Is your organization getting better in planning?
Logically you would say so. You always get more insight and experience in the planning process and you build on that. But how do you that? For example, a higher productivity would not necessarily imply that you became better in planning. In this blog we describe how you can measure the planning performance of your organization.
Why measure planning performance?
Why would you actually want to measure the planning performance? Because you want to have grip on things. You want to be in control when it comes to the utilization of your staff and the progress of your projects and activities. You want to predict the hours required as best you can and always improve in it. In that respect, this fits in well in the concept of Lean thinking.
Measuring the planning performance, for example, can provide insight into:
- Which parts in the company are very erratic
- Which persons (planners and project managers) have trouble with planning
- Which (type of) projects contribute the most to uncertainty
- What is the trend in planning performance. Are we getting better or worse?
Such insights are valuable to everyone: the management, managers, project managers and even employees. Based on these insights you can decide to organize yourself differently. The implementation of erratic projects you can, for example, allocate to a separate unit and leave the stable projects in a unit where you can optimize utilization.
Executives and project managers who are planning below par can be assisted in improving their planning skills. Employees who continuously spend too much time can be helped to see where the problems lie and how you can solve this with them. In short: measuring and improving the planning performance can really raise your organization to a higher level.
How do you calculate it?
To establish the planning performance, you need to record the actual hours. Otherwise, we have nothing to compare with. Furthermore, as a starting point we take it that we express the planning performance in a percentage. If you have 8 hours planned and you have also really spent 8 hours, then the planning performance is 8/8 = 100%. If you have spent 0 hours, then the planning performance is 0/8 = 0%. And at an actual spending of 4 hours, the planning performance is 4/8 = 50%.
Suppose you have 8 hours planned and 12 hours actually spent. You then allocate 8 hours on schedule in the planning, but you have spent 4 hours more. Now, how do you evaluate this?
If we total the line of the examples, we would come out on 12/8 = 150% performance. That is highly debatable. Exceptions then work positively in on the performance figures. That does not give a good picture, whether you plan well or not. In addition, as a starting point we have assumed that you can never have more than 100% planning performance.
You can also turn it around and take the actual hours as the divisor. Then the performance becomes 8/12 = 67%. On the one hand, something could be said, because in this example there were more hours needed; then those should also have been planned. On the other hand, unnecessary exceptions (read: errors) could affect the conclusion whether or not you plan well. That is not correct, so this calculation is also debatable.
You might also be able to express the difference (4 hours exception) in relation to the planned hours. You’ll get a performance of 4/8 = 50%. With an exception of 8 hours, however, you get 8/8 = 100% performance. That makes no sense and is therefore not usable.
The conclusion is that you should round off exceptions, and not add them. You should simply state that you want to know if the planned hours were actually spent. So you look to see what hours are in accordance with the planning. In the following examples the planning performance is then:
When reporting, do not lose yourself in the details. There is no use in making analyses per post as in the above examples. The danger is that you then draw conclusions on the basis of a few cases. Thus you reach no statistical relevance. It is therefore important that you look more at totals by project, department and employee.
With respect to time you should also consider planning performance over a longer period than, for example, one day. Consider the planning performance over weeks and months. That way you can also see the trend and that is important information; are we getting better or worse in planning?
You should be able to reflect the planning performance as shown in the following chart. The blue line represents the planning performance. The green bars indicate the hours in line with planning. The red bars indicate the number of hours outside planning. These are therefore the hours spent that were not planned.
You can use this chart to see that, despite the slight dip in the months of August to September, there is a slightly rising trend in the planning performance. The hours out of planning also give valuable information. You want to keep this as low as possible. These hours could also fall under overtime. The planning performance can still be quite high.
If you can make such a chart by department, project manager, employee, project, and so on, then you have a very powerful analysis tool!
I would like to thank Jurgen Overweg of Evident Interactive for his contribution to this blog on the definitions of a number of KPIs, including planning performance. From his experience and insights, he gave some guidance with the assumptions and calculations.
Co-author: Jurgen Overweg
Mark de Jong
Mark is Sales & Marketing Manager at Timewax. He has a background as a project and resource manager with PricewaterhouseCoopers Management Consultants with expertise in the field of Professional Service Automation (PSA)