Benchmarking involves the use of data to compare a company’s performance against industry measures and key indicators. It isn’t a new concept – it has been used in the construction industry as a method of improving performance in a systematic and logical way, by measuring and comparing against competitors, or against other business units or projects, and then using lessons learned to make targeted improvements. It involves answering the questions:
- Who performs better?
- Why are they better?
- What actions do we need to take in order to improve our performance?
And yet, we now find ourselves entering an era where benchmarking is all the more
valuable and relevant, in the context of global programmes and projects of a significant
scale, so how we collate, level and present comparative studies has changed considerably in a matter of years. It is what we at Linesight often refer to as the next phase of benchmarking – cost and schedule intelligence, which provides meaningful, easy-to-digest data, to facilitate informed and timely decision-making.
Our life sciences collaboration
Linesight is leading a collaboration with the major pharmaceutical companies on benchmarking data. Merck, AstraZeneca, BMS, Pfizer, GSK, WuXi and others are already
participating in this global effort to collate capital project benchmarking costs, schedule intelligence and analysis in a central, independent, confidential fashion. Connecting the
world’s leading life sciences organisations means that we are enabling peer and market
alignment by providing valuable cost and schedule intelligence on all major projects.
Commenting on the initiative, Steve White, Lead, Global Project Services at Merck noted:
“Benchmarking data is essential to gauge the capital effectiveness of our projects, both internally and externally with other pharmaceutical companies.”
Steve Townsend, Director Project Controls, Global Capital Projects at GSK also added:
“As we seek to continuously improve our project scoping and delivery, we must understand how we compare to our peers within the industry. Participating in this programme offers
us the necessary access to key, comparative data and should provide us with improved confidence.”
The rationale and some key challenges
Benchmarking is an extremely powerful and useful tool when used correctly, to gauge
performance against key indicators and against the market. It facilitates value in the
building of a business case for CAPEX expenditure, providing a level of predictability and
certainty with regards to the information being presented to the financial decision-makers
within an organisation. For many within the life sciences sector, this is now becoming a key requirement in securing approval for projects and programmes. It demonstrates capital effectiveness and identifies opportunities for improvement and optimisation.
Other key benefits it can deliver include:
- Forward-planning information as a cost/duration range
- Enhancing the quality of early estimates and schedules, and allowing for these to be appropriately interrogated and challenged
- Setting cost target ranges
- Providing a valuable forensic tool for a programme
- Strategic planning of project execution
- Identification and management of scope creep or cost overruns
However, it is important to note that it presents its challenges, and the importance of expert guidance across a benchmarking project cannot be understated:
- It is not an estimate – it is a baseline indicator only
- No two projects are alike, and levelling is required to make the comparisons meaningful
- Specific cost and schedule drivers are often not fully known or understood
- The ‘normalisation’ of a benchmark is not an exact science
- Owner experience and expertise varies greatly
- Project drivers can have a significant impact on the resulting data
A meaningful output
While the data in itself is extremely powerful, it only becomes meaningful and particularly informative upon its presentation – it is at this point that it becomes cost and schedule intelligence. Ultimately, 93% of all human communication is visual and 90% of the information sent to the brain is visual, so representing the output in a visual context is key
in enabling stakeholders quickly understand the significance of the data. It allows for instantaneous processing of large volumes of complex data, relationships and patterns to be quickly identified, and emerging trends and concepts to be pinpointed, which are all
fundamental parts of the decision-making process.
Applicability for other sectors
Although Linesight has, of course, worked on extensive benchmarking projects across
multiple sectors, this is an innovative initiative with regards to the level of collaboration at
play between these major life sciences organisations. There can be a reticence in some
sectors for competitors to come together to collaborate, but our panel understands the value of the data output and the importance it will play in bringing predictability and meaningful insights to the sector. Of course, this is based on our committment to ensuring that datasets are anonymised. To learn more about what the life sciences benchmarking
collaboration or to participate in this programme, please contact firstname.lastname@example.org.