Are you in this spot? Before you are even get a couple of months into a new budget year you’re already behind. People just back from leave, a bunch of new starters to on-board, action list growing and day to day demands not affording you the time.
When you reach this point you are at risk of implementing expedient actions and behaviours to deliver short term outcomes that may compromise the overall value of the operation. That is, I might deliver the budget outcomes for March but what are the consequences of the decisions I make down the track.
One question we might ask ourselves, “do you have a plan or a budget? ”
At various companies and operations locations I have asked to see the plan and have been presented with spreadsheet or table of a whole raft of numbers. Personally I don’t know how to do 17Mbcm per annum. I do know the levers I can pull to get more than 450 dig hours per month, I can ensure we have 6 to 8 trucks presented to the machine and I can make sure the digger is set up and the operator has the skills to get 50 LCM on average per dipper. If I do all of these things then the outcomes are consequences of my plans and actions.
The Oxford dictionary defines a plan as “A detailed proposal for doing or achieving something”. Our simple definition of a plan is who is going to do what by when, what steps we need to take. In the enable business planning system we have defined Strategy, Plans and Budgets as the WHAT, the HOW and the MEASURE.
Another question to ask is “do I know how this budget or measures were determined? ”
Another way of looking at this question is do I know what I need to do to deliver my outcomes?
The development of a plan and budget for an operating mine site is a relatively complex task. It often involves a large number of inputs (1000’s), numerous people, across disciplines and multiple systems (authorised and unauthorised).
Whilst it is a key task for the management team it is often not afforded the appropriate priority, time and project management. This is despite the fact that it will set the basis on which decisions are made and the teams / mines performance will be assessed.
The result is often a plan and budget that is:
• Not Reliable
• Not really understood
• Managers do not feel accountable for the outcomes
It’s generally a familiar list of the many reasons why this occurs including:
• often they are not based on a solid resource understanding and fit for purpose mine and maintenance plans
• the culture and behaviour utilised to develop the budget often leads to a lack of accountability or ownership for its delivery
• key inputs are not developed or understood by those accountable for delivery of those inputs
• reconciliation processes (physical and fiscal) are compromised by timeframes and shareholder representative objectives
• insufficient work, understanding and communication to fully reflect the top down direction of the shareholders
• the majority of budgeting tools are seen as the work of commercial people
• the ability to understand inputs and outputs and the mechanics by which they are joined is often limited to one or two people. The black box syndrome.
So how can we start to address this? How could we flip this whole process upside down so that it is structured, simple, controlled and I feel accountable? Obviously there is some serious thinking to do but here are some simple prompts to get you thinking.
• Connect the planners, modellers and those accountable
• Make the time – it is important work but perhaps not always urgent
• Make a plan – not a budget. The budget will come if I do the plan.
• Keep it simple and transparent
• Try knowing why and not just what
A robust plan and understanding of the plan helps across the board, whether it be knowing what to do to get my outcomes and set the priorities, or communicating and supporting the plan to shareholders and our people. At enable, we have developed a business planning process that is free to download and use.