Exploring the facilities management effective rate as a useful metric

Abstract

Purpose

The purpose of this paper is to investigate the use of the effective rate as a useful metric. Facilities management operations who function as re‐charge organizations (public or private, non‐profit or profit) are able to track performance and do comparisons for expense recovery while taking into account the organization's unique environment.

Design/methodology/approach

After providing a definition of the effective rate, some of the influences and the importance of measuring performance for facilities management operations are discussed. The remainder of the paper focuses on the findings based on a qualitative single case study that not only clarifies the use of the metric, but also confirms the usefulness for a service‐oriented organization to measure and track performance.

Findings

Taking into account the unique environment of each organization along with the differences for time not billed back to the customer (un‐billable), the effective rate is offered as a quantitative means to measure performance as it influences the organization's billing labor rates.

Research limitations/implications

The single case study raises the issue of generalizability, but points out that much can be gained from the research. In the spirit of true qualitative research, the intent is to provide the findings allowing the reader to determine possible transferability where logic and reality is justifiable.

Practical implications

The effective rate, once normalized for the particular environment, can be used as a benchmark for both internal and external evaluations of performance for facilities management organizations.

Originality/value

The effective rate, whether actually calculated or not, influences the organization's finances through the billing labor rate in its attempt to recover costs and can serve as a performance tracking metric.

Citation

Chrusciel, D. (2006), "Exploring the facilities management effective rate as a useful metric", Facilities, Vol. 24 No. 1/2, pp. 18-30. https://doi.org/10.1108/02632770610639170