Value Driver Modelling
Example Value Driver Trees
Copyright
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Modelling
Driver Trees
der a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
Value Driver Modelling
Example Value Driver Trees
Benefits Realisation VDT
Benefit Dependency Network
HOW
one- off programme related ongoing new ways of working
People + Process
IT Enablers Enablers Business Changes
Performance
Server Business Management
Virtualisation Analytics System
Standardise
Software-As-A- Timesheet
Service Business System
Service Processes System
Processes
To achieve the new way of working, IT, People and Process enablers
are required
Value Driver Tree
Increase revenue from accurate Increased hours from recording at least
timesheets ($) planned capacity (hrs)
1,875,000 1,250
X X
Legend X
Assumption
Investment Objective
Business Benefit
Recoverable Chargeable Rate ($/hr)
1,500
X
WHAT WHY
new ways of working The benefits and why we want them
Investment Drivers &
Business Benefit Objectives Objectives
Increase capture
of hours
Increase
Increase revenue
revenue Post Merger
from accurate Environment
timesheets (Internal)
Increase % of
chargeable
chargeable time
time
ess enablers To achieve the Objectives and Benefits, a new way of
working is required
FTEs charging less than planned
capacity (#)
50
Days worked per year (#)
200
Additional hours per resource day
0.13
Gap from planned capacity
0.50
X
Planned hours (hrs)
8.0
-
Chargeable hours
7.5
% of improvement
25%
Average Chargeout Rate ($/hr)
2,000
% of increase that is chargeable
75%
Value Driver Modelling
Example Value Driver Trees
Revenue VDT
Total Revenue ($USD) Average Price ($USD/L) Foregin Exchange (USD/AUD)
39,098,182 36.36 1.10
X
Domestic Price ($AUD/L)
40.00
Total Chemical Input
Total Litres Constrained (L) Contrained (L)
1,075,200 1,157,863
Min Min
Legend
Calculation
Input
Total Production Input (L)
1,081,825
Min X
Total Labour (L)
1,075,200
X
X
Total Litres produced from Consumable (L)
Consumable (L)
1,289,883 1,612,354
x
Litres Produced per
Consumnable Litres (L/L)
0.80
Reagents ($) Reagents (L)
1,157,863 5,789,316
x
Litres Produced per Reagent
Litres (L/L)
0.20
Operating Time (UtilHr)
1,985
Litres per hour (L/hr)
545
Total hours of work a year per Average days worked a year
person (hrs) (#)
1,920 240
X
Average shift (Hrs)
Number of Employees (#)
14
Litres per hour (L/hr)
40
Value Driver Modelling
Example Value Driver Trees
Cost VDT
Total External Services Cost
Total Cost ($) Total Fixed Cost ($) ($)
21,995,356 612,562 28,000
+ +
Total General & Admin Cost
($)
584,562
Total Variable Cost ($) Total Materials Cost ($)
21,995,356 17,578,632
+ +
Legend
Calculation
Input
Total Electricity Cost ($)
250,324
+ X
Total Labour Cost ($)
4,166,400
X
X
Consumables ($) Consumable (L)
6,000,000 2,000,000
X
Cost per Consumable L ($/L)
Reagents ($) Reagents (L)
11,578,632 5,789,316
X
Cost per Reagent ($/L)
Operating Time (UtilHr)
1,985
Power Consumption
Power Cost ($/UtilHr)
(Kwh/UtilHr)
126 1,695
X
Electricity Cost ($/Kwh)
0.07
Total hours of work a year per Average days worked a year
person (hrs) (#)
1,920 240
X
Average shift (Hrs)
8
No. of Employees (#)
14
Average cost per Employees
($/Hr)
155
Value Driver Modelling
Example Value Driver Trees
Profit VDT
Gross Profit ($) Total Revenue ($) Average Price ($AUD/L)
9,065,977 31,061,333 28.89
- X
Legend
Calculation
Input
Total Litres Constrained (L)
Linked value
1,075,200
Min
Min
Total Cost ($) Total Fixed Cost ($)
21,995,356 612,562
+ +
Total Variable Cost ($)
21,995,356
+
+
Foregin Exchange ($AUD/
$USD)
0.90
Domestic Price ($USD/L)
26.00
Total Chemical Input Total Litres produced from Consumable (L)
Contrained (L) Consumable (L)
1,157,863 1,600,000 2,000,000
Min Min x
Litres Produced per
Consumnable Litres (L/L)
0.80
Reagents ($) Reagents (L)
1,157,863 5,789,316
x
Litres Produced per Reagent
Litres (L/L)
0.20
Total Production Input (L) Operating Time (UtilHr)
1,081,825 1,985
Min X
Litres per hour (L/hr)
545
Total hours of work a year per Average days worked a year
Total Labour (L) person (hrs) (#)
1,075,200 1,920 240
X X
Average shift (Hrs)
Number of Employees (#)
14
X
Litres per hour (L/hr)
40
Total External Services Cost
($)
28,000
+
Total General & Admin Cost
($)
584,562
Total Materials Cost ($) Consumables ($) Consumable (L)
17,578,632 6,000,000 2,000,000
+ + X
Cost per Consumable L ($/L)
Reagents ($) Reagents (L)
11,578,632 5,789,316
X
Cost per Reagent ($/L)
Total Electricity Cost ($) Operating Time (UtilHr)
250,324 1,985
+ X
Power Consumption
Power Cost ($/UtilHr) (Kwh/UtilHr)
126 1,695
X
Electricity Cost ($/Kwh)
0.07
Total hours of work a year per Average days worked a year
Total Labour Cost ($) person (hrs) (#)
4,166,400 1,920 240
X X
Average shift (Hrs)
No. of Employees (#)
14
X
Average cost per Employees
($/Hr)
155
Value Driver Modelling
Example Value Driver Trees
Financial VDT
Economic Value Added NOPAT Tax
117,000 225,000 30%
- X
EBIT
750,000
Cost of Capital WACC
108,000 9%
X
Net Assets
1,200,000
Name Definition
Asset turnover sales / assets
Current asset turnover sales / current assets
Fixed asset turnover sales / fixed assets
EBIT margin EBIT / sales
Gross profit margin (sales cost of goods sold) /
ROA net income / assets
Contribution Margin Sales
1,000,000 4,000,000
- -
Cost of Goods Sold
3,000,000
Cost of Organisation
250,000
Fixed Assets
900,000
+
Current Assets
300,000
Ratio
3.33
13.33
4.44
19%
of goods sold) / 25%
19%
Value Driver Modelling
Example Value Driver Trees
Reporting
Margaret Gold
Total Labour Costs ($) Total hours of work a year per person (hrs)
(CFO)
Planned 2,976,000 Planned
Actual 2,808,000 Actual
Variance -6% Variance
No. of Employees (#)
Planned
Actual
Variance
Average cost per Employees ($/Hr)
Planned
Actual
Variance
David O'Sullivan Matthew Wallace
Average days worked a year (#)
(HR) (Superintendent)
1,920 Planned 240
2,160 Actual 240
13% Variance 0%
Luke King
Average shift (Hrs)
(Supervisor)
Planned 8
Actual 9
Variance 13%
David O'Sullivan
(HR)
10
10
0%
Susan Grace
(IR)
155
130
-16%
Value Driver Modelling
Example Value Driver Trees
Value Driver Table
Units Year 0 Year 1
Parameter
Cotton Gin Calendar Time (Hrs) 8,760 8,760 8,760
Cotton Gin Down Time Maintenance (Hrs) 1,474 1,474 1,474
Cotton Gin Scheduled Loss (Hrs) 476 476 476
Cotton Gin Unscheduled Loss Other (Hrs) 868 868 868
Cotton Gin Unscheduled Loss Failures (Hrs) 130 130 130
Cotton Gin Available Time (Hrs) 7,286 7,286 7,286
Cotton Gin No Scheduled Production (Hrs) 151 151 151
Cotton Gin Operating Standby (Hrs) 2,389 2,389 2,389
Cotton Gin Utilised Time (Hrs) 4,746 4,746 4,746
Cotton Gin Operating Delay (Hrs) 1,093 1,093 1,093
Cotton Gin Operating Time (Hrs) hrs 3,653 3,653
Average Metres per Hour m/hr 54 54
Total Metres Rolled m 197,253 197,253
Average Metres per Separations m/sep 25 24
Number of Separations sep 7,890 8,219
Average Separations per Processed Tonne sep/t 300 300
Amount of Processed Tonnes t 26 27
Number of Cotton Gins # 10 10
Total Processed Tonnes with Factory t 263 274
Baseline t 263 274
Improvement t 0 0
Value Driver Tree Version
Year 2 Year 3 Year 4
8,760 8,760 8,760
1,474 1,474 1,474
476 476 476
868 868 868
130 130 130
7,286 7,286 7,286
151 151 151
2,389 2,389 2,389
4,746 4,746 4,746
1,093 1,093 1,093
3,653 3,653 3,653
54 54 54
197,253 197,253 197,253
23 22 21
8,576 8,966 9,393
300 300 300
29 30 31
10 12 12
286 359 376
314 359 376
-29 0 0
Value Driver Modelling
Example Value Driver Trees
Longitudinal VDT
J A S O
Actual 1,256 1,100 1,230 1,536
Production
Planned 1,250 1,500 1,250 1,000
Actual $ 12 $ 12 $ 12 $ 13
Variable Cost
Planned $ 10 $ 10 $ 10 $ 10
Actual $ 15,072 $ 13,200 $ 14,760 $ 19,968
Total Variable Cost
Planned $ 12,500 $ 15,000 $ 12,500 $ 10,000
Actual $ 5,000 $ 5,500 $ 5,600 $ 5,700
Fixed Cost
Planned $ 4,500 $ 4,500 $ 4,500 $ 4,500
Actual $ 20,072 $ 18,700 $ 20,360 $ 25,668
Total Cost
Planned $ 17,000 $ 19,500 $ 17,000 $ 14,500
Total Cost
$30,000 $6,000
$25,000 $5,000
$20,000 $4,000
$15,000 $3,000
$10,000 $2,000
$5,000 $1,000
$- $-
J A S O N D J F M A M J J A S
Tot
$25,000
$20,000
$15,000
$10,000
$5,000
$-
J A
N D J F M A M
1,234 1,353 1,303 960 900 680 642
1,000 1,000 1,000 900 1,000 1,250 1,250
$ 15 $ 13 $ 12 $ 11 $ 10 $ 10 $ 10
$ 10 $ 9 $ 9 $ 9 $ 9 $ 9 $ 9
$ 18,510 $ 17,589 $ 15,636 $ 10,560 $ 9,000 $ 6,800 $ 6,420
$ 10,000 $ 9,000 $ 9,000 $ 8,100 $ 9,000 $ 11,250 $ 11,250
$ 5,000 $ 3,000 $ 3,000 $ 3,500 $ 3,400 $ 3,600 $ 3,400
$ 4,500 $ 4,500 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000
$ 23,510 $ 20,589 $ 18,636 $ 14,060 $ 12,400 $ 10,400 $ 9,820
$ 14,500 $ 13,500 $ 14,000 $ 13,100 $ 14,000 $ 16,250 $ 16,250
Fixed Costs
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$-
J A S O N D J F M A M J
Total Variable Cost Production
$25,000 1,800
1,600
$20,000 1,400
1,200
$15,000
1,000
800
$10,000
600
$5,000 400
200
$- -
J A S O N D J F M A M J J A S O N D J F M A M J
Variable Cost
$16
$14
$12
$10
$8
$6
$4
$2
$-
J A S O N D J F M A M J
J
1,000
1,500
$ 10
$ 9
$ 10,000
$ 13,500
$ 3,000
$ 4,000
$ 13,000
$ 17,500
uction
D J F M A M J
ble Cost
D J F M A M J
