Archive | 2000


2:39 pm
October 1, 2000
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Asset Reliability Coordinator

The maintenance planner might better be described as asset reliability coordinator. Here’s why.

The rush to reliability, fueled by rising global competition, high fixed costs, capital intensity, and the pressure for greater on-stream performance, is providing the planning and scheduling function with an opportunity to add further value to its business objectives. The maintenance planner might better be described as asset reliability coordinator.

Across the landscape of industrial plant maintenance, the asset performance picture is not all that good. Consider the following:

  • Thirty percent of newly overhauled machines fail on startup
  • An estimated one-third of the money spent on preventive maintenance is wasted
  • Sixty percent of premature bearing failures are due to improper fitting, maintenance, and handling
  • Maintenance and operation account for 70 percent of the money spent on pumps.

To rise above these shortcomings, plants have redundant systems and spared equipment to assure process availability. The average refinery runs at nearly 95 percent average availability, but studies have shown that downtime affects the bottom line by smaller profit margins, decreased yield and quality, reduced safety, additional environmental incidents, and missed delivery dates.

Additionally, plants have had to spend scarce capital to build more capacity to meet the fluctuations in their demand patterns and compensate for process unreliability.

Use of maintenance craft resources is even more alarming: average craft productivity, measured through “wrench time” studies, is typically in the 25 to 35 percent range. Productive work is held up by time spent waiting for materials, tools, instructions, and clearance and time spent traveling to the job.

Inefficiencies in craft utilization, many of which are beyond the individual craftperson’s control, contribute to additional expense for outside contractors, rush charges for materials not planned to be on hand, excessive overtime, and work that had been identified but was not performed in a timely manner.

Perhaps the greatest cost for these inefficiencies is lost production resulting from process interruptions from unreliable equipment. Some examples illustrate the magnitude of benefits that flow from improved asset reliability:

  • If an average size refinery were to increase its availability from 92 to 96 percent, with a $3/barrel margin, it would generate an additional $6 million/year.
  • For an electric utility with a 1000 MW steam system, each 1 percent availability improvement might be worth over $300,000/yr in power transaction capability.
  • Each 100 Btu/kWh improvement in efficiency might be worth over $400,000/yr.
  • A 1 percent sustainable improvement in availability for a 1000 MW system means 10 MW of future power plant that does not have to be built. When construction prices are $1200/kW, which is worth $12 million in capital expenditures.

One of the best weapons for fighting these deficiencies in maintenance performance is the competent planning and scheduling of maintenance activities.

The benefits of good planning

The benefits of good planning fall into several major categories:

  1. Productivity. Planning affects productivity most in the reduction of delays. Implementing a fundamental planning and scheduling system should help improve productivity to about 45 percent. Then, as files become developed to prevent recurrence of problems of past jobs, productivity should increase to 50 percent. Finally, a good enterprise asset management (EAM) system should boost productivity to more than 55 percent. This increase in productivity alone, from 35 percent to 55 percent, boosts a 90 person maintenance workforce to the equivalent of 141 people.
  2. Quality. Having the work scope, instructions, parts, tools, and crafts all correctly identified and ready before the job starts has a direct positive effect on quality. Quality is indirectly affected by the boost in productivity because the freed-up workforce can spend more time on difficult jobs and proactive work.
  3. Shift to proactive work. Proactive work includes root cause failure analyses on repair jobs and corrective maintenance to fix small problems before they get out of hand. It also includes project work to improve less reliable equipment and increased attention to preventive and predictive maintenance. Greater productivity creates, in effect, greater resources. In a company with much reactive work, these additional resources are used to put out fires. A company with reactive work under control can leverage the additional resources to do more proactive maintenance work, dealing efficiently with situations and preventing fires. World-class companies with preventive maintenance well in hand invest those resources in training to further increase labor skills and in projects to improve equipment or other work processes.
  4. Increased availability. When more time is spent in proactive and preventive work, process interruptions become less frequent and less severe. With more time to plan ahead and anticipate equipment needs, planners can develop a more closely integrated schedule that accommodates both production and maintenance needs. A collateral effect is the reduction in on-hand maintenance, repair, and operating (MRO) inventories and total spending on spares.
  5. Improved efficiency. Almost by definition, better-running equipment and processes provide improved quality in terms of both final product and conversion of raw materials into finished products.
  6. Deferred capital investment. When the availability of existing equipment is increased, the need for additional new capacity can be postponed. Or in situations with relatively stable demand, the number of productive assets can simply be reduced. Either situation can have a considerable financial benefit to the company and its shareholders.
  7. Reduced unit costs. When all of the potential benefits are consolidated, per-unit costs are reduced, providing a sustainable competitive advantage for the already efficient producer and a potential lifeline for the substandard producer. Thus, as process efficiencies level off, or as additional gains are no longer cost effective, asset performance and reliability become central to profitability. One of the key drivers for additional reliability is the ability to integrate production and maintenance activities into a single, comprehensive plan that maximizes output at lowest possible costs.

At this point, the asset reliability coordinator assumes a pivotal role.

Asset reliability coordinator
Traditionally, the maintenance planner has been selected for personal knowledge of the technical side of maintenance (the whos and whats of equipment care), rather than the management side (the whys and whens). There is a need for personnel who understand the value of objective data on equipment condition, reasons for failure, and the protection of the economic value created by asset reliability.

Following are summary descriptions of the responsibilities of the recast asset reliability coordinator, using new tools and techniques to focus on asset reliability and availability, by making the crews not only more productive, but “smarter” by arming them with increased knowledge:

Job planner role
Central to the coordinator’s ability to add value is his or her primary work product: highly focused work packages that contain not only a listing of which craft skills are required for what periods of time, and the likely parts to be used, but more supporting documentation, for example:

  • The location of the MRO parts that have been kitted or delivered to the jobsite
  • Digital photographs of the asset and work area
  • Safety procedures, including lockout-tagout requirements, zero-energy requirements, process safety requirements, confined entry permit forms, and environmental concerns
  • Original manufacturer and internal documentation of wiring, layouts, dimensions, and tolerances
  • A full bill of materials, with stores catalog numbers, in the event unanticipated damage is found
  • Special equipment and tools that may be required
  • A history of the most recent condition readings and work performed on the asset (repairs and replacements, preventive maintenance checks, predictive maintenance findings, instrumentation readings, operator logbook entries, etc.)
  • Results of the coordinator’s jobsite visit and comments on the work to be done
  • A feedback form to record “found, fix, and fault” information by the crew.

The level of documentation should be commensurate with the requirements of the work. Routine repetitive work should require relatively little documentation, probably nothing more than a standard job template, which exists in a library of such plans.

Work scheduler role
The second primary work product of the coordinator is the work schedule, actually a series of interlocking schedules with progressively more detail as the anticipated work time draws closer. In industries such as petrochemicals, with major turnarounds and long lead times, a long planning and scheduling horizon is critical to success.

The schedules are a joint product of operations, maintenance, and engineering and reflect all of the work to be accomplished. The coordinator generally chairs the scheduling meetings and comes prepared with a standard schedule incorporating production requirements (and windows of opportunity that normally arise), the condition of operating equipment and potential liabilities, and the manpower that will be available for the upcoming time period. Best practices call for detailed scheduling at least a week ahead, with less stringent requirements for the upcoming two weeks. Each functional group will have reviewed the work-order backlog to ensure that critical work has been identified, planned, and made ready for scheduling.

Analyst role
A longer-range and potentially more critical function of the coordinator is to develop the ability to forecast future maintenance requirements. Today’s EAM systems allow for a three-way view of asset performance: historical, looking backward to determine the most common root failure causes; real-time condition monitoring (typically through the plant’s distributed control systems); and forward, analyzing each asset’s mean time between failure and forecasting when the asset is most likely to affect the production process again. Failure information is critical to these views, and the coordinator must be zealous in gathering and recording that information.

The coordinator is also the database administrator for the records maintained in the EAM equipment history and condition files and the person in charge of the open backlog. This second function is extremely important in providing life-cycle management of all work requests and work orders. Timely and accurate knowledge of the current status of all open work orders allows maintenance and operations to take advantage of unforeseen opportunities and maximize the use of unscheduled downtime.

Facilitator role
A key trait for success is the coordinator’s ability to influence the actions of others. In most organizations, the planner, now coordinator, has no staff, no organizational authority, and no budget. But he or she is charged with coordinating the activities of a diverse group whose short-term goals may or may not be in alignment. Facilitation skills and a clear vision of the longer-term objectives will serve the coordinator, and his organization, well. Such skills can be learned and will improve with repeated practice.

Communicator role
Finally, the coordinator must be able to clearly communicate the desired direction he or she is recommending, in terms that are relevant to the audience, whether it is operations (more throughput), maintenance (fewer breakdowns), or management (financial impact). Again, such skills can be learned.

Technology support
None of the higher-level functional requirements of the coordinator can be achieved without enabling technologies. At a minimum, the support systems must include the following:

  • A modern EAM system capable of capturing and analyzing both static and dynamic information on equipment condition and the likely time frame to the next critical production interruption.The system must contain critical equipment information, including performance parameters, bills of material, and component-level tracking, and be fully integrated with the human resources and financial systems. Additionally, the system, or allied systems, must be able to display, manage, and distribute documents and perform higher-level analytical functions on data in the system. The coordinator must be trained to easily navigate the complexities of these systems and to interpret the details and convert them into usable information.
  • Man-machine interface software connected to the EAM that monitors equipment parameters and downloads the information directly. Using previously established set points, the EAM system may generate a predictive or corrective maintenance work order before a costly and disruptive process interruption occurs.
  • A decision-support system that integrates the information from multiple systems and promotes data-based decisions. The information model developed by the Machinery Information Management Open System Alliance (MIMOSA) provides an excellent definition of how an integrated system would function.
  • Standards-based, distributed-component architecture that facilitates the adoption of enhancements as they become available. Considerable efforts have been devoted to removing the “islands of information” situations in which plants with multiple systems find themselves.

Best business practices
No functional area exists in a vacuum. The relationships among various functions are described by business rules that specify roles and responsibilities, decision points, data flows, and evaluation criteria.

A starting point is the description of a vision of how the company’s assets will be maintained:

To ensure that the assets of the company will be reliable. This goal will be achieved by anticipating deterioration and addressing its root cause by technical means and education of company personnel. The timing at which these actions will be initiated will be set through a mature financial appreciation that takes into account the optimum time at which items can be removed from service.

The next step is to define the relationship between operations and maintenance. The elements of such a definition might include the following:

  1. Production owns downtime data and meticulously records failures, being particularly careful to log the reason for downtime.
  2. Production attempts limited inspections, in keeping with their technical expertise, but raising their awareness of the condition of the assets they use.
  3. Production moves to a greater sense of ownership of the assets, demanding more detailed information from maintenance regarding the condition of the equipment and the service provided and required by maintenance.
  4. Maintenance reviews the history of their performance, particularly focusing on breakdowns. Where could work have been anticipated?

The two groups jointly review the inspection program in the light of information raised under items 2 and 4.

Additionally, the basics of asset care must be in place and rigorously practiced every day:

  • Work is identified early and jointly approved by maintenance and operations
  • Work packages are developed reflecting the nature, scope, and complexity of the work to be performed
  • Work schedules are developed in accordance with the lowest-cost combination of maintenance, operations, and asset repair and replacement elements
  • Asset care is based on historical information of performance and current condition monitoring
  • Rigorous attention is given to understanding, capturing, and analyzing the root causes of asset failures.

The starting point for improving maintenance planning is the interface between operations and maintenance, to identify sources of uncertainty that would adversely affect planning and scheduling and the execution of maintenance tasks. In particular, the focus needs to be on the ability of the two groups to work together to reduce the total costs of operating.

The most critical skill required for improving reliability and availability is understanding the root causes of failure. This knowledge, in turn, leads to the development of an intelligent and cost-optimized plan for asset care and the prevention of production interruptions.

The asset reliability coordinator is in a pivotal role to use information available through a combined view of historical, current, and forecast asset performance. MT

Robert Wilson is director of client assessments at Performance Consulting Associates, Duluth, GA; (770) 717-2737

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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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3:02 am
July 2, 2000
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Carrying RCM Tasks to the Plant Floor

We generally think of reliability centered maintenance (RCM) implementation as three separate activities:

  • RCM analysis resulting in recommended RCM-based preventive maintenance (PM) tasks
  • Carrying those RCM-based PM tasks to the plant floor (task packaging)
  • Conducting the Living RCM Program to measure results and fine tune the process.

I found (much to my surprise at first) that successfully initiating and completing the first activity (analysis) was done with very little, if any, difficulty. The problems, however, with the other two activities were often extremely difficult, and sometimes catastrophic. These problems varied from site to site, but there are a handful of common topics:

Staff buy-in
Nothing new is ever successfully introduced into an operating plant, facility, or factory unless the people who are charged with the responsibility to do it are 100 percent behind it. You will obviously obtain some degree of acceptance of RCM simply by the successful completion of the analysis process on some complex plant systems. But this acceptance (buy-in) is very narrow, and, as a result, many practitioners often move on to task packaging without first obtaining a broader degree of ownership and buy-in from plant supervision and craft personnel. Without that broader acceptance, it is unlikely that any attempt to carry the RCM PM tasks to the floor will be successful. So, a carefully planned program of indoctrination and education must precede any attempt to actually do the RCM PM tasks, and the broadest possible inclusion of plant personnel in the analysis process itself should occur in order to systematically develop buy-in and ownership with the work force.

Equipment-oriented mindset
In a typical plant, we commonly find craft and supervisory leaders to be skilled and dedicated people who have spent many years of hands-on work with the equipment. In fact, their careers are focused on assuring that the equipment is always operating or available to operate if called upon. In other words, their job focus is equipment preservation. However, RCM takes a different view of what their job focus should be—namely, to assure that critical plant functions are always available when required. This is function preservation.

The shift in emphasis from equipment to function preservation frequently becomes a difficult concept to sell; yet it is the basis for all of the RCM-based PM tasks. Plant personnel need to have some grasp of the conceptual logic behind RCM, or they will have difficulty changing their old (and comfortable) ways of doing business.

New tasks, new technologies
Human beings resist change. We are comfortable with the status quo. Over the years, in comparing the content of existing PM programs versus a recommended RCM-based PM program, changes in the range of 40 to 80 percent occur. Clearly, plant staff personnel must have some appreciation of where changes of this magnitude come from and why they are very beneficial to do. But beyond that, other resistance factors enter the picture.

The RCM program will always introduce new PM tasks (it also will delete nonvalue-adding tasks). These new PM tasks will require new work orders, often completely new procedures, and perhaps also new tools and craft skills.

In a large number of cases, RCM will introduce predictive maintenance (PdM) tasks into the program. This will always require some degree of new tools and craft skills. So the shift to the RCM program is not just a buy in and function-oriented mindset; it is also a commitment to some degree of time and money to make it happen. Thus, various levels of management approval could be involved. And most certainly, a dedicated attitude among the craft personnel together with efficient resource planning is a must if successful implementation is to occur.

The first step to solving these potential problems is to recognize their existence, and then make them a part of your overall installation plan for the RCM program. You must decide up front how you will address these issues. If you wait until they are upon you, chances are that you may never proceed to place your RCM-based PM tasks on the floor where they belong. MT
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2:59 am
July 2, 2000
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It's Time To Grow Up, Gearhead


Robert C. Baldwin, CMRP, Editor

“We find people who want to install software and technology when they should be installing a strategy.” That is a comment from one of the contributors to this issue’s directory of Maintenance Information Systems for Midsize and Larger Organizations. I call this fixation with having the right technology the gearhead mentality.

The gearhead mentality was first called to my attention by my son. He has been teaching electric guitar and bass for some years and applying his income toward his education. He is now in the home stretch of a master’s degree. A number of his students have always wanted to spend the lesson time paid for by their parents in discussing the pros and cons of various models and brands of guitars, amplifiers, and effects pedals rather than on learning to play the instrument. He calls these students gearheads.

Music gear usually doesn’t make much of a difference if you don’t know how to play, or don’t practice very often.

There are gearheads everywhere. Lots of them are in sports, looking for the best racket, club, ball, or shoe to give them that winning edge. In fencing, the sport in which I compete, the gearheads are easily sucked into discussion on the virtues of various sword handle designs—French, Belgian, Russian, Italian, American, Visconte, etc. It doesn’t make much difference what kind of handle you use if your feet are slow, or you can’t put your point on the target, or you can’t make an effective parry.

Sports gear usually doesn’t make much difference if you can’t keep your eye on the ball. Laser guided rackets and clubs aren’t available & yet. And when they arrive, the gearheads will have them, but performance in the new laser game will remain a function of conditioning, skill, and strategy.

There was a newspaper story recently about the initiative in Wyoming to connect every schoolroom in the state to the Internet, including a six-student school that meets in a mobile home. The author pointed out that those students were more interested in working the ranch than surfing the net.

Educational gear doesn’t make much difference without a challenging lesson plan developed by an understanding teacher.

So, when it comes to gear, how different is reliability and maintenance than music, sports, or education? If you’re a gearhead, it’s time to grow up and work on the fundamentals instead of looking for some technology to save your skin. When you grow beyond the gearhead stage, our directory can help you in your search for the best software to execute your reliability strategy. MT

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2:14 am
July 2, 2000
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Keeping the Gloss on Maintenance at Johnson Polymer

Plant keeps tight rein on spare parts inventory with EAM/CMMS. Equipment history reports help keep reliability and maintenance operations efficient.

In enterprise asset management or computerized maintenance management system (EAM/CMMS) is fundamental to running a reliability and maintenance organization in a businesslike manner. Such a system has been keeping us on track since the late 1980s.

Our five facilities in Sturtevant, WI, produce the base polymers used by the SC Johnson family of companies. You’ll find them in everything from floor coatings to, very likely, the ink and coating on the article you’re reading now. We have 138 operators and staff supported by 10 maintenance technicians who, in turn, can be supplemented with staff from SC Johnson central maintenance.

As an ISO 9000 certified facility and member of the Chemical Manufacturers Association, we always desired to account for our maintenance operation. We had started our own stockroom to provide needed special parts and wanted to track work orders, parts, and other aspects of maintenance. We knew a computerized system would help us more efficiently meet and support our objectives and the regulatory requirements for maintenance integrity.

In the late 1980s, we selected Mainsaver as our EAM/CMMS and, from the get-go, employed the full system, including inventory control, purchasing, work order system, and predictive maintenance. We saved over $200,000 that first year through consolidating our purchasing power. We were able to demand better pricing and obtain shorter delivery times. In addition, we received savings from the efficiencies such an EAM/CMMS provides.

We have been able to maintain spares at a level that is both sufficient and cost-effective. Reports are generated and requisitions issued whenever quantities drop below a predetermined level. Sufficient stock is available for scheduled projects.

The purchasing module generates purchase orders (PO) for both stocked and nonstocked items, special orders, and services. It tracks open POs and generates a list of those that are past due. When we create a PO, our Finance Department pulls through the information for the accounts payable system, later matching up the PO with the vendor invoice.

Our system receives maintenance input, creates work orders, and tracks work in process. It provides a variety of reports, including work status and equipment availability, as well as cost and repair history. This is especially important for creating a maintenance program that’s predictive and proactive.

Today we’re tracking and performing predictive maintenance on 1300 various reactors, tanks, valves, pumps, and controllers. Each of these is identified in the system with its own equipment number. We track the history on each piece of equipment and can write work orders against all of them. We average 62 work orders a day.

In addition, each of these listed equipment products has many spare parts. In fact, we stock over 4000 unique items in our stockroom and turn this stock 1.3 times per year.

How our system works
It doesn’t happen very often, but let’s assume an equipment asset, such as a valve, breaks. First, a work order is written to repair Valve No. 1234. The appropriate spare parts, designated on the spares list, are checked from the stockroom and installed. We know when the failure occurred, what parts were issued, who repaired the valve, and when the problem was corrected.

In addition, we also will determine if the valve is to be disposed of or repaired. If repairable, a new work order is written. The valve is provided the spare parts it needs, as written on that work order, and rebuilt. It then is issued back to stock. Again, we can determine the materials and labor expense of fixing that valve.

Histories are analyzed and used to update the predictive maintenance needs of that valve application and whether it is economical to repair or dispose of such valves. More importantly, though, because of having the right spare parts on hand, when we have a breakdown, we can respond and repair more quickly to keep that line flowing.

Never having breakdowns or downtime is even better. That’s where predictive maintenance comes in, and we count heavily on the EAM/CMMS to assist us. In addition to knowing the history of our equipment, we know the number of hours Valve No. 1234 should operate. We know its efficiencies from our automated processing system. That valve should be able to handle 100 gpm. If its efficiency slacks to 99 gpm, we need to keep an eye on it. Let’s assume the line is scheduled to run for another 4 hr. We’ll nurse it to avoid a breakdown or slowdown. The second the line stops, we’re there to replace or repair that valve.

Our lines run 24/7 and can be in continuous operation for a month or two at a time. That’s a maintenance nightmare. On the other hand, we do know when the plant is scheduled for a shutdown. So does the EAM/CMMS and, using it, we know what equipment needs to be updated during that shutdown, based on the tracking and histories of that equipment. We also know what parts are needed so, ahead of time, we order those we don’t have and assure all required parts are in stock by shutdown.

For scheduled shutdowns, we quite often will hire two or three people from central maintenance to help our 10 staffers. Again, we know what the workload will be, based on histories of both equipment and labor time. Once that plant stops, we get to work, refurbish the plant in the limited time allotted, and assure that the facility is ready to go when production wants to turn on the switch.

Reports are vital
It’s one thing to collect all the data. It’s something else to get it into information that helps us manage. We can track our individual maintenance technician hours, even when nonmaintenance functions such as training or company meetings are attended. We break out that time so it’s not allocated to actual maintenance work. We need to know the exact time spent on specific jobs. Knowing how long it takes to replace the typical Valve No. 1234, we know how much time to schedule for replacing 15 of these valves when we have a plant shutdown. We don’t want to hire too many or not enough central maintenance help plus we can better schedule our own people.

A shiny future
We’re not standing pat. During the second half of this year, we plan to switch our system from an IBM AS/400 computing platform to one using Microsoft Windows, which is no problem with Mainsaver EAM/CMMS. We’re also looking at the web-enabled benefits. For instance, we have a sister plant in Delaware that’s now on its own. With enterprise visibility, especially on key, expensive parts, we could increase our stocking power, minimizing the redundancy of stocking seldom used parts. We could make both plant maintenance operations more efficient by having even better histories on parts and suppliers.

The slogan of Johnson Polymer is “where solutions surface.” We in maintenance also like to think of it as our own for our plants and, in turn, for our customers. MT

David J. Wenszell is stockroom manager and training coordinator–North American manufacturing at Johnson Polymer, Sturtevant, WI 5317l

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