Thursday 30 April 2015

Estimating the value of lessons

Many organisations attempt to assign value to lessons in a lessons management system, and there are two ways you can do this. 

A screen sub-panel from the lessons management hub
showing vale assigned to lessons

Assigning value to lesson-learning has three main advantages;
  • It reassures the people using the system that there is value in lesson learning. A panel on the front page of your lessons management system such as the one shown here reassures people logging into the system that valuable lessons are being shared.
  • Lessons can be high-graded according to value, with the most valuable lessons getting highest priority.
  • It reassures management that there is value in lesson learning, and makes them think twice before axing the lessons management team and closing down the system.
However there are also counter-arguments;

  • Assigning value to lessons can be subjective (see below)
  • Value is yet another piece of metadata that needed to be added.

If you decide to go down the path of assigning value to lessons, you can estimate this value in three ways;

  1. You estimate a projected value, where you look at the impact the lesson had on the project where the lesson was identified (measured through lost time, saved time, wasted cost, saved cost etc), and then you forecast  that forward by estimating the frequency of recurrence. Imagine a new way of working was developed which saved a project $100k on a particular activity. Imagine that activity is repeated in other projects a total of 10 times a year. If you document that new way of working as a lesson, then the projected value of that lesson is $1 million per year ($100k times 10, assuming all the future projects re-use the lesson). This of course is only an estimation - maybe the activity is repeated only 5 time, or 20 times. In some cases it might save $50k, in others $200k.
  2. You record an actual value, where the lesson is re-used (either directly, or through embedding into process) and you can then measure the improvement that results. This is more accurate than the projected value but it sometimes can be difficult to isolate the impact of one lesson when many lessons are applied together.  This approach was used by the Ford Best Practice replication system, where each focal point who received a lesson needed to report what has been done with this knowledge in their local plant and if they applied the lesson, what value did it add.
  3. You record an aggregate value, by looking at the improvement in results over time.  There are several examples on this blog of the aggregate improvement that comes through learning and re-use of knowledge, for example in Trinidad offshore platforms, Oil wells in Oman, Nuclear power stations in Korea, and jumping frogs in California.

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