AAOM Handbook

Operating Model Interactive Handbook

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AAOM FLOWSHEET

OVERVIEW

SET PERFORMANCE TARGETS FLOWSHEET SET PRODUCTION STRATEGY FLOWSHEET SET SERVICE STRATE G Y FLOWSHEET SET OPERATING MASTER SCHEDULE FLOWSHEET SET EXPENDITURE SCHEDULE FLOWSHEET WORK APPROVAL FLOWSHEET PLANNING FLOWSHEET

SCHEDULING FLOWSHEET RESOURCING FLOWSHEET WORK EXECUTION FLOWSHEET MEASURES FLOWSHEET ANALYSE AND IMPROVE FLOWSHEET MANAGEMENT ROUTINES AAOM GLOSSARY OF TERMS

KEY COMPONENTS OF OUR OPERATING MODEL

Updated: 08/2018

Labour, materials & equipment

OPERATIONAL PLANNING

WORK MANAGEMENT

Set expenditure schedule

Resourcing

Set production strategy

Set performance targets

Set operating master schedule

Approve work/cost commitments

Set business expectations

Schedule work

PROCESS PERFORMANCE

Plan work

Execute work

Set service strategy

Measure social process performance

FEEDBACK

Modify or adapt the business

Measure work management performance

Measure process performance

Analyse & improve

Copyright; McAlear Management Consultants 2004.

BUSINESS PROCESS FRAMEWORK OVERVIEW BPF.00

Author: Mick McAlear McAlear Management Consultants 2012

© McAlear Management Consultants 2005 – 2012

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Context ...........................................................................................................................3 What is a Process? ........................................................................................................3 What goes on in a Process?..........................................................................................4 Process Control..............................................................................................................5 The Value of Low Variation in a Process. .....................................................................6 Keys to Minimising Variation..........................................................................................9 Modelling a Process to Control Variation in Work.......................................................12 Social Considerations ..................................................................................................19 Identifying and Making Interventions ...........................................................................22 The Business Process Framework .............................................................................23 Purpose ........................................................................................................................24 Quantity ........................................................................................................................25 Design ..........................................................................................................................25 Quality ..........................................................................................................................25 Schematic Diagram Element Task Assignments........................................................25 Detailed Flowcharts .....................................................................................................25 Action/Decision Task Assignments .............................................................................25

Context

This document provides a high level outline of the Business Process Framework (BPF). The BPF was developed as a system for managing the work that people do. Its aim is to help a group of people, tasked with working together to produce a set of outcomes, to understand the work they must do to be successful, and how the work activities should be sequenced, assigned and executed for the group to function as an effective team. The system is a called a business process framework as it describes the basic activities, structure and guiding principles that are necessary for the successful establishment and operation of any type of business process involving the work of a team of people. It is called a framework because, while the basic elements will be consistent for all business processes, the actual work being undertaken, and the tools and systems involved in implementing the BPF elements may differ widely between processes. For most of us, the recognisable processes we encounter are those involved in the physical transformation, transfer or storage of items. Such processes are all around us, and a few moments of contemplation will be sufficient for most of us to identify them in our personal or work life. Getting dressed in the morning is a process, as is dining at a restaurant, shopping, mining, mineral processing and manufacturing. Each of these examples is a physical process, where it is generally easy to sense (see, hear, feel) what is happening to items as they move through the Process – ie the process is tangible. There are also Processes that deal with less tangible items such as information. Examples of these are producing a set of accounts and the provision of specialised technical advice in areas such as safety, environment or engineering. The activities behind the delivery of such services are basically transforming, transferring and storing information to finally deliver the accounts, advice, report, specification or procedure required. Information that is transferred or stored (either in paper or electronic forms) is tangible and we can, with some imagination, visualise these steps. Transformations of information, such as in making a decision, are often more difficult for us to visualise but can still be represented, as for example when decision algorithms are programmed into software. The set of sequenced, specified activities that are necessary to continually deliver a desired set of materials or information is a Process. A Process can be seen in the flow sheet of a mine or mineral processing plant. It can also be seen in a flow sheet for producing a set of financial accounts, or solving a technical problem in order to deliver advice. What is a Process? A Process can be defined as a set of activities (work), performed in a specified sequence and manner, for the purpose of producing a desired outcome.

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What goes on in a Process?

Each business Process has at its core the completion of work that will produce the outcomes expected from the Process. The keys to a successful Process are; understanding all of the work that will make the Process successful, and consistently and correctly completing that work. Note. The definition of work used within the BPF documentation derives from the Oxford English Dictionary - viz the application of effort (either physical or mental) towards the achievement of an outcome. Within the BPF we use three terms 1 to classify the different types of work involved in any specific Process. These are; 1. Production Work – activities directly involving transferring, transforming or storing items (materials or information) used in producing the outcome of the process. For example: a. in a mining/mineral processing environment; blasting, hoisting, stockpiling, grinding, smelting. b. in a power generation environment; transferring fuel, transforming energy (eg oil to heat, rotation of alternator to electricity), transforming voltage & current levels and transmitting power over lines.. c. in an accounting environment; collecting, processing and storing information on costs and outputs. Note: The world is full of interconnected processes, and the output of one process will typically produce and/or deliver, through a series of transform, transfer and storage activities, material or information that is used in another process. In the BPF, all activities involved in transforming, transferring or storing materials or information, in any process, are defined as the Production work of that Process. 2. Service Work – activities involved in identifying and managing threats that would otherwise cause the Production work of the Process to stop, either in full or in part. For example: a. in a mining/mineral processing environment; monitoring and maintenance of environmental controls, monitoring and maintenance of ground support or pit walls, monitoring and maintenance of roads, monitoring and maintenance of equipment. b. in a power generation environment; monitoring and maintenance of environmental controls, monitoring and maintenance of equipment. c. in an accounting environment; maintenance of information systems, backup of critical information. From this definition it should be obvious that Service work is a process of risk management.

1 These terms are adapted from the work of Macdonald Associates.

3. Support Work – activities that predominantly serve the purpose of improving the effectiveness or efficiency of a Process. For example; analysing the effectiveness of the Process or work design and identifying better alternatives, pre-planning and scheduling work activities to improve the quality and cost of outcomes.

Process Control.

In many mechanised Processes an automatic control system is implemented. The purpose of the control system is to ensure that the equipment applied to transforming, transferring and storing materials consistently performs a defined set of actions, in a specific sequence, and to a set standard. Implementation of a control system involves two distinct phases - design and then operation. The design of the control system involves understanding the expected outcomes, the hardware and raw materials available to the Process, and then defining the actions, sequencing and performance standards required to deliver those outcomes. Operation of the Process involves the repeated and consistent application of the designed work steps and standards, with measurements used to maintain the stability and capability of the process. There are also many Processes where the work is not mechanised or automated, but is either performed or directly controlled by people. Examples include operation of mining equipment, producing accounts and preparing technical analyses and reports. A very large proportion of Service work is also performed by people - eg maintaining equipment. To sustainably deliver the expected outcome of these Processes there will potentially be many Production and Service tasks that must be performed at a specific time, and to a set standard, and that could potentially interact or interfere with each other. These Production and Service tasks, their sequence or timing, and their specifications must be designed. There must also be consistent execution of the designed work, with measurements used to maintain the stability and capability of the process. The BPF is a system design to deliver the requirements outlined in the above paragraph. It is a system for defining and managing the Production and Service work that people perform. The BPF has many similarities with the design and operation of an automatic control system. You should note in the schematic of the BPF below, that while there are separate sub-processes for Set Production Strategy and Set Service Strategy (which define what the Production and Service work is), all of the Production and Service work is thereafter integrated into a single stream of activities. This is in recognition of the fact that both Production and Service work are necessary and, because of potential interaction and interference, should all be integrated in time and space.

© McAlear Management Consultants 2005 – 2012

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Business Process Framework

Labour, Materials & Equipment

Work Management

Set Expenditure Budget

Resourcing

Set Production Strategy

Set Operating Master Schedule

Set Performance Targets

Set Business Expectations

Approve Work/Costs

Schedule Work

Execute Work

Process Performance

Plan Work

Set Service Strategy

Modify or Adapt the Business

Measure Social Process

Measure Work Manag’t

Measure Output

Analyse and Improve

Careful observation of highly reactive Processes could lead to the conclusion that the only elements of the BPF that are occurring are the resourcing and execution of urgent work, and that this is happening in a disorganised, ineffective and inefficient manner. That is, the failure to implement the other elements of the BPF may not stop the Process completely, but will cause it to perform well below its potential. The above situation can occur because most of the elements of the BPF are Support work. Those elements between Set Performance Targets and Scheduling are Support activities completed in order to set up the Resourcing and Execution of the Production and Service work for success. Measurement and Analyse and Improve are also Support activities, but of a feedback nature, since they provide the data and approach to improve the Process. However, getting the Support activities of the BPF effectively implemented can significantly reduce the level of variation and waste in Process outcomes, which can add significantly to the value delivered. While we may not always be conscious of it, we appreciate and depend on the Processes and systems we use to act in a predictable and consistent manner. If they don’t, it generally produces confusion, uncertainty and waste. The outputs of poorly controlled systems may exhibit erratic and unpredictable performance, and large variations in the output. The following chart shows the actual daily output from a mine. The Value of Low Variation in a Process.

Most managers would find the above chart difficult, if not distressing, to look at. Consequently, they generally prefer to filter some of the variation from the data. Following are two charts of the same data, but presented as the daily average over seven day and one month periods.

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The charts progressively look more ‘acceptable’. In the monthly chart there are a few low periods where obvious reasons, or excuses, may be proposed for the low output, but otherwise the results appear to be reasonably steady, and you may even hope that the performance has improved – even though the reality is very different. These filtered charts hide the fact that the large swings in the daily output produce lots of waste: • Pushing hard to try to catch up for the low days results in additional labour and energy use, and additional stress to, and failure of, equipment. • The surging and stalling of throughput results in the same type of delays and losses that occur when traffic gets into a stop/start pattern rather than remaining free flowing. • Labour and energy are wasted when equipment fails or the process stalls. Producing with an output variation swing of ±100%, rather than ±10%, can result in waste of between 30% and 50% of the labour, equipment, and energy used in the process. What is also hidden in the averaged data charts is just how much potential capacity there is within the process. While the average output on all charts is equal, no points on the averaged monthly output chart are above 120% of the average, few points on the averaged seven day output are above 125% of the average. However, the chart of daily output rates indicates that there are a lot of days when output was above 180% of the average, with one as high as 200%. For this process sustained output rates that are double the historic average may not be possible, but rates that are significantly higher probably are.

A common consequence of reducing the variation in the output of a Process is that the average output increases. Following is a chart for the same Process as the charts

above, however the chart view has been modified to include a period at the end where the output variation was reduced. This was achieved by improving the management of work, thereby reducing the number of low values but not increasing the maximum value – this is just the type of improvement expected through application of the BPF. The reduction in variation results in a 25% increase in the average output, and there is still probably a lot more improvement available.

It is not uncommon for this type of improvement in average output to accompany a reduction in output variation.

Our goal therefore should be to remove variation, and its attendant losses, from the processes we manage.

Keys to Minimising Variation.

The outcomes produced from any Process are the consequences of what comes into and happens within the process. If the Process inputs and operation are not changed the outputs will not change. This is embedded in the quote from Albert Einstein that the definition of madness is doing the same thing over and over and expecting a different outcome. If you want to change the outcome of your work, you have to do something different. The converse of this is that if you want the same outcome, then make sure that you do exactly the same thing over and over again. This is the essence of achieving Process consistency. Statistical Process Control (SPC) theory defines two distinct components of the performance consistency of a Process. These are the Stability and the Capability of the Process.

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A Stable Process will produce some variation in its outputs, however these variations will be distributed in a random pattern. The average of the output values, and the range of deviation of individual output values from the average, will be consistent. The benefit of having a Stable Process is that it is not changing, therefore its future performance should be the same as its past performance – ie performance in a Stable Process is predictable. Producing a stable Process requires that the all elements of the Process occur in the same sequence, and in the same way, each and every cycle. Machines, robots and computers are very good at doing exactly the same thing over and over, whereas people are very poor at this. This is the underlying reason that process automation and computer controlled robots and machines have yielded such enormous productivity and quality improvements in industry. However, since many elements of our work processes must continue to be performed by people, a fundamental challenge in achieving stable Process performance is to establish appropriately standardised completion of the work people perform. The Business Process Framework (BPF) is a system designed to help achieve this. Excessive variation in output is waste produced by the Process. If you increase the output of a wasteful Process you will also increase the waste produced. Therefore the logical steps to improving the capability of a stable Process are firstly to reduce the variation to less than the specification limits, and then to look for a change that will move the output to the desired target. A good analogy from target shooting is; if your shooting is producing a very wide pattern of hits, trying to adjust the sights will not produce any improvement. You have to focus on achieving a tight pattern first, by improving the consistency of the position/aim/fire process. When you have a tight pattern that is consistently displaced from the target you can get on target by adjusting the sights. A Capable Process is one that is Stable and delivers the customer’s expectations (ie it meets the specifications).

There are three significant causes of excessive variation in Process output. These are; • Excessive variation in the inputs, • Excessively variable performance of the Process steps, and • Over reaction (un-necessary change – usually made by management) to normal variation in the Process. If the inputs to a Process exhibit variation then either the Process must be less efficient through trying to respond to and control the potential effects of this input variation, or the variation will flow through to the output. Removal of variation at the input is frequently the most cost effective way to reduce overall Process variation. It is obvious that if a machine or person carrying out a step in the Process produces an output that has excessive variation then this may flow through to other steps and finally to the output. To remove variation these causes must be identified and removed/reduced. People are inherently far less consistent in the performance of tasks than machines, hence much of our effort towards reducing variation in Stable Processes should be directed towards achieving standardised completion of the work people perform. However, measuring, understanding and improving the standard of people's work performance is probably the most neglected or avoided improvement opportunity. Instead, managers will consistently modify plant, specifications and procedures in response to variation in performance that had a root cause in misuse of plant, or neglect of specifications or procedures. The third of the significant causes of variation is less intuitive or obvious for people to recognise. It is that when we make a Process change in response to normal variation, that change produces an increase in variation, not a reduction. This result can be demonstrated with simple experiments or, for the brave, the Process they

© McAlear Management Consultants 2005 – 2012

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manage. In one case the manager of a chemical plant decided to test this principle by ‘locking up’ the Process controls where there was an historical variability of 10%. When the operators lost the ability to change any of these parameters the variability instantly dropped to less than 2%. By definition, if a Process is statistically stable, greater than 99 measurement points in each 100 will fall randomly within the historical range, even though there will be changes from point to point. The appropriate change made in response to that 1 unusual measurement can avoid the loss of Process stability and an increase in variation. Any change made in response to one of the other 99 points will tend to produce instability and increase variation. To avoid over-reaction you have to correctly recognise which 1 point in 100 needs a response. Fortunately this is made easy by some simple statistics. Unfortunately most managers ignore the statistics and frequently over react, destabilising the Process. • Specify in detail the tasks (what they are, the sequence, the dependencies and the performance specification) that are necessary and appropriate for the Process to perform as required. • Implement the tasks accurately and consistently. • Measure that the Process is performed, and performs to, specification. • Correct all variations from the Process specification but don’t change the Process. If you manage to establish a stable Process that has output variation less than your specification limits you have demonstrated an exceptional capacity for consistency, discipline and a constancy of purpose. You have earned the right to change the Process in a way that will improve its performance capability. The simple version of the formula for a stable, low variation Process is; • Understand the expectations of the Process (the specifications). When you are planning to implement a new Process the starting point for a successful outcome is to prepare a conceptual model and flow chart that defines what outputs the Process must deliver, what inputs it will require, and what must be done with those inputs in order to deliver the required outputs. The model and flow chart for any two Processes that must produce the same type of outputs from the same type of inputs will at a summary level look the same. It is only at the most detailed level of the Process design that differences may become evident. Modelling a Process to Control Variation in Work.

Following is a generic model that could be applied to managing the Production and Service work necessary for achieving performance from a Process.

Management Process Model

PROCESS

INPUTS

OUTPUTS

MANAG’T PROCESSES

TARGETS / STRATEGY SCHEDULE / BUDGET WORK MANAG’T ANALYSE & IMPROVE

EFFECTIVENESS

LABOUR

EFFICIENCY

MATERIALS

EQUIPMENT

SUSTAINABILITY

PLANNED

RIGHT WORK

SCHEDUED

RIGHT TIME

RESOURCED

RIGHT WAY

The purpose of a Process is to produce a desired set of outcomes. The outcomes (purpose) of a Process can be characterised by its Effectiveness (units of quality output on/over time), Efficiency (eg units of output per unit of input or cost per unit of output), and Sustainability (the requirements for continuing in business - eg safety, environment, social, return on investment and operating life expectations). The minimum set of measures that fully represent the significant characteristics of the purpose of the Process form the Key Performance Indicators (KPIs) of that purpose. As stated and seen above, the outputs of a Process exhibit variation – and in some cases significant variation! Consequently, when setting performance targets for a Process the impact of variation must be taken into account. Setting a target that comprises a single number is rather meaningless. When the varying output of a process is compared to it the two will almost always be different – look at the charts above and you will see that, regardless of the value you choose, that value seldom recurs over the period of measurement. A target must therefore be expressed as a specification that may include; a lower limit, an upper limit, or both, and perhaps a target mean. Where it is not necessary for every result to meet the specifications, but they must be met when averaged over a number of results, then this measurement interval must also be specified. The number of result within this interval that meet a specification (a measure of the confidence level of the Process) can then easily be

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identified in the KPI capability histogram. A target should therefore include a specification, a required confidence level (the percentage of results that must meet the specification) and the interval over which the confidence must be met. In the following example, simulating the results of a product batching process; • 87% of the batches produced lie between the specification limits, ie the confidence level is 87%, and • the mean weight of the batches produced by the process is 98kg, and the mean weight of the batches that meet the specification limits is 100kg.

The measures of Process outcomes are typically of a lagging nature. Consequently, it may be hours, days, months or years between the time a change to the input, operation, or servicing of the Process is made, and the results of that change become evident in some of the outcome measures. Once such a lagging change has been initiated it cannot be reversed instantly. There will also be a time lag to reverse the change, during which the resulting variation in output is causing waste. Hence, while it is important to measure the output of the Process we cannot avoid the risk of variation in it if that is all we measure. In order to deliver the output of a Process there must be an understanding of its underlying theory, and the technical standards and guidelines applying to it. These will help define the Production and Service work. An example is the blasting of rock in a mine. The purpose of the blasting is to deliver fragmented rock. The underlying theory is that drilling a particular pattern of holes, filling them with the specified type and amount of materials, and firing the holes in a specified sequence, will produce the correct size and quantity of rock fragments, in the right position. This could be summarised by stating that if you do the right work, at the right time, and in the right way, you will get the right outcomes. A more common example of this theory in action can be observed with the warranty provisions applied to cars. The warranty is only

offered on the provision that specific service work is completed on the car, according to a specified schedule, and by accredited personnel.

The relationship between the performance of a Process and the application of the theory generally follows the law of diminishing returns. There are two characteristics of the interpretation of the theory that determine the shape of the curve. These are; • the design of the Process (and it’s environment) in regard to the requirements of the theory, • the strategies adopted for implementing the theory, and, there are two characteristics of the application of the theory that determine where on the curve a Process will be operating; • the execution of the strategies, and • the cost effectiveness of the resources employed.

This may be represented in the following diagram.

The consistent application of a proven theory (relating to inputs and operation) of a Process is a leading indicator of its output performance.

There can be considerable differences in the way the output of a Process responds to changes in the application of the theory. • Immediate and linear change. For example, the change in the direction of a car when the steering wheel is turned.

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• A time lag. For example, the time delay between moving the rudder on a ship and its change in direction. • A step change (a significant change in output over a very short period of time). For example, the change in rock condition when blasting. If we wish to maintain low variation in the Process output then it follows that whenever there is either a time lag or a step change in the relationship between the application of the theory and the delivery of the output we must measure that the theory is being correctly and consistently applied. The minimum set of measures that fully represent these significant characteristics of the application of the theory of the Process form the Key Performance Indicators (KPIs) of that theory.

The first key element of the underlying theory of the Business Process Framework is;

Doing the right work, at the right time and in the right way will deliver the required performance.

This is true regardless of the type of Process. We used examples above of how doing the right work, at the right, and in the right way applies for drill and blast and for servicing your car. In a safety or environmental context it should be obvious that if there is a procedure for identifying/preventing a potential incident, and that procedure is applied ahead of a task or situation that could result in the type of incident, and the procedure is applied correctly, then there should not be any unwanted outcomes.

Measures of the Right Work, at the Right Time, and in the Right Way are leading (work management) indicators of the Process performance.

An effective management system must therefore include the steps necessary to define what elements of a Process (activities and hardware) are critical to delivering the intended outcomes, and the Production and Service strategies (the right work, right time and right way) needed to consistently deliver the outcomes to specification. This process of defining what is the right work and the right time must also take into account all standards and guidelines that are applicable to either the outcomes or methods for the work. This is an area where the contribution of specialised functions such as safety, environment or engineering groups feed into the Production and Service work for other Processes. Within the Business Process Framework these activities are incorporated in the elements for Setting the Production and Service Strategies. Each of the work activities derived from the Production and Service strategies will occur at different times and frequency over any period of Process operation. In order to forecast the results that will be produced by a set of Production and Service strategies, the schedule of the timing and frequency of each work activity must be forecast, and the collective impact of the activities on the Process output performance estimated. Regardless of the best efforts to consistently execute the chosen strategies there will be some variation in the outcome produced at each execution. This will produce some variation in the output performance of the Process.

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.

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The timing, frequency and cost of every work activity will exhibit some degree of variation. An effective management system must therefore develop an Expenditure Budget that reflects the variation in timing and frequency of work, and also the variation in cost that occurs at each execution. The results will be represented in a probability distribution of the likely cost outcomes. This distribution can be compared to the specification and confidence level required for the cost target for the Process to validate whether the chosen Production and Service strategies, Operating Master Schedule and resourcing can meet the performance targets. Within the Business Process Framework these activities are incorporated in the elements for Setting the Expenditure Budget. The Operating Master Schedule and Budget together define our ‘best estimate’ of the Production and Service work that we will execute in the future, developed from our understanding of performance expectations and our selected Production and Service strategies. This ‘best estimate’ is typically developed many months ahead of when we will actually execute the work. It should not be surprising then that there is likely to be some variation between what we thought would be required when we set up the schedule and budget, and what is optimally required when we arrive at a point in time on the schedule. If we blindly execute work from the original Operating Master Schedule then the work may not produce performance that meets specifications, in fact the wrong work, or the wrong timing, may increase the variation between the actual and expected output. Work Approval allows us to confirm, before we commit to the execution of work, that all Production and Service work entering into Work Management is necessary and appropriate for delivering the performance required of the Process, and that the work is funded within the approved expenditure budget. The consistency and efficiency of implementing the Production and Service strategies will be enhanced if the Work Management process ensures that work is well planned (fully specified), and that resources are appropriate, flexible and scheduled to complete work at the Right Time, while optimising productivity. Comparative measures of performing work in a re-active manner and in a well organised and prepared manner, consistently indicate that; • 80% of safety incidents can be avoided, • 60% of environmental incidents can be avoided • labour productivity can improve by 30%, • the direct cost of work can reduce by 50%, and • Process output can increase by 30%. Some observations that can be drawn from the first element of the Business Process Framework theory are that there is a Right Time for the execution of every Production and Service work activity, and that if work is not completed at the right Time there will be a negative impact on Process output performance. The logical conclusion from this is that the purpose of Scheduling is to allocate resources so that all work is completed by the Right Time. The Right Time drives scheduling, and scheduling is the hub of the work management process – that is, everything else revolves around it. Consequently the purpose of planning is to specify everything that is necessary to complete the work when it is scheduled, the purpose of resourcing is

to deliver all resources for the schedule, and the purpose of execution is to complete the work from the schedule. This paradigm tries to hold the performance of the Process as a constant by allowing resources to be a variable. This is a significant contrast to the far more common work management paradigm – scheduling work to match to the availability of resources. In this case the constant becomes the resource and the variable becomes the timing of the work, and hence the performance of the Process.

The quality of the planning, scheduling, and resourcing applied to Production and Service work are leading indicators of the effectiveness and efficiency of the Process.

Therefore, the second key element of the underlying theory of the Business Process Framework is;

If the work is planned, scheduled and properly resourced ahead of execution the desired outcome will be achieved more consistently and at lower cost.

Ensuring that all Production and Service work is effectively executed at the correct time requires a good work management process. Within the Business Process Framework these activities are incorporated in the elements of Work Management; Approve Work, Planning, Scheduling, Resourcing and Work Execution.

Social Considerations

The Business Process Framework is a system intended to ensure that we deliver the performance required from a Process. However, it is primarily a system that deals with; • the interpretation of the expectations and needs of a Process by people, • the translation of these expectations and needs into the work that people perform, and • the management of that work.

PROCESS / CONTROL SYSTEMS RELATIONSHIP

PROCESS

INPUTS

OUTPUTS

Instructions

CONTROL SYSTEMS

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Whereas, in an automation system the work that affects the Process performance in undertaken by hardware, in the Business Process Framework the support (management) work is undertaken by people. If you don’t take care of the Process and automation system hardware it will not work effectively for you. Similarly, if you don’t take care of the people engaged in the Production, Service and Support work they will not work effectively for you. In fact they may choose to deliberately work against you. People choose to give their support and effort to an undertaking. The key issue is that it is their choice, and theirs alone. Others can influence, but each individual will make their own decision. How then do we help people to make the decision to give their support and efforts to an undertaking? Understanding and applying some basic human traits will help. As individuals humans are not equipped with greater physical strength, or better offensive or defensive features, than most of the creatures that we share this world with, and compete with for survival. However we have at least two innate traits that have contributed to our success; • greater intelligence, and • an inclination towards trusting and cooperating with others. It is cooperation that allows us to combine our intelligence and strength to survive and succeed. The above observations suggest that a successful survival strategy has selected people who will tend to trust, cooperate with and support others. If this is true, then we need to understand what is likely to stand in the way of our innate tendency to trust and cooperate, and to cause a person to choose not to give their effort to their work? Ian Macdonald, of Macdonald and Associates (MAC), proposes that there are six principal influences on a person’s willingness to give their effort to an undertaking with others. These may be represented as a continuum between two opposites in the values that an individual perceives others to hold and enact. Applying this to the workplace suggests that if an employee perceives that management exhibits values and behaviours that lay to the left of the continua, they will be more likely to give their support and effort. If an employee’s perceptions of management lie to the right of the continua, they will be unlikely to give their support and effort. Values Continua

Caring ------------------------------------------------------------------ Uncaring Respectful ------------------------------------------------------- Disrespectful Fair -------------------------------------------------------------------------- Unfair Truthful --------------------------------------------------------------- Untruthful Trustworthy ----------------------------------------------------- Untrustworthy Courageous ---------------------------------------------------------- Cowardly

From this premise, a key part of the work of management is to create an environment that leads employees to the belief that management’s values lay on the left side of the values continua. MAC suggests that there are three areas where management action shapes employee’s beliefs. They are: • Behaviour, • Systems, and • Symbols. Behaviours. The acts and omissions of management, as seen, heard and felt by employees, will each be interpreted by employees as an indicator of management’s values. Systems There are three fundamental types of management systems: • Technical – the processes and tools for getting Production, Service and Support work done (eg the Business Process Framework), • Commercial – the processes and tools used to control money (in its various forms), and • Social – the benefit systems, role descriptions, performance reviews, grievance systems that are about people. Symbols. Symbols are physical evidence in the workplace created by the actions and decisions of management. Tolerating untidy, dirty and poorly maintained amenities and workplaces may be seen as a symbol that we don’t care about employees or work standards. Not dealing with poor work performance or habits as a symbol that we lack courage. Not keeping appointments or being on time as a symbol that we don’t respect others or value their time. Turning a blind eye to unsafe conditions or actions as a symbol that you don’t care for employees or their families. In order to ensure that the employees working in a process are committed to providing their support and efforts towards its success, management need to create an environment (behaviours, systems and symbols) where employees believe managers have positive values . Each of these systems, as seen, heard and felt by employees, will be interpreted by employees as an indicator of management’s values.

Therefore, the third key element of the underlying theory of the Business Process Framework is;

A culture of engaged employees believe that their leaders’ behavior demonstrates positive values. An engaged workforce will be the most productive.

Measures of the workforce perceptions of management values, behaviours, systems and symbols, are also leading (social) indicators of the Process performance.

© McAlear Management Consultants 2005 – 2012

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Identifying and Making Interventions

The Business Process Framework requires that measures be established for ; • the purpose of the process, • the technical theory , and • the social theory . The purpose of measures is to indicate that an intervention in a process may be required. There is an implication to this statement that is too important to leave unsaid – ie measures also indicate when to leave the process alone (you may remember that the subject of counterproductive intervention was mentioned earlier). Measures must also provide an objective, repeatable understanding of what is happening, that is based on a validated theory. The Business Process Framework requires that measures be presented as Control Charts and Capability Histograms, and that the principles of statistical process control be applied to the measurement interpretation, issue analysis and the development of an intervention - where one is required. Over-reaction is to be avoided and special and common cause issues treated appropriately. The performance of a Process will not remain stable and capable, nor will it be sustainably improved, if the information delivered by measures is not applied to the appropriate levers for the Process performance. The DMAIC (Define, Measure, Analyse, Improve and Control) process is one that is widely applied in a broad cross section of industries. It has a proven track record, when applied correctly, of helping with understanding what is affecting the performance of a process and systematically and efficiently working to the implementation of controls to deliver stable, capable and improved performance. The principle levers for moving the performance of a Process; • Design of the Processes for the environment in which it operates. • Strategies (Production and Service) applied to the Process. • Execution of the strategies. • The cost effectiveness of the resources employed. If there are no cost effective options for achieving the required performance using the above 4 levers, then the remaining options are to either; • accept different expectations, or • make fundamental change to the purpose or theory. To deliver and sustain performance expectations, the results of analysis and improvement work must be tied into one of the above areas. Measures must provide a truthful and revealing picture of what is happening. They must not mask variation that is significant to the performance of the process.

Within the Business Process Framework these activities are incorporated in the Analyse and Improve element.

The Business Process Framework

The schematic of the Business Process Framework presents a model that identifies each of the significant elements required for an effective process for managing the work that people do, and illustrates the principle connections representing the flow of information from the setting of business expectations through to delivery, understanding and responding to performance. The diagram is a simplified model and does not seek to represent every nuance of interaction in the elements. Nor does this model provide the detail necessary to; • fully understand the BPF, • identify all of the actions and decisions (work) that are necessary and appropriate for the each element of the BPF,

• implement the BPF accurately and consistently, • measure the purpose and theory of the BPF.

This additional detail must be developed for each element of the BPF schematic, and for each work step within each element to the level of detail that will support the consistent and effective execution of the all the work.

Business Process Framework

Labour, Materials & Equipment

Work Management

Set Expenditure Budget

Resourcing

Set Production Strategy

Set Operating Master Schedule

Set Performance Targets

Set Business Expectations

Approve Work/Costs

Schedule Work

Execute Work

Process Performance

Plan Work

Set Service Strategy

Modify or Adapt the Business

Measure Social Process

Measure Work Manag’t

Measure Output

Analyse and Improve

The model does allow us to visualise the flow and feedback of items (principally information) in a process that is far less tangible than the physical Production and Service work to which it is applied. What is also evident from the diagram is that every one of the activities identified in it affects, and is affected by, every other activity in the diagram. If any activity is not designed correctly, or not executed at the right time, and in the right way, then the quality and efficiency of every other activity will be affected.

© McAlear Management Consultants 2005 – 2012

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Executing each one of the activities on the above diagram entails a significant number of decisions and actions – there are over 350 in the detail of the Business Process Framework design. If we are to have any chance of meeting the requirements for the best consistency and performance from an activity, and from the BPF as a whole, we will have to ensure that each decision and action, and its performance specifications, are defined and appropriate. The detailed design delivers this. The design must provide a tightly specified instruction for all the work for which the outcome or method of execution really matters. It is sometimes thought that providing such detailed and comprehensive specifications and instructions is disrespectful of people, implying that they need to be given this detail because they could not do the work without it. This is not the case. There are three other reasons why detailed instructions and specifications are required: • There may be several different ways of doing the work, or different specifications that could be applied to the work. If such options do not produce unacceptable variation in the work outcome then an approach and specification do not need to be mandated. If a different approach or specification can produce unacceptable variation to outcomes then one standard must be set, and this must be mandated for all. It is not a message that the person executing the work does not know how to do it, but a message that doing the work in the specified way matters. • As stated before, people are generally the most unreliable element in a process. It is a human trait that we can and will make mistakes in processes that we have completed correctly many times before, particularly if the process is complex. Detailed instructions, specifications, and their abbreviated form in checklists, are essential to achieving consistency in work performed by people. Therefore, in all walks of life checklists and instructions are used where it is critical that consistency be achieved. For example, a person cannot obtain a pilot’s licence without demonstrating many times that they can land a plane. Yet every time a pilot lands a plane they work through a detailed checklist – why – because it matters, and even experienced people forget, or can be distracted. • If there is no documented approach or specification then work practices mutate over time. Most of these mutations have the effect of reducing the consistency and quality of work. Without a documented standard there is no reference point, no ability to measure work performance, and hence a very difficult task to maintain a standard.

Purpose

The purpose of the Business Process Framework is to ensure that;

Processes deliver the business expectations established with management