AAOM Handbook

SS.11 Develop Statistical Business Loss Projections

Context

The objective of a Service Strategy for a process is to manage threats so that the process can sustainably deliver the required outcomes, at the lowest practical cost. The task assignments completed to up to this point in the process of setting the Service Strategy have identified the probable threats related to the process, and the most likely cost effective Service Strategy available to manage those threats. The most likely cost effective Service Strategy was selected on the basis that it could meet the HSE performance targets and produced the lowest NPV for implementation. However, this does not guarantee that it will meet the performance targets required to deliver the Business Expectations. Each service strategy also has the potential to impose its own restrictions on the performance of the Process on which the strategy is implemented. Some examples of these restrictions could be: • Downtime needed to execute work required by the strategy. • Reductions in process operating rate before, during or after the execution of work required by the strategy. • Production of non-prime output before, during or after the execution of work required by the strategy. To determine if the proposed Service strategies have the potential deliver the performance target we must estimate the performance losses that will be created by the implementation of the Service strategies. The impact of these potential loss distributions will be modelled in a Production and Service strategy value driver tree, to determine the likely performance of a set of Production and Service strategies. If the modelling does indicate that the Performance Targets are likely to be met, then other potential Production and Service strategies will need to be evaluated, until the best option is identified. If the Service Strategies for Equipment and Workplaces have not changed then the impact of those strategies on performance losses will not change. Where a change in Service Strategy has occurred, or is planned to occur, the expected impact on performance losses must be estimated and modelled. The probable performance loss from a Service Strategy over any period of time is not a single value, but rather it is a range of values with differing probabilities of occurrence (i.e. the performance is best represented in a capability histogram). This is consistent with the way we have defined and modelled the performance for a process during the Set Performance Targets. Where a change in Service Strategy occurs, the projected performance losses can be estimated by taking the historical performance losses and adjusting them for the estimated changes to the losses produced by the historical and planned strategies.