KPI’s and Sustainability – Possibilities and Challenges

Monday, April 25th, 2022

KPI’S and Sustainability – Possibilities and Challenges
By Dale R. Schuss, Assoc RICS CFM SFP FMP RPA
President – IFMA Facility Management Consultants Council

There was a time when key performance indicators (KPI’s) for facilities were based on metrics that rarely changed over the years.  As an outsourcing facility management provider for multiple clients and sites, the important KPI’s we used were based on customer satisfaction (from questionnaires); work order completion, budget versus actual costs, and facility condition reporting (often completion of the reports and changes in the facility condition index (FCI)).  Sometimes utility costs were included as a KPI, but uncontrollable variations in the costs (such as weather and occupancy levels) could complicate the ability to accurately measure the real difference in usage.  KPI’s were selected measurements that reflected our client’s organizational goals and followed SMART (strategic, measurable, achievable, relevant, time based).  Outside of organizational goals, regulatory requirements set by government departments could also determine KPI’s to add (such as health and safety procedures and permits).

Over the last several years, many organizations have implemented sustainability as a strategic goal to practice good corporate citizenship, meet social needs, and work towards eliminating harmful impact on the environment.  Today, a growing trend for corporations is to adopt environmental, social and governance (ESG) models that commit the company not only to the maximum return to the shareholders, but to sustainability.  The facilities of any company (like all the built environment) are going to be a top focus for the organization to meet their sustainability goals.  The facility manager must embrace the commitments of the organization they serve and not only implement strategies and tactics to meet social and sustainability goals, but to establish metrics to accurately measure and monitor progress.

Possible additional metrics for the facility include: energy reduction; waste reduction; recycling expansion; supply chain waste; water reduction; ongoing training; stormwater diverted; greenhouse gas emission reductions; number of annual social initiatives and budget; carbon footprint reduction; and reduction in greenhouse gas emissions.  Taking these metrics, new KPI’s can be set to measure progress.  Although all the metrics listed here (there are of course more) could be calculated to roll up into one KPI (for example: improvement in overall sustainability), the organization may prefer sustainability to be broken down into two or more KPI’s – to better understand more the distinct aspects of the metrics.  A possible KPI based on the metrics listed here could be for improvement in site impact – based on waste reduction, stormwater diversion, recycling expansion, energy, carbon footprint and emissions reductions.  A second KPI could be based on the increase in initiatives approved and training completed each measurement period.

KPI’s for sustainability improvements can be difficult to measure if the data used for the metrics is not reliable or is incomplete.  Measuring improvement requires a baseline figure to compare with, so determining the baseline requires extensive research on current costs and adjusting for issues that can cause variances (such as changes in occupancy, facility use, changes in equipment).  As many sustainable initiatives require an upfront capital expenditure, measuring reductions in energy use alone for example, can be misleading if the initial capital cost is ignored.  Overall, the KPI’s can be measured on improvements made at the facility over the baseline and if benchmarking data is available, a KPI can also be measured against other facilities that are used for the same purposes in like regions and industry.

To work around some of the complexities and challenges in how to measure sustainability improvements, research and additional training may be required.  Due to COVID-19, facility occupancy levels have varied. For example, measurements employed to manage energy and consumables that make use of the whole facility, and full-time employee (FTE) staff may be modified by percentages of the space, time, and people present.  Software and references to help compile and report sustainability results to apply to ESG criteria can track improvements and develop KPI’s.

Sustainability for any organization must meet social, economic, and environmental requirements, with ongoing refinements in measuring and reporting.  We will continue to see changes in remote work, technology, and consumer preferences. These and other contextual factors mean continuous attention to KPI’s to make sure that what we are measuring relates to the objectives of the evolving organization.

Click to access FMCC_Feature_Newsletter_April2022.pdf

One response to “KPI’s and Sustainability – Possibilities and Challenges”

  1. David says:

    A colleague describes an organizational culture where environmental sustainability is a well established theme, with recognized projects and practices. “Mostly these take place at the department or site levels and report summary results internally. How we operate and maintain our business and facilities for environmental and personal health and safety appeals to our staff, customers, compliance authorities, and to the public. Top management now asks that we add more systematic and standard reporting of initiatives and results. Furthermore, we are asked to include impacts at large, for example the net effects of staff commuting, hybrid work practices, and procurement and purchasing. Top management has mentioned ESG, of course, and other topics, like emissions scope 3.”
    How can your colleague find out how to get up to speed to do this?

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