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Choosing a Normalizing Factor Basis
What is normalization, and why is it important?
Normalization is the process of adjusting environmental performance measurements to account for increases or decreases in production or facility activity over time. Normalization is important because it recognizes that facilities can become more environmentally efficient, even if total production, and thus their total environmental impact, increases. Conversely, if production declines, normalization allows Performance Track to separate out the effects of declining production from any gains in environmental efficiency.
How should facilities choose a basis for normalization?
The basis of normalization is a brief description of how production or activity is defined at a facility. Facilities should choose a basis of normalization that directly demonstrates changes in the activity level or output of the facility. The basis of normalization should describe both WHAT is being produced and HOW production is measured. The basis of normalization should not change from year to year, and in most cases the same basis of normalization should be used for all Performance Track goals. It is best to choose a basis of normalization that is measured in physical quantities (e.g., pounds) as opposed to dollar values.
Manufacturing facilities should normalize using production quantities. For example, for an electroplating facility, an appropriate basis of normalization could be "tons of material electroplated." For a car manufacturer, an appropriate basis of normalization could be "number of cars produced."
Non-manufacturing facilities should
normalize according to the best unit of economic
activity if applicable. Even though employment
may not immediately rise or fall with changes in
output, it is a relatively good indicator, and is
typically the best normalizing factor basis for
public facilities. Service facilities may also
choose other bases of normalization, so long as
they are logically (if indirectly) linked to
production, and so long as they are facility-wide
(to correspond with facility-wide goals).
The following table lists sample bases of
normalization in a number of different
non-manufacturing sectors. If dollar value of
sales is used as a basis of normalization, all
dollar values should be adjusted for inflation.
|
Example Bases Of Normalization For
Non-Manufacturing Facilities
|
|
|---|---|
|
Sector
|
Bases of Normalization
|
| Public Facilities and Institutions, Research Organizations | Number of employees, number of work hours |
| Post Office | Volume of mail processed |
| Cleaners | Pounds of clothes cleaned |
| Hotels | Lodging room nights |
| Hospitals | Number of hospital beds |
| Retail | Number of employees, square feet of retail space, or volume of sales (adjusted for inflation) |
| Energy | Total energy production (Btu, mmBtu, KwH, or MwH) |
| Fuel oil delivery | Gallons of oil sold |
| Utilities, Sanitary Services | Number of households served |
Some normalizing exceptions exist. Goals for Land and Habitat, Noise, Vibration, or Odor do not need to be normalized. Material Procurement and Supplier Environmental Performance goals need to be normalized differently. Please see the Performance Track Normalizing Guidance (PDF, 309KB, 27 pp) for more information.