Benchmarking

Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost.

Benchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.

Also referred to as “best practice benchmarking” or “process benchmarking,” this process is used in management, in which organizations evaluate various aspects of their processes in relation to the processes of best-practice companies, usually within a peer group defined for comparison. This allows organizations to develop plans to make improvements or adopt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but it is often treated as a continuous process in which organizations continually seek to improve their practices.

In project management benchmarking can also support the selection, planning and delivery of projects.

In the process of best practice benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful. According to National Council on Measurement in Education, benchmark assessments are short assessments used by teachers at various times throughout the school year to monitor student progress in some area of the school curriculum.