“The data collected is used as information. The results of the analysis are visible. Actions are taken as a result of the information to improve reliability and are fed back to the data acquisition teams.”
It sounds obvious, but I’ll say it anyway. If the data collected is to be of value, it must be utilised!
The utilisation of data means transforming it into information and knowledge that can support business decisions. This ultimately requires someone in a decision-making capacity to easily access, understand and then make an informed decision and define actions that will improve one or more aspects of business performance.
Below is a checklist of questions that need to be answered if the data is to serve a purpose.
- Why is the measure required – What business purpose does it serve? E.g., what business process or outcome is being measured.
- What should we be measuring – What are the factors that are important to the organisation’s goals and vision?
- How do we calculate the measure – What formula is used to calculate the measure?
- When is the measure taken – Is it Daily, Weekly, Monthly, etc.
- Who is accountable for the measure? – It must be a person who is a position to influence it.
- What is the target? – How are the results interpreted? Is the current value good or bad and to what extent?
- What actions can be taken to improve the measure? – The more specific the action the data drives, the better.
Line-of-Sight Between KPIs and Business Objectives
To increase the likelihood that the data will be utilised I recommend starting with the end use in mind. The data must have a purpose and that purpose must be in line with the overall business objectives of the organisation.
Remember – The goal of any organisation is to legally and safely increase profit and reduce cost, while simultaneously increasing both return on investment (ROI) and cash flow. With this in mind, there should be a clear line-of-sight between each measure that the data will be used to create and the overall business objectives of improved safety, cost reduction and revenue increase.
The Balanced Score Card
Building on the line-of-sight concept covered above is the Balanced Score Card (BSC).
This concept was developed by Kaplan and Norton in the early 1990s and many companies have and still use it successfully.
The BSC is a performance management system that maps the business function’s overall mission and strategy to a set of specific objectives and then these objectives are mapped to measurable PI and KPIs and action plans to improve those if they are off-target.
The BSC is balanced because it directs the organisation to consider 4 specific perspectives of performance that map to the key aspects of overall business success.
These perspectives are:
- Finance – the investors’ view.
- Customer – what is valued by end-user of the product or service.
- Internal Processes – what does the company do to achieve its finance and customers’ objective.
- Learning and growth – what is the company’s capability to improve the value it is creating through its people.
The BSC create a framework for a companywide performance management system. The concept helps the organisations to select and then focus on improving the critical few measures with the biggest impact on what really matters, i.e., Finance, Customer Satisfaction, Internal Value Creation Processes and Learning & Growth. The BSC is cascaded down to each of the company’s departments and though this creates a clear link between the strategic objectives of the company, the KPIs that measure the strategic success, through to shorter-term actions that people take every day to meet these KPIs.
Balanced Score Card for Maintenance & Reliability
From a maintenance operation viewpoint, we must consider the Reliability Management System. The Reliability Management System Model, but summerised in the simplified block diagram below.
We build on the reliability management system with a typical example of a vision and a strategic objective from an oil and gas company. Remember there must be a line of sight between maintenance and the company vision and objectives. With this information, we can start to become more specific with KPIs we need to add to our BSC.
Safely increase profit, while reducing cost and increasing ROI and cashflow
Zero Safety Incidents, PE > 80%, 100k > bbl./day, Lift cost < $30, ROI > 20%
|Increase profit and reduce cost, while simultaneously increasing both return on investment (ROI) and cash
|- Value of Unplanned Production Losses
- Cost of Breakdown Maintenance
- Maintenance Cost Per BBL produced
- Cost of Preventative Maintenance
- Business Plan Budget vs Actual Cost
- % of Projects Life-Cycle Costing Carried Out
|Increase the availability of critical equipment
|- % Availability of Critical Equipment
- % of Critical Spares in Stock
|Improve the efficiency and effectiveness of maintenance execution to support finance and customer objectives
|- Annualised Hours vs Site Capacity
- Total Open Workpool vs. Site Capacity
- Work orders awaiting approval
- Unassessed Safety, Environment or Production Critical Backlog
- % Preventative Maintenance Compliance
- % Schedule Compliance
- % Break-in work
- % Tooltime
- Work Order history data quality score
|Learning & Growth
|Develop and maintain a highly skilled, competent, empowered and motivated maintenance and operations team.
|- Employee engagement feedback score
- % Compliance with M&O competency matrix
- % of failure due to controllable human factors
- % of RCAs Fully Complete
The foundation of the BSC is the company’s strategy and vision. The link between the strategy and vision, business perspectives and department performance measures keeps the organisation focused on what matters. Assigning KPI targets adds an emphasis on performance targets. This allows individuals to see a connection between what they do day-to-day and the overall company success (or failure!).
Defining Key Performance Indicators (KPIs) and Measures
To formalise KPIs there needs to be a document created that clearly outlines the list of Maintenance and Reliability PIs that the company will track. This document should be a controlled document formally signed off by management. I’ve added an example in section 11.8. It must define the targets, definition of the calculation, the reason for the PI and how it links into improving business performance.
Below is a sample of a KPI simple one-page layout that can clearly define any KPI. This information will give the KPIs a sense of permanence and control as to change them it will be necessary to go the formal document control process. This will help protect against frequent changes based on whatever the flavour of the month is in measures and KPIs. It also clarifies it to everyone how each KPI is calculated.
Automation of KPIs
Calculating the KPIs must be automated. It may start off being a manual process, but a plan must be put in place to automate as much of calculating the measures as possible. Manual collection will not be sustainable for a few reasons.
Cost – First, this process will consume ever-increasing amounts of staff time. Costly time and time that could be better spent analysing and acting on the data.
Accuracy – The second reason is accuracy and repeatability. If data is collected automatically is it will be repeatable and accurate. Manually collected data can be very prone to errors and omissions. It can take a lot of time trying to get to the bottom of these errors if the figures are created with inconsistent rules each week or month. This is non-value adding time that can be easily overcome by some up-front effort and investment in automation of the process.
Clarity – Finally, automating the calculation process forces you to be very clear on the definition of the measures and the parameters to be used to extract the information. This level of details can then be recorded in the KPI document so there is a clear understanding of how each is calculated.
Performance Management System
The BSC must exist within a performance management framework. This framework is key for setting and communicating the company strategy and vision. It is also used for defining goals and setting targets, monitoring process towards those targets and then identifying and tracking actions to be taken to maintain or improve performance. The BSC Performance Management Framework below describes this process. The BSC is central to this performance management process.
In summary, you need to utilise the data you are collecting into you balanced score card. The best way to do this is by implementing a structured performance management framework, like the one outlined above. It’s not rocket science but it does take discipline really define what is important to measure and establish that line of sight between the measures and the business results.
You need to hold yourself and your team accountable to the targets and have open and honest discussions that define clear actions to improve these measures when they are off-target and continue to reinforce those activities and practices that are bringing in the results you need. This is when data is transformed into action!
This article is a very high-level introduction to the BSC. The purpose of it is to increase your awareness of what the BSC is and how it might translate into an organisation where the reliability of equipment is a key business driver.
For further reading, I recommend The Balanced Scorecard: Translating Strategy into Action (affiliate link).
For some excellent online overview videos, I’d also recommend https://www.clearpointstrategy.com/ (no affiliation) for some excellent short overview videos on the topic of the BSC.