Project Quality Planning Tools: Benchmarking

Did you know that project management can be similar to detective work? The benchmarking process (BMP) is like an investigation. It involves searching through available clues, finding leads, and then following up on those leads to understand the processes of world-class companies.

The BMP compares the performance of one company against another that is best-in-its-class. This is an effective tool and technique for quality planning.

Why should you perform a BMP? There are two main reasons for benchmarking—setting goals and process development. The BMP also will help you to know yourself, understand your competition, and define and integrate the best processes into your organization.

The benefits of benchmarking far outweigh the costs or effort involved. Benchmarking will:

• improve customer satisfaction
• define the best processes
• improve already-existing processes
• promote a desire to improve and change
• identify your competitive position
• improve the relationship between benchmarking partners.

The BMP provides information about where a company stands when compared to standards. These standards are set by customers, companies, certification organizations, and industry associations. The BMP will indicate the areas of strength within a company and uncover opportunities for improvement.

There are four common types of benchmarking assessments: internal, competitive, world-class operations, and activity-type benchmarking. Details are provided below.

• Internal benchmarking. This type of benchmarking usually takes place first. It involves examining your own organization and determining the best practices observed. It's easy to carry out, and matters of security and confidentiality do not exist.
• Competitive benchmarking. This is also called reverse engineering. It involves studying a competitor's services, products, and processes. The easiest way to do this type of benchmarking is to buy the competitor's product or service and then analyze it.
• World-class operations benchmarking. This benchmarking type takes the BMP past a specific type of organization to one that is different. It's a useful technique for discovering innovative processes not currently used by an organization.
• Activity-type benchmarking. This type of benchmarking examines specific process steps or activities that go beyond specific industries. It includes activities such as recruiting, invoicing, and engineering change control.

The benchmarking process is a useful tool and technique for quality planning. It's natural that companies want to immediately visit a top-notch organization as their first BMP activity. Although doing this is a part of the BMP, it's not the only activity that should be performed. There are six separate stages for every BMP.

• Process design (planning). Select one quality process to study at a time. Form a team of people involved in the process you wish to study. Determine the measurements you will use.
• Internal data collection. Know your own practices and performance. This can be done using such techniques as system and process flowcharts, or cause-and-effect diagrams.
• External data collection. Select a competitor in the same or different industry as your company. Select one that is best-in-its-class for the process you are studying.
• Data analysis. Compare the information gathered with the information from your own company.
• Process upgrading. Based on information you have learned from your competitor, identify which ideas can be adopted for your own process and decide how they can be implemented.
• Periodic reassessment. Monitor the effectiveness of the new ideas and re-benchmark them at specific intervals of time.

Effective benchmarking requires choosing the specific benchmarking type and completing the appropriate steps. This process is not just about uncovering the secrets of your competition—it includes learning about yourself.