Management in the Built Environment
Influences on real estate benchmarking practice: Understanding the challenges and opportunities in the real estate benchmarking process
According to current theory, corporate real estate departments should choose a limited set of personalized Key Performance Indicators that are based on their own strategy and context. In general, organizations are often found to lack an objective assessment and rationale for the selection of these KPIs. Although previous studies have made an inventory of a large amount of possible performance indicators for real estate, still relatively little is known about what influences the choice for certain indicators. In this study the factors that influence an organization to choose certain KPI’s to benchmark their real estate are uncovered. In order to do this, 22 interviews were conducted with a variety of experts and practitioners. As a general conclusion, it can be posited that two of the strongest influences that were found are the current financial crisis and the fact that CREM departments report to finance. These two factors both cause a strong focus on quantitative and especially financial KPI’s. However, what influences benchmarking practices above all is the fact that benchmarking is a very complex process, many challenges can be encountered along the way and producing truly meaningful results requires competence, experience and a well-structured process. Organizations, on average are found to have built still relatively little experience and competence in this area, only the most basic kpi’s are used as portfolio-wide benchmarks and the validity and completeness of these benchmarks is still low.