Archive | September, 2000


3:08 am
September 2, 2000
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The Ever-Changing Role of Leadership

Perhaps one of the most over-used and abused phrases we’ve been hearing in the past 2 years is, “the new economy.” This vague, ill-defined reference speaks to the rise of Internet-based companies, fast-paced technology companies that do not concern themselves with concepts like profit but rather focus on development and revenue. Change is not the buzzword that drives the new economy; it’s a way of doing business. Not just some change, but change all of the time, rapid and dramatic.

Most people involved with the maintenance function, a function that is slow to accept change and innovation, have viewed all of the talk of the new economy like outsiders. It’s like watching a parade through a store window. It’s bright and colorful, but there’s something between you and it that makes it seem less real.

There are a number of reasons for this conundrum. For all of the hype of the new visions toward management and leadership, the maintenance business is a work-based business (something that is often foreign to Internet startup companies). For all of the innovation in the field, the rise of computerized maintenance management systems and other tools, there has been little or no change in the core business that is maintenance. The role of leaders in maintenance is often the same as it was two decades ago: maintain the assets of the company to the maximum capability for the least amount of money.

As one maintenance manager put it to me, “Computers can tell you when to work on something, but in the end, turning a wrench is still turning a wrench.” It’s hard to argue with someone who is dead-on right—at least at a tactical level.

So what is different with the rise of the new economy? For one thing, it has accelerated companies’ expectations of maintenance doing much more for much less cost. As the trickle of technology reaches maintenance departments, they are expected (as if by magic) to be able to do a great deal more with these tools. There is a perception that if personal computers are delivered, if infrared gear or handheld data collectors are provided, productivity will increase enough to offset the costs.

In reality, technology is a tool that can allow a maintenance manager to reduce costs. What drives that, however, is not the tools.

It’s the leadership.

What the new economy is doing is forcing more traditional maintenance managers to alter their roles to become process managers and financial control managers. They are expected to understand their business at a tactical hands-on level, while at the same time understanding how to set a strategy for maintenance operations and drive to that strategy.

This expectation is not necessarily a bad thing, despite the grumblings of some managers who resist any or all change. Present-day leaders in maintenance have to look at the new tools they can lay hands on as only part of an overall solution. It is up to them to map out a means to implement these solutions, to leverage the tools and technology so that they can achieve the savings expected or even demanded by upper management.

From a leadership perspective, contemporary maintenance managers must have a full understanding of the processes that drive their business. They must comprehend the technology that they have, and what’s available. When they view technology, the new leaders in our business must be able to see not just the tools, but the way to make the tools work. They must see not threats to their jobs or pains in their rumps, but means for them to alter their processes to make a difference in their jobs.

More important, maintenance leaders who want to be successful in bringing technology to bear against their problems must have the capability to lead and develop their people along with the processes changes and technology. They must be able to communicate what their vision looks like to the rank and file, and more important, they must know the best way to deal with resistance to change.

We’ve all seen new technology tools fail because they were implemented poorly. But the new economy demands change, constant change. Being able to wrap one’s hands around the new tools, and to find ways to implement those new tools and change the supporting processes, is critical.

So where does this take us? To a new breed of professional maintenance manager who is a technology leader and a pragmatic business person first—a hands-on maintenance person second. It will also mean changes in our business that many have longed for, a potential for an influx of tools and techniques that will possibly change the concept of wrench-turning forever. MT
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3:05 am
September 2, 2000
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Flip the Gearheads


Robert C. Baldwin, CMRP, Editor

In the last issue, I complained about gearheads, people who have a tendency to focus on tactical gear-oriented solutions to reliability and maintenance issues before dealing with more important strategic issues. I used some sports analogies to suggest that investment in maintenance technologies without a rational reliability strategy is similar to buying the finest cele-brity-branded sports gear without spending time in physical training and practice of the fundamentals of the sport. The gearhead’s performance probability won’t change significantly because sports gear isn’t worth much in the absence of training.

While attending the International Maintenance Conference (IMC) last month in Nashville, I had time to rethink my stand and see the flip side of my gearhead prejudice. Conference speakers and attendees explored the pros and cons of various tactical solutions to maintenance problems. A number of presentations focused on gear, with the thought that understanding technology will increase options for the strategist.

Like most of my conference presentations, my talk at IMC made reference to material from The Book of Five Rings (Go Rin No Sho), a classic guide to strategy by the 16th-century samurai, Miyamoto Musashi. I pointed out that, according to Musashi, “You should not have a favorite weapon. To become over-familiar with one weapon is as much a fault as not knowing it sufficiently well. You should not copy others, but use weapons which you can handle properly.”

On the flip side, without understanding a variety of weapons, the strategy of the warrior (or the reliability and maintenance professional) can be limited severely.

There is a difference between a gearhead’s compulsion to own the latest technology and what should be a reliability and maintenance strategist’s compulsion to understand technology and choose the solutions that are most congruent with the organization’s strategy.

Although I have urged gearheads to grow up by trading their technology fixation for a broader strategic view of reliability and maintenance strategy, I’m also now advocating the flip side—suggesting that reliability and maintenance leaders should cultivate the gearhead’s thirst for information about technology. After all, if you don’t keep up with technology, you’re like a manager of financial assets that doesn’t bother to monitor interest rates or check out various investment vehicles.

If you are being paid to fight for reliability and availability of equipment assets, you should become familiar with all the weapons in the reliability arsenal. MT


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10:02 pm
September 1, 2000
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Using Oil Analysis for Machine Condition Monitoring

Oil analysis can go far beyond simply revealing the condition of the lubricant. Advanced oil analysis techniques are being used to monitor equipment condition. Through the use of these advanced techniques, equipment reliability increases and unexpected failures and down time can be minimized. Many types of abnormal wear can exist inside a piece of machinery. However, there are only a few primary sources of the wear. Problems related to the oil itself may contribute to wear when the lubricant has degraded or become contaminated. Machine condition also can contribute to the generation of wear if a component is misaligned or improperly balanced. Improper use of the equipment, such as overload or accelerated heating conditions, also can generate wear. Here are some examples of types of wear.

  • Abrasive wear is the result of hard particles coming in contact with internal components. Such particles include dirt and a variety of wear metals. Using a filtration process can reduce abrasive wear which will, in turn, ensure that vents, breathers, and seals are working properly.
  • Adhesive wear occurs when two metal surfaces come in contact, allowing particles to break away from the components. Insufficient lubrication or lubricant contamination normally causes this condition. Ensuring that the proper viscosity-grade lubricant is used can reduce adhesive wear. Reducing contamination in the oil also helps eliminate adhesive wear.
  • Cavitation occurs when entrained air or gas bubbles collapse. When the collapse occurs against the surface of internal components, cracks and pits can be formed. Controlling foaming characteristics of oil with an antifoam additive can help reduce cavitation.
  • Corrosive wear is caused by a chemical reaction that actually removes material from a component surface. Corrosion can be a direct result of acidic oxidation. A random electrical current also can cause corrosion. Electrical current corrosion results in welding and pitting of the wear surface. The presence of water or combustion products can promote corrosive wear.
  • Cutting wear can be caused when an abrasive particle has embedded itself in a soft surface. Equipment imbalance or misalignment can contribute to cutting wear. Proper filtration and equipment maintenance are imperative to reducing cutting wear.
  • Fatigue wear results when cracks develop in the component surface, allowing the generation and removal of particles. Leading causes of fatigue wear include insufficient lubrication, lubricant contamination, and component fatigue.
  • Sliding wear is caused by equipment stress. Subjecting equipment to excessive speeds or loads can result in sliding wear. The excess heat in an overload situation weakens the lubricant and can result in metal-to-metal contact. When a moving part comes in contact with a stationary part, sliding wear becomes an issue. Providing proper lubrication, filtration, and equipment maintenance can reduce much of the wear that occurs inside of equipment. Potential problems can be identified with predictive maintenance techniques such as vibration, infrared thermography, and oil analysis. By monitoring the equipment’s condition with oil analysis, a plant can identify various types of wear and take corrective action before failure occurs. In many cases, oil analysis can identify problems with rotating equipment even before vibration analysis detects it.
  • When an oil analysis condition monitoring program is implemented, it is important to select tests that will identify abnormal wear particles in the oil. When components inside the equipment wear, debris is generated. Identifying the wear debris can establish the source of the problem. Here are some examples of laboratory tests that can help identify wear.
  • Spectrometric analysis is the most commonly used technology for trending concentrations of wear metals. The main focus of this technology is to trend the accumulation of small wear metals and elemental constituents of additives, and identify possible contaminants. The results are typically reported in parts per million. This technology monitors only the smaller particles present in the oil. Any large wear-metal particles will not be detected or reported.
  • Particle counting tracks all ranges of particles found in the sample. However, particle counting does not differentiate the composition of materials present. Its main focus is to identify the number of particles in the sample. The results are typically reported in certain size ranges per milliliter or per 100 milliliters of sample.
  • Direct-reading ferrography monitors and trends the relative concentration of ferrous wear particles and determines a ratio of large to small ferrous particles to provide insight into the wear rate of the lubricated component. This method can be used as a tracking and trending tool, especially in systems that generate a high rate of particles.
  • Analytical ferrography uses microscopic analysis to identify the composition of the material present. This technology differentiates the type of material contained within the sample and determines the wearing component from which it was generated. It is used to determine characteristics of a machine by evaluating particle type, size, concentration, distribution, and morphology. This information assists in determining the source and resolution of the problem.

Each laboratory test has limitations. A well-balanced test package will correctly identify potential problems in equipment. Many of the laboratory tests actually complement each other.

The purpose of an oil analysis program should not be to merely check the lubricant’s condition. The real maintenance savings from utilizing oil analysis occur when equipment problems are detected. Break-in wear, normal wear, and abnormal wear are the three phases of wear that exist in equipment. Break-in wear occurs during the startup of a new component. It typically generates significant wear-metal debris that will be removed during the first couple of oil changes. Normal wear occurs after the break-in stage. During this stage the component becomes more stabilized. The proportion of wear metals increases with equipment usage and decreases when makeup oil is added or oil is changed. Abnormal wear occurs as a result of some form of lubricant, machinery, or maintenance problem. During this stage the wear metals increase significantly.

When oil analysis is used routinely, a baseline for each piece of equipment can be established. As the oil analysis data deviate from the established baseline, abnormal wear modes can be identified. Once abnormal wear modes have been identified, corrective action can be planned.

Implementation of an oil analysis program with analyses consistent with the goals of the program significantly reduces maintenance costs and improves plant reliability and safety. Lubricant analysis for the purpose of machinery conditioning monitoring is at its best with a significant amount of historical data. It is important to establish a baseline for each piece of equipment. Certain analytical results may change with lubricant oxidation and degradation from normal use; the major changes occur because of contamination from environmental factors and machinery wear debris. The analytical costs of a properly implemented program should be covered by the extension of the lubricant change interval. Increased reliability and availability, and the prevention of unanticipated failures and downtime are added benefits. MT

Information supplied by PdMA Corp., Tampa, FL 33610; telephone (800) 476-6463; e-mail; Internet

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9:31 pm
September 1, 2000
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Comparing Maintenance Costs

The popular benchmarking metric of cost/ERV is a valuable tool for setting long-term goals when used correctly in conjunction with targets for plant reliability. Here is how it is calculated.

Measures of maintenance cost have contributed to the decline of more than a few reliability professionals’ careers. From a 35-year career in maintenance and reliability, I have observed that tracking maintenance costs exists in one form or another, even where no other performance measures are in place. As some of you have heard me say (tongue in cheek): “Maintenance managers have always had measures of performance, usually cost and head count. Any other measures are just background noise.”

Another basic observation is that if you spend enough time in a manufacturing facility with responsibility for cost and performance, cynicism tends to creep into your philosophical views.

Maintenance costs have been measured, are being measured, and will be measured in the future. The question is, How to do it properly, and how to keep it in balance with other important measures?

Historical measures of maintenance cost
Essentially every manufacturing process has a manufacturing cost sheet to accumulate the costs of manufacturing a product. These costs include variable costs, such as raw materials, utilities, and energy, as well as fixed costs, such as labor, benefits, depreciation, and overhead. Maintenance costs are usually viewed as fixed costs with components of labor, benefits, materials, contractor labor, salaries, and overhead. If no other maintenance cost measures exist, most manufacturing managers can look at manufacturing cost sheets and extract the key components of maintenance cost.

The most basic measure of maintenance cost is a sum of extracted components from a manufacturing cost sheet, and is simply total maintenance cost. This measure can vary greatly by interpretation of what is or is not included.

Perhaps the most commonly calculated form of maintenance cost is the one required annually by the Securities and Exchange Commission (SEC), the so-called 10K filing. The 10K report has specific definitions for elements of cost, most commonly maintenance, repair, and service. If every company read and interpreted the 10K guidelines the same way, there would be a reasonably consistent basis to compare total maintenance costs with the outside world. My experience suggests that there are wide variances in how 10K costs are reported.

Various organizations have attempted to compare maintenance costs using 10K data for both maintenance cost numbers and historical investment values. Although the cost values are subject to interpretation of the 10K rules, the historical investment values are, perhaps, even more questionable. One organization has tracked and published maintenance costs for an industry sector, using a measure roughly equivalent to 10K Maintenance Cost/Historical Investment. In the 1970s and 1980s, it was basically the only tool available to look at performance.

This concept of measurement has led to various measures of maintenance cost using some form of investment value as a normalizing denominator. Measures of cost in relation to replacement value have emerged as a standard form of cost comparison. Consequently, there is a substantial interest in the methods for calculating estimated replacement values (ERV).

Using plant investment to normalize maintenance costs
Using investment in the calculation of maintenance costs provides a convenient basis for comparing plants of a similar type but which vary in size. Within a reasonable range, using the ERV in the cost calculation (dollar cost/dollar ERV) is a valid mechanism for comparing plants that differ in size. The rationale for using the estimated replacement value, rather than the original cost of the plant is the effect of construction cost escalation over time (inflation). Two relatively new plants built 10 years apart could have original costs that vary by 50 to 100 percent.

Using the maintenance cost/ERV metric
Any manufacturing facility has maintenance costs that vary from month to month. Cost fluctuations may represent scheduled maintenance shutdowns, unexpected shutdowns, seasonal maintenance work, or preventive maintenance tasks. Because some fluctuation in maintenance cost is normal, looking at maintenance costs monthly is best done by comparison with budget. Looking at maintenance cost/estimated replacement value is best done quarterly and annually to ascertain the long-term trend.

In the final analysis, anyone who has responsibility for maintenance and reliability has two primary business contributions: highly reliable equipment and the lowest consistent maintenance cost. Measures for each of these functions tend to be trended over time. The maintenance cost/ERV measure is best considered as a component of a total measurement model, such as the one outlined in the accompanying diagram.

The pitfalls of estimated replacement value
The first basic requirement is to ensure that the maintenance costs you have assembled and the replacement investment value you are using are calculated on the same basis, and that the costs collected represent maintenance expenditures on the investment considered. A potential stumbling block is to discover that the ERV does not agree with an insurance value. In that case, some investigation is in order to establish what was included in the insurance value.

Another pitfall is discovering that not all corporations use the same indexes when calculating inflation factors. Some use Bureau of Labor Statistics factors (Construction Cost Index or other); some use the Marshall-Swift index; some large corporations have established their own factors, based on corporate construction history. For older plants, these factors can present substantially different views of replacement value. And when a plant is bought or sold, its current value may be established as the purchase price, rather than an indexed original cost.

Finally, some tax rules allow depreciation of a plant to the value in use. So the real trap is that a plant’s actual value, original or current, may be a mystery. When the plant’s investment books are clouded by some of the pitfalls mentioned previously, I tend to rely on the insurance value as the best available estimate of a plant’s current value.

What is included in calculation of maintenance costs?
Simply stated, maintenance costs include direct labor with benefits, materials, labor by contractors, and salaries and overhead. The sum of these components should be considered total maintenance cost. Each of these components has a definition that should be consistently applied. The safest approach is to use the definitions required in the SEC 10K report.

How to calculate replacement value
Once you have established that the original equipment investment figures reasonably agree with equipment actually in use (and being maintained), the next step is to identify clusters of equipment by the year in which they were acquired. This activity will allow you to consider each cluster of investment and escalate it to a current value, using the selected index. Your company may already use a preferred index, or you may choose the index protocol you believe to be most accurate. I prefer to use the Bureau of Labor Statistics Construction Cost Index (BLS CCI). There are variations in index methods, and the variations become magnified with older plant and equipment.

The next step is to sum the indexed clusters of investment to get a total current value of plant and equipment. It is a good idea, at this stage, to compare the indexed value of the plant with other plants recently built, adjusting for size and available insurance values.

Even when a company is self-insured, there is normally an established “insurance value” to help define the financial exposure the company risks. These values are typically prepared by an insurance underwriter, even if the plant is self-insured. Underwriters follow a procedure very similar to the one described.

What are the merits of tracking cost/ERV?
Looking at maintenance costs per investment dollar recognizes that costs go up with increasing amounts of equipment. Using ERV in the denominator helps to place the amount of equipment in consistent terms, that is, today’s dollars.

By normalizing size and age of plant, it is possible to compare performance with a much wider base of data. The adage that an older plant will cost more to maintain is not supported by data, at least over the first 25 or 30 years of its life. A poorly maintained 10-year-old plant may be in much worse shape and cost more to maintain than a properly maintained 25-year-old plant. The cost versus age curve is far from a linear relationship. If maintained properly over time, a plant is continually being restored to as-new condition, a basic tenet of the total productive maintenance philosophy.

Maintenance cost/estimated replacement value is a standard barometer of maintenance performance. For all its limitations, it is a useful and widely accepted measure.

Limitations of the cost/ERV metric
Aside from the difficulties of determining the original cost and selecting an appropriate index protocol, there are other problems and stigmas attached to the use of ERV.

It is a measure that has often been used to browbeat maintenance managers. It may steal focus from reliability issues or total cost of manufacture (for example, cost per pound). It may become the only measure managers look at—versus a balanced set of measures.

Basic tenets of benchmarking
There are some very basic and standard warnings in benchmarking:

  • Never, never use a single metric to draw conclusions. It takes sets of three or four metrics to produce a sound conclusion.
  • Look at cost, but also look at equipment reliability, staffing, basic practices in use, and stores and spare parts management.
  • Benchmark across similar and dissimilar industries, but look more closely at those in similar industries. You can learn from both.
  • Use benchmarking as a method to highlight opportunities for improvement, not as an end in itself. Be prepared to use the results to create or reshape a strategic plan.
  • Use many measures for benchmarking. Use a focused, abbreviated set of measures for performance tracking. Some of the measures will be the same; some will differ.

Maintenance cost/ERV. Use it or not?
I say yes. Understand the limitations, understand the implications, and measure cost/ERV consistently. Use cost/ERV to set long-term goals, along with targets for plant reliability. Cost/ERV is one of the most widely used metrics available. World-class plants tend to fall in the range of 1 to 2.5 percent MT

Edwin K. Jones, P.E., is a consultant based in Newark, DE. He can be contacted at (302) 234-3438; e-mail

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