Productivity Leadership Program Productivity Growth in the Passenger Transport Industry through Best Practice An initiative of the Australian Chamber of Commerce and Industry (ACCI) through funding provided by the Federal Department of Employment. The mission of ACCI's Productivity Leadership Program is to develop education and skills to support cooperative and productive workplace relations that promote national economic prosperity and social inclusion for all Australians.

Driving the Performance of your Business Measuring Performance Presented By: David Fennell, Senior Manager, Business Consulting Pitcher Partners

Why Measure Performance – Support the implementation and execution of Strategy – Measures drive action – Organisations who effectively measure their performance achieve superior results Measures are embedded in Bus Contracts Measuring Performance

StateKPIs Queensland19 NSW Metro23 Victoria Metro8 Measuring Performance KPI’s Include: On-time running Cancelled / Missed Trips Customer Complaints Passenger Satisfaction Vehicle Maintenance Major Defects Passenger Growth Driver Courtesy

Measuring Performance Overview Key Concepts and Terms Backward Looking Measures Forward Looking Measures Critical Success Factors (CSFs) Balanced Scorecard Process to Identify the Right Measures for Your Business How to Identify your Critical Success Factors How to Measure these Critical Success Factors

Measuring Performance Backwards looking measures - tell you what you have done Forward looking measures - tell you what you need to do Key Concepts

Measuring Performance Tell you what you have done Are the result of many actions Give a clear indication of whether you are travelling in the right direction Don’t tell you how to improve Backward Looking Measures:

Measuring Performance Return on equity Sales per month Cost per kilometre Overtime hours last month Examples of Backward Looking Measures

Measuring Performance Focusing on aspects of performance that are most critical for current and future success Non-financial measures (not expressed in $$) Timely – daily or weekly Simple – all staff understand the measure and what corrective action is required Forward Looking Measures

Measuring Performance Major fleet services scheduled next month Safety initiatives scheduled next month Cost reduction initiatives to be implemented in the next month Charter bookings next month “What gets measured gets managed” Examples of Forward Looking Measures

Measuring Performance Sports Team President and CEO are interested in Backward Looking Measures Coaching staff are interested in Forward Looking Measures Analogy

Measuring Performance What are they: Those activities that are critical to the success of the business Need to understand these in order to identify the right measures Examples Bus Operator Supplier Critical Success Factors

Measuring Performance Critical Success Factor Example Distribution Company CSF - trucks filled as close to capacity as possible Large trucks were being sent out with small loads Managers were focusing on delivering in full on time

Measuring Performance Balanced Scorecard (BSC) Multi-dimensional framework for describing, implementing and managing strategy Links objectives, initiatives and measures to strategy Considers past and future performance Integrates the following perspectives: o Financial o Customer o Internal o Learning and Growth

Measuring Performance Financial To satisfy our shareholders, what financial objectives must we accomplish? Customer To achieve our financial objectives, what customer needs must we serve? Internal To satisfy our customers and shareholders, in which internal business processes must we excel? Learning & Growth To achieve our goals, how must we learn and innovate BSC

Measuring Performance Summary Backward Looking Measures - tell you what you have done Forward Looking Measures - tell you what you need to do Critical Success Factors – most important issues and aspects of organisational performance Balance Scorecard - performance measurement and management system

Measuring Performance Process for Developing Measures 1.Identify your Critical Success Factors 2.Test the Critical Success Factors 3.Breakdown the Aspects of each Critical Success Factor 4.Apply measures each Aspect 1. Identify CSFs Identifying Measures 2. Test CSFs 3. Breakdown Aspects of CSF’s 4. Apply Measures to Aspects

Measuring Performance Review your current known success factors Consider other success factors o Economic, political, environmental and technological trends o Customer expectations o Likely future customers expectations o Financial status of the organisation o Existing culture

Measuring Performance

Improved On time Running Driver Training Continuous Improvement Employee Satisfaction Customer Satisfaction Maintained & Clean Fleet Efficient Rostering Increased Patronage Workplace Health & Safety Cost Reduction Fleet Utilisation Technology & Innovation

Measuring Performance Improved On time Running Driver Training Continuous Improvement Employee Satisfaction Customer Satisfaction Maintained & Clean Fleet Efficient Rostering Increased Patronage Workplace Health & Safety Cost Reduction Fleet Utilisation Technology & Innovation

Measuring Performance

Example Improved On time Running Driver Training Continuous Improvement Employee Satisfaction Customer Satisfaction Maintained & Clean Fleet Increased Patronage Workplace Health & Safety Cost Reduction Fleet Utilisation Technology & Innovation Efficient Rostering

Measuring Performance Critical Success Factor FinancialCustomer FocusLearning & GrowthInternal Process Driver Training Workplace Health & Safety On-time Running Continuous Improvement Maintained & Clean Fleet

Measuring Performance Identify aspects of each CSF CSF

Measuring Performance On-time running Driver Bus

Measuring Performance On-time running Driver Bus

Measuring Performance On-time running Driver Bus Ratio of Spare Vehicles No. of Vehicles Off the Road On time running % On time running % by driver No. of written warnings issued No. of Unscheduled Maintenance On time running % by bus No of Drivers Trainings last month No of drivers identified for individual training next month No of employee (driver) suggestions received Planned implementations of Driver suggestions next month No. of Vehicles Waiting for Parts No. of employee recognitions planned next week

Measuring Performance On-time running Driver Bus Ratio of Spare Vehicles No. of Vehicles Off the Road No. of Vehicles Waiting for Parts On time running % On time running % by driver No. of written warnings issued No. of Unscheduled Maintenance On time running % by bus No of Drivers Trainings last month No. of employee recognitions planned next week No of drivers identified for individual training next month No of employee (driver) suggestions received Planned implementations of Driver suggestions next month Past Current & Future

1. Identify CSFs Identifying Measures 2. Test CSFs 3. Breakdown Aspects of CSF’s 4. Apply Measures to Aspects Repeat Steps 3 and 4 for each Critical Success Factor

Measuring Performance Other Considerations o More Data now o Focus on the important measures o Be conscious of unintended behaviours that may arise out of measures o Engage the right mix of people o Review

Measuring Performance ItemMeasured byGives you GeneralAverage kilometers per busUtilisation of assets / coverage of overheads Drivers’ WagesCost per bus hourMeasure to compare to budgets, benchmarks and prior periods. Understanding the different components such as normal time, overtime, on-costs and sick leave is also important. Drivers’ WagesUnrostered Pay - Paid Hours / Rostered Hours Unrostered overtime - Paid EOH / Rostered EOH Mix of Casual Wages - Casual hours / Total hours Understanding of variations in above and provides direction for investigation Mechanics’ Labour Repairs and maintenance Cost per kilometerMeasure to compare to budgets, benchmarks and prior periods. Repairs and maintenanceNumber of defects Number of off road days Provides an indication of the performance of the workshop. Also explains variances in repairs and maintenance costs. FuelCost per kilometerMeasure to compare to budgets, benchmarks and prior periods. FuelAverage consumption Average price for period – compare to independent source Understanding of variations in above and provides direction for investigation Bus overheads (Ins, Rego etc.) Cost per busMeasure to compare to budgets, benchmarks and prior periods. Other overheadsCost per busMeasure to compare to budgets, benchmarks and prior periods. Looking for efficiencies as the business grows. FinanceTotal Monthly Fleet Revenue Versus Monthly Fleet Finance Payments Understanding of any cash flow gap to be funded through operations FinanceNew Vehicles Funding Vs FinanceUnderstanding of any gap that will affect your earnings and cash flow FleetMarket value of fleet less outstanding lease liabilities Equity value of your fleet

Measuring Performance Summary Backward Looking Vs Forward Looking Balanced Scorecard 1.Identify your Critical Success Factors 2.Test the Critical Success Factors 3.Breakdown the Aspects of each Critical Success Factor 4.Apply measures each Aspect 1. Identify CSFs Identifying Measures 2. Test CSFs 3. Breakdown Aspects of CSF’s 4. Apply Measures to Aspects

Dr. Richard Shrapnel, PhD Executive Director Phone: Amanda Roberts Assistant Manager Phone: David Fennell Senior Manager Phone: Questions?

Driving the Performance of your Business Pitcher Partners would like to thank the Federal Department of Employment and the Australian Chamber of Commerce and Industry (ACCI).