest opportunity for improvement, whereas those units and work groups that have had consistently high levels of performance will likely have less opportunity for improvement. Regardless of the size of the opportunity, improvement is worthy of acknowledgment. For organizational units that have lower levels of performance, it may take significant time for dramatic improvement. If rewards and recognition are based solely on the highest level of performance, then units with lower levels of performance might not be motivated to improve. Chapter 1: Introduction to Benchmarking 24

Conversely, high levels of performance should not be ignored. Those units and work groups that have had consistently high levels of performance are not likely to achieve great improvements through benchmarking. However, they need recognition for what they have achieved year in and year out. For these units, continued improvement, even if small, is worthy of recognition. BENCHMARKING MYTHS There are many misconceptions regarding benchmarking. Benchmarking is a positive and rewarding activity that can only benefit the individuals and the organizations involved if it is approached from the right perspective and with the right attitude. Here are some benchmarking myths that need to be dispelled: ♦ Everybody and every organization is different, so you cannot compare performance. Effective customer-driven benchmarking methods control for variations in weather, terrain, traffic, and other hardship factors outside the control of organizational units. Likes are compared with likes. ♦ Benchmarking places too much emphasis on who is best. This emphasis is misplaced. Identifying best performance is a means to an end. The end is to continuously improve the satisfaction and value that customers receive from road maintenance by illuminating and adopting best practices. Benchmarking is also about the personal and professional growth that results from sharing and learning from others. ♦ By focusing on the “best” performer, you single out one organization. In benchmarking, there usually are numerous “best” performers that vary depending on the set of measures used and the environmental factors at play. Also, once the best performer is identified, the attention should be focused on trying to understand the nature of the best performers’ business practices and the feasibility of others easily adopting or improving upon them. Also, it should be noted that over time, the “best” performers will change. 25

♦ Benchmarking is time-consuming and expensive. Managed properly, benchmarking yields large improvements in customer-oriented outcomes and organizational cost savings. Nearly every major corporation does some type of benchmarking because the net benefits are so compelling. The profitability and even the survival of many firms and lines of business depend on informed benchmarking. The government can reap similar benefits. ♦ You can’t get started unless you have all the data and the measures. You can begin a benchmarking process without an ideal set of data and measures. By making judicious choices about which attributes of the maintenance products, services, and activities you want to explore in benchmarking, you can start to reap the benefits; learn from an initial effort; and fill in missing steps, data, and measures as you go. ♦ The rewards of benchmarking just go to the best performers. Not just one organizational unit will improve its performance when it adopts a best practice: all organizational units can potentially adopt the best practice, and thus the service to customers of the entire organization will be enhanced. CRITICAL SUCCESS FACTORS As you apply the method of customer-driven benchmarking in this guide, bear in mind the following critical success factors: Chapter 1: Introduction to Benchmarking 26

27 ✓ Remain focused on the customer. Keep your attention on the outcomes that affect customer satisfaction and value received, not on production and inputs. ✓ Assess customer priorities using market research. Use surveys and focus groups to determine customer preferences, expectations, and satisfaction. ✓ Secure strong management support. It is essential to obtain buy-in from all levels of management, particularly those directly involved. ✓ Use agreed-upon measures. Without a set of common measures that partners agree to use, there is no basis for performance assessment. ✓ Establish trust among the benchmarking partners. The success of the benchmarking effort will rise or fall with the level of trust you achieve with your partners. ✓ Maintain a sense of proportion. Balance extremes in everything you do in a benchmarking project. Too much or too little attention to detail, data collection, best practices documentation, and so on can undermine your benchmarking effort. ✓ Pace yourself and, at the minimum, pursue the low-hanging fruit. Do not try to accomplish everything immediately. At the least, achieve some small success each step of the way that can lead to larger success.

Next: Chapter 2 - Selecting Benchmarking Partners »
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TRB's National Cooperative Highway Research Program (NCHRP) Report 511: Guide for Customer-Driven Benchmarking of Maintenance Activities provides guidance on how to evaluate and improve an agency's performance through a process called "customer-driven benchmarking." The objective of benchmarking is to identify, evaluate, and implement best practices by comparing the performance of agencies.

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