Targeting performance measures based on performance prediction

Purpose – This study aims to investigate the development of predictive tools in performance measurement and management (PMM), and modeling of a forward‐looking method to help managers to quantitatively target performance measures based on achieving desired improvement, minimum cost and strategic priorities. Design/methodology/approach – A case‐based methodology is used to test the conceptual approach in a production system. Mathematical models are used to model modules of the proposed approach. The proposed approach is applied to an actual conventional power plant unit to show its applicability and superiority over conventional methods. Findings – The developed system enables managers to develop systematic ways to manage future performance; for example, planning, performance forecasting and target setting. The predictive ability of the developed system is comparable with the judgment of the manager in the case company. Originality/value – This paper proposes the use of mathematical models in the development of performance measures targeted on performance prediction and desired improvement. The paper also offers practical help to organizations to embed a forward‐looking capability into their operations.