Submitted by: Muhammad Zeshan

Registration#: L1S18MPAF0025
Subject: Advanced performance Management
Topic: Benchmarking of AV Company
Presented to: Dr. Muhammad Ahmed
Dated: 13th April, 2018

AV COMPANY
Requirement (A) Assess the progress of the benchmarking exercise to date, explaining the
actions that have been undertaken and those that are still required.

1) Area to Benchmark

AV primary objective “to meet the accommodation needs of person within its locality”
should be modified to “to meet the accommodation needs of local persons within available
resources” for this purpose AV should select the following areas for Benchmarking.

i. Rental Income
ii. Major Repairs and Planned Maintenance
iii. Day to Day Repairs

2) Identify Key Performance

i. AV should utilize their property 100%to maximize income and also
increase Rent of room to meet the Expenses and should maintain some
reserve for abnormal loss / cover the inflation factor.
ii. Reduce the cost of heating replacement and Miscellaneous expense
iii. Day to Day repair should be reduced

3) Selection of Organizations for benchmarking comparison

We have selected BW for Benchmarking to learn the areas which need to be improved.

4) Measure performance of all organizations involved

The BW performance is better because in whole year there is no unoccupied property
and it also has good control on their expenses other than Salary and Interest similar
charges. Whereas the AV has unoccupied property during the year up to $36,438/- and
their operating expense are higher than BW.
 5) Compare performance
Comparison of AV & BW on the basis of expense incurred average one bed room and
amount earned from one bed room.

Average Income of One Bed Room of AV & BW Benchmarking

Explanation of Rental Income AV$ BW$ Difference
Total Rental Income 2386K 2500K
Total No. of Properties 900 400 500
Average Rental Income from One bed AV needs to Improve this
room 2,652 6,250 (3598) area of Income.
Average Expenses of One Bed Room of AV & BW
Explanation of Expenses AV$ BW$ Difference
Av Cost of Staff Salaries is
Staff and Management Cost 500 1,550 under controlled
AV needs to Improve this
Major Repair and planned maintenance 758 505 253 area of expense.
AV needs to Improve this
Day to Day Repair 531 319 212 area of expense.
Sundry Operating Cost 339 588 AV is paying less than BW
Net Interest & Similar Expenses 585 1,875 AV is paying less than BW

6) Specify areas of improvement

There are total three areas which need to be improved.
i. The Rental Income can be increased by two ways; one is to utilize 100%
rental property over the whole period to maximize the rental income and
other one is to increase the rental income up to 5%.
ii. Decrease repair and Planned Maintenance work cost by searching new
vendor for doing the same thing with low price.
iii. Day to Day repair cost should be decreased by giving training to staff to
best use of furniture and building to save cost.

7) Implement and Monitor

AV is a charity organization so their management should discuss the above findings with
their stakeholders and then start improving the captioned areas. The management
should monitor the implementation plan for improvement.
Requirement (B) Evaluate as far as possible, AV’s benchmarking position.

AV is not performing well in three areas which are given below:

Benchmarking Position
The rental income of AV is less than BW even though AV has 900
Rooms and BW has only 400 Rooms. The average rental income
of one room of AV is $2,652 whereas BW has $6,250. The AV is
charity organization due to this the rental income is less. BW has
utilized his 100% property where AV could not use its 100%
Rental Income property and unoccupied property amount is $36,348/- so AV
should make strategy for utilization of its 100% property. Further
AV should also increase the rent of 5% to meet their expenses as
due to inflation next year the expenses will also increase. So it’s
better to increase rent of property to save from loss by next
year.
Av is spending $253/- extra on one room as compare to BW. AV
should check that why miscellaneous construction work required
Major Repair and as BW is not performing any miscellaneous work and further the
planned maintenance heating system replacement cost should be eliminated in next
year by buying best quality heating system as BW does not have
any heating cost this year.
Av is spending $212/- extra on one room as compare to BW. AV
should check that why our organization needs day to day repair
Day to Day Repair work as BW day to day repair cost is very low. We may need to
train our staff how to use furniture / how to clean furniture or
building etc to avoid day to day repair cost.

Requirement (C) Evaluate the benchmarking technique being used and discuss whether BW is a
suitable benchmarking partner for AV to use.

Following are the Points which are suitable for AV while Benchmarking to BW

 AV find out the areas of improvement because of same sector business

 AV identifies the difference between services provided to AV customers and BW customers.
 AV identifies how their performance can be improved.

AV has selected the BW which is profit making organization whereas AV is non-profit making
organization if AV should select the same organization whose main objective is not to earn profit then
they may identify closest area which need to be improved.