Integrated Performance Measurement Design: Insights from an Application in Aircraft Maintenance

Abstract

This paper describes the development and application over a four-year period of a performance monitoring system based upon mathematical programming methods. The setting is the engineering services division of an international airline. An integrated performance measurement system (IPMS) is developed that extends the balanced scorecard into an holistic appraisal system incorporating multiple perspectives and supporting measures. Data Envelopment Analysis (DEA) is used to quantify changes over time in productivity and continuous improvement. Fine-tuning of the DEA model to reflect the airline's strategy provides a balanced view of organisational performance. Further refinement and depth of analysis is obtained through the use of Malmquist techniques to trace the sources of performance change to efficiency and organisational learning. A noteworthy feature of the project was the very positive response from within the enterprise to the introduction and use of an application that provides appropriate and incisive performance feedback.

Keywords: aircraft maintenance, balanced scorecard, continuous improvement, data envelopment analysis, Malmquist, performance measurement, productivity

JEL Classification: M40, M46