Looking at Value Through a Non-Financial Lens

Oct 21, 2020 4:37:00 PM

By: Matthew Grant

It’s important for us at Bluefield to know that each project we complete for our clients adds measurable value to their business. We challenge ourselves during each team meeting to make sure we’re delivering the identified value in line with expectations. This value is again challenged when we hold close out discussions with clients at the end of projects.

This conversation is normally straightforward when the project involves a cost reduction or productivity uplift (so long as you don’t fall into some basic calculation traps!) But for many projects, it’s not that easy. We know from our own experience, both at Bluefield, and working on sites throughout heavy industries, that measuring and demonstrating “value” is much harder for projects when you can’t express it in financial terms.

Over the past few weeks, our team have shared some valuable examples of looking at value through a non-financial lens. Even though the benefits can’t be directly measured in the bottom line of a business, the benefits to the business are still very real.

We’ve listed some of the best examples below:

Reducing Risk (also known as “Getting a Good Night’s Sleep”)

Nothing causes more stress for managers than the prospect of a fatal incident. The stress is manageable when risks are known, and controls are in place and shown to be effective. However, it’s the risks we don’t know about, or the controls we think are in place but aren’t, that are the real worry.

Bluefield regularly conducts asset condition or integrity assessments for clients to give them confidence that their assets are fit for purpose and are being adequately maintained and operated. We typically look for both physical defects and management system defects (for example, incorrect maintenance strategies or preventive maintenance tasks not being identified).

As an example – in a recent assessment, using the client’s own risk assessment criteria, we found an average of 20 defects per asset with the potential to either kill multiple people, or result in a financial loss of greater than $10 million. This wasn’t a case of being alarmist – we found significant structural cracks in walkways, critical gear boxes with vibration alerts that had been growing in severity for 18 months (and no spares on site), and inoperable fire suppression systems. None of these were identified as defects in the site’s systems.

Based on these findings, the client was able to either rectify the defects immediately, or else to submit a budget proposal to fund the repairs that was based on the client’s own criteria. Most of us have had the experience of trying to gain capital or out-of-budget funding to repair an old or failing asset; we often resort to scaremongering because that’s all we have. It’s much easier when we’re armed with clear information!

For us, this was a clear example of measurable value, and the client certainly expressed their appreciation that they could “sleep better at night” because of the work.

Freeing up Time

Another difficult value case is when an individual or team can free up time by removing non-value-adding tasks. A common mistake is to say, “the rate is $X/hr, and we save Y hours per week, therefore we’re saving $Z per year.” In practice, unless the work is done by a contractor, or an entire role is being removed, you’re not saving anything in dollar terms.

But does that mean these projects aren’t value-adding? Maybe there’s an alternative way to look at it.

In one of our recent projects, we helped a client improve their budgeting and cost management systems. They estimated that their managers and other leaders were each spending five days per month reallocating costs. With a better system that removes non-value-adding work, it was possible to virtually eliminate this labour.

What could a maintenance manager do with an extra five days per month? They could spend that time in the field, conducting safety interactions or coaching their team. They could work to improve their other processes, improve their asset management plans and maintenance strategies, or lead defect elimination projects on their assets. Or – as a novel idea – they could go home an hour earlier each day and spend time with their family.

Measuring the financial value of this project was difficult, if not impossible. But at the same time, the indirect value is so large that it becomes obvious.

Measurement is Still Important

Although it’s not always possible to attribute financial benefits to a project, that doesn’t mean value can’t, or shouldn’t, be measured. The key is to make sure that there is a common view on what success looks like, so that a decision can be made on whether to invest, and the team can hold themselves to account at the end of the project.

Even something as esoteric as “getting a good night’s sleep” can still be measured in terms of the number and severity of identified and managed risks. If you can clearly and confidently answer the question “why are we doing this?” then that’s a good sign that you understand the value of your work.

 

Click here to download our FREE “Ten-Question AM Assessment” tool.

Click here to download our “Blue Paper” on “Managing Mobile Equipment Fire Risks.”

Click here to read our article “Achieving 110% Availability, and other “Value-Adding” Initiatives

Click here to read our article “Asset Integrity: The Key to a Good Night’s Sleep.