Ever wondered why some projects seem to glide effortlessly to success, while others seem to hit every bump in the road? The answer might lie in the power of benchmarking.
As the legendary management consultant Peter Drucker once said: “What a business needs most for its decisions — especially its strategic ones — is data about what goes on outside it. Only outside a business are there results, opportunities, and threats.”
In project management, benchmarking serves as the yardstick that measures the effectiveness and efficiency of your management practices. Strategic initiatives like project benchmarking can help reduce costs, improve quality, and streamline processes. Let’s explore how benchmarking can transform your project management approach and deliver better results.
Understanding project management benchmarking
Imagine sailing a ship without a compass. You’re out there on the vast, unpredictable seas, navigating solely by instinct. Sounds risky, doesn’t it? That’s the equivalent of trying to run projects without benchmarking.
In fact, according to PMI’s 2020 Pulse of the Profession,11.4% of investment goes to waste due to poor project performance, which results in 67% of projects failing to meet goals and objectives.
Simply put, project management benchmarking is comparing your project performance against industry standards, best practices, and competitors. It is the compass that guides your ship — your project — towards success by providing valuable insights about your current performance and how it squares up against others in the industry.
Benchmarking involves tracking and comparing quantitative data, such as cost, speed of delivery, quality, customer satisfaction, and other metrics. It helps you assess the strengths and weaknesses of your project management processes and identify areas for improvement. So you can devise data-driven strategies to increase efficiency and ensure successful project outcomes.
A successful benchmarking process is built on several key items:
Identify: Establish the areas, processes, and metrics you want to improve.
Collect: Gather relevant data from internal and external sources through surveys, interviews, and analysis.
Analyze: Compare and contrast your performance against industry standards, best practices, and competitors and devise a plan to improve.
Implement: Execute changes to processes, procedures, and practices, based on the analysis.
Evaluate: Track progress and measure performance against benchmarks to assess achieved improvement. If it’s not working, adjust your approach and repeat.
Implementing the right project management benchmarking practices can help you transform your organization and increase its competitive advantage.
How project management benchmarking works
Project management benchmarking operates on a cycle of continuous improvement. It helps organizations move beyond guesswork and assumptions to make decisions based on data-driven insights. As the team works through each phase of the benchmarking process, they gain valuable knowledge about their projects and develop actionable solutions to improve performance.
The benchmarking process starts with defining the aspects of the project that are critical to its success — often referred to as Key Performance Indicators or KPIs. These could include timelines, budget, quality of deliverables, and customer satisfaction, among others.
After defining the KPIs, the next step is to collect data on these aspects from internal sources, such as project management tools, project teams, company reports, and customer feedback. You can also tap into external sources through surveys, interviews with stakeholders, and industry research of direct competitors.
After analyzing this data, you can devise strategies to close any gaps between your performance and the benchmarks by implementing changes to processes, procedures, and practices. Your action plan could include:
Adjusting internal processes
Improving team collaboration and communications
Implementing new tools and technologies
Finally, the project team evaluates performance against benchmarks to measure improvement and identify areas for further optimization. This continuous improvement cycle allows you to consistently refine your project management approach for future projects.
Benchmarking techniques for project management
The success of your benchmarking efforts relies on understanding and utilizing the proper techniques for your project. Here are six types of benchmarking techniques used in project management.
Internal benchmarking involves comparing performance, processes, and practices within the organization. This helps identify discrepancies between teams, departments, or individual projects and highlight areas for improvement.
Benchmarking metrics could include project cost, quality of deliverables, and time-to-market. Evaluating and comparing performance internally helps increase efficiency, reduce costs, and identify opportunities to add value.
Competitive or external benchmarking, as the name suggests, involves comparing your project performance against that of direct competitors. It uses external sources, such as public information, industry surveys, or competitor reports, to compare performance in pricing, product features, market share, customer satisfaction, and innovation.
This helps you better understand your competitive position in the market and devise strategies to stay ahead of the competition.
Functional benchmarking goes beyond direct competitors and measures performance against other successful organizations in different industries. It helps you identify trends, innovative ideas, and processes you can leverage for improvement.
You can analyze their customer service, product development, or operational techniques and develop new strategies to enhance your current project management processes.Professional services providers, for instance, may compare their customer retention or loyalty programs to those of retailers or hospitality organizations.
Process benchmarking is an in-depth analysis of internal processes and procedures. It looks at how resources are used, what tasks take up the most time, and how you can eliminate redundancies or bottlenecks. The goal is to reduce costs and improve productivity by streamlining processes and speeding up decision-making.
This can involve using automated tools to track project performance, introducing checklists and templates to standardize processes, or adopting agile methodologies to reduce cycle times.
Strategic benchmarking focuses on your organization’s long-term objectives and goals, such as customer satisfaction, profit margins, and market share. It examines how well you perform compared to industry standards and the strategies competitors use to achieve their goals.
This helps you create a roadmap for success that includes setting performance targets, measuring success, and developing strategies to close any gaps between your performance and industry benchmarks.
Performance benchmarking is the most granular type — it looks at individual tasks and evaluates the performance of individual team members or departments. You can measure performance metrics like project completion time, cost per task, quality control processes, and customer satisfaction to identify improvement areas.
This helps you refine processes, adopt cost-effective solutions, and improve efficiency to drive project success.
Best practices for effective project management benchmarking
Project management benchmarks provide a wealth of data to help you identify trends, measure performance metrics, validate assumptions, and uncover improvement opportunities. To ensure your benchmarking efforts are successful, there are a few best practices you should keep in mind.
Put the right tools and technology in place
Benchmarking requires accurate, up-to-date data to be effective. So you must invest in the right tools and technologies to collect, analyze, and visualize this data. You can adopt project management software that integrates with your existing systems, introduce cloud-based data storage, or use analytics tools to uncover insights from large datasets.
A powerful software tool will help you quickly generate reports, track KPIs, and compare performance against benchmarks.
Teamwork.com is an all-in-one project management platform designed to help you streamline processes, collaborate with teams more effectively, and measure performance against benchmarks. Get started with a free 30-day trial today.
Identify clear benchmarking objectives
You must define clear, measurable goals and KPIs for your project before you can start benchmarking. This will help you identify the right metrics to measure, the sources of data you need to collect, and the type of benchmarking most appropriate for your project. When setting these goals, consider factors like customer satisfaction levels, cost savings, project timelines, and quality of deliverables.
Collect accurate and reliable data
Project benchmarking is only as reliable as the performance data it’s based on. You must verify that data points are accurate and collected from reliable sources for meaningful insights. Poor data collection can skew your results, leading to false conclusions and misguided decision-making. Use industry standards, survey customers, or consult subject-matter experts to ensure your data is accurate.
Share benchmarking results with key team members
Benchmarking results should not remain within the confines of the project manager’s office. Share your findings with key team members and stakeholders and use them to initiate team discussions. This will help everyone understand the project’s performance against industry benchmarks, identify areas for improvement, and discuss strategies to increase efficiency or reduce costs.
Make benchmarking a continuous effort
Benchmarking isn’t a one-time initiative. It’s an ongoing effort that should be part of your organization’s DNA. Track performance data regularly, identify any gaps between current benchmarks and industry standards, and take action swiftly to bridge them. Set a schedule for benchmarking reviews and update your goals and metrics based on changing market conditions or project needs.
Benchmarking simplified with Teamwork.com
Project management benchmarking is invaluable for identifying improvement opportunities, streamlining processes, and measuring performance against industry standards. When used correctly, it can help increase efficiency, reduce costs, and improve customer satisfaction.
But to get the most out of benchmarking, you need the right tools and technology, clear objectives, reliable data sources, and a commitment to making it an ongoing effort.
Whether you’re just getting started with benchmarking or looking to improve existing processes, Teamwork.com can help. Our project management software provides the tools to collect project data, streamline processes, and collaborate with teams more effectively.
Sign up for your free 30-day trial today to get the most out of your benchmarking efforts.