In part 1 and 2 of our benchmarking series, we’ve already covered benchmarking in general and internal benchmarking in project management. The last part of the series will take a closer look at external benchmarking. External benchmarking helps you identify your strengths and weaknesses compared to your competition. Based on the benchmark, you’ll be able to create an action plan to improve your processes so you can increase your competitive advantage.
External benchmarking works as follows: You identify a project of one of your competitors, which serves as a baseline (benchmark object) against which you compare and assess your own projects. The benchmark object could be a project that was completed successfully due to the exceptional project management, a fact the whole industry is talking about.
The next step is to identify the differences between the benchmark project and your organization’s projects. Then you should develop measures to increase the efficiency and effectiveness of your organization’s project management based on the insights you gained from analyzing your competition.
External benchmarking in project management: A 5-step instruction
1. Selection of benchmark object
First, choose a competitor’s project to use as the baseline for the benchmark. The benchmark object can be a successful project or effective project management processes that were used to complete the project successfully.
2. Selection of comparison objects
Now identify some of your projects or objects which you want to compare with the benchmark object. You could either choose all of your projects or just some of your most successful projects for the comparison.
3. Collection of data
This is the most difficult step of performing a benchmark, since it is often difficult to get the necessary project data from your competitors. You can collect data by analyzing secondary information or you can survey your organization’s project managers, or by surveying your competitor directly – which is rare but not impossible.
The most important aspect is to get enough data on your benchmark object as well as the projects you want to compare with it. Only then will you be able to perform an accurate comparison.
4. Identification of performance gaps and causes
After collecting the necessary data, it’s time to compare the data. Focus on finding performance gaps, i.e. in which aspects is the benchmark object superior to the other analyzed projects. Then find the causes for the occurrence of these performance gaps, such as an understaffed project team or calculating budgets too tightly.
5. Development of possibilities for improvement
Develop a plan to improve your projects based on the identified gaps and causes. The goal is to improve your project so that it’s on the same level as the benchmark project. It’s important to remember that benchmarking is always part of a continuous improvement process. You should constantly check your projects for existing and new performance gaps compared to the competition, this will enable you to reach a high degree of efficiency.