AAOM Handbook

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2.2 Setting performance targets Following the Communication of Business Expectations from the Executive to the General Manager of an operation or the configured LoW4 role, the calibrated LoW4 BSP model is used to set initial (pending confirmation from the OMS) set of performance targets to the required confidence levels for output volumes, cost and capital by changing input parameters to represent future scenarios ST.05 is title Set Performance Targets to set the direction for the Production and Service Strategies. Understanding and modelling sources of variation and instability (i.e. risk events and their impact) enables calculation of confidence level and setting of realistic performance targets as shown in Figure 4 below on an annualised output.

Figure 4 – Setting Performance Targets with confidence levels The calibrated BSP model allows the roleholder to assess constraints and future opportunities and constraints thereby setting performance targets. Performance targets must be set before evaluating Production and Service Strategies, otherwise Production and Service strategies have no target distributions to refer to as start, which is followed by validation through the strategies. The BSP model allows the roleholder to focus on excessive variation and the “predominant” bottleneck and to understand the impact of solving these on interdependent processes. Validating the opportunity requires defining strategies to stabilise, reduce variation and make performance step changes towards P101 requirements, and validating the deliverable value via the OMS and EPS.The Operation LoW4 complexity BSP model needs to take a planning period of 5 years+ into consideration as scenarios. This implies possible future changes in the business scenarios and strategies(e.g. additional mining areas, concentrators, product mix etc.) over the 5 year period and hence a set of changing input parameters is required for the model. Process buffers are modelled including buffer starting capacities, minimums and maximums. For Sustainability measures, other than process buffers, performance forecasts will not be an output of the BSP model as this is defined by discreet data, but shall be developed and presented as: The confidence level shall be calculated from the percentage of potential threats that have a forecast threat rating below the target upper specification limit. The confidence level for all performance targets shall be supported with: • a specification of the opportunities and threats that could significantly affect the outcome and the control actions that will be implemented to reduce threats and deliver opportunities. • a histogram of the distribution of HSE threat rating values and • a histogram of the distribution of Business threat rating values.

Operational Planning: Building a Business Structure Performance Model Page 33 of 39