AAOM Handbook

Additionally, the individual work activities flowing out of a Production or Service strategy will interact with other work, and there will be variation in both the timing and manner of this interaction. An effective management system must therefore develop an Operating Master Schedule that integrates the work required to implement the Production and Service strategies, and can represent the distribution of likely Process performance outcomes that will be produced by the implementation of the strategies. This distribution can be compared to the outcome specifications and confidence level required for the Process to validate whether the chosen strategies and schedule can deliver the performance targets. Within the Business Process Framework these activities are incorporated in the element for Setting the Operating Master Schedule. Once an optimal combination of strategies and schedule (the combination that meets the Process effectiveness, yield and sustainability performance targets) have been identified, the only undefined parameter that will determine the cost of the work (and hence the cost performance outcome) is the cost of the resources that will be applied to the work. The Set Expenditure Budget process resolves this by identifying the optimal source and cost of the resources to be applied to the Operating Master Schedule. Note that for a set Process design and production/service strategies it is not possible to choose the output performance (effectiveness, yield and sustainability) and cost performance independently – they are related through the performance/effort curve. Note however that changes in effort do not produce changes in outcome performance that follow the curve, they follow a hysteresis loop about the curve - as illustrated in the following diagram. Consequently if you try to choose a level of performance that is not sustainable for a level of effort, the Process is set up for a delayed, but typically dramatic, drop in performance.

© McAlear Management Consultants 2005 – 2012

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