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Cost/Duration per value added

Analyzing Cost and duration is certainly the most popular analysis provided by a Process Mining Project. That makes perfect sense as the main outcome expected is most of the time to improve the efficiency of the process itself. Coming from the qualification stages we should be able to categorize each Process Steps by their real value. 

Remember these three Process Steps categories :

  • The Value added steps
  • The Non-Value added steps
  • The Necessary steps

It happens we can affect some specific Process Steps to a category above. In this case we could create a dummy category (in which we could specify a zero cost for example).

A good way to value the Process step is to use the cost of an event. Indeed, Each step has its own duration, so it would be possible to specify a cost on this duration. 

Let’s take an example with the HR onboarding process for a new employee. In a very simple manner and in the case of this example we can split this workflow in four major steps:

Of course each step needs some work and each workload has its own duration and so its own cost depending on the employee(s) who are in charge to provide the work. That clearly means the work provided in one step can be done by one or many different workers, and each worker role has his own cost calculated on a specific duration. Sometimes it’s not easy to calculate the cost of a Process Step and we may have to consider using a rough estimation of this cost. 

The best Process Mining solutions provide a way to configure the cost based on different information. They are able to calculate these costs on the fly and provide some great business outcomes in real time.

Of course the calculation of the Process Step cost must be weighted by the real participation of each role. In the case above we have for Step 1 two different roles involved (with two different costs associated) so that it would be necessary to use the percentage of the participation of each to be able to calculate the Process Step Cost.

The Process Step 1 cost is: 5$20% + 10$ 80%

Calculating the cost is pretty easy if we know the rates and the roles involved in accomplishing the task. This information sometimes directly comes from the data and can be filled out directly in the Process Mining solution.

We may also consider several ways in configuring the Process Step cost:

  • The cost is fixed for all the Process Steps. That means all the Process Steps will have exactly the same cost. 
  • The same Process Steps can have a different cost The rate can be fixed as well or come from an attribute, or can come from another configuration table (ie. external lookup table)
  • The cost is calculated by a using rates, roles and time intervals (like explained above)
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