Master Thesis Facility Management Business Essay
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Published: Mon, 5 Dec 2016
Atkin and Brooks (2009) states that the most important function of Facility Management is to provide, operate, maintain and improve supporting services in order to create an environment that supports the primary processes or -objectives of a concerning organizations. They also say that in practice, facilities management can cover a wide range of supporting services and products.
According to Cotts et al (2009) the most recent definition of facility management is: “a profession that encompasses multiple disciplines to ensure functionality of the build environment by integrating people, place, process and technology”. This definition seems more to be inclined to overall business strategy because of the integration of people, place, process and technology to ensure good facilities management. Looking at the interesting definition on business strategy by Johnson et al. (2009) we see that strategy contains the direction and scope of an organization over the long term, for achieving advantage in a changing environment throughout configuration of resources and competences with the aim of fulfilling stakeholders’ expectations. This definition on strategy shows us the same points of interests as the definition by Cotts et al, namely the aspects of the configuration of resources and competences (for instance people, place, process and technology) for realizing effective management.
Barrett and Baldry (2003) say that facilities management has traditionally been regarded as the poor relation within the real estate, architecture, engineering and construction sector. This is because it was seen in the old fashioned sense of for example catering, cleaning, repairs and maintenance. According to the aforementioned definitions I can state that nowadays facilities management covers more than only providing services. It’s also about changes, supporting processes and committing to the overall business strategy of an organization. Maybe it is important to find a certain balance in all aforementioned aspects in the several definitions, for realizing the most efficient way in managing facilities.
Aforementioned definitions display that the fundamental principle of facility management is often likely to be complex and mostly it affects multiple disciplines to ensure functionality of the build environment. Facility management also concerns the support of the primary processes and it mostly requires an integrated approach. In practice, facility management bring recourses, skills, technology and ideas together to achieve business objectives and deliver business benefits. Simply said; facility management can move an organization from where it is now, to where it needs to be in the future to meets its business strategy and -objectives (Atkin and Brooks, 2009). But how are these complex daily facilities management performances be measured in order to know if facilities provide value for money and provide qualitative support to the primary process in the working environment?
Brian Atkin and Adrian Brooks (2009) states, that quality of facilities management manifests itself in many ways. If users or customers were asked to define what quality meant to them in the context of a facility, there would be as many different definitions as there were users. In order to overcome this potential problem, facilities managers need to focus closely on users and customers to elicit their view on what quality means to them. In many situations, it is possible to substitute the word performance for quality. Facilities performances are ways of focussing on what users and customers really expect and mean by quality. In the context of services and facilities, quality is something that can be defined and determined as performances.
Performance measurement emphasizes the quantifying of an action, whereas measurement is the quantification and action leads to performances. Performance measurement emphasizes the process of quantifying the effective control and monitoring of facility processes and services (Maas and Pleunis, 2006). Simply put, performance measurement includes activities to ensure that facility objectives and goals are consistently being achieved in an effective and efficient manner. Performance measurement is developed as a means of monitoring and maintaining organisational control, which is the process of ensuring that an organisation pursues strategies that lead to the achievement of overall goals and objectives (Amaratunga et al., 2000).
The process of performance management is the following: from the strategy, policy, and objectives set out by the facilities organization, goals can be formulated. These goals must be made enforceable and measurable. By appointing critical success factors (CSF), it is possible to define which criteria must be met to achieve these facilities goals. For monitoring and managing these goals, key performance indicators (KPI) should be defined. Key performance indicators are specified measurable results and serve as the basis for monitoring processes and management reports (Maas and Pleunis, 2006).
Interesting philosophies that have been discussed in the academic world as well as in the business world are about performance measurement systems as a tool for delivering strategic objectives, such as The EFQM Excellence Model (European Foundation of Quality Management, 1992) or the Balanced Scorecard (Kaplan and Norton, 1992). These models are discovered and accepted in the last decade by many organizations as the integrated management models for effective operating and directing organizations (Ahuis and Diepman, 2006). In this research project, the focus lies on the Balanced Scorecard as a management framework for measurement of operational performances.
In a paper about performance evaluation in facilities management, written by Dilanthi Amaratunga, David Baldry, and Marjan Sarshar (2000), a number of points are defined based on their research which need further clarification and investigation in further research. One of these points is about reviewing of common goals, critical success factors and performance measurement relevant to facilities management, in the context of the application of the balanced scorecard. They say that research is necessary for identification if the Balanced Scorecards is appropriate to other levels within the facilities management unit and consideration of the implications of using different Balanced Scorecards at different levels in a facilities management organisation. They have stated the hope that the outcome of further research will enable academics and practising managers to assess whether the Balanced Scorecard is likely to be successful in facilities management.
Therefore, in this project, I will investigate performance evaluation in facilities management, whilst the main discussion is about the application of the balanced score-card (BSC) concept as a widely used management framework for measurement of operational performance within facilities departments. Furthermore, this thesis identifies this framework as a strategic management system for facilities management. The main purpose of the research is to attempt to apply a Balanced Scorecard into the daily facilities management practices of a case study and to learn about performance assessment and its outcomes, for instance which performance indicators or ratio’s are most effective to find for facilities performance measurement. 
In accordance with aforementioned, it is expected that development of an appropriate balance of performance measures to support the critical success factors of a facility management organizations is complex and it affects multiple disciplines. Because of this, the research question of this project thus is the following:
To what extent will the Balanced Scorecard be auseful instrument to measure performance measurement for facility management and which success factors and key performance indicators are most effective to find for efficient facilities performance measurement?
I am looking for the most effective and efficient outcomes of performance evaluation in facilities management.
When I mention outcomes, I do not specifically mean only the application of the Balanced Scorecard in practice. With outcomes, I mean a critical review of the best to find goals, critical success factors and performance measurement relevant for professional performance measurement within the profession of facilities management. The Balanced Scorecard will be used as a helpful framework for assessing which outcomes are best to find.
I will try to answer my research question by looking at a specified case, where I will conduct a case study research in collaboration with the facility management department of Centraal Boekhuis. This case study will focus on testing how Centraal Boekhuis works with performance measurement related to its facilities management strategy, and how it best can work with the balanced scorecard. The explanation for this case study can possibly be found in qualitative data, for example the study of business documentation and reports that are in stock within the company about facilities strategy, its business strategy and performance measurement. The exploratory part of the research describes the testing of the Balanced Scorecard within Centraal Boekhuis, to see if the balanced scorecard is applicable for facilities management performance assessment and which goals, critical success factors and performance measurement relevant for professional performance measurement are best to be find.
In the theory section, I will extensively explain the theory on performance measurement, performance measurement in facility management, performance assessment, the balanced scorecard, and the theory on facilities strategy, critical success factors, and key performance indicators. Interesting literature on goals, critical success factors and performance measurement relevant for professional performance measurement are critically reviewed and compared with my own study findings on these issues. However, I will first give some necessary background information and explain why I have chosen to study the current case situation of Centraal Boekhuis for my research project.
This project aims to contribute to the profession of facility management in general, and the theory that will be used might be applicable to several (facility management) organizations. However, the project is a case study on Centraal Boekhuis. In order to make sure that readers who are not familiar with Centraal Boekhuis can follow the arguments, a short overview of Centraal Boekhuis will be provided. I will also offer some background information on the facility management department of Centraal Boekhuis. At the end of this section I will describe why I have chosen to study the current case situation of Centraal Boekhuis for my research project.
Centraal Boekhuis is a (leading) logistics service provider in stocking, storage, distribution and transportation of books. More than 500 publishers and over 1500 booksellers use the service facilities for distribution, transportation, information and administration. For publishers is Centraal Boekhuis the entry into the Dutch and Flemish (book) markets. For booksellers in the Netherlands and Flanders, Centraal Boekhuis is theprovider of the assortment of Dutch-language books, general as well as educational or scientific books, and a selected range of foreign-language books.
Besides taking care of stocking, storage, distribution and transportation of books, Centraal Boekhuis also offers administrative or financial services. For publishers the company organizes complete stock and sales recording, invoicing and debt collection. Booksellers as well benefit from a broad range of information technology services. The majority of Centraal Boekhuis’ services are integrated in a single automated system (CB Online), so customers have access to the operational and management information they need, focused on their company’s business processes.
Upon request, Centraal Boekhuis will also arrange the storage, distribution and transport of office supplies, stationary and greeting cards. All logistic activities and processes are linked with the transport centre’s delivery network. The centre’s range of services includes processing special offers and returned goods, (temporary) storage, order picking and carrying out special mailing campaigns with value-added logistics.
The Transport Centre of Centraal Boekhuis organizes transport from and to countries outside the Benelux. In England is a consolidation point bounded, where shipments from 1600 English publishers intended for Dutch bookshops are collected and forwarded to the Netherlands. This enables Centraal Boekhuis to offer customers attractive services. Shipments from Germany and America are transported along similar lines.
For over 135 years Centraal Boekhuis have been the logistic partner in the Dutch book trade. In 1871 the Vereeniging ter Bevordering van de Belangen des Boekhandels (VBBB) in Amsterdam lay the foundations for Het bestelhuis van de Nederlandsche Boekhandel, presently called Centraal Boekhuis. Publishers send their boxes with books to that warehouse of books, where the boxes were distributed across the Netherlands.
Many years later, in 1926, the VBBB decided to found Centraal Boekhuis in Amsterdam. Well-established publishers were obliged to store their books in the central depot of Centraal Boekhuis in Amsterdam. From now on the book stores and publishers could order their books with Centraal Boekhuis from one central point in the Netherlands. In 1973, because lack of space, Centraal Boekhuis grounded their company in Culemborg, where the company nowadays is still grounded. In that same year is Het Bestelhuis and Centraal Boekhuis merged into one company: Centraal Boekhuis B.V.
The daily management of Centraal Boekhuis is directed by the Senior Management Team (SMT). The lead direction of the 5 Senior Managers is directed by a Chief Executive Officer, namely Hans Willem Cortenraad. They have weekly meetings to discuss the company’ policy and how this policy is best directed to the line managers. The Senior Managers are directly responsible for the various divisions within the company. The line managers will direct the division policy to their employees. In a schematic way it will thus be structured:
Chief Executive Officer:
- H.W. CortenraadChief Executive Officer
Senior Management Team:
- Jaco Gulmans Human Resources Management
- Ronald Janssen Information Communication Technology
- Harry van der Linden Finance & Controlling
- Marinus Ploos van Amstel Account Management & Marketing
- Cees Pronk Logistics
- Egbert Guis Project Management
Centraal Boekhuis in figures (2009)
- Full time employees: 579
- Publishers: 500
- Booksellers: 1500
- Available Dutch titles: 80,000
- Number of copies delivered per year: 60,000,000
- Number of delivery addresses per day: 2500
- Number of packages transported per year: 4,500,000
- Number of pallets transported per year: 300,000
FACILITY MANAGEMENT DEPARTMENT
The daily facility management of Centraal Boekhuis is overall directed by the Senior Manager Human Resources (HR). The Senior Manager HR informs the Board of Directors, and the Senior Management Team regarding the direction and strategies of the Human Resources- and facilities department. The manager of the facility services department will direct the division policy of the facilities services. The facility services manager is thus responsible for strategic, tactical and operational control of the facilities department (Centraal Boekhuis, policy plan Facility Management, 2010).
The key characteristics of the way facilities services are offered by the facility management department of Centraal Boekhuis, is to support the customers’ needs in stocking, storage, distribution and transportation of books. Centraal Boekhuis have many facilities services, ranging from building management, reception, mail room, security, accommodation management, catering but also facility services like maintenance management and technical services. Most of the supporting facility services of Centraal Boekhuis are outsourced for creating a higher service level.
Besides the day-to-day operations of the facilities of Centraal Boekhuis, the facility management department of Centraal Boekhuis also provides services like Custodial Services, Mail Services, and Utilities and Energy conservation. The facilities service department offers a facility desk, a central service point, which provides a proclamation service for the internal customers. The facility desk is a service for customers where they can report questions, problems or suggestions concerning facilities services. The facility desk subsequently will try to solve the concerning reports.
The mission statement of the facility management department of Centraal Boekhuis displays that the facility department makes a differentiation between strategic, tactical, and operational management, with also continuing interaction with the core business and the environment of the organization.
Maas and Pleunis (2006) recognizes that strategic facilities management should be based on strategic, tactical and operational management levels, as well as there has to be a certain focus on internal and external processes, aspects and developments. The facilities management department of Centraal Boekhuis has lately changes its way of directing and managing the facilities services. The department has been split into three management levels (strategic, tactical and operational) and will make usage of management tools in order to direct and manage the facilities department efficiently.
The board of directors of Centraal Boekhuis (2009) has formulated a covering policy on performance measurement for the strategy period 2009-2011, whereas this policy among other things is focused on active control of processes with help of high quality management information. This policy is subsequently also stated for the facilities management department of Centraal Boekhuis for the plan-period 2010 (Facility policy, 2010 – 2012, Centraal Boekhuis). The problem is that facility management for Centraal Boekhuis is complex and affects multiple disciplines. Therefore it is difficult to describe performance evaluation in facilities management, and it is hard to define which goals, critical success factors and performance measurement are relevant to measure facilities performances optimally.
In this section, I will first present a hypothesis about performance measurement for facility management. Then, I will explicate the theory on which the hypothesis is based. I will do so by first offering some information on performance measurement and its history, and then present important theories on performance measurement in facility management, including theory on the balanced scorecard and facility management strategy. In order to make the hypothesis plausible, the theories which I will discuss are mainly focussed on performance measurement in relation with facility management.
I will test the following hypothesis:
“The balanced scorecard can be usedfor performance measurement for facility managementwhilst the process of using the balanced scorecard will in consequence function as a helpful framework in finding the most effective success factors and key performance indicators for efficient facilities performance measurement.”
This hypothesis claims the search for the most effective and efficient outcomes of performance evaluation in facilities management. When I mention outcomes, I do not specifically mean the application of the Balanced Scorecard in practice. With outcomes, I mean a critical review of the best to find goals, critical success factors and performance indicators relevant for performance measurement within the profession of facilities management. The Balanced Scorecard will be used as a helpful framework for assessing which outcomes are best to find in facilities management.
When studying the literature about performance measurement it is notable that this topic is broadly discussed. Performance measurement is a topic which is often discussed in the business world as well as in the academic world. It is for that reason that there are many definitions to be find in the literature about performance measurement. Several of them will be treated in this research. According to Leeny et al (1995), performance measurement is literally the process of quantifying action, where measurement is the process of quantification and action leads to performance. Sink discussed performance measurement in 1991 as a “mystery… complex, frustrating, difficult, challenging, important, abused and misused” function. Performance of a business or organization is a function of the efficiency and effectiveness of the actions which it undertakes, thus performance measurement can be defined as the process of quantifying efficiency and effectiveness of actions. Though, these definitions displays that performance measurement remains a very broad topic.
For example, as displayed by Neely in 2002, there have been appearing new reports and articles about performance measurement at a rate of one every five hours per working day since 1994. It would be no surprise that recent years researchers have developed new approaches of measuring performance, such as activity-based costing (Kaplan and Cooper, 1997) and shareholder value (Rappaport, 1986). Other researchers have developed performance measurement theories, such as the performance pyramid by Lynch and Cross (1990) or the macro process model as discussed by Brown (1996). One of the most recent developed and widely discussed framework for performance measurement is the performance prism, developed by Neely et al. (1996, 2002).
Though, according to Neely et al. (1995), performance measurement is rarely defined. When studying their comments regarding performance measurement definitions, they propose the following definitions in which they clarify performance measurement: performance measurement, a performance measure and a performance measurement system. These definitions can be explained as the following:
- “Performance measurement can be defined as the process of quantifying the efficiency and effectiveness of action.”
- “A performance measure can be defined as a metric used to quantify the efficiency and/or effectiveness of action.”
- “A performance measurement system can be defined as the set of metrics used to quantify both the efficiency and effectiveness of actions.”
There is also an interesting vision on performance measure by Hronec (1993) where he defines performance measures as the vital quantifications on how well the activities within a process or the outputs of a process achieve a specific goal. Subsequently, the need for integration of the different measures is supported by Hronec too (1993), whereas a performance system is defined as a “tool for balancing multiple measures (cost, quality and time) across multiple levels (organization, processes and people)”.
As mentioned earlier, a performance measurement systemcan be defined as the set of metrics used to quantify both the efficiency and effectiveness of actions.  The most notably performance measurement frameworks are the balanced scorecard (BSC) by Kaplan and Norton, (1992 and 1996a) and the business excellence model, developed by the European Foundation of Quality Management in 1992. According to research of Bernard Marr and Gianni Schiuma (2002), the dominance of the Balanced Scorecard concept is immense. The Balanced Scorecard seems to be the most influential concept in the field of performance measurement. It is also for that reason that my research focuses on putting the balanced scorecard to the test as a performance measurement system for facilities management.
However, at the end of each of the management processes of these frameworks, the users of the frameworks have only decided what to measure, but nothing has been implemented yet. Achieving implementation and embedding of performance measurement can be done with help of a performance measurement system. Performance measurement systems are developed as a means of monitoring and maintaining organizational control (Nani et al, 1990), which basically is the process of ensuring that an organization pursues strategies that lead to the achievement of overall goals and objectives (Kaplan and Norton, 1996).
Kaplan (1991) stated that an effective performance measurement system should provide timely and accurate feedback on the efficiency and effectiveness of operations. When applying a performance measurement system such as the balanced scorecard in practice, it is thus important to look at what to measure and to apply a certain focus on continuous improvement. In many cases the continuous improvement is mainly shaped by the management model of continuous improvement Plan, Do, Check, Act (PDCA), or also called the Deming Circle. The Deming Circle (1950) is named after Edwards Deming, but originally it was developed by Walter Shewhart (1939). The model gives a representation of the iterative process of continually working on improvements, and is formed by the facets Plan-Do-Check-Act. This principle states that to achieve goals, a continuous development process must be notified of: making plans of actions, the execution of planned actions, checking the results of the actual planned actions, and, if necessary, timely adjustments of the plans.
FACILITY MANAGEMENT STRATEGY
Performance measurement is ultimately about realizing and implementing strategy (Neely, 1994). Therefore, a more exploratory analysis about (facility management) strategy is necessary to place strategy realization in the context of performance measurement.
The traditional literature about business strategy is often about the general definitions of business strategy, where organizations focus on where they want to be on the long term (mission and vision) and how this is achieved (goals and objectives) (Alblas & Wijsman, 2001) in order to gain competitive advantages. The current literature about strategy describes more that strategy is about the importance of achieving advantage in a changing environment throughout configuration of resources and competences with the aim of fulfilling stakeholders’ expectations (Johnson et al., 2009). Aforementioned shows that the current literature on business strategies discusses the importance of the characteristic aspects change and configuration (Kloosterboer, 2005). The relative context between business strategy and changes is an important aspect that must be taken into account before I continue my research.
According to Bryan Atkin and Adrian Brooks (2009), Change Management is the key towards innovation of organizations. In order to make progress and achieve greater efficiency and better value for money and to be more effective or competitive, organizations have to do things differently and have to make changes. Atkin and Brooks (2003) characterize facility management as an essential aspect for managing and reducing the inherent risks associated with change and innovation. Therefore changing organizations need facility management for making those strategic changes.
In accordance with research executed by Johnson et al. (2009), formulating strategy can be thought of as having three main elements: understanding the strategic position of an organization, making strategic choices for the future, and managing strategy into action. These three elements in developing strategy are widely used in the business world and many organizations just follow these steps in order to be successful in making strategy.
Understanding the strategic position is concerned with identifying the impact on: strategy of the external environment (product and markets), an organization’s strategic capability such as resources and competences (strengths and weaknesses), and the expectations and influence of stakeholders (corporate governance). The strategic choices element involves the options for strategy in terms of the directions in which strategy might move and the methods by which strategy might be pursued, for example, strategic choices about entering new markets or strategic choices about developing new products. Strategy in action is concerned with the methods by which organizations pursue their strategies and that chosen strategies are actually put into practice. Critical success factors (CSF) and key performance indicators (KPI) are required to control the way in which strategy is implemented and to ensure that strategies are implemented according to plan.
Also Critical Success Factors (CSF) for the facilities department must be identified. These critical success factors are expressions of accomplishment that represent either progress towards – or success in reaching – goals (Ahuis and Diepman, 2006). A critical success factors helps a manager to implement strategy by justifying the stated goals. Subsequently, with help of Key Performance Indicators (KPI), goals are obtained and realized. Key Performance Indicators help an organization define and measure progress toward organizational goals and are quantifiable measurements that reflect the critical success factors of an organization (Geelen, 2004), such as ratio’s and monthly figures of costs.
I will now discuss the profession of facility management in the context of corporate strategy. The essence of facility management is to support the execution of an organization’s strategy to deliver support to the primary process (Maas and Pleunis, 2006). The research of recent literature shows us that facility management is nowadays recognized as one of the most important business processes within organizations (Barrett and Baldry, 2003).
It is for that matter that organisational changes and the application of facility management for realising t
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