The balanced scorecard and the customer perspective (Essay Sample)

The balanced scorecard and the customer perspective
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The balanced scorecard and the customer perspective
The concept of a Balanced Scorecard is essentially a strategic measurement system which is organized in 4 perspectives, and the system seeks to establish tangible performance indicators in every function of the organization (Niven, n.d). This essay compares and contrasts the Balanced Scorecard (BSC) used by the British Air Authority at Terminal 5 (T5) project with the typical quadrants that are characteristically applied in a conventional balance score card approach: customer focus, learning and growth focus, internal focus, and financial focus. In essence, this essay discusses how Terminal 5 project adapted the balanced scorecard approach to fit prevailing circumstances.
For about 20 years, companies in the service and manufacturing industries have been working with difficulty at striving to bring the power, rigor, and discipline of performance measurement into their organizations basing on the BSC (Martello, Watson & Fischer, 2008). A major established desirable quality of the balance scorecard is that it proposes a balance between concepts that may really be contradictory to managers. For instance, the BSC seeks to balance between operational measures versus financial measures; longer-terms and short-term objectives; between lagging and leading indicators; results indicators versus enabling indicators; and between external performance versus internal performance (Basu, Little & Millard, 2009; Murby & Gould, 2005).
At the Heathrow Airport’s Terminal 5 project, a customized application of a performance management system basing on the concept of the BSC created a new approach to include every major stakeholder to move toward a culture of project quality. By the year 2008, roughly 50,000 persons, staffs, and major stakeholders have been involved with the construction of T5 (Basu, Little & Millard, 2009). The project’s mission and main objectives were to: establish new benchmarks in delighting air travelers at Terminal 5; leave behind a legacy of excellence; construct and deliver Terminal 5 to new industry benchmarks of health safety as well as security; attain outstanding performance to ensure punctual delivery, value for money, as well as a productive and efficient Terminal 5; and to get the proactive support and trust of the stakeholders.
T5 Project’s performance management system was highlighted by carefully planned key performance indicators (KPIs) and measures; there were 5 KPIs, 10 key measures, as well as 37 performance data. The 5 KPIs were: (i) verifications planned and work supervised; (ii) benchmarks agreed; (iii) inspected and protected; (iv) compliance assured; and (v) handover agreed and work complete (Basu, Little & Millard, 2009).
Key balancing principles of the 4 aspects of the balanced scorecard
Terminal 5’s key performance indicators and key measures were tailored to satisfy the requirements of the T5 Agreement as well as the project’s complexity which spans air, road, and rail infrastructures. The key balancing principles of the 4 facets of the BSC – internal processes, customer, learning and growth, and financial – were included into the key performance indicators of the Terminal 5 project. Financial perspective: in what way do we have to appear to our shareholders for us to succeed monetarily? This perspective relates to the Benchmarks Agreed KPI of the Terminal 5 project (Basu, Little & Millard, 2009). Customer perspective: in what way do we have to appear to our customers for us to realize our vision? This perspective relates to the Handover Agreed and Work Complete KPI of the T5 project. Internal Business Process: what business processes should we excel at so that we can satisfy both our customers and shareholders? This relates to the Inspected and Protected and Compliance Assured KPIs of the T5 project. Learning and growth: how would we maintain our capacity to change and improve for us to attain our vision? This relates to the Verifications Planned and Work Supervised KPI of the T5 project. In the BSC, the leading or enabling indicators are provided by learning and growth.
Terminal 5 Project key measures in the aspects of the BSCBSC aspectsTerminal 5 project BSC examples of key measures1CustomerHandovers accepted RFT
O&M manuals accepted
Outstanding work items closed 2Financial Total estimated cost of the non-conformance reports
Benchmarks/samples agreed3Learning and growthTeam certificates of compliance given out
Inspection and test plans agreed
Supervisors RFT-trained4Internal Business ProcessInspections meeting quality and benchmark standards
Checks that show work is protected
non-conformance reports raised
non-conformance reports closed
Basically, not all the key measures as a group in each of Terminal 5 Project’s key performance indicators comply with particular aspect of the balanced scorecard. However, the essential principles of the BSC were espoused and tailored usefully to the performance management systems of Terminal 5 project and attained the project’s specific requirements.
Conclusion
In conclusion, Terminal 5’s performance management system actually established a best practice of the implementation of a BSC paradigm in big project by involving major contractors and stakeholders. The metrics of this Terminal 5 project BSC were customized to reflect the project’s exact requirements as enablers and illustrating results leading to continuous improvement. Data related to non-conformance resolution were very much effectual in spotting the cost of poor quality, in improving the design and processes by examining origin causes by supplier or task, and in drawing the project board’s attention. Heathrow Airport’s Terminal 5 project balanced scorecard reveals that metrics could actually be ta...