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The Opportunity

  • A large global manufacturer desired to implement a cost benchmarking system to understand the financial performance of 430 facilities across the world. Historical cost metric and asset attribute data was being collected.
  • The objective was to build a model, integrated with their financial planning tools, to facilitate an exception-based approach for planners to understand costs that would be outside the expected norm.  Focus could then be directed toward assets or regions that warranted investment or some other kind of action.

Our Approach

  • The key benchmarking metric was cost per square meter of an asset.  A statistical model was built to relate and quantify this metric to the attributes of the asset.  Example attributes included building age, type of function in the facility, condition assessments, etc.
  • This model was used to provided expected values of the cost metric for each asset, based on its attributes and budget history.

The Impact

  • The output of the model boiled down to a single, simple-to-understand cost performance index, where the actual performance was compared to what the model would expect the cost to be, based on the attributes and past budget allocations for the facility.
  • With this cost performance index integrated into the tool, along with supporting information about the assets and budgets, it was easy for planners to quickly find exceptions and understand how to make better budget allocation decisions.
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