How to Define a Ratio Metric
Ratio metrics divide one metric quantity, such as Operating Expenses, over another quantity, such as Rentable Area. Doing so lets you track performance but factor out fluctuations and differences in the size of the portion of the portfolio or the size of the organizational unit being measured.
Example
Take for instance a metric Op Ex (per Rentable Area). This is the ratio of:
Real Estate Op Ex (fin_RealEstateOpEx_monthly), which sums the cost of all operational expenses from the Cost Transactions table every month.
Rentable Area (spac_RentableArea_monthly), which calculates the total Rentable Area from the Buildings table every month.
You can define this ratio metric, Op Ex (per Rentable Area), to be the costs divided by the rentable area. This ratio metric then presents operational costs (e.g. $0.92/sqft or €.05/sqM depending on your project's Organizational Budget Currency and your Base-Unit area). The ratio remains valid regardless of whether the rentable area grows or shrinks over time. The ratio also remains valid for all building sizes, since the expenses are prorated to size.
| Field | Value |
|---|---|
| Metric Title | Op Ex (per Rentable Area) |
| Metric Name | ops_OpEx_perRentableArea_monthly |
| Metric Description | IFMA includes only housekeeping, maintenance, and utilities in its "Cost of Operations" benchmark. |
| Business Implication |
Scaled cost for operations. Costs that rise higher than inflation indicate a lack of control. Buildings that cost more to operate than buildings of a like-type indicate a problem area. Aside from cost-control, this metric is used for budgeting. Increased or decreased facility size can drive a change in the operations budget. For example, a direct, knock-on effect of effective space planning is that operations cost drop in proportion with saved space. |
| Assumptions | Provide the specified Ratio Metric Numerator and Denominator metrics. |
| Collect: Recurrence | Every month, On The Last Day of the Month |
| Ratio Metric Numerator | fin_RealEstateOpEx_monthly
|
| Ratio Metric Denominator | spac_RentableArea_monthly
|
| Report: Trend Direction | Smaller is Better |
| Report Benchmark Value | 0.92 |
| Report Limit High Warning | 0.99 |
| Report Limit High Critical | 1.06 |
| Numeric Format | Budget Currency |
| Decimal Places | 2 Places |
| Metric Granularity Assignments | All, by Building, by Building Use |
Comments
Ratio Metric Numerator and Denominator. This specifies the name of the metrics to use in the numerator and the denominator for the metric. When the metric rule fires, it first calculates all non-ratio metrics, collecting a set of data for each metric. It then takes a pass to calculate all ratio metrics. In doing so, it essentially takes the set of metrics records for the numerator in the Metric Trend Values table, divides each one by the set of metrics records in the denominator in the Metric Trend Values table, and stores the result in a third set of metrics records assigned to the ratio metric.
Collect: Recurrence. In order to calculate ratios between metrics, they must have the same recurrence so that the metric rule will calculate their data on the same schedule and so can calculate ratio value on the same schedule. The rule compares whether the set of data for the numerator and the set of data for the denominator have the same actual Collected Date or (metric_date) value.
Metric Granularity Assignments. In order to calculate ratios between two metrics, the numerator and denominator metrics must also have the same granularities, so that the metric rule can calculate the ratio for eacg levels of granularity. It is fine if the numerator and denominator have a super-set of the granularities calculated by the ratio metric. For instance, the ratio metric can have granularities "b" and "c", the numerator metric can have granularities "a", "b", and "c", and the denominator metric can have granularities "b", "c", and "d".
Collect: Formula. Be certain to leave the formula with its default value of "NONE".
Deletions. When maintaining your metric definitions, do keep in mind that if you delete the numerator or denominator metric for a ratio metric, the metric rule can no longer calculate that ratio metric.