Robust And Dynamic Performance Measurement Methodology

Since performance itself is defined in terms of efficiency and effectiveness of action, the asset management processes and outcomes have to be evaluated on that basis (OGC) (2006). A number of performance measurement systems exist. However, two considerations guided the choice of the measurement system appropriate for this study. It was necessary that the chosen performance measurement system would be able to align with any particular local authority’s strategy and that it was dynamic. A performance measurement system that aligns with strategy is one that ensures that the computed performance measures derive from strategy. Measures that derive from strategy make it possible to demonstrate, for instance, how asset management contributes to the core business of the organisation and thus help the organisation achieve its strategic goals (Lindholm, 2006; Amaratunga and Baldry, 2003). In order to ensure that a suitably chosen performance measurement system aligned with a local authority’s corporate strategy, it was necessary that the performance measures were computed from strategic planning and asset management planning. The measures derived from strategic planning made sure that the following strategic asset management questions: where should the property be located?; why should the property be sited in a particular location?; and what size of property is needed to support a service? were addressed by the study (Audit Commission, 1988b; 2000).

Another set of performance measures / indicators are those derived from asset management planning. These measures make sure that the operational element of asset management delivered the strategic asset management objectives by undertaking the facilities and estates management work necessary to ensure that property is in the condition, form, layout and location desired. The facilities management services performance measures in particular sought to establish whether there was proper coordination of the needs of people, equipment, and operational activities into the building workplace (Brown et al, 1993; Then, 2005; Ali, 2007). Estates management measures sought to determine whether the care of buildings met occupier’s satisfaction.

117

A dynamic performance measurement system is sensitive and responsive to changes in the external and internal environment of the organisation and their implications for asset management. Furthermore, such a performance measurement system ensures that gains achieved through improvement programmes, such as asset management improvements are maintained (Bititci, Turner, and Begemannc, 2000: cited by Amaratunga and Baldry, 2003). The need for a dynamic performance measurement system was considered crucial if the aim of the study was to be fulfilled. This was especially important in view of the fact that each English and Scottish local authority organisation is unique in some sense. As has been pointed out by Lindholm (2006), different organisations have different strategic objectives to reflect social, cultural, size and geographical variances. Given these local authority differences, the developed performance measurement system needed to be dynamic by being flexible and adaptable to be able to reflect these different circumstances. Lindholm (2006) suggests that it is desirable that an adopted measurement system should have separate measures for both strategic performance and tactical performance (Lindholm, 2006). The strategic and tactical performance measures are used to measure strategic planning and asset management planning performances respectively. Strategic performance measurement assesses the effectiveness of the process for translating strategy into concrete objectives and evaluation of the achievement of those objectives. In the context of asset management, strategic measurement systems are for the continuous controlling of asset management processes. Tactical Tools are internal tools which are used for analysing the current situation. In the case of asset management practice such analysis concerns identifying property performance or asset management capability shortfalls that need improving.

However, the distinction between tactical tools and strategic measurement systems is not always clear cut. As is pointed out by Lindholm (2006), who states that some of the available tactical tools can be used for both internal analysis and strategic performance measurement. Such dual purpose developed tools are therefore used for measuring the

118

progress being made with asset management practice, asset management processes as well as for measuring the outcome of asset management practice. The outcome of asset management practice are the outcomes associated with facilities management and physical real estate services as well as the asset management capabilities. Table 5.1 summarises the strategic measurement systems and tactical tools. The tools are presented by their purpose of use, by the object of the measurement and by the user of the result of measurement. Table 5.1: Summary of the Strategic Measurement Systems and Tactical Tools used in CREM

Purpose of the Use Object of the measurement For

continuous follow up

For identifying the development areas (strategic gap identification) CREM Processes CREM results / Outcome (physical real estate or workplace i.e. space) Strategic Measurement System

Balanced Score Card (BSC) _{√ √ √}

Performance Pyramid √ √ √

PMSSI _{√ √}

Navigator _{√ √}

Intangible Assets Monitor √ √

Tactical Tools Benchmarking _{√ √ √ √} POE _{√ √ √} Building-in-use _{√ √} Performance Map _√ MicroscanFM √ √ √ Apgar’s Method _{√ √}

Source: Adapted from Lindholm (2006)

Most of the presented systems were developed for corporate real estate management (CREM) which is the strategic management of operational properties of private sector organisations. Extreme care had to be exercised, therefore, when choosing private sector customer-oriented measurement models to measure asset management performance in local authorities. According to Brackertz and Kenley (2002), the need for such caution is

119

because private sector models treat the community as the user or customer of the service thereby ignoring the fact that they are in actual fact both, citizens and customers. Such private sector oriented approaches are unlikely to adequately address issues of governance, political management and responsiveness to the community’s service needs especially at the user interface.

The most well known and used strategic measurement system is, according to Lindholm (2006), the Balanced Score Card (BSC) developed by Robert Koplan and David Norton in 1992. The BSC is a measurement system that enables organisations to clarify their vision and strategy and translate them into action (Lindholm, 2006). Besides BSC, there are other strategic measurement systems such as: performance pyramid, performance measurement system for service (PMSSI), navigator and intangible assets monitor. The basic idea of these systems is more or less similar than in the BSC framework (Table 5.1). The BSC was rejected for use in this study as it is only widely used in private sector real estate. Despite the similarities with BSC, these other strategic performance measurement systems are not as popular and widely used. According to Lindholm (2006) none of these systems are used in asset management performance or its private sector operational property management equivalent, corporate real estate management (CREM) performance measurement. Due to their private sector orientation and also as a result of lack of popularity, these other systems too were rejected for use in this study.

Of the available tactical tools, Lindholm (2006) suggests that Benchmarking is one of the most popular ways to use corporate real estate management (CREM) performance measures for analysis of current situation as well as for strategic measurement. The other commonly identified tactical performance measurement tools are Post Occupancy Evaluation (POE); Building In Use (BIU); Performance Map models; MicroscanFM; and Apgar’s Method. These other tactical tools, apart from benchmarking, were also considered unsuitable for use in this study. The tools either are not widely used in real estate measurement or are limited in their application. They only focus on tactical performance and do not address strategic

120

performance issues (Table 5.1). Brackertz and Kenley (2002) argue, therefore, that the appropriate model for the evaluation of property asset management performance applicable in the local government context is one that uses a balanced approach that incorporates: service, community (stakeholders), financial, and building related measurements. Benchmarking was therefore adopted as the most suitable performance measurement system for use in this study as it is balanced in its approach and focuses on both strategic as well as tactical performance measurement.