KPI's: Promoting Aviation Value & Building Credibility with the Top Floor

Stan R. Phipps, CAM Manager – Finance & Business Services

ConocoPhillips Aviation October 21, 2014

Session Description

• This session will explore ideas on developing and communicating Key Performance Indicators (KPI’s) that build credibility with target audience (executive leadership) through transparent reporting of the important metrics that measure the costs, performance and value addition of the company’s aviation department. Scope will include ideas on 1) strategy development (what are the objectives, opportunities and future state to be achieved), 2) goals definition to support the strategy, 3) process & tools for data gathering, benchmarking and reporting, and 4) sustainability & continuous improvement.

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Credibility: “Show me the Money (Data).”

• To be persuasive we must be believable; to be believable we must be credible; to be credible we must be truthful."

Edward R. Murrow

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Strategy Development: Reinforced using KPI’s

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Opportunities

Future State

Objectives

KPI’s: Why should we care?

• What gets measured gets done

• Aligns actions with results

• Fosters prioritization, accountability & rigor

• Measures progress

• Establishes an opportunity to tell your story

• Creates credibility & trust based on data

• Dispels misperceptions & rumors

• Facilitates access to funding

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When should KPI’s be used…? Anywhere on anything!

Where?

• Safety, Risk, Aircraft, FBO’s, Airports, Hangars, Fuel, People, Catering, Environmental, Goals, Projects

What?

• Quantitative

– Safety/Regulatory

– Operational

– Financial

– People

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• Qualitative • Customer Service • People • Productivity • Progress

How do we do KPI’s the right way? • Understand what’s important to your company and its

executive leadership – How do they measure success and why do you exist

• Define how your aviation team can contribute to success – Corporate Values, Vision, Mission, Strategy,

• Establish aligned aviation goals and KPI’s

• Report regularly using language they understand – Use: Variable cost, NPV, DPP, ROCE, Risk/Reward, P10-50-90

– Not: Direct cost, LLP, LOA, eAPIS, MEL, Cycles, SIFL, Mach 8.0

• Seek feedback and improve

• You’ll never reach perfection so just get started!

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KPI’s support success by measuring progress versus plan

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KPI’s

Goal Setting

Keys to successful

outcomes are line of

sight understanding

and “skin in the

game” using

individual goal setting

Metrics

Goals Definition in Support of Strategic Objectives

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Align & Own Your Space

Aviation Vision:

Develop & manage an inventory of customized

aviation solutions to support the project life

cycles of our company. Deliver measured

accountability for aviation risk management &

reliability.

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Company Vision:

Smart Growth, Superior Returns, Core Values

Aviation Mission:

Committed to Safety, Service and Team

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Process & Tools

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What makes a good metric? A good measure: Description:

Is quantitative The measure can be expressed as an objective

value

Is easy to understand The measure conveys at a glance what it is

measuring, and how it is derived

Encourages appropriate

behavior

The measure is balanced to reward productive

behavior and discourage “game playing”

Is visible The effects of the measure are readily apparent

to all involved in the process being measured

Is defined and mutually

understood

The measure has been defined by and/or

agreed to by all key process participants

(internally and externally)

Encompasses both

outputs and inputs

The measure integrates factors from all aspects

of the process measured

Measures only what is

important

The measure focuses on a key performance

indicator that is of real value to managing the

process

Is multidimensional The measure is properly balanced between

utilization, productivity, and performance, and

shows the trade-offs

Uses economies of effort The benefits of the measure outweigh the costs

of collection and analysis

Facilitates trust and

ownership

The measure validates the participation among

the various parties

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Aligns with Strategy

Resonates with Target audience

Drives the right outcome; watch

out for unintended consequences!

Collaborate with stakeholders

Document a repeatable process

Repeatable report timing

Define an Owner

Use benchmarks for comparison

Continuous improvement

What makes a lousy metric?

• Metrics for the sake of metrics

– No alignment or no one cares

• Too many metrics creating inaction

• Little credibility

• Driving the wrong behavior or decisions

• Lack of follow up to improve

• No documentation or record of methodology

• No benchmark comparisons

• Excessive effort relative to value gained

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Gathering & Reporting Tools Gathering Tools

– Maintenance Databases

– Trip Scheduling Databases (e.g. FOS)

– Crew Duty Tracking

– Aircraft

– Financial & Inventory Systems (e.g. SAP)

– Third Party off the shelf software

– Manual approaches

Reporting Tools – Safety, Environment & Risk reporting tools

– Excel spreadsheets, graphs, tables

– PowerPoint

– Third Party off the shelf software

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Aircraft Shuttle Sep YTD 2013

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Key Performance Indicators Report through 2nd Quarter 2014

HEALTH, SAFETY & ENVIRONMENTAL ALASKA SHUTTLE / Boeing

2010 2011 2012 2013 2nd Qtr.

2014 2010 2011 2012 2013 2nd Qtr.

2014

Employees Number of Round Trips

HS&E Audits Total Passengers

Global Charter Reviews Passenger Load Factor

Safety Recordables On Time Departures

Incidents/Near Misses On Time Arrivals

Recordable Rate Cost per Passenger

Contractors

Budgeted Cost/Passenger

Safety Recordables

Duty Days per Pilot (avg.)

Recordable Rate Duty Days per FA (avg.)

Total Recordable Rate

EXECUTIVE FLEET OKLAHOMA SHUTTLE

2010 2011 2012 2013 2nd Qtr.

2014 2010 2011

2012 2013 2nd Qtr.

2014

Number of Trips Number of Round Trips

Total Flight Hours Total Passengers

Domestic Hours Passenger Load Factor

International Hours On Time Departures

NetJets & Charter On Time Arrivals

Aircraft Availability Dispatch Reliability

Dispatch Reliability Maintenance Delays

Maintenance Delays

Maintenance Cancellations

Maintenance Cancellations Seat Cost

Deadhead hours Cost per Passenger

Commercial Airline Ticket

Freight Savings

Continuous Improvement & Sustainability

• Start small and grow smartly

• Borrow shamelessly; use benchmarks

• Commit, document and don’t stop

• Automate where possible

• Seek feedback from Target Audience

• Adjust as needed

• Don’t stop with the report; analyze, understand and improve!

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"Success is not final, failure is not fatal:

it is the courage to continue that counts."

- Winston Churchill

Session Conclusion

• This session explored ideas on developing and communicating Key Performance Indicators (KPI’s) that build credibility with target audience (executives) through transparent reporting of the important metrics that measure the costs, performance and value addition of the company’s aviation department. Scope will include ideas on 1) strategy development (what are the objectives, opportunities and future state to be achieved), 2) goals definition to support the strategy, 3) process & tools for data gathering, benchmarking and reporting, and 4) sustainability & continuous improvement.

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