AAOM Handbook

ST.07 Have Options been Exhausted?

Context

The overall purpose of the process of Setting Performance Targets is to define the confidence level of process meeting a set of business expectations. Achieving this requires that we compare the predicted performance of the process, under a specified set of conditions, with a set of performance targets derived from the Business Expectations. The predicted performance of a process is derived from the Operating Model processes of Setting Production and Service Strategies, Setting Operating Master Schedule, and Setting Expenditure Budget. If the above Operating Model processes produce a set of strategies, schedule and expenditure budget that meet the Business Expectations then we have an approach that can be locked in for execution. If not, then we need to look for areas of the process performance where changes to strategy, schedule or resourcing/pricing may be able to allow Business Expectations to be met. That is, we need to identify the constraints in the current approach, and the opportunities that can move performance to match the Business Expectations. During the process of Setting Performance Targets the historical performance and the estimated influence of projected changes to the Production and Service Strategies and Master Operating Schedule are fed into the appropriate performance model(s) to predict the range and shape of the predicted performance outcomes. If the predicted performance does not meet the performance target confidence levels derived from the Business Expectations then we must decide whether; • there are potential changes that can be made to the Production and Service Strategies, or • there are potential adjustments that can be made to the Operating Master Schedule, or • the performance targets must be reset, and/or • changes to the basic process design must be considered if the performance targets are to be met. The Production and Service Strategies underlying the modelling for predicted performance will include both historical strategies and changes proposed from application of the Analyse and Improve process to effectiveness, sustainability and efficiency outcomes. If this combination of Strategies does not produce the required performance then there are likely to be alternatives to the historical strategies that have been made practical by improved; technology, strategy specifications, or operating and maintenance practices since the historical Strategy was adopted. Alternately, there may be strategy options that can be implemented at a higher cost but still meet the performance targets. The Operating Master Schedule is built around the Production and Service Strategies and the trigger parameters and tolerances defined for them. Options to optimise the Schedule around the trigger tolerance and synergies between

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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