AAOM Handbook

• Less tangible resources such as the support of local communities or governments, essential for sustaining a 'licence to operate'. This may include characteristics covering safety, environment, social expectations and return on investment, and may be assessed by measuring the delivery of outcomes against expectations. Understanding and setting Performance Targets for Output Capacity and Unit Costs requires the ability to model the performance of each element in the Business Structure and the effect of interactions between the connected elements. Two different types of model are used for these functions in the Business Process Framework, a Value Driver Tree where performance is dependent between flow sheet levels but independent across a level and a Value Stream Map where performance is interdependent across a level. Due to inherent variation in processes, the Performance Targets for each element of the Business Structure over a period of time is typically not a single value, but rather it is a range of values with differing frequencies and durations of occurrence (i.e. it is best represented in a Capability Histogram). The range and shape of the performance distribution(s) can be a function of; • process design, • Production and Service strategies • the effectiveness of strategy implementation, • the efficiency of strategy implementation, • the cost effectiveness of the resources employed in implementing the strategies, and • the relative position in the life cycles of the resources employed in executing the strategies (such as the changes in performance that occur as ore bodies and equipment are depleted or wear out, or the changes in performance that occur as new employees gain knowledge and experience). If there are no significant changes to any of these fundamental performance drivers then the range and shape of the performance histogram should not change. However, if a shift in any of these drivers can be achieved then a change in the range or shape of the performance histogram can be predicted. A potential set of changes to these drivers represents a potential alternate operating scenario. The starting point for the development of a scenario is the statistically stable historical performance. This performance can then be adjusted for each anticipated change to any of the fundamental performance drivers. These changes can affect either the range or shape of the performance histogram, or both. All of these anticipated changes for each element of a Business Structure can be fed into the appropriate performance model(s) and predict the range and shape of possible performance outcomes. The above modelling work allows us to predict what performance might be expected from any section of the Business Structure, given its historical performance and the anticipated set of changes defined in a scenario. We still need to determine if there are practical Production and Service strategies, and

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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