Iso 9001 - 2015

The American University in Cairo (AUC)
Engineering Services
Productivity Measurement, Analysis and

Improvement
Instructors:
Dr. Adel El Shabrawy Dr. Attia H. Gomaa
Industrial Eng. Dept. - Head of Industrial Eng. Dept. -
High Technology Institute Fayoum University
attiagomaa@yahoo.com
April 2006
AUC- Engineering Services

Improvement
Authors:
Dr. Adel El Shabrawy Dr. Attia H. Gomaa
Industrial Eng. Dept. - Head of Industrial Eng. Dept. -
High Technology Institute Fayoum University
attiagomaa@yahoo.com
Who Should Attend:

Managers and senior staff members in public and private sector
companies.
Objectives:
• To define concepts, methods, and indicators of performance
evaluation.
• To develop the participants capabilities in measuring and
analyzing performance indicators in different areas.
• To raise the skills of participants in planning, implementing and
following-up performance improvement programs.
Course Outline:
• Definition and nature of performance evaluation & productivity.
• Performance evaluation & productivity methods.
• Productivity analysis
• Technical indicators.
• Economic and financial indicators.
• Analysis of performance indicators.
• Performance & productivity improvement techniques.
• Planning and following-up of performance
• Project risk management
• Case studies.
Global PE – Dr. Attia Gomaa


Improvement
CONTENTS:
INTRODUCTION
1. Productivity concept
2. Production & productivity
3. Origin of the word “ productivity ”
4. Production systems & resources
5. Management & control & productivity
6. Productivity analysis
7. Productivity & effectiveness & efficiency
8. Types of productivity
9. Productivity terms
10. Benefits of higher productivity
11. Benefits of higher productivity measurement
12. Measurement of production
13. Productivity measurement units
14. Labor productivity measurement
15. Material productivity measurement
16. Machine productivity measurement
17. Energy productivity measurement
18. Productivity & financial indicators
19. Project risk analysis
20. Productivity levels
21. Overall productivity analysis
22. P. indicators for production activities
23. Performance evaluation sheet for production activities
24. Productivity improvement techniques
25. Productivity improvement cycle
26. Real case studies

INTRODUCTION
This course is mainly concerned with the problems of productivity

analysis in industry, especially manufacturing industries.
This course systematically presents several conceptual and pragmatic

methodologies, tools, and techniques for the productivity cycle.
This course attempts to serve the practical needs of industrial engineers,

productivity directors/coordinators, productivity managers, corporate
planners, and administrators.
This course is written in a relatively simple, easy-to-understand style,

making it suitable for industrial engineers and practitioners. About 20
references and about 15 worked examples further help the reader
understand the topics.
Finally, I’m very grateful to my readers, participants & professional peers

for joining us in this course.
Dr. Attia H. Gomaa

1. PRODUCTIVITY CONCEPT
What is the productivity?
Productivity is a measure of the following:

• System performance
• System efficiency
• Resource utilization
• The relationship between real output and inputs.
Productivity is measured as:

• The ratio of output to input.
• The ratio between the amount produced and the amount
of any resources used in the production.
• Output per unit of input (resources)
Waste
Input Output
Productivity = Output / Input

2. PRODUCTION & PRODUCTIVITY
The term “Productivity” is often confused with the term “Production”.

Many people think that the greater the production, the greater the
productivity. That is not necessary true.
• Production is concerned with the activity of producing goods

and/or services.
Production …….... Quantity
• Productivity is concerned with the efficient utilization of

resources (inputs) in producing goods and/or services (output).
Productivity ……… Resource utilization
If viewed in quantitative terms, production is the quantity of output

produced, while productivity is the ratio of the output produced to the
input(s) used.
In short, higher productivity means that more is produced with the same
expenditure of resources, i.e. at the same cost in terms of land, materials,

machine time or labor; or alternatively that the same amount is produced at
less cost in terms of land, materials, machine time or labor used up, thus
releasing some of these resources for the production of other things.
3. ORIGIN OF THE WORD “ PRODUCTIVITY ”
• Quesnay, 1766, the word “productivity” appears for the first time.
• Littre, 1883, “faculty to produce”.
• Early 1900s, “Relationship between output and the means employed

to produce this output”.
• OEEC, 1950, the Organization for European Economic Cooperation:

“Quotient obtained by dividing output by one of the factors of
production”
• Davis, 1955, “Change in product obtained for the resources

expended”.
• Fabricant, 1962, “Always a ratio of output to input”.
• Kendric & Creamer, 1965, Functional definitions for partial, total-

factor and total productivity.
• Siegel, 1976, A family of ratios of output to input.
• Sumanth, 1979, Total productivity: the ratio of tangible output to

tangible input.
4- PRODUCTION SYSTEM & RESOURCES
Production is a process of transforming input(s) to output(s).
Production process
Input Output
A system is a collection of components (or items) that work together to

achieve a certain objective.
Production system is a configuration of resources combined for the

provision of goods or services.

Planning and Control Cycle
Update
• Scope
5) Actions:
• Requirements 1) Policy
• Proactive
• Targets
• Preventive
• Constraints
• Corrective
• WBS 2) Master
Plan
PM
4) KPI
3) Action
DM RM CM PM SM Plans
3) P.E.
Operational management 4) Detailed

2) Follow-up Plans
5) Work Orders
1) Feedback
Review Site

Constraints
• Target Products/
• Information Processes Services
• Resources
Control
- Technical constraints
- Financial constraints
- Targets Production - Products /

- Information processes Services
- Resources - Reports
Production
performance
indicators
This enables us to optimize the resources for maximizing the output of

a production system.

Two basic targets for any production system:

• Provision of customer service
• Resource productivity
The productivity of a certain set of resources (input) is therefore the

amount of goods or services (output) which is produced from them. What
are the resources at disposal of a manufacturing company?’ They are:
1- Materials
2- Machines
3- Manpower
4- Method & Technology
5- Land and building
6- Money
7- Market
8- Management Tools
9- Information
Land in a convenient location on which to erect the buildings and other

facilities necessary for the operations of the enterprise, and the buildings
erected on it.
Materials that can be converted into products to be sold. They include fuel,

chemicals for use in the processes of manufacture, and packing materials.
Machines, plant, equipment and tools necessary to carry out operations of

manufacture and the handling and transport of materials; heating,
ventilating and power plant; office equipment and furniture.
Manpower (men and women) necessary to perform the manufacturing

operations; to plan and control; to do clerical work; to design and to
research; to buy and sell.
The use which is made of all these resources combined determines the
productivity of the enterprise. The resources consist of “real” things and
services. When they are used up in the process of production, “real” costs
are therefore incurred. Their cost may also be measured in terms of money.
Since higher productivity means more output from the same resources, it
also means lower money costs and higher net money returns per unit of
output.
The relative importance of each of the resources mentioned above varies

according to the nature of the enterprise, the country in which it is
operating, the availability and cost of each type of resource and the type of
product and process.

5. MANAGEMENT & CONTROL & PRODUCTIVITY
Who is responsible for making sure that the best use is made of
all these resources?
Who is responsible for seeing that they are combined in such as

way as to achieve the greatest productivity?
Answer: The management of the project.
What is the project management?

Project Management is a powerful systematic methodology to
achieve a certain target and to improve the resource
productivity. Through:
(1) Define the target & scope & constraints
(2) Information collecting & analysis
(3) Planning & target plans
(4) Organization
(5) Motivation & Direction
(6) Implementation
(7) Control

(8) Corrective Actions
(9) Learned lessons
(10) Closed out report
Project Management is the application of knowledge, tools and

scientific techniques to project activities in order to meet or
exceed the system needs and expectations from the project.
Project Targets Dimensions:
• Time wise Right time or less

• Cost wise Right cost or less
• Quality wise Right quality or more
• Quantity wise Right quantity or more
• Resource wise Right resources or less
• Safety wise Right safety or more
What are the main TARGETS In Production Systems?
- Maximization Targets:
• Cost Wise: Profit, Value added
• Quantity Wise: Production volume

• Material Wise: Mat. utilization
• Manpower Wise: Worker utilization
• Machines Wise: M/c. utilization
• Quality Wise: Yield
• Time Wise: Availability
- Minimization Targets:
• Cost Wise: Cost elements
• Quantity Wise: WIP
• Material Wise: Mat. scrap
• Manpower Wise: Unused capacity
• Machines Wise: Unused capacity
• Quality Wise: Rejected
• Time Wise: Downtime
Project Planning:
• What is to be achieved? "Project description"
• Why? "Target"
• How? "Method"
• Who? "Resources"
• When? "Schedule"
• Where? "Location"

Project Time Plans:
• Long term 2 to 10 y Risk 15 to 25%
• Medium term 6m to 1 y Risk 7 to 10%
• Short term 1w to 3 m Risk 3 to 5%
Project Level Plans:

• Master plan Top management (10 -15 activity)
• Action plan Control management (50-100)
• Detailed plan Operational manag. (more than 500)
Project Risk Plans:

• Target plan (normal or most likely)
• Optimistic plan
• Pessimistic plan
Project Strategic Plans:

• Strategic plan
• Tactical plan
• Operational plan
• Urgent plan
Project Information:
• Complete information "Overall planning"
• Incomplete information "Partial planning"
• Without information "Trial & error"

Project data:
• Certain data "Deterministic"
• Uncertain data "Probabilistic"
Managing Project Budget:

• Look at history of similar projects
• Determine internal resources
• Determine external resources
Budget Calculation:
• Direct cost (materials, labor, equipment)
• Indirect cost (overhead)
• Total cost = direct cost + indirect cost
Project risk areas:

• Data accuracy
• Work contents
• Schedule
• Resources
• Finance
Project Planning Approaches:

• CPM (Critical Path Method)
• PERT (Program Evaluation & Review Technique)
• GERT (Graphical Evaluation & Review Technique)

• Simulation
• Resource smoothing (time constraints)
• Resource leveling (non-time constraints)
• Duration compression (time crashing)
• Project management software (Primavera, Microsoft Project,
.. etc.)
Parameter Project Planning Approaches

CPM PERT GERT
Duration Certain Uncertain Uncertain
Logic diagram Certain Certain Uncertain
Project Planning & Control

Planning Control
WBS Productivity Analysis
Master Plan Performance Evaluation

Action Plan Follow-up

Project Planning & Control Steps:
Targets Constraints Resources
Information
Long-run Plans
Annual run Plans
Short run Plans
Management Action
Control Implementation

Total Project Control:
Quality Quantity
Under HSE Conditions
Cost Time
Resources
Total Control Indicators:

1- Work quantity control
• Over estimation
• Under estimation
2- Time control
• Behind schedule (late)
• Ahead schedule (early)
3- Cost control
• Cost overrun
• Cost underrun

4- Quality control
• Acceptable level
• Non-acceptable level
5- Inventory control
• Over estimation
6- Resources control
• Over estimation
7- Plant condition control (safety, etc.)

• Acceptable level
• Non-acceptable level

Control Steps:
1- What to control?
2- What is the standard (target) performance?
3- What is the actual performance level?
4- Comparison between the actual & target.
5- Detection of variance
6- Identification of causes of variance
7- Corrective actions
8- Learned lessons.
Total Control Levels:

1- Review and data collection.
2- Follow-up.
3- Performance evaluation.
4- Productivity analysis.
5- Risk analysis for any future project.
6- Corrective actions.
7- Learned lessons.

1- Project 2- Project 3- Project

Integration Scope Time
Management Management Management
4- Project 5- Project
Resource Cost
Management Management
Quality Contractors
Communications Procurement
10- Project 11- Project 12- Total Project

Risk Implementation Control
Management

6. PRODUCTIVITY ANALYSIS
WHAT IS THE PRODUCTIVITY ANALYSIS?
Productivity Analysis is a powerful systematic

methodology to measure the following:
o System performance
o System efficiency
o System effectiveness
o Resource utilization
o Profitability
WHY PRODUCTIVITY ANALYSIS (PA)?
PA helps decision makers

• to identify the driving factors of productivity.
• to adopt the appropriate action / policy.
• to monitor its consequences.

7. PRODUCTIVITY & EFFECTIVENESS & EFFICIENCY
Productivity Dimensions
Time Quantity Quality Cost
Effectiveness Efficiency
= Actual output / 1- Technical Efficiency

Planned output 2- Operating Efficiency
3- Production Efficiency
4- Economical Efficiency
Effectiveness:
• It is related to performance.
• It is the degree of accomplishment of objectives.
• How well a set of results is accomplished.
Efficiency:
• It is related to resource utilization.
• It is the degree resources utilization.
• How well the resources are utilized to achieve the results.
Productivity:
• It is a combination of both effectiveness & efficiency.

Productivity index
= Output obtained / Input expended
= Performance achieved / Resources consumed
= f (Effectiveness) / f (Efficiency)
8. TYPES OF PRODUCTIVITY
Based on outputs and inputs, productivity concepts may be

classified to two main categories as:
• Total productivity,
• Specific (partial) productivity.
8.1. TOTAL PRODUCTIVITY:

• Total productivity is the ratio of total output to the sum of all
inputs factors.
• It is a relationship between production volume and all
production elements consumed to achieve it.
The concept relies on the fact that production of an enterprise depends on

factors as capital, machinery, materials….. etc, as well as labor. Hence, it
becomes necessary to correlate different levels of productivity with

performance and utilization of such other elements.
Total productivity = Total output / Total input
Total input = Labor + Material + Services + Depreciation + etc.
Total productivity reflects integrality of factors involved in production and

avoids measuring high performance of one factor on the account of low
performance for another.
However, this concept has been criticized. It assigns an equal weight to

both the human element and other human-innovated elements as
machinery, and material. A human individual has a more crucial role in
production as its development, organization, planning, control, and
processing. Other elements are looked at as technical tool that are managed
by individuals to induce high productivity. Another criticism is that total
productivity is usually measured in monetary units, and this basis of
measurement is sensitive to price and market changes which would lead to
false productivity indicators.

8.2. SPECIFIC (PARTIAL) PRODUCTIVITY
• Partial productivity is the ratio of output to one class of input.

• It is a relationship between production volume and the amount
consumed of this element to produce.
Partial productivity = Total output / One of the inputs
Such as:
Material productivity = Total output / Material cost
Labor productivity = Total output / Labor cost
Machinery productivity = Total output / Depreciation
Energy productivity = Total output / Energy cost
Capital productivity = Total output / Capital
Total Factor Productivity (TFP)
• It is the ratio of net output to the sum of associated labor

and capital inputs factors.
Net output = Total output – Intermediate goods & services purchased
TFP = Net output / (Labor + Capital)
TFP = Output index / Input index

Productivity Change = Change in output y / Change in input x
Examples of each type of productivity may make its meaning clearer:
• PRODUCTIVITY OF LAND: If, by using better seed, better

methods of cultivation and more fertilizer, the yield of corn
from a particular hectare of land can be increased from 2 quin-
tals to 3 quintals, the productivity of that land, in the
agricultural sense, has been increased by 50 per cent. The
productivity of land used for industrial purposes may be said to
have been increased if the output of goods or services within
that area of land is increased by whatever means.
• PRODUCTIVITY OF MATERIALS: If a skilful tailor is able

to cut 11 suits from a bale of cloth from which an unskillful
tailor can only cut ten, in the hands of the skilful tailor the bale
was used with 10 per cent greater productivity.
• PRODUCTIVITY OF MACHINES: If a machine tool has been

producing 100 pieces per working day and through the use of
improved cutting tools its output in the same time is in-creased
to 120 pieces, the productivity of that machine has been
increased by 20 percent.

• PRODUCTIVITY OF MEN: If a potter has been producing 30

plates an hour and improved methods of work enable him to
produce 40 plates an hour, the productivity of that man has
increased by 331/3 percent.
The factors affecting the productivity of each organization are many, and
no one factor is independent of others. The importance to be given to the
productivity of each of the resources (land, materials, machines or men,
etc.) depends on the enterprise, the industry and possibly the country.
To achieve the greatest increases in productivity, action must be taken by

all sections of the community:
• Governments,
• Employers,
• Workers.
Governments can create conditions favorable to the efforts of employers

workers to raise productivity. For these it is necessary, among other things:
• to have balanced programmes of economic development;
• to take the steps necessary to maintain employment;
• to try to make opportunities for employment for those who are
unemployed or underemployed, and for any who may become

redundant as a result of productivity improvement in individual
plants.
This is especially important in developing countries where unemployment

is a big problem.
Employers and workers also have vital parts to play. The main
responsibility for raising productivity in an individual enterprise rests with
the management. Only the management can introduce and create a
favorable climate for a productivity programme and obtain the co-
operation of the workers which is essential for real success, though this
requires the goodwill of the workers too. Trade unions can actively
encourage their members to give such co-operation when they are satisfied
that the programme is in the interests of the workers, as well as of the
country as a whole.
To manage productivity in a true sense of the term, four formal phases

must be recognized:
• Measurement,
• Evaluation,
• Planning, and
• Improvement.

Once the productivity level of an organization is measured in the current
time period (for example, the current month, quarter, or year), it must be
compared with the target level set up in the preceding period. Based on this
evaluation, a new productivity level must then be planned for the next
coming period. Finally, depending on the nature and level of the planned
target of productivity, improvement must take place in the next period.
To determine if the planned level has in fact been achieved, productivity

must be measured again in the next period. The entire cyclic process
repeats for as long as an organization formally manages its productivity
level and growth rate.
9. PRODUCTIVITY TERMS:
• Measuring unit
• Measuring process
• Standard
• Performance
• Performance standard
• Objective
• Norm
• Material utilization factor
• Ratio
• Index

10- BENEFITS OF HIGHER PRODUCTIVITY
The following is a list of some benefits that accrue from higher

productivity:
1. Higher productivities in a company with respect to human and

physical resources will mean higher profits, because
Profits = revenue - cost of goods and services produced by the

utilization of human and material resources
2. Higher company productivity is generally translated into higher real

earnings for its employees.
3. The public realizes more social benefits because of increased public

revenues.
4. The consumer has to pay relatively low prices because the cost of
manufacture is reduced through higher productivity.
11- BENEFITS OF PRODUCTIVITY MEASUREMENT
Productivity measurement in an organization can have the following

benefits:

1. The organization can assess the efficiency of conversion of its
resources so that more goods or services are produced for a given
amount of expended resources.
2. Resource planning can be facilitated through productivity

measurement; both on a short-and long-term basis.
3.The economic and non economic objectives of the organization can be

re-organized by priority in the light of a productivity measurement
effort.
4. Planned productivity-level targets for the future can be modified

realistically based on the measured levels now.
5. Strategies for improving productivity can be determined based on the

extent of the gap between the planned level and the measured level of
productivity.
6. Productivity measurement can help in comparing the productivity

levels between organizations within a particular category, either at the
industry or at the national level.
7. Productivity values generated as a result of a measurement may be

useful in planning the profit levels in an organization.
8. Measurement creates competitive action.
9. Collective bargaining can be accomplished more rationally once

productivity estimates are available.
12. MEASUREMENT OF PRODUCTION
12-1- Physical Method:

• Production is measured using physical units as ton, meter, liter, etc.
• This method can be applied in industrial sectors with homogeneous
production.
• The following formula is generally used:
n
P = ∑ qi
i =1
where qi is the quantity of the ith product in physical units.
12-2- Modified-Physical Method:

• This method is used whenever production is not homogeneous.
• Coefficients of Equivalence are introduced to transform quantities of
different products into a quantity of a standardized product.

• The next expression can be applied for measuring production.
n
P = ∑ qi ⋅ ei
i =1
where ei are the i th product coefficient of equivalence.
The evaluation of the coefficients of equivalence are subject to few

considerations as:
• product unit cost,
• processing time per unit,
• manual labor used,
• weight or volume of a product, or
• Any other special characteristic of a variety of products.
12-3- Monetary Method:

Whenever it is not possible to apply the physical method, the monetary
value of production is used.
In this case, the following formula can be applied:

n
P = ∑ qi ⋅ pi
i =1
where Pi is the price per unit of the i th product.

The price must be specified as either the whole sale, retail, or discounted
price. Also when comparing productivity indices at different periods, a
base period must be used to account for inflation and other changes effects.
Even though this method is easy to apply, it suffers a major deficiency

specially when applied on the national or sector level.
The production, as measured, includes the value of all input elements (raw
material, semi-finished products, standard parts, etc.) purchased from other
sectors. The effect is such that the output of one sector, that will be
purchased by another, will also be considered as part of the production for
the other sector, and thus inflating the total value of production on the
national Level. This phenomenon also occurs on the corporation level.
Input elements for a corporation purchased from other corporations will be
included in the value of production of this corporation, while the value of
these elements do not represent actual contribution by it.
A better approach that has been suggested is to use the value added (or not
value added) to express production. The Value added concept expresses
production (P) as the total value of production less the value of input
elements purchased from outside. The advantage of this concept is that it
accounts for the actual contribution of a given system only.

Two forms are used, the value added (VA) and the net value added (NVA):
n m
VA =
ij ∑qi ⋅ pi − ∑I j ⋅ c j
i=1 j =1
n m l
NVA =
ij ∑qi ⋅ pi − ∑I j ⋅ c j −∑Dk
i=1 j=1 k=1
where,
Ij: number of units purchased of the J th input element
Cj: Cost/unit of input element j.
Dk: depreciation cost for the fixed asset.
12-4- Labor Method:

This method measures production in terms of labor units, where actual or
standard time needed to produce one unit is evaluated. This method is
particularly suitable when more than one product exists. Any of the
following two expressions can be applied:
n
P = ∑ qi ⋅ ti
i =1
of the jth labor plan to produce P; lij labor consumed of the jth labor class to
produce the i th product; and tij is the time per unit consumed of the jth
labor class to produce qi of the i th product.

As it can be seen in the physical method the problem is how to com-
bine working hours of different labor classes with different skills. This
problem is taken into consideration by the next method.
12-5- Labor Modified-Physical Method:

This method uses weighing factor scheme to adjust for the different labor
class effects. The time consumed by each labor class is weighted by the
average wage rate for this class:
m
∑ w j ⋅l j
j =1
L = m
∑wjj =1
where wj is an average wage weighing factor for the i th labor class, and lj
is the time consumed by labor class j to produce P.
Another weighing factor that may be suggested, however difficult to apply,

is based on a skill point rating system for each class of labor.
12-6- Labor Monetary Method:

This method is based on using money values to express labor consumed, it
is the most straight forward and easy-to-apply method. It can be expressed
mathematically as follows:

n
P = ∑ qi ⋅ ti
i =1
where ti., tj are the actual time and standard time of labor consumed per
unit of product i.
Here, it is recommended to use standard processing times to compensate

for different labor skills and unify the method of measure-merit.
13. PRODUCTIVITY MEASUREMENT UNITS
Output units:
- Physical units (ton, unit, m3)
- Standard physical units
- Monetary unit ($, L.E.)
Input units:
- Physical units (man, man-hour, ton, unit, m3)
- Monetary unit ($, L.E.)

14. LABOR PRODUCTIVITY MEASUREMENT:
Measurement of Labor:
Methods of labor measurement are also classified as Physical Method,

Modified-Physical and Monetary Method, and we outline each of them as
they will be applied:
1- Physical Method:
Labor units used in this method are man-hours or man-days, necessary to
produce a particular quantity Any of the following forms can be used.
n
L= ∑li
i=1
n
L = ∑l j
j =1
n m
L = ∑ ∑lij
i =1 j =1
n m
L= ∑ ∑qi ⋅ lij
i=1 j=1
where, li is labor consumed to produce quantity qi; lj is labor consumed:

n
L= ∑w jj =1

where wj is the wage paid to the jth labor class to produce production
volume P. Some few problems are associated with this method. The wages
considered could be gross wage, basic wage, net wage or wages plus fringe
benefits. Also wage systems are different from an enterprise to another and
from a native currency to a foreign one. These limitations should be
carefully considered especially in comparative analysis.
As we have outlined above, there are twelve different methods for

measuring labor Productivity as the quotient P/L. Some of the different
methods along with their corresponding Productivity indices that we intend
to use are outline in the following table:
Labor unit Output unit

Physical unit Monetary unit
(Ton, unit, ..) (L.E.)
Physical unit Ton / worker L.E. / worker
(worker, man- Unit / worker L.E. / man-hour
hour, ..) Ton / man-hour
Monetary unit Ton / L.E. L.E. / L.E.
(L.E.) Unit / L.E.
Ton / L.E.
In Conclusion to this section we recommend using the physical method

whenever applicable. Otherwise, on the national level, we recommend
using the monetary method (value added) to measure production, and on
the corporate level, either the monetary or the labor method may be used.

15. MATERIAL PRODUCTIVITY MEASUREMENT
Material unit Output unit

Physical unit Ton / ton L.E. / ton
(Ton, unit, ..) Unit / ton L.E. / unit
Ton / unit
(L.E.) Unit / L.E.
There are many industries in which the cost of raw material represents 60
per cent or more of the cost of the finished product, the balance of 40
Percent divided between labor and overhead costs. Many countries have to
import a very large proportion of their basic raw materials and pay for
them in scarce foreign currencies.
Under either of these conditions the productivity of materials becomes a

key factor in economic production or operation; it is likely to be far more
important than the productivity of land or labor or even plant and
machinery. Although the technique of work study deals primarily with
improving the utilization of plant and of the services of labor, it can
frequently contribute to savings in materials, either directly or indirectly, as
in saving the erection of buildings through the better utilization of existing
space.

In general, however, savings in materials, direct or indirect, are affected in
the following ways:
* At the design stage or time of specification:
• by ensuring that the design is such that the product can be
manufactured with the least possible use of materials, especially
when they are scarce or dear;
• by ensuring that plant and equipment specified for purchase is
the most economical possible in terms of materials consumed in
its operation (e.g. fuel) for a given level of performance.
*At the process or operation stage:

• by ensuring that the process used is the right one; by ensuring
that it is being operated correctly;
• by ensuring that operatives are properly trained and motivated
so that they will not turn out faulty work which has to be
rejected, leading to loss of material;
• by ensuring proper handling and storage at all stages from raw
materials to finished products, first eliminating all unnecessary
handling and movement; and
• by proper packaging to avoid damage in transit to the customer.
The question of material saving is so important to many countries that a

separate volume would be needed to discuss it.

16. MACHINE PRODUCTIVITY MEASUREMENT
Output unit
Machine unit Physical unit Monetary unit
Physical unit Ton / machine L.E. / machine
(machine, Unit / machine L.E. / m/c-hour
m/c-hour, ..) Ton / m/c-hour
(L.E.) Unit / L.E.
Ton / L.E.
System Effectiveness
Efficiency Availability
Utilization & Reliability Maintainability

Resource productivity MTBF MTTR
MTBM MTTM
Maintenance Control Levels:
- Maintenance Follow-up
- (Actual/Plan)
- Maintenance Performance Evaluation

- Time Availability
- Reliability
- Mean Time Between Failures (MTBF)

- Mean Time To Failures (MTTF)
- Mean time to repair (MTTR)
- Mean time between repairs (MTBR)
- Mean Time Between Maintenance (MTBM)
- Preventive Maintenance Rate (PM rate)
S −d
Availability = A =
S x 100%
Percentage of downtime = Id = 100% - A
S −d
Mean time between failures = MTBF =
f
df
Mean time to repair MTTR =
f
Where, S = Scheduled production time
d = Downtime f = Number of failures.
df = Downtime delays from failures.
Example:
Scheduled production time = 31 day
Downtime = 6 day
Number of failures = 3 failure/month
31− 6
A= x 100% = 80.6 %
31
Id = 100 - 80.6 = 19.4%
31− 6
MTBF =
3 = 8.33 days
6
MTTR= = 2 days
3

MEASUREMENT OF MAINTENANCE EFFECTIVENESS
Equipment Losses Categories

Category Equipment losses Indicator
Down-time losses Equipment failures Equipment
(lost availability) Set-up and adjustments availability
Speed losses Idling and minor Equipment
(lost performance) stoppages performance
Reduced speed operation efficiency
Defect losses Scrap and rework Equipment quality
(lost quality) Start-up losses Rate
Resource losses Critical resource Resource
consumption rates productivity
Cost losses All the previous losses Repair cost
CM/PM cost ratio
Down time cost
Overall equipment effectiveness (OEE)

OEE = Equipment Availability × Performance efficiency × Quality rate
Total effective equipment productivity (TEEP)
TEEP =Utilization × Availability × Performance efficiency × Quality rate
Net equipment effectiveness (NEE)
NEE = Uptime ratio × Performance efficiency × Quality rate
Mean unit between assists (MUBA):

MUBA = Total number of units produced / Number of stoppages

What is the effect of Maintenance Policy on the

Equipment OEE?
Maintenance Policy OEE
Operate to failure (RTF) 30 – 50 %
Good PM Program 60 – 80 %
Good bonus & incentive system
Good PM Program based on RCM
Good bonus & incentive system More than 80 %
What are the main factors, which affect the Equipment

OEE?
• Product quality
• Production continuity & rates
• Shutdown frequency
• HSE factors
• Equipment availability
• Resource availability
• Operating & maintenance cost
• Down time cost rate
17. ENERGY PRODUCTIVITY MEASUREMENT
Energy unit Output unit

Physical unit Ton / K.w.h. L.E. / K.w.h.
(K.w.h.) Unit / K.w.h.
(L.E.) Unit / L.E.

18. PRODUCTIVITY & FINANCIAL INDICATORS
Change in Change in Change in

Resource Productivity Product
Quantity Quantity

Cost Profit Revenue

Resource Price Product
Price Contribution Price
Profit = Revenue – Expenses
Profitability = Revenue / Expenses
Output quantity * Unit price

Profitability = -----------------------------------
Input quantity * Unit cost
Output quantity Price

Profitability = ----------------------- * --------
Input quantity Cost
Profitability = Productivity * Contribution factor
Productivity = Value added / hour worked.
Value added = Gross real revenue - intermediate goods

19. Project Risk Analysis:
Risk Radar ® is a risk management database that is designed to help

project managers identify, prioritize, and communicate project risks in a
flexible and easy-to-use form.
Risk Radar ® provides standard database functions to add and delete

risks, together with specialized functions for prioritizing and retiring
project risks. Each risk can have a user-defined risk management plan and
a log of historical events. A set of standard detailed and summary reports
can be easily generated to share project risk information with all members
of the development team. The number of risks in each probability/impact
category by time frame can be displayed graphically, which allows the user
to visualize risk priorities and easily uncover increasing levels of detail on
specific risks.
Risk Radar ® also provides flexibility in prioritizing risks through

automatic sorting and risk-specific movement functions for priority
ranking.
Risk Radar ® will assist Risk Officers to identify the highest-priority risks
and to keep attention focused on them as a project evolves over time.

Risk Radar ® does not discover risks; the project team must do that. But
once a risk is identified.
Risk Radar ® allows the risk to be fully described and prioritized relative
to the other risks a project faces. The key to successful use of Risk Radar ®
is to keep the highest-priority risks at the top of the risk-ranking list and to
focus mitigation efforts on them.
With Risk Radar ® a risk can be described; prioritized relative to all the
other risks in the database; a risk mitigation plan can be developed; and
events and decisions recorded that affect the risk over time.
Risk Radar ® includes a full set of standard short- and long-format reports
as well as a viewgraph-formatted report for communicating risk priorities
and mitigation efforts to upper management and the entire project team.
Risk Radar ® performs many of the Risk Analysis and Prioritization

functions automatically once the risk is entered into the data base. To
perform the risk prioritization process, subjective estimates must be made
based on professional judgment of the Probability that a risk will become
a problem and its impact on the project if the problem does occur.

A Probability value of the risk occurrence of A = 10%, B = 30%, C = 50%,
D = 70%, or E = 90% is chosen, and then an Impact value of the risk
becoming a problem is chosen between 1 = very low, to 5 = very high.
Risk Radar then calculates a Risk Exposure for each risk. Consistent with
government and commercial best practices.
Risk Radar ® defines the Risk State using two qualitative values (1)
Probability and (2) Impact and then the Risk Exposure is calculated
from the Probability and Impact. The Probability and Impact fields are
provided as drop-down boxes.
Risk Radar ® uses risk exposure as a means to help rank risks relative to
one another, but it assumes these numbers have little or no meaning in an
absolute sense. In most cases, it would be inappropriate to compare
risks across projects based solely on numerical factors such as
probability, impact, or exposure. The best that can be hoped for is that
the project team will use numerical risk values consistently over the life of
the project so there is a consistent ranking of risks to keep the most
important ones at the top of the list.

A Risk Level is determined based on the Risk Exposure classes according

to the following mapping. This calculated value is displayed on the Risk
Edit screens as shown in Figure 1.
Risk Radar ® calculates a Risk Exposure (RE) value based on the

assigned probability and impact using the following formula.
RE = Probability x Largest Impact
Probability
Level Criteria Probability
A Remote 0.1
B Unlikely 0.3
C Likely 0.5
D Highly Likely 0.7

E Near Certainty 0.9

Impact Definitions
Impact Technical Schedule Cost

0 Does not apply Does not apply Does not
apply
1 Minimal or no impact Minimal or no impact Minimal or no
Impact
2 Acceptable with some Additional resources <5
required, able to
reduction in margin satisfy
3 Acceptable with Minor slip in key 5-7%
milestones; not able
significant reduction to meet need date
in margin
4 Acceptable, no Major slip in key 7-10%
milestones or critical
remaining margin path impacted
5 Unacceptable major Can’t achieve key > 10%
milestone
program milestone
milestone
Risk Exposure Range Risk Level

0.1 to 0.7 Low
0.9 to 2.1 Medium
2.5 to 4.5 High
The detailed Risk Level mapping is shown in the table below:
Probability Risk Level (Risk Exposure)
E Medium Medium High High High
(0.9) (1.8) (2.7) (3.6) (4.5)
D Low Medium Medium High High
(0.7) (1.4) (2.1) (2.8) (3.5)
C Low Medium Medium Medium High
(0.5) (1.0) (1.5) (2.0) (2.5)
B Low Low Medium Medium Medium
(0.3) (0.6) (0.9) (1.2) (1.5)
A Low Low Low Low Low
(0.1) (0.2) (0.3) (0.4) (0.5)
1 2 3 4 5
Impact

Red = Unacceptable. Major disruption is likely. Different approach

required. Priority management decision required.
Yellow = Moderate. Some disruption approach may be required.

Additional management attention may be needed.
Green = Low. Minimum impact. Minimum oversight needed to ensure risk

remains low.

Risk analysis for certain project:
Risk Exposure Area Risk Unit
Budget
0 to $50,000 overrun 1
$50,001-$100,000 overrun 2
$100,000-$200,000 3
$300,000-$500,000 4
over $500,000 5
Schedule Impact
0 to 3 month slip 1
3 month to 6 month slip 2
over 18 month 5
Staff and Other Resources
0 to 5% resource shortfall 1
5.1% to 10% resource shortfall 2
over 25% resource shortfall 5
Quality Impact
0 to 5% quality gate failure 1
5.1% to 10% quality gate failure 2
over 25% quality gate failure 5
User Satisfaction Impact
0 to 5 unresolved user comments 1
over 50 unresolved user comments 5

20. PRODUCTIVITY LEVELS:
Level Productivity indicators

Top
management Monetary indicators
Middle
Management
Operational
management Technical indicators
21- OVERALL PRODUCTIVITY ANALYSIS
Production Quality Inventory

Activities Activities Activities
Spare Parts Quality

Activities Activities
Total
Marketing Productivity Purchasing
Analysis
Financial Administration
Law
Activities
….. …..

22 - PRODUCTIVITY INDICATORS FOR PRODUCTION
ACTIVITIES
The major production activities can classified into six groups:

- Production process
- Materials
- Labor
- Machines
- Maintenance
- Inventory
22-1- Production process targets & measures:

Targets Measures
Maximize: - Production rate
- Production quantity (Output per hour)
- WIP %
Minimize: - Production progress %
- WIP (Actual output/ Target output)
- Lateness - Work orders progress %
(Actual orders / Target orders)

22-2- Materials targets & measures:
Targets Measures
Maximize: - Yield %
- Yield - Scrap %
- Rework %
Minimize: - Rejected %
- Scrap - Material cost %
- Material cost
22-3- Labor targets & measures:
Targets Measures
Maximize: - Labor productivity
- Output per man-hour (Output per Man-hour)
- Used capacity - Labor utilization factor %
- Labor idle time %
Minimize: - Labor cost %
- Idle time
- Labor cost

22-4- Machines targets & measures:
Targets Measures
Maximize: - Machine productivity
- Machine output (Output per Machine-hour)
- Used capacity - Machine utilization factor %
- Machine idle time %
Minimize: - Machining cost %
- Idle time
- Machining cost
22-5- Maintenance targets & measures:
Targets Measures
Maximize: - Average availability %
- Availability - Average reliability
- Reliability - MTBF / MTTF / MTTR
- Down time due to maintenance
Minimize: - Corrective maintenance %
- Down time - Maintenance cost %
- Maintenance cost - Losses due to maintenance

22-6- Inventory targets & measures:
Targets Measures
Maximize: - Material Inventory availability%
- Material availability - Material Inventory rejected%
- Down time due to inventory
Minimize: - Losses due to inventory
- Rejected

23- PERFORMANCE EVALUATION SHEET FOR
PRODUCTION ACTIVITIES
Item Measures Actual Target Change%

1- - Production rate
Production - WIP %
Process - Production progress %
- Work orders progress %
2- - Yield %
Materials - Scrap %
- Rework %
- Rejected %
- Material cost %
3- - Labor productivity
Labor - Labor utilization factor %
- Labor idle time %
- Labor cost %
4- - M/c productivity
Machines - M/c utilization factor %
- M/c idle time %
- Machining cost %

Item Measures Actual Target Change%

5- - Average availability %
Maintenance - Average reliability
- MTBF / MTTF
- MTTR
- D.T. due to maintenance
- Corrective maintenance %
- Maintenance cost %
- Losses due to maintenance
6- - Inventory availability%
Inventory - Inventory rejected%
- D.T. due to inventory
- Losses due to inventory

24. PRODUCTIVITY IMPROVEMENT TECHNIQUES
Productivity can improve through:

• Technological development
• Improved operational efficiency
• Allocation of the resources to produce the right outputs by
the right inputs, utilizing the optimal scale and the scope
In a comprehensive survey of the literature, more than 50 different

techniques of productivity improvement were cataloged. These
techniques can classified into seven basic groups:
1- Technology based techniques
2- Material based techniques
3- Product based techniques
4- Employee based techniques
5- Task based techniques
6- Management based techniques
7- Investment based techniques

24-1- Technology based techniques
- Computer Applications
- Computer Graphics (Auto-Cad)
- Computer Aided Design (CAD)
- Computer Aided Process Planning (CAPP)
- Computer Aided Manufacturing (CAM)
- Group Technology
- New Production lines / Machines
- Rebuilding old machines
- Maintenance planning & control
- Layout
24-2- Material based techniques
- Inventory control
- Material Requirements Planning (MRP)
- Quality control
- Material handling improvement
- Material reuse & recycling
- New materials

24-3- Product based techniques
- Research & Development (R&D)

- Product design
- Product standardization
- Product reliability improvement
- Value engineering
24-4- Employee based techniques
- Individual financial incentives

- Group financial incentives
- Training & education
- Quality circles
- Brain storming
- Working conditions improvement
- Communication improvement
- Job rotation
24-5- Task based techniques
- Work study
- Job evaluation
- Job safety

- Human factors engineering (Ergonomics)
- Computer aided data processing
- Scheduling
24-6- Management based techniques
- Marketing Management
- Production Management
- Quality Management
- Cost Management
- Maintenance Management
- Material Management
- Resource Management
24-7- Investment based techniques
- Reducing the administration cost

- Increasing value added
- Increasing contribution
- Increasing profit

25. PRODUCTIVITY IMPROVEMENT CYCLE
To manage productivity in a true sense of the term, four formal phases

must be recognized:
Phase I: Measurement
Phase II: Evaluation
Phase III: Planning & Implementation
Phase IV: Control & Updating
Once the productivity level of an organization is measured in the current

time period (for example, the current month, quarter, or year), it must be
compared with the target level set up in the preceding period. Based on this
evaluation, a new productivity level must then be planned for the next
coming period. Finally, depending on the nature and level of the planned
target of productivity, improvement must take place in the next period.
To determine if the planned level has in fact been achieved,

productivity must be measured again in the next period. The entire
cyclic process repeats for as long as an organization formally manages
its productivity level and growth rate.

Phase I: Measurement
• Data collection & analysis
• Productivity indicators
• Determination of problems types
• Determination of problems priorities
• Information collection & analysis
• System analysis
• Proposal solutions
Phase II: Evaluation

• Feasibility study
• Determination of functional requirements
• Choose the best solution
Phase III: Planning & Implementation

• Preparation of implementation specification
• Programming
• Implementation
Phase IV: Control & Updating

• Review
• Follow-up
• Performance evaluation
• Productivity analysis
• Corrective actions
• Plans update
• Report preparation

Performance Management & Appraisal
Case Studies

8- PMIS for a Small Company

8-1- Project Study Phase
8-1-1- Description of the current system
M-1- Top management level:
M-1-1- Planning:
M-1-1-1- Next year predictions
M-1-1-2- Risk analysis
M-1-1-3- Work Breakdown Structure (WBS)
M-1-1-4- Master plans
M-1-1-5- Master budget analysis
M-1-1-6- Critical resource analysis
M-1-2- Control:
M-1-2-1- Annual performance evaluation (target / actual)
M-1-2-2- Annual performance evaluation for last two years
M-1-2-3- Annual performance eval. for last multi years
M-1-2-4- Annual performance eval. for critical projects

M-2- Control management level:
M-2-1- Planning:
M-2-1-1- Work Breakdown Structure (WBS)
M-2-1-2- Master projects schedule
M-2-1-3- Resource predictions
M-2-1-4- budget predictions
M-2-1-5- Risk analysis
M-2-1-6- Critical resource allocation
M-2-1-7- Action plans (schedule, resources, cost)
M-2-1-8- Project Planning (schedule, resources, cost)
M-2-1-9- Critical resource analysis for each project
M-2-2- Control:
M-2-2-1- Annual performance evaluation (Target / Actual)
M-2-2-3- Annual performance eval. for last multi years
M-2-2-4- Annual critical resource productivity analysis
M-2-2-5- Monthly Perf. eval. for the current and last year
M-2-2-6- Project performance evaluation (Target / Actual)
M-2-2-7- Critical resource productivity anal. for each Project

M-3- Operational management level:
M-3-1- Project targets & requirements

M-3-1-1- Target budget, time, quality, etc.
M-3-1-2- Constraints.
M-3-2- Project design

M-3-2-1- Engineering calculations
M-3-2-2- Project drawings
M-3-2-3- Bill of Materials (BOM)
M-3-3- Project Quality

M-3-3-1- Standard quality (required)
M-3-3-2- Inspection information
M-3-3-3- Quality control
M-3-4- Project planning

M-3-4-1- Master plan
M-3-4-2- Action plan
M-3-4-3- Detailed plan
M-3-4-4- Job description
M-3-4-5- Performance rates
M-3-4-6- Resource profiles
M-3-5- Procurement
M-3-5-1- Material Requirements Planning (MRP)
M-3-5-2- Suppliers selection
M-3-5-3- Procurement planning
M-3-5-4- Procurement control

M-3-6- Inventory
M-3-6-1- Inventory ABC analysis
M-3-6-2- Inventory limits
M-3-6-3- Inventory Lot sizes
M-3-6-4- Inventory transactions
M-3-6-5- Inventory cost analysis
M-3-6-6- Inventory control
M-3-7- Production (Construction, Fabrications, .. etc.)

M-3-7-1- Production target schedule
M-3-7-2- Production materials plans
M-3-7-3- Production manpower plans
M-3-7-4- Production machines plans
M-3-7-5- Production cost analysis
M-3-7-6- Production control
M-3-8- Maintenance planning

M-3-8-1- Maintenance target schedule
M-3-8-2- Maintenance spare parts plans
M-3-8-3- Maintenance manpower plans
M-3-8-4- Maintenance cost analysis
M-3-8-4- Maintenance control
M-3-9- Project updating

M-3-9-1-
M-3-9-2-
M-3-10- Project control (target / actual)

M-3-10-1- Performance evaluation for production system
M-3-10-2- Performance eval. for maintenance system
M-3-10-3-

8-1-2- Module descriptions:

For examples,
M-1-2-1- Annual performance evaluation (target / actual)
I- Module block diagram:

Inputs Tools/ Outputs
Approach
1- Production volume 1- Follow-up indicators.
2- Unit Price Excel 2- Performance evaluation.
3- Average manpower 3- Productivity analysis.
4- Average labor rate 4- Perf. Eval. for base year
5- Direct material (Actual 2002).
quantity 5- Prod. analysis for base
6- Direct material cost year (Actual 2002).
7- Indirect material cost 6- Conclusion.
8- Depreciation
9- Capital cost
10- Total energy
consumption
11- Energy cost rate
12- Other expense

II- Module Inputs Form:

Consider the XYZ company, the data for target and actual for year
2002 are given below:
Item Year 2002

Target Actual
Production volume (unit) 1200 1000
Unit Price ($) 900 1000
Average manpower (worker) 320 300
Average labor rate ($/year/worker) 950 1000
Direct material quantity (ton) 160 150
Direct material cost ($/ton) 970 1000
Indirect material cost (1000$) 60 50
Depreciation (1000$) 100 100
Capital cost (1000$) 300 300
Total energy cons. (1000 k.w.h.) 230 200
Energy cost ($/ k.w.h.) 0.6 0.5
Other expense (1000$) 45 50
Based on these data, construct the following:

1. Follow-up indicators.
2. Performance evaluation.
3. Productivity analysis.
4. Performance evaluation for base year (Actual 2002).
5. Productivity analysis for base year (Actual 2002).
6. Conclusion.

III- Module Output Forms:
(1): FOLLOW-UP INDICATORS
Target Actual Chang

Item
2002 2002 e%
Unit Price ($) 900 1000
Average labor rate $/year/worker 950 1000
Indirect material cost (1000$) 60 50
Depreciation (1000$) 100 100
Capital cost (1000$) 300 300
Total energy consumption (1000 k.w.h.) 230 200
Energy cost ($/ k.w.h.) 0.6 0.5
Other expense (1000$) 45 50
Total output (M$)

Total inputs (M$)
Profit (1000$)
(%)

(2): PERFORMANCE EVALUATION INDICATORS
Item Target Actual Change

2002 2002 %
Total output (M$) 1.0
Labor cost (1000$) 300
Material cost (1000$) 200
Depreciation (1000$) 100
Capital cost (1000$) 300
Energy cost (1000$) 100
Other expense (1000$) 50
Total inputs (1000$) 950
Profit (1000$) 50
(%) 5.2%
Value Added (1000$) 800
($/$) 4

(3): PRODUCTIVITY ANALYSIS INDICATORS

(Monetary unit $/$)
Productivity indicator Target Actual Change
2002 2002 %
Total productivity ($/$) 1.053
Material productivity ($/$) 5.000
Labor productivity ($/$) 3.333
Machinery productivity ($/$) 10.00
Energy productivity ($/$) 10.00
Capital productivity ($/$) 3.33
Other expense prod. ($/$) 20.00
Total factor prod. ($/$) 0.583
(Physical units)
Labor productivity unit /worker 3.33

Material productivity unit /ton 6.67
Energy productivity k.w.h./ unit 200

BASE YEAR – ACTUAL 2002
Item Target Actual Change

2002 2002 %
Total output (M$) 1.0
Labor cost (1000$) 300
Material cost (1000$) 200
Depreciation (1000$) 100
Capital cost (1000$) 300
Energy cost (1000$) 100
Other expense (1000$) 50
Total inputs (1000$) 950
Profit (1000$) 50
(%) (5.2%)
Value Added (1000$) 800
($/$) (4 $/$)


BASE YEAR – ACTUAL 2002
(Monetary unit $/$)
Productivity Target Actual Change
2002 2002 %
Total productivity ($/$) 1.053
Material productivity ($/$) 5.00
Labor productivity ($/$) 3.33
Machinery productivity ($/$) 10.00
Energy productivity ($/$) 10.00
Capital productivity ($/$) 3.33
Other expense prod. ($/$) 20.00
Total factor prod. ($/$) 0.583
(Physical units)
Labor prod. (unit /worker) 3.33

Material prod. (unit /ton) 6.67
Energy prod. K.w.h. / unit 200

IV- Module Calculations:
Available Information:
Output elements:
• Production volume
• Unit price
Total output = Production volume * Unit price
Inputs elements:
• Labor cost
• Material cost
• Depreciation
• Capital cost
• Energy cost
• Other expense
Total inputs = Labor cost + Material cost + Capital cost

+ Energy cost + Other expense

Follow-up indicators:
1- Profit = Total output - Total inputs
Profitability = Total output / Total inputs
Performance indicators:
2- Value Added = Revenue – Material Cost

Value Added % = Value Added / Material Cost
3- Contribution = Fixed cost + Profit

or
Contribution = Total output – Variable inputs
Contribution % = Contribution / Variable inputs
Productivity Indicators (Monetary unit $/$):

4- Total productivity = Total output / Total inputs
5- Material productivity = Total output / Material cost
6- Labor productivity = Total output / Labor cost
7- Machinery productivity = Total output / Depreciation
8- Energy productivity = Total output / Energy cost
9- Capital productivity = Total output / Capital
10- Other expense productivity= Total output / Other expense

11- Total factor productivity =
Net output / Internal resources
Net output = Total output – External resources
Assume that the company purchases all its materials and services.
External resources =
Material cost + Capital cost + Energy cost + Other expense
Productivity Indicators (Physical units):

12- Labor productivity
= Production volume / Average manpower
13- Material productivity
= Production volume / Direct material quantity
14- Energy productivity =
Total energy consumption / Production volume

Module block diagram:

Approach
5- Direct material quantity 2002.
6- Direct material cost 5- Prod. analysis for base
7- Indirect material cost year 2002.
8- Depreciation 6- Conclusion.
9- Capital cost
10- Total energy
consumption
12- Other expense

I- Module Inputs Form:
Consider the XYZ company, the data for output produced and
inputs consumed for May 2001 & May 2002 are given below:
Item Year Year

2001 2002
Unit Price ($) 800 1000
Average labor rate ($/year/worker) 900 1000
Indirect material cost ($) 45,000 50,000
Depreciation ($) 100,000 100,000
Capital cost ($) 300,000 300,000
Total energy consumption (K.W.H.) 250,000 200,000
Energy cost ($/ K.W.H.) 0.5 0.5
Other expense ($) 60,000 50,000

2. Performance evaluation.
3. Productivity analysis.
4. Performance evaluation for base year 2002.
5. Productivity analysis for base year 2002.
6. Conclusion.

II- Module Output Forms:
Year Year Change

Item
2001 2002 %
Production volume (unit) 1200 1000 - 16.7
Unit Price ($) 800 1000 + 25.0
Average manpower (worker) 310 300 - 3.2
Average labor rate $/year/worker 900 1000 + 11.1
Direct material quantity (ton) 180 150 - 16.7
Direct material cost ($/ton) 900 1000 + 11.1
Indirect material cost (1000$) 45 50 + 11.1
Depreciation (1000$) 100 100 0.0
Capital cost (1000$) 300 300 0.0
Total energy consumption (1000 k.w.h.) 250 200 - 25.0
Energy cost ($/ k.w.h.) 0.5 0.5 0.0
Other expense (1000$) 60 50 + 16.7
Total output (M$) 0.96 1.0 + 4.20

Total inputs (M$) .971 .950 - 2.2
Profit (1000$) - 11 50
(%) -1.1 5.2 + 6.3

Item Year Year Change

2001 2002 %
Total output (M$) 0.96 1.0 + 4.20
Labor cost (1000$) 279 300 + 7.53
Material cost (1000$) 207 200 + 3.38
Depreciation (1000$) 100 100 0.0
Capital cost (1000$) 300 300 0.0
Energy cost (1000$) 125 100 - 20.0
Other expense (1000$) 60 50 - 16.7
Total inputs (1000$) 971 950 - 2.2
Profit (1000$) - 11 50 5.2%
(%) - 1.1 + 6.3
Value Added (1000$) 453 800
($/$) 2.19 4 + 82.64


(Monetary unit $/$)
Productivity indicator Year Year Change
2001 2002 %
Total productivity ($/$) 0.989 1.053 + 6.47
Material productivity ($/$) 4.638 5.000 + 7.81
Labor productivity ($/$) 3.441 3.333 - 3.23
Machinery productivity ($/$) 9.600 10.00 + 4.17
Energy productivity ($/$) 7.680 10.00 + 30.21
Capital productivity ($/$) 3.200 3.33 + 4.06
Other expense prod. ($/$) 16.000 20.00 + 25.0
Total factor prod. ($/$) 0.463 0.583 + 25.92
(Physical units)
Labor productivity unit /worker 3.87 3.33 - 13.95

Material productivity unit /ton 6.60 6.67 0.0
Energy productivity k.w.h./ unit 208.3 200 - 3.98

BASE YEAR – 2002
Item Year Year Change

2001 2002 %
Total output (M$) 1.2 1.0 - 16.7 %
Labor cost (1000$) 310 300 - 3.2 %
Material cost (1000$) 230 200 - 13.0 %
Depreciation (1000$) 100 100 0.0
Capital cost (1000$) 300 300 0.0
Energy cost (1000$) 125 100 - 20 %
Other expense (1000$) 50 50 0.0
Total inputs (1000$) 1015 950 - 6.4 %
Profit (1000$) 185 50
(%) (15.4%) (5.2%) - 10.2
Value Added (1000$) 970 800
($/$) (4.2 $/$) (4 $/$) - 4.76 %


BASE YEAR – 2002
(Monetary unit $/$)
Productivity Year Year Change
2001 2002 %
Total productivity ($/$) 1.182 1.053 - 10.9
Material productivity ($/$) 5.217 5.00 - 4.16
Labor productivity ($/$) 3.871 3.33 - 13.98
Machinery productivity ($/$) 12.00 10.00 - 16.67
Energy productivity ($/$) 9.60 10.00 + 4.17
Capital productivity ($/$) 4.00 3.33 + 16.75
Other expense prod. ($/$) 24.00 20.00 + 16.67
Total factor prod. ($/$) 0.811 0.583 - 28.11
(Physical units)
Labor prod. (unit /worker) 3.87 3.33 - 13.95

Material prod. (unit /ton) 6.67 6.67 0.0
Energy prod. K.w.h. / unit 208.3 200 - 3.98
See M-1-2-1

M-1-2-3- Annual performance evaluation for last multi years
I- Module block diagram:

Approach
5- Direct material quantity 2002.
6- Direct material cost 5- Prod. analysis for base
7- Indirect material cost year 2002.
8- Depreciation 6- Risk analysis for the
9- Capital cost future year (2003)
10- Total energy 7- Conclusion.
consumption
12- Other expense

II- Module Inputs Form:
Consider the XYZ company, the data for output produced and inputs
consumed for four last years (from 1999 to 2002) are given below:
Item Year Year Year Year

1999 2000 2001 2002
Production volume (unit) 1450 1300 1200 1000
Unit Price ($) 720 750 800 1000
Average manpower (worker) 340 330 310 300
Average labor rate 700 750 900 1000
($/year/worker)
Direct material quantity (ton) 220 200 180 150
Direct material cost ($/ton) 700 750 900 1000
Indirect material cost (1000$) 25 30 45 50
Depreciation (1000$) 100 100 100 100
Capital cost (1000$) 300 300 300 300
Total energy consumption (1000 310 300 250 200
k.w.h.)
Energy cost ($/ k.w.h.) 0.3 0.4 0.5 0.5
Other expense (1000$) 75 70 60 50

2. Performance evaluation indicators.
3. Productivity analysis indicators.
4. Performance evaluation for base year 2002.
5. Productivity analysis for base year 2002.
6. Risk analysis for the future year (2003).
7. Conclusion.

III- Module Output Forms:
See M-1-2-2-
BASE YEAR – 2002
BASE YEAR – 2002
(6):RISK ANALYSIS
Item Year Year Year Year Exp. forecasting

1999 2000 2001 2002 2003 Limit
P. volume (unit) 1450 1300 1200 1000 ? ?

See M-1-2-1
Forecasting & Risk estimation

Y=a+bX
Sum Y = n . a + b Sum X , Sum XY = a Sum X + b Sum X2
Measuring the accuracy of forecasting:

1- Coefficient of correlation
r =( n Sum XY - Sum X Sum Y) /

( n Sum X2 – (Sum X) 2 ) 0.5 ( n Sum Y2 – (Sum Y) 2 ) 0.5
2- Mean Absolute Deviation
MAD = sum | A – F | / (n -1)
3- Mean Squared Error
MSE = sum (A – F)2 / (n -1)
Controlling the forecast:
CLs = 0 ± Z S
0
S = Standard deviation of the distribution of errors

=√ MSE
Z=3 99.7% of the values can be expected.


Example: Production volume
Year Year Year Year Exp. Risk%

Item
1999 2000 2001 2002 2003 2003
P. volume (unit) 1450 1300 1200 1000 ? ?
X 1 2 3 4 5
Y 1450 1300 1200 1000 ?
XY 1450 2600 3600 4000
n=4
Sum X = 10 Sum X2 = 30
Sum Y = 4950 Sum XY = 11650
Sum Y = n . a + b Sum X Sum XY = a Sum X + b Sum X2
4950 = 4 a + 10 b 11650 = 10 a + 30 b
14850 = 12 a + 30 b
a = 1600 b = - 145
Y = 1600 – 145 X Y5 = 1600 – 145 (5) = 875
X 1 2 3 4 5
A 1450 1300 1200 1000 -
F 1445 1310 1165 1020 875
(A-F) 5 10 35 20
(A-F)2 25 100 1225 400
MSE = 1750 / (4 -1) = 583
S = 24 Z=2
CLs = 0 ± Z S = 0 ± 48

M-1-2-4- Annual performance evaluation for critical projects
Module Input Forms:
1- Relations:
Project ID P1 P2 P3 P4 P5 P6 P7 P8
Predecessors - - - - P2 & P4 P3 P6 P5 & P7
Project Production plan & critical resources

# Duration Equipment Manpower cost Material cost
(month) cost (M$) (M$) (M$)
P1 5 5.0 10 30
P2 2 1.5 1.5 3
P3 2 1.5 2.5 8
P4 2 1.0 2.0 6
P5 3 2.0 8.0 14
P6 2 2.0 4.0 8
P7 3 0.5 1.5 4
P8 3 0.5 1.5 2
Target budget rate: 11 M$ /month & Target duration: 10 month
Overhead cost rate = $ 4,000 /month & Downtime cost rate = $ 6,000/month
Project Actual production & critical resources

# Duration Equipment Manpower cost Material cost
(month) cost (M$) (M$) (M$)
P1 6 4.0 10 32
P2 3 2.0 2.0 4
P3 2 1.5 3.0 7
P4 3 1.0 2.0 5
P5 4 2.0 7.0 15
P6 2 2.0 5.0 7
P7 3 0.6 1.4 4
P8 2 0.7 1.3 2
Maximum budget rate: 14 M$ /month & Actual duration: 12 month
1. Target plans (schedule, equipment profile, cost profile, and S-curve).
2. Follow-up indicators
3. Performance evaluation indicators
4. Productivity analysis indicators

5. Conclusion.
M-2-2-5- Monthly Performance evaluation for the current and last
year
Module Input Forms:
The monthly production report for an Egyptian foundry is as follows:
Year 2001 Year 2000

Indicator Unit January Year to January Year to
date date
Production indicators:
Planned production quantity Ton 160 1200 120 900
Actual production quantity Ton 130 900 110 800
Rejected quantity Ton 10 70 8 50
Resources indicators:
Average working manpower Man 50 52 48 50
Total manpower working time Man-hr. 7250 51000 7000 50000
Average working furnaces Furnace 30 33 28 32
Furnaces working time Fr.-hr. 4500 33000 3500 25000
Total charge material quantity Ton 185 1300 160 1100
Total energy consumption K.W.H 78000 550000 75000 520000
Based on these data, determine the different performance evaluation indicators

for the production system.

M-2-2-6- Project performance evaluation (Target/ Act.)
I- Module Input Forms:
The production plan and the actual production in a power towers fabrication
project are as follows:
Activity ID (work order) A11 A12 A13 A14 A15
Predecessors - - - A11 A13
Target plan:
Target no. of equipment is 12 eq./week & Target duration: 24 week

Work Production plan & critical resources
order # Duration Number Planned Standard Planned Planned
(week) of quantity cost manpower material
equipment (ton) ($/ton) (Man- (ton/ton)
day/ton)
A11 8 5 40 1000 100 1.20
A12 5 7 30 1200 110 1.20
A13 6 8 50 900 95 1.20
A14 8 5 30 850 80 1.20
A15 20 5 80 950 95 1.20
Overhead cost rate = $ 1,000 /week & Downtime cost rate = $ 3,000/week
Actual plan:
Work Actual production & critical resources

order # Duration Number Actual Actual Actual Actual
(week) of quantity cost manpower material
equipment (ton) ($/ton) (Man- (ton/ton)
day/ton)
A11 9 6 40 1100 95 1.30
A12 6 6 20 1200 110 1.25
A13 6 8 40 1000 100 1.20
A14 9 5 35 800 80 1.15
A15 20 5 90 1000 85 1.16
Actual no. of equipment is 14 eq./week & Actual duration: 27 week


M-3-4-5- Project performance evaluation (Target/ Actual)
Gas Pipe Line 120 Km

Target production:
Activity Activity Description Performance Cost

ID rate Km/day 1000 L.E. / Km
E Excavation 2 5
S Stringing 4 400
W Welding 1 20
N NDT 2 10
C Coating & Wrapping 2 2
L Lowering 4 1
B Backfilling 4 3
T Hydrotest (3 days) 0.1
Target duration: 6 month * 24 day/month
Overhead cost rate = $ 1,000 /day & Downtime cost rate = $ 2,000/day
Actual production:
Activity Activity Description Duration Cost

ID (day) 1000 L.E.
E Excavation 50 500
S Stringing 25 40,000
W Welding 140 2,500
N NDT 80 1,500
C Coating & Wrapping 50 250
L Lowering 40 150
B Backfilling 25 350
T Hydrotest (5 days) 10
Actual duration: 8 month * 24 day/month


M-3-6-1- Production Performance evaluation (Target/ Actual)

The monthly production plan and the actual production are as follows:
Production Plan (Jan. 2001)
Activity Planned Standard Planned Target Estimated Estimated

ID quantity cost period date manpower material
(ton) ($/ton) (day) Jan. (man- quantity
2001 hour/ton) (ton)
A01 40 1000 10 1 to 11 50 52
A02 30 1200 6 3 to 9 60 45
A03 50 900 9 11 to 20 45 70
A04 20 850 6 20 to 26 40 24
A05 20 950 5 25 to 30 48 26
Actual Production (Jan. 2001)
Activity Actual Actual Actual Actual Actual Actual

(ton) ($/ton) (day) Jan. (man- quantity
hour/ton) (ton)
A01 40 1100 9 2 to 11 70 56
A02 20 1200 5 3 to 8 60 28
A03 40 1000 8 12 to 20 50 60
A04 10 800 3 20 to 23 35 13
A05 20 900 6 25 to 31 45 28


M-3-6-2- Production Performance evaluation (Target/ Actual)
Monthly Plan for Civil Works (Jan. 2004)

1- Activity List
Duration Predecessors Relations
Activity ID
(day) (SS, FF, etc.)
1 Mobilization MOB 1
2 Excavation #1 EX1 3 MOB
5 Concrete #1 CO1 8 EX1 SS 1
8 Finishing FIN 2 CO1 FS5
CO2 FS5
CO3 FS5
2- Resource List:
Resource Resources description Unit Limits/day Price
code Norm. Max. LE/unit
L01 Excavation worker md 3 6 40
L02 Concrete worker md 6 12 60
E01 Excavator eqd 1 2 400
E02 Concrete mixer eqd 1 2 500
M01 Concrete material m3 - - 500
md = man-day eqd = Equipment day
3- Resource Allocation:
Resource/day
Activity ID
1 2 3
1 Mobilization MOB L01, 2
2 Excavation # 1 EX1 L01, 3 E01, 1
5 Concrete # 1 CO1 L02, 6 E02, 1 M01, 40
6 Concrete # 2 CO2 L02, 6 E02, 1 M01, 50
7 Concrete # 3 CO3 L02, 6 E02, 1 M01, 40

8 Finishing FIN L02, 3
4- Base Calendar (Working periods)

Saturday Sunday Monday Tuesday Wednesday Thursday Friday
X X X X X X
1/01/04
Holidays: 20 to 21 Jan. 2004
Actual production:
Duration Actual resources/day

Activity
(day) 1 2 3
MOB 1 L01, 2
EX1 2 L01, 2 E01, 1
EX2 4 L01, 2 E01, 1
EX3 2 L01, 3 E01, 1
CO1 7 L02, 6 E02, 1 M01, 35
CO2 13 L02, 7 E02, 1 M01, 45
CO3 7 L02, 5 E02, 1 M01, 45
FIN 3 L02, 4
Actual duration: 31 day

1. Target plans (schedule, resource profiles, cost profile, and S-curve).
5. Conclusion.

M-3-6-2- Maintenance performance evaluation (Target/ Actual)

The yearly PM programs information for six similar gas turbines in a power station
are as follows:
Maintenance levels per gas turbine

PM Type Frequency Duration No. of Spare parts Cost
(day) Workers $1000
Y – Level 1 Yearly 15 20 10
S – Level 2 6 Monthly 10 20 8
3M – Level 3 3 Monthly 5 15 5
M – Level 4 Monthly 2 10 2
• Gas turbine operating conditions: 24 hour/day
• Workers operating conditions: 300 day/year & 8 hour/day
• Average effort of CM = 380 man-day per gas turbine
• Average annual spare parts CM cost = $ 12000 per gas turbine
• Average CM downtime = 15 days/year per gas turbine
• Average downtime cost rate = $ 1000 per day
• Average labor cost rate = $ 10 per man-day
• Overhead cost = 25 % direct cost (spare parts & labor)
Actual work performed:

• Total labor force = 30 workers
• Annual spare parts cost = $ 360,000
• Average down time = 70 day/year per gas turbine

for the maintenance system.

The yearly PM programs information for six similar gas turbines in a power station
are as follows:
Target work performed:

Item PM CM Total
Total labor force (worker) 18 7 25
Annual spare parts cost ($1000) 264 72 336
Annual labor cost ($1000) -- -- 75
Overhead cost ($1000) -- -- 514
Average down time 51 15 66
(day/year per gas turbine)
Average downtime cost rate = $ 1000 per day

Item PM CM Total
Overhead cost ($1000) -- -- 520


The six-monthly maintenance costs ($1000) for a productive system are as follows:
Target Costs:
Month #
Cost item
Jan Feb Mar Apr May Jun Jly
PM Cost:
Spar parts 100 100 100 100 100 100 100
Labor 50 50 50 50 50 50 50
CM Cost:
Spar parts 200 200 200 200 200 200 200
Labor 150 150 150 150 150 150 150
DT Cost 300 300 300 300 300 300 300
Actual Costs:
Month #
Cost item
PM Cost:
Spar parts 23 38 49 56 68 65 54
Labor 32 65 96 94 94 90 72
CM Cost:
Spar parts 231 213 181 185 199 196 157
Labor 503 370 293 164 201 193 142
DT Cost 407 397 320 290 330 320 362


Monthly Maintenance Plan for Wire Production Line (1 Jan. 2004)
∅9 ∅6 ∅3 ∅2
W01 W02 W03
1- Activity List
Relations
Duration
Activity ID Predece (SS, FS, FF,
(day)
ssors and SF)
1 Preparation PRP 2 - -
2 Mechanical maintenance # 01 MM1 7 PRP -
3 Electrical maintenance # 01 EM1 9 MM1 SS 3
8 Setup EM1
STP 1 EM2 -
EM3
2- Resource List
Resource Limits/day Price

Resources description Unit
Code Norm. Max. LE/unit
L01 Mechanical worker md 3 6 40
L02 Electrical worker md 4 8 60
SPS Spare parts & supplies cost - - 1000

3- Resource Allocation
Resource
Activity ID SPS
L01/day L02/day
(Total)
1 Preparation PRP 2 1 1
2 Mechanical maintenance # 01 MM1 4 - 3
3 Electrical maintenance # 01 EM1 - 5 4
2
8 Setup STP 2 1
4- Base Calendar (Working periods)

Saturday Sunday Monday Tuesday Wednesday Thursday Friday
X X X X X X
1/01/04
Holidays: 20 to 21 Jan. 2004
Actual resources
Duration
Activity L01/ L02/ SPS
(day)
day day (Total)
PRP Preparation 1 2 1 1
MM1 Mechanical maintenance # 01 6 4 - 3
EM1 Electrical maintenance # 01 9 - 4 5
STP Setup 1 1 2 1
Actual duration: 31 day
1. Target plans (schedule, resource profiles, cost profile, and S-curve).
5. Conclusion.

CASE 14-
The monthly production plan and the actual production in ABC Company
are as follows:
Work Production Plan (Jan. 2001) Actual production (Jan. 2001)

order # Planned Estimated Actual Actual
quantity Material quantity material quantity
(ton) quantity (ton) (ton) (ton)
A11 40 60 40 63
A12 30 40 20 40
A13 50 65 40 62
A14 20 25 10 22
A15 20 30 20 27
Based on these data, determine the different control indicators.
CASE 12-
are as follows:

quantity Production quantity production date
(ton) date (ton)
A11 40 1 to 9 Jan. 40 1 to 8 Jan.
A12 30 7 to 13 Jan. 20 8 to 14 Jan.
A13 50 11 to 20 Jan. 40 12 to 22 Jan.
A14 20 20 to 25 Jan. 10 23 to 28 Jan.
A15 20 25 to 30 Jan. 20 26 to 31 Jan.

CASE 15-
are as follows:

quantity (ton) Man- quantity (ton) man-hours/ton
hours/ton
A11 40 50 40 45
A12 30 60 20 58
A13 50 45 40 48
A14 20 43 10 45
A15 20 48 20 50
CASE 14-
The annual budget and the actual cost for a production department are as
follows:
Budget Actual
Cost item Current Year to Current Year to
month date month date
Direct labor 5000 70000 4000 60000
Indirect labor 4936 53834 3111 48834
Direct materials 1000 10000 400 5000
Indirect materials 808 8565 232 4711
Based on these data, determine the different cost indicators for this
department?

CASE 16-
The monthly production plan and the actual production are as follows:
Production Plan (Jan. 2001)
Activity Planned Standard Planned Target Estimated Estimated

(ton) ($/ton) (day) Jan. 2001 (man- quantity
hour/ton) (ton)
A01 40 1000 10 1 to 11 50 52
A02 30 1200 6 3 to 9 60 45
A03 50 900 9 11 to 20 45 70
A04 20 850 6 20 to 26 40 24
A05 20 950 5 25 to 30 48 26
Actual Production (Jan. 2001)
Activity Actual Actual Actual Actual Actual Actual material

ID quantity cost period date manpower quantity
(ton) ($/ton) (day) Jan. (man-hour/ton) (ton)
A01 40 1100 9 2 to 11 70 56
A02 20 1200 5 3 to 8 60 28
A03 40 1000 8 12 to 20 50 60
A04 10 800 3 20 to 23 35 13
A05 20 900 6 25 to 31 45 28

CASE 17-
The three monthly production plan and the actual production for an
Egyptian foundry are as follows:
Three Monthly Production Plan (Year 2001)

Month Planned Standard Estimated Estimated
quantity cost manpower material
(ton) (1000 $) (man-hour) quantity (ton)
January 160 157 7810 217
February 140 139 7000 190
March 180 180 8500 250
Three Monthly Actual Production (Year 2001)

Month Actual Actual Actual Actual
quantity cost Manpower material
(ton) (1000 $) (man-hour) quantity (ton)
January 130 134 7250 185
February 128 126 6900 180
March 175 177 8400 240

CASE 18-
The annual budget and the actual cost for a production department are as
follows:
Budget Actual
Item Current Year to Current Year to
month date month date
Production quantity 50 650 40 550
(ton)
Labor rate ($/ton) 100 105 102 105
Indirect labor 1000 11000 1500 13000
Material quantity (ton) 70 800 40 600
Material price ($/ton) 300 290 302 295
Indirect materials 1000 9000 600 6000
Based on these data, determine the different cost performance indicators

for this department?
CASE 18-
The annual material requirements plan and the actual needed for a
production department are as follows:
Plan (Jan. 2001) Actual (Jan. 2001)
Material Planned Standard cost Actual Actual cost
Code quantity ($/unit) quantity ($/unit)
(unit) (unit)
1001 100 1000 120 1100
1002 500 1200 450 1300
1003 800 500 900 480
1004 100 250 - -
1005 - - 90 300

CASE 19-
The annual spare parts plan and the actual needed for a maintenance
department are as follows:
Spare Plan Actual

parts Planned quantity Standard Actual quantity Actual cost
Code (unit) cost ($/unit) (unit) ($/unit)
2001 200 10 220 12
2002 600 12 550 13
2003 900 50 900 48
2004 1000 25 - -
2005 500 10 100 8

CASE 20-
The annual overhaul plan and the actual overhauls for a maintenance
department are as follows:
Annual overhaul plan Actual overhauls

Machine type M/c Average time M/c Average time
numbers man-hour/Mc. Numbers man-hour/Mc.
Gas turbines 50 MW 6 500 4 600
Gas turbines 100 MW 4 800 3 750
Gas turbines 120 MW 1 1000 1 1200


CASE 21-
Monthly production information on Foundry Shop FS510 was

as follows:
Item Jan. Feb.

2004 2004
Working days 31 28
Standard production rate (ton/hr) 8 8
Average daily time (hr/day) 24 24
Average down time (hr/day) 6 4
Average standby (hr/day) 3 3
Average target quantity (ton/day) 120 136
Average actual quantity (ton/day) 80 105
Average sound quantity (ton/day) 70 98
Average defect quantity (ton/day) 10 7
Average energy consumption 49 67
(1000 kwh/day)
Material cost (1000 L.E/day) 100 130
Based on these data, determine the different PE indicators for the

productive system.

Basic data
Item Jan 04 Feb 04 Feb. / Jan.
Production rate (ton/hr) 8 8 100 %
Total time (hr/day) 24 24 100 %
Average down time (hr/day) 6 4 67 %
Average available time (hr) 18 20 111 %
Average standby (hr/day) 3 3 100 %
Average used time (hr/day) 15 17 113 %
Average target quantity 120 136 113 %
(ton/day)
Average actual quantity 80 105 125 %
(ton/day)
Average sound quantity 70 98 129 %
(ton/day)
Average defect quantity 10 7 64 %
(ton/day) (14%) (7%)
Energy productivity (kwh/ton) 700 684 98 %
Material productivity (1000 1429 1326 92 %
L.E/ton)

Performance Evaluation
Indicator January February Feb. /
2004 2004 Jan.
Availability 18/24= 75 % 20/24= 83 % 111 %
Performance 80/120= 67 % 105/136= 77 115 %

efficiency %
Quality rate 70/80= 88 % 98/105= 93 % 106 %
Utilization ratio 15/18= 83 % 17/20= 85 % 102 %
Uptime (hr/day) 70/8= 8.75 98/8= 12.25 140 %
Uptime ratio 8.75/15= 49% 12.25/17=72 147 %

%
OEE 44 % 60 % 136 %
TEEP 37 % 51 % 138 %
NEE 29 % 52 % 179 %
Energy 700 684 98 %

productivity
(kwh/ton)
Material 1429 1326 92 %
productivity
(1000 L.E/ton)

CASE 22-
The six-monthly maintenance costs ($1000) for a productive

system are as follows:
Target Costs:
Month #
Cost item
PM Cost:
Spar parts 100 100 100 100 100 100 100
Labor 50 50 50 50 50 50 50
CM Cost:
Spar parts 200 200 200 200 200 200 200
Labor 150 150 150 150 150 150 150
DT Cost 300 300 300 300 300 300 300
Actual Costs:
Month #
Cost item
PM Cost:
Spar parts 23 38 49 56 68 65 54
Labor 32 65 96 94 94 90 72
CM Cost:
Spar parts 231 213 181 185 199 196 157
Labor 503 370 293 164 201 193 142
DT Cost 407 397 320 290 330 320 362
Based on these data, determine the different performance

evaluation indicators for the maintenance system.

Target:
Month #
Cost item
Jan Feb Mar Apr May Jun Jly Total
PM Cost 150 150 150 150 150 150 150 1050
CM Cost 350 350 350 350 350 350 350 2450
TM Cost 800 800 800 800 800 800 800 5600
DT Cost 300 300 300 300 300 300 300 2100
TM+DT 1100 1100 1100 1100 1100 1100 1100 7700
PM/TM 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.955
CM/PM 2.33 2.33 2.33 2.33 2.33 2.33 2.33 16.33
Actual:
Month #
Cost item
PM Cost 55 103 145 150 162 155 126 896
CM Cost 734 583 474 349 400 369 299 3208
TM Cost 1196 1083 939 789 892 864 787 6550
DT Cost 407 397 320 290 330 320 362 2426
TM+DT 1603 1480 1259 1079 1222 1184 1149 8976
PM/TM 0.05 0.10 0.15 0.19 0.18 0.18 0.16 1.007
CM/PM 13.35 5.66 3.27 2.33 2.47 2.38 2.37 31.82
Change %:
Month #
Cost item
PM Cost
CM Cost
TM Cost
DT Cost
TM+DT
PM/TM
CM/PM

CASE 23-
The yearly PM programs information for six similar gas

turbines in a power station are as follows:
Target work performed:

Item PM CM Total
Overhead cost ($1000) -- -- 514
Average downtime cost rate = $ 1000 per day

Item PM CM Total
Overhead cost ($1000) -- -- 520

evaluation indicators for the maintenance system.

Performance Evaluation Sheet:
Change
Item Target Actual
%
Total labor force (worker) 25 30 + 20
Annual s. parts cost ($1000) 336 400 + 19
Annual labor cost ($1000) 75 80 + 6.6
Overhead cost ($1000) 514 520 + 1.2
Total m. cost ($1000) 925 1000 + 8.1
Average down time 66 50 - 24.3
Down time cost ($1000) 66 50 - 24.3
TMC + DTC 991 1050 + 6.0

Availability % 81.9 86.3 + 5.3
CM/PM % (labor force) 7/18 = 10/20 = + 28.5
38.9 50
CM/PM % (Spare parts) 72/264 = 100/300 = + 22.0
27.3 33.3
Overhead % 514/411= 520/480= - 13.6
1.25 1.08
Labor productivity % 25/6= 30/6= - 16.6

(worker/gas turbine) 4.17 5.00

CASE 24-
The six-monthly maintenance costs ($1000) for a productive

system are as follows:
Target Costs:
Month #
Cost item
PM Cost:
Spar parts 100 100 100 100 100 100 100
Labor 50 50 50 50 50 50 50
CM Cost:
Spar parts 200 200 200 200 200 200 200
Labor 150 150 150 150 150 150 150
DT Cost 300 300 300 300 300 300 300
Actual Costs:
Month #
Cost item
PM Cost:
Spar parts 23 38 49 56 68 65 54
Labor 32 65 96 94 94 90 72
CM Cost:
Spar parts 231 213 181 185 199 196 157
Labor 503 370 293 164 201 193 142
DT Cost 407 397 320 290 330 320 362
Based on these data, determine the different performance evaluation

indicators for the maintenance system.

Target:
Cost item Month #

PM Cost 150 150 150 150 150 150 150
CM Cost 350 350 350 350 350 350 350
DT Cost 300 300 300 300 300 300 300
TM Cost 800 800 800 800 800 800 800
Actual:
Month #
Cost item
PM Cost 55 103 145 150 162 155 126
CM Cost 734 583 474 349 400 369 299
DT Cost 407 397 320 290 330 320 362
TM Cost 1196 1083 939 789 892 864 787

Global Performance Evaluation Module

Main Inputs:
Review information (operational P.E.)
Dimension Item Per 1 Per 2 % PE
Working - Total monthly days
conditions - Planned working days
- Unplanned working days
- Actual working days
- Std. working hours/day
- Overtime (man-hour)
Production - Std. perf. rate (ton/day)
- Actual production (ton)
- Rejected (ton)
Critical - Available materials (ton)
materials - Used materials (ton)
(XXX) - Recycle materials (ton)
Critical - Total daily (worker)
manpower - Average daily (worker)
(YYY) -
Critical - Operating units (eq.)
equipment - Standby units (eq.)
(ZZZZ) - Actual hours (eq.-hour)
Critical - Std. rate (www/ton)
supplies - Total energy (www)
(WWW) -
Cost - Material (1000LE)
- Labor (1000LE)
- Equipment (1000LE)
- Subcontractor (1000LE)
- Prod. overhead (1000LE)
- Office overhead (1000LE)
- Bonus (1000LE)
- Total revenue (1000LE)
Others -

Main Indicators:
P.E. Report (Middle management level)
Dimension Item Jan. Feb. % PE

Working - Availability %
conditions - Reliability %
- Utilization %
- Overtime ratio %
Production - Performance %
- Quality rate %
Critical - Material utilization %
materials - Material yield %
-
Critical - Manpower utilization %
manpower -
Critical - Equipment utilization %
equipment -
Critical - www utilization %
supplies -
Cost - Overhead ratio %
- Bonus ratio %
- Profit %
- Value added ratio %
-
Global System:
- Total productivity %
- OEE %
- OCE %
Specific:
- Material productivity %
- Labor productivity %
- Machine productivity %
- Energy productivity %
-

KPIs report:
P.E. Report (Top management level or System level)

Cost - Overhead ratio %
- Bonus ratio %
- Profit %
- Value added ratio %
-
Global System:
- Total productivity %
- OEE %
- OCE %
Specific:
- Material productivity %
- Labor productivity %
- Machine productivity %
- Energy productivity %
-
Recommendation:

Real case study: Foundry department – xyz Company

Global Performance Evaluation Module
Review information (operational P.E.)
Working - Total monthly days 31 29
conditions - Planned working days 25 24
- Unplanned working days 3 2
- Actual working days 20 21
- Std. working hours/day 10 10
- Overtime (man-hour) 500 600
Production - Std. perf. rate (ton/day) 100 100
- Actual production (ton) 1800 1700
- Rejected (ton) 200 100
Critical - Available materials (ton) 2500 2000
materials - Used materials (ton) 2200 2000
- Used alloys (ton) 20 8
- Recycle materials (ton) 500 460
Critical - Total daily (worker) 20 20
manpower - Average daily (worker) 18 17
Critical - Operating units (eq.) 2 2
equipment - Standby units (eq.) 1 1
(furnace) - Actual hours (eq.-hour) 180 200
Critical - Std. energy rate (kwh/ton) 600 600
supplies - Total energy (1000 kwh) 1400 1300
(energy)
Cost - Material (1000 LE) 1600 1500
- Labor (1000 LE) 1000 1000
- Equipment (1000 LE) 800 800
- Subcontractor (1000 LE) 200 300
- Prod. overhead (1000 LE) 400 300
- Office overhead (1000 LE) 200 200
- Bonus (1000 LE) 60 58
- Total revenue (1000 LE) 6000 6100
Others -

Project Performance Evaluation

Target Performance:
Item unit Value
Work Schedule:
§ Excavation m3 3000
§ Concrete m3 1500
§ F-Concrete m3 1000
Budget Cost:
§ Excavation LE/m3 5
§ Concrete LE/m3 100
§ F-Concrete LE/m3 800
Critical equipment:
§ Excavator m3/day 200
§ Concrete pump m3/day 100
Critical materials:
§ Cement for concrete kg/m3 250
§ Cement for F-concrete kg/m3 350
Actual Performance:
Item unit Value
Work Performed:
§ Concrete m3 2000
Actual Cost:
§ Excavation LE 16,000
§ Concrete LE 180,000
§ F-Concrete LE 600,000
Critical materials:
§ Available Cement ton 800
§ Used Cement ton 800

Bill of Quantities:
§ BCWS = Budget Cost of Work Schedule
§ ACWP = Actual Cost of Work Performed
§ BCWP = Budget Cost of Work Performed
§ Total Variance = BCWS – ACWP
§ Cost Variance = WP (BC – AC) = BCWP – ACWP
§ Schedule Variance = BC (WS – WP) = BCWS - BCWP
§ Schedule Late / early duration
Productivity:
§ Total Productivity %
§ Equipment Productivity %
§ Material Utilization %
§ Material Productivity %
§ Labor Productivity %

Performance evaluation for maintenance projects
Case Study:
The annual maintenance works report for a maintenance

project in XXX Company is as follows:
Year Year
No. Description Type
2004 2005
Maintenance Engineers 16000 15000
1 manpower Tech. 18000 19000
(Man-hours) Helpers 13000 12000
No. of W/O 4000 6000
Man Hours 12000 14000
2 Actual PM
Duration (Hrs) 4000 5000
Back Log 650 600
No. of W/O 500 700
Man Hours 5000 6000
3 Actual CM
Duration (Hrs) 500 3000
Back Log 50 70
Planned 3500 3500
4 Total cost (1000 LE)
Actual 4200 4500
Planned 5000 5000
5 Revenue (1000 LE)
Actual 6000 7000

evaluation indicators for this project.

Performance evaluation for maintenance projects:

KPI Type 2004 2005 PE
No. of W/O
Man-hours
1- CM / PM
Duration (Hrs)
Overall (10-20%)
2- Utilization (50-60%)
3- Quality Rate (80-90%)
4- Reliability (80-90 %)
5- OCE (30- 40%)
6- Performance Rate Planned
( L.E / man-hour) Actual
• CM/PM Overall =
10 X No of WO X man-hours X Durations
• Utilization =
Total Work orders man-hours / Total Available man-hours
• Quality Rate =
(No of PM) / (No of PM + No of CM)
• Reliability =
(PM man-hours) / (PM man-hours + CM man-hours)
• Overall Craft Effectiveness =

Utilization X Quality Rate X Reliability
• Performance rate =
Revenue / total man-hours

Exam
Please attempts all questions - No. of questions 4 – No. of Pages 3
Q1:
The monthly civil works report for a civil project in ABC Company is as
follows:
Target Performance:
Item unit Value
Work Schedule:
§ Concrete m3 1500
Budget Cost:
§ Excavation LE/m3 5
§ Concrete LE/m3 100
§ F-Concrete LE/m3 800
Critical equipment:
§ Excavator m3/day 200
§ Concrete pump m3/day 100
Critical materials:
§ Cement for concrete kg/m3 250
§ Cement for F-concrete kg/m3 350
Actual Performance:
Item unit Value
Work Performed:
§ Concrete m3 2000
Actual Cost:
§ Excavation LE 16,000
§ Concrete LE 180,000
§ F-Concrete LE 600,000
Critical materials:
§ Available Cement ton 800
§ Used Cement ton 800
indicators for this project.

Q2:
The monthly production report for an Egyptian foundry is as follows:
Year 2001 Year 2000

Indicator Unit January Year to January Year to
date date
Production indicators:
Planned production quantity Ton 160 1200 120 900
Actual production quantity Ton 130 900 110 800
Rejected quantity Ton 10 70 8 50
Resources indicators:
Average working manpower Man 50 52 48 50
Total manpower working time Man-hr. 7250 51000 7000 50000
Total charge material quantity Ton 185 1300 160 1100
Total energy consumption K.W.H 78000 550000 75000 520000

indicators for the production system.

Q3:
The monthly production report for a machining workshop is as follows:
Dimension Item Jan. Feb.

Working - Total monthly days 31 29
conditions - Planned working days 25 24
- Unplanned working days 3 2
- Actual working days 20 21
- Std. working hours/day 10 10
- Overtime (man-hour) 500 600
Production - Std. perf. rate (ton/day) 100 100
- Actual production (ton) 1800 1700
- Rejected (ton) 200 100
Cost - Material (1000 LE) 1600 1500
- Labor (1000 LE) 1000 1000
- Equipment (1000 LE) 800 800
- Subcontractor (1000 LE) 200 300
- Prod. overhead (1000 LE) 400 300
- Office overhead (1000 LE) 200 200
- Bonus (1000 LE) 60 58
- Total revenue (1000 LE) 6000 6100

indicators for the production system.

References:
1- Chase and Aquilano, “Production and Operations Management: A Life
Cycle Approach”, 5 Th. ed., IRWIN, (1989).
2- Diewert, W.E., “Fisher Ideal Output, Input, and Productivity Indexes
Revisited”, Journal of Productivity Analysis 3, 211-248. (Sections 1,2,3,9) ,
(1992).
3- Elsayed and Boucher, “Analysis and Control of Production Systems”
Prentice-Hall, INC, New Jersey 076632, (1985)
4- Färe, R. and D. Primont., “Multi-Output Production and Duality: Theory
and Applications”, Kluwer Academic Publisher, (1995).
5- Fried, H. O., C. A. K. Lovell, S. Schmidt (Eds.), “Measurement of
Productive Efficiency”, New York, Oxford University Press, (1993).
6- Kuosmanen, T., and T. Post, “Measuring Economic Efficiency with
Incomplete Price Information: With An Application to European
Commercial Banks”, European Journal of Operational Research 134, 43-58,
(2001).
7- Lovell, C.A.K., “The Decomposition of Malmquist Productivity Indexes”,
mimeo, (2001).
8- Richard, T. “Forecasting, Monitoring and Controlling Productivity”, In
developing work standards. Industrial Engineering and Management Press,
U.S.A., (1985).
9- Riggs, James L., “Production Systems: Planning, Analysis, and Control” ,
5th ed., John Wiley & Sons, Inc., New York, (1987).
10- Roman, Z. “Productivity and Economic Growth”, Akademiai Kiaato,
Budapest, (1982).
11- Seiford, L.M., and R.M. Thrall, “Recent Developments in DEA: The
Mathematical Programming Approach to Frontier Analysis”, Journal of
Econometrics 46, 7-38, (1990).
12- Sumanth, David J., “Productivity Engineering and Management”, McGraw-
Hill Book Company, New York, (1984).
13- Tsujimira, K., “The Measurement of Productivity”, Asian Productivity
Organization, Japan, (1963).
14- Tulkens, H., “On FDH Efficiency Analysis: Some Methodological Issues
and Applications to Retail Banking, Courts, and Urban Transit”, Journal of
Productivity Analysis 4, 183-210 , (1993).
15- Wild, Ray, “Essentials of Production and Operations Management”, Holt,
Rinehart and Winston Ltd., London, New York, Sydney, Toronto, (1980).
16- Willam, G. “The Economics of Industrial Organization”, 2nd ed., Prentic-
Hall International, Inc London, (1985).

Iso 9001 - 2015

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Iso 9001 - 2015

Hochgeladen von

Copyright:

Verfügbare Formate

The American University in Cairo (AUC)

Productivity Measurement, Analysis and

Productivity Measurement, Analysis and

Who Should Attend:

Global PE – Dr. Attia Gomaa

Productivity Measurement, Analysis and

Global PE – Dr. Attia Gomaa

This course is mainly concerned with the problems of productivity

This course systematically presents several conceptual and pragmatic

This course attempts to serve the practical needs of industrial engineers,

This course is written in a relatively simple, easy-to-understand style,

Finally, I’m very grateful to my readers, participants & professional peers

Dr. Attia H. Gomaa

Global PE – Dr. Attia Gomaa

What is the productivity?

Productivity is a measure of the following:

Productivity is measured as:

Productivity = Output / Input

Global PE – Dr. Attia Gomaa

The term “Productivity” is often confused with the term “Production”.

• Production is concerned with the activity of producing goods

Production …….... Quantity

• Productivity is concerned with the efficient utilization of

Productivity ……… Resource utilization

If viewed in quantitative terms, production is the quantity of output

Global PE – Dr. Attia Gomaa

3. ORIGIN OF THE WORD “ PRODUCTIVITY ”

• Littre, 1883, “faculty to produce”.

• Early 1900s, “Relationship between output and the means employed

• OEEC, 1950, the Organization for European Economic Cooperation:

• Davis, 1955, “Change in product obtained for the resources

• Fabricant, 1962, “Always a ratio of output to input”.

• Kendric & Creamer, 1965, Functional definitions for partial, total-

Global PE – Dr. Attia Gomaa

• Siegel, 1976, A family of ratios of output to input.

• Sumanth, 1979, Total productivity: the ratio of tangible output to

4- PRODUCTION SYSTEM & RESOURCES

Production is a process of transforming input(s) to output(s).

A system is a collection of components (or items) that work together to

Production system is a configuration of resources combined for the

Global PE – Dr. Attia Gomaa

Planning and Control Cycle

Operational management 4) Detailed

Global PE – Dr. Attia Gomaa

- Targets Production - Products /

This enables us to optimize the resources for maximizing the output of

Global PE – Dr. Attia Gomaa

Two basic targets for any production system:

The productivity of a certain set of resources (input) is therefore the

Land in a convenient location on which to erect the buildings and other

Global PE – Dr. Attia Gomaa

Machines, plant, equipment and tools necessary to carry out operations of

Manpower (men and women) necessary to perform the manufacturing

The relative importance of each of the resources mentioned above varies

Global PE – Dr. Attia Gomaa

Who is responsible for seeing that they are combined in such as

Answer: The management of the project.

What is the project management?

Global PE – Dr. Attia Gomaa

Project Management is the application of knowledge, tools and

Project Targets Dimensions:

• Time wise Right time or less

What are the main TARGETS In Production Systems?