Selecting the Right Key Performance Indicators

An effective set of interlocking indicators provides feedback to individuals, groups, and the enterprise, directing the behavior of all. By Anthony McNeeney, Meridium Measures of performance have been used by management for centuries to review current operational capabilities. Such measures have been used to assess both departmental and corporate performance, as well as trend performance achieved against plan. In many industrial facilities, these measurements are related to safety (number of incidents), environmental (number of releases), costs (percentage of departmental budgets used), and production (comparison of actual vs targeted production output). These measures are needed in order to determine not only if resources and costs have been managed for the production achieved, but also whether the assets or plant remain in good health. Clearly, these measures provide assurance that asset policies in place today do not limit capabilities for tomorrow. In order to define a complete set of performance measures, companies must ensure that simple, workable measures are in place. The real challenge is not only to select those indicators that satisfy budgetary goals, but also to build the activities needed to meet the levels of asset performance required to meet strategic goals. Selecting the right measures is vital for effectiveness. Even more importantly, the metrics must be built into a performance measurement system that allows individuals and groups to understand how their behaviors and activities are fulfilling the overall corporate goals.

BUILDING AND TESTING PERFORMANCE INDICATORS

As with many management issues, it is often best to build a solution in stages. Suggested stages for performance indicators are: 1. Define the links between corporate goals and major operational perspectives. 2. Map these strategic links to required processes in each perspective area. 3. Define a set of near-term and medium-term metrics which drive the new outcomes in each perspective. 4. Define the gaps and dependencies across the organization which will need to be bridged to result in corporate success. 5. Implement the metrics as individual and group scorecards and monitor to secure the strategic results. Use the SMART test S = Specific: clear and focused to avoid misinterpretation. M = Measurable: can be quantified and compared to other data. A = Attainable: achievable, reasonable, and credible under conditions expected. R = Realistic: fits into the organization's constraints and is cost effective. T = Timely: doable within the time frame given. Key performance indicators should be trendable, observable, reliable, measurable, and specific. back to article

PERFORMANCE INDICATORS FOR MANAGING RISK AND IMPROVING PROFITABILITY

High level goal: Manage Risk and Improve Profitability of Chemical Plant Operations Perspective Reliability Perspective Work Management Perspective Safety and Environmental Perspective Goals: Controlled, audited environmental; safe, audited operational capabilities Strategic KPI Incident rate Safety performance index PHA/reviews completed, number PSM compliance audits, number Significant environmental aspects defined/quantified, number

Goals: Reduce operating Goals: Maximize uptime; Goals: Minimize costs and risks; preserve plant and asset corrective work; restore maximize output integrity asset condition

Strategic KPI Plant availability Number LPO events Time operatingoutside deterioration limits, percent Plant uptime, percent Production targetcompliance

Strategic KPI Plant availability Proactive work orders, percent Emergency work orders on high critical systems, percent Significant deterioration mechanisms improvements Inspection compliance Protective device schedule compliance Quantified reliability target, number Predictive maintenance compliance Operational KPI MTBF by equipment type, area MTBR by equipment type, area MTBM by equipment type, area MTBF growth Cumulative nonavailability of critical assets Unscheduled maintenance events, number Completed work order records on significant failures,

Strategic KPI Planning compliance Work order complete (within 20 percent of planned costs) Proactive work orders, percent Scheduling compliance Assessments of work order complete, number Quantified availability targets, number

Operational KPI Process availability variance Utility variance Product transfer indicator Quality limit excursions, number Actual counter measures, number Startup indicators Shutdown indicators Offspec product Scrap value Inventory

Operational KPI Emergency work orders, percent Reactive work orders, percent Backlog work orders, number Overtime hours, percent Work orders planned, number Cumulative maintenance costs for standing order Average direct cost per maintenance event Work orders

Operational KPI Outstanding items from monthly safety inspection report, number E&S A incidents, number E&S B incidents, number E&S C incidents, number Total days lost days due to injury PHA action items

number Bad actor count Current mechanical availability Mechanical availability trend

scheduled, number Rework, percent Closed work orders within 2 days of schedule, percent