AAOM Handbook

SS.12 Have Confidence Levels on Performance Targets Been Met?

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 a process, identified the most likely cost effective Service Strategy available to those threats, and estimated the performance losses that will arise from the implementation of the strategy. 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. To determine if the proposed Service Strategies will deliver the performance targets we must determine whether the estimated performance impacts of the strategy will produce any significant impact on the confidence levels for the process performance targets. The performance target confidence levels for a change in Service Strategy can be estimated using a statistical value driver tree model of the Production and Service Strategy characteristics (time, rate, quality, reliability, process efficiency, etc.). The model must be fed with the projected loss distributions estimated for the selected strategies. If the estimated performance and confidence level for the proposed Production and Service strategies produce a match to the confidence level required for the performance targets then the strategies will likely be effective and can be further developed for implementation. If the estimated performance for the proposed strategies produce a confidence level that exceeds the target then the responsible manager may wish to reset the performance targets. If the estimated performance for the proposed strategies produce a confidence level below the target then a new package of strategies will need to be proposed, or new targets set, or the lower confidence level accepted by the responsible manager.

Purpose

To determine if the performance forecast for the proposed Service Strategies meets the confidence level set for the process performance targets.

© McAlear Management Consultants 2006

Operational Planning: Set Service Strategy

Updated: August 2018

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