The Hidden Plant - Maintenance...the plant based on best demonstrated performance and operating characteristics of best performing plants • Quantified current operating rates of

The Hidden Plant:

A Collection of Asset Management Articlespublished by S. Bradley Peterson

Strategic Asset Management Inc.25 New Britain AvenueUnionville, CT 06085

(800) 706-0702www.samicorp.com


(800) [email protected]

SAMI

Developing an AssetManagement Stratey

S. Bradley PetersonStrategic Asset Management Inc.

ABSTRACT

Most large plants have $100’s of millions in investment.They were all built with an objective to provide earningssuperior to risk-free government bonds. While thereare many factors which influence profitability, maximiz-ing output potential is often the single greatest opportu-nity, especially for low-margin, commodity-type busi-nesses. A typical measure of success of asset deploy-ment is Return on Assets (ROA).

Strategic Asset Management involves managing thecapital investment towards a long-term program ofincreasing the ROA. This is a top-down function ofsetting a performance specification for each majoroperating unit, identifying the critical components ofperformance, and systematically improving the keycontrollable variables of operation.

Managing assets strategically involves every functionin the plant working towards the same goals. Opera-tions and maintenance are rewarded for creating andutilizing the capacity of their units. Purchasing has itsmain goal as operating reliability, with cost as animportant but secondary goal. Engineering is based ontotal lifecycle value created, including product charac-teristics, maintainability, operability, and total cost peroutput unit.The improvement cycle is based on the OperationalReliability Maturity Continuum. This empirical modeldescribes five stages of mastery that create a founda-tion of improved performance with growth potential

continuing over a ten-year period. By describing therole of maintenance, operations, engineering, accountingand management in the improvement cycle, the plantcan guide creation of a strategic plan for improvement,tied with bottom-line performance expectations.

Once a business model is developed, each party setsgoals and works toward a combined action plan. Theinitial action plan is usually an improved planned mainte-nance environment, depending on the benchmarkposition on the Maturity Continuum. Implementationrequires the proper structure, measures, information andcommitment. Each major factor of implementation isidentified.

Once a proper maintenance process is established, theplant will continue improvement by adopting moreproactive maintenance approaches in a staged andmeasured environment. The key to success is knowingall the factors involved, and institutionalizing change inwork and process before proceeding with additionalstages of development.

WHAT IS STRATEGIC ASSET MANAGEMENT?Strategic Asset Management is a new model forextracting value from production assets. It represents acomprehensive, top-down approach to managing plantequipment and people for maximum profitability. It’ssingle most important feature is in its fact-basedmanagement of the potential profitability of a plant,based on market conditions and variables within thecontrol of management. The scope of Strategic AssetManagement (SAM) begins with sales forecasting,through production planning, includes all facets ofmanufacturing, and ends with delivery of product to acustomer.

Copyright 2002 by Strategic Asset Management Inc. 3

We start with a view of the original purpose of theplant. Why did we build or purchase this plant, any-way? To provide employment? Yes, but only as a by-product. To satisfy customers? Yes, but as a means toan end. We built this plant because we believed wecould generate a greater return on capital thaninvesting in a government bond. By taking the risksassociated with manufacturing, we could apply ourknowledge, our systems, our proprietary process, andour people for solid profitable returns.

Our goal, then, will always be to manage our resourcesto gain profits, while safeguarding our people, property,community and environment. This means we need tounderstand the key levers to unlocking equipment assetpotential, by building our capabilities in a systematicway.

The rewards are straightforward. If we can use ourtotal resources better than our competition, we willproduce a superior, lower cost product with highermargins, have pricing flexibility to sell all of our productin a saturated market, and survive hard times while ourcompetitors fail.

DIFFERENCES WITH MAINTENANCE AND RELIABILITY

Our vision and ultimate goal is to have the plant runningcontinuously at full rates, with no downtime and minimalplanned outages or turnarounds. Where do mainte-nance and reliability fit in this picture? Most plantstoday spend most of their resources responding toemergency repairs. How do we move from a repairculture to asset management?

This starts by aligning the vision of the entire manage-ment team. Who affects system reliability and through-put? Engineering? Purchasing? Operators? R&D?Production scheduling? Maintenance? The answer isobvious—everyone affects how well the plant pro-duces. Yet the functions seldom work towards thesame goals and rewards systems, leaving us frustratedin our attempts to make progress.

R&D, for instance, often design a process and equip-ment that don’t use industry standard components norcomponents already stocked by the plant, and don’tcoordinate with purchasing and engineering. Purchas-ing often knows little about the effects of their actions,whether the suppliers provide durable, maintainableequipment and parts. Rather they are rewarded most

often for cost savings, no matter what the effect onproduction. Engineers design equipment and processesto meet product specifications. It’s rare that theyconsult with operators or maintainers about the ease ofkeeping the equipment and processes running. Whenthe new system is operational, they are off to their newproject. Production schedules are made to accommo-date a fast changing sales forecast, resulting in produc-tion run breakages, excess inventory, and stressedequipment. Operators do their best to assure theprocess is running. But if a breakdown occurs, whoyou gonna call? The last one on the list—the mainte-nance guys, who better get it back in production fast!And who are handicapped in getting the equipment onschedule, having the drawings and parts necessary,receiving a poor description of the problem, and work-ing under the gun!

Fixing the maintenance department or starting a reliabil-ity function aren’t going to create an industry leader.Only through sharing a future vision of plant operations,and multi-year plan of change and continuous improve-ment, can we make breakthroughs in creating value.

HOW DOES SAM DIFFER FROM TRADITIONAL MAINTENANCE

IMPROVEMENT EFFORTS?Most maintenance improvement initiatives today arefunctional in nature. They compare, among a varietyof indicators, how well our company does against avariety of other companies, and endeavor to change theway maintenance is done. What’s wrong with that?

First, most of the other companies under comparisonare only marginally better than ours. Our conclusion: ifwe simply change certain practices, we will be as good(or bad) as the rest. There is no emphasis on thefinancial results we expect to see, no understanding ofthe core issues at work, no plan for major culturalchange, and little senior management involvement andcommitment. The issues to be worked are tactical, andseldom result in measurable progress, either in leadingor lagging indicators. We don’t have a view of theresults of change on the financial performance of theplant, and end up spending money to improve mainte-nance based on faith that it’s the right thing to do.

The key requirements of successful plant-wide reliabil-ity improvement are these:• An analysis of the potential production available in

Developing an Asset Management Strategy

The Hidden Plant by S. Bradley Peterson

4

the plant based on best demonstrated performance andoperating characteristics of best performing plants

• Quantified current operating rates of each units,and goals for improving these rates

• A business case with a three-five year horizonwhich identifies expectations for costs and produc-tion based on improvement efforts.

• A multi-year plan that identifies the types ofchanges in practices and measurements needed toachieve the goals

• A keen understanding that every function worksinterdependently to management equipment health

• Accountability for delivering these results, tran-scending annual budget cycles

A tall order? You bet! This type of sustainable effort isexactly what distinguishes one competitor from another.

A comparison of current practices with Strategic AssetManagement practices illustrates the point:

DEVELOPING A STRATEGIC PLAN FOR

ASSET MANAGEMENT

SAM is based on several core principles. These shouldbe well understood before proceeding.

1. The plant exists only for one reason—to produce asmuch product as possible, to specification anddelivery schedules, at the lowest sustainable price

2. To improve will require fundamental changes in disci-pline and culture, beginning with the management team.Relationships and personal prejudices will be realigned

3. Everyone is the plant is on the same team and must worktoward the same goals

• A shared vision of how the plant will work inthe future

• A multi-year plan for mastering new skills inasset management

• A business case that continuously createsbottom-line value

Functional Excellence Model

• Operations owns production, maintenance ownsequipment

• Maintenance excellence means efficient service(e.g. repairs) to production. A customer servicemodel dominated by operations. Most work isinside planning time horizon

• Repair efficiency is the best measure of mainte-nance performance. No time to do it right, buthope there is time to do it over

• Production runs at any cost. Don’t have time toturn equipment over to maintenance as sched-uled.

• Goals are set by functional managers, resulting incontradictory and self-defeating reward/recogni-tion practices. Most measure are lagging indica-tors, demonstrating past results

• Purchasing excellence means having the lowestcost of items available

• Pressure is on individuals to do better. No gaugesor tools of “better” exist

Asset Management Excellence Model

• Operations owns equipment and is responsible forequipment health

• Maintenance is a partnership with operations toidentify and work ways to improve equipmenthealth

• Breakdowns represent an unacceptable manage-ment system failure, and require failure analysisof equipment and process

• Production insists on and participates in assuringprevention and improvement activities

• Goals are developed top-down in a cascadedfashion. Functions share lagging indicator goals(e.g. monthly production), and have uniqueleading indictor goals that support activities (e.g.% of PM’s performed to schedule)

• Purchasing and inventory management’s highestgoal is parts service level and MTBF is pur-chased parts

• Each piece of equipment has an operatingperformance specification, and gets the attentionnecessary for it


To achieve a shared vision, we begin by creating aStrategic Plan for Asset Management.

Our first step is to identify the potential capacity of theplant, and the profitability available. We look at theoverall production map of the plant, and identify boththe theoretical capacity and the best demonstratedperformance of the unit. This is the most difficultquestion management will have to face, because theconclusion is so painful. In some cases the theoreticalcapacity may be double what we achieve, and evenbest demonstrated performance identifies a huge gapwith where the plant is today.

We can also identify maintenance cost structures andhow they must change. When equipment health isexcellent, there is less labor and parts required than fora continuous repair operation. Validating maintenancecost reduction potential is an appropriate place to usebenchmarking.

The additional production and reduced maintenancecosts lead us in two directions. First, we can summa-rize the business case, with benefits as well as cost, asshown in this illustration.

Capacity Analyis Identifies Potential Bottlenecks andShortfalls From Potential Production (lbs/hr)

Process 1

Permit MaxTheor. CapacityBest Month95-96 Avg. Rate

Gain/Loss FactorEquiv. Adj. Cap.

17,540

14,986

14,986

12,90513,57212,31610,822

-10.0%13,855

21,84211,6489,948

+10.5%24,026

13,21813,92412,58511,063

-6.2%12,671

12,45013,76311,79110,285

-4.5%14,087

58,42226,06520,612

27,238

12,338

Theor-Best Mo.Theor.-Avg.Best Mo-Avg.

5,202

2,648

1,2562,7501,494

11,8941,700

1,3392,8611,522

1,9723,4781,506

37,8105,453

Performance

2,554 10,194 32,357

Process 2 Process 3 Process 4 Process 5 Process 6

A Typical Benefits Case Would Cover These Areas

Cost Reduction ($M)Cost Reduction ($M)

� Labor

� Contractors

� MRO

Total Cost Reduction

Additional ProductAdditional Product

� Unit 1

� KLBS

� Profits ($ 0.20)

� Unit 2

� KLBS Cap

� Profits ($ 0.60)

Total BenefitsTotal Benefits

Year 1Year 1 Year 2Year 2 Year 3Year 3 TotalTotal

$ 0.75 $ 1.00 $ 0.25 $ 2.00

$ 1.00 $ 0.50 $ 0.50 $ 2.00

($ 0.25) $ 0.75 $ 0.25 $ 0.75

$ 1.50M $ 2.25M $ 1.00M $ 4.75M

9,000 14,000 22,000 45,000

$ 1.8M $ 2.8M $ 4.4M $ 9.0M

5,000 8,000 14,500 27,500

$ 3.0M $ 4.8M $ 8.7M $ 16.5M

$ 6.3M$ 6.3M $ 9.85M$ 9.85M $ 14.1M$ 14.1M $ 30.25M$ 30.25M



6

Second, we can identify operating specifications toachieve our annual improvement targets. Instead of“do better”, we identify uptime requirements at theequipment level to achieve total operating goals.Because equipment operates in series, our individualequipment uptime goals must be higher than unit goals.For example, if our unit goal is 75% of maximumcapacity, each major piece of equipment must be higher.For five pieces of equipment,

95% x 95% x 95% x 95% x 95% = 77%

We then identify specific goals and work necessaryover a multi-year horizon, at the appropriate level ofdetail.

We document our efforts in an Asset ManagementStrategic Plan, with the following outline:

• The Summary is a concise extract of the importantfeatures of the overall plan, intended to give seniormanagement an overview of findings and expecta-tions

• The Current Assessment is the status of ourplant, including our operating rates versus potential,overall maintenance and reliability statistics com-pared with world class performance, and a bench-mark against the Operational Reliability MaturityContinuum

••••• Future Operations Vision documents how weexpect to operate in the future. What will we looklike? How will roles and responsibilities evolve?This is based on understanding best practices, andenvisioning their implementation in our plant.

••••• Initiatives outline the major components of ourimprovement process over the next several years.They are described by intent, outcomes and pro-cess, rather than as specific plans.

• The Business Case outlines the opportunities weintend to capture, both in terms of cost savings andadditional production, and the outlays required to getus there.

••••• Plans and Resources Required outlinetimeframes, deliverables, measures, people’sinvolvement and other resources necessary toachieve the goals.

••••• Structure, Accountability and Measures showhow we will execute the individual project compo-nents, who is accountable and how we will measuresuccess

••••• Next Steps identify how we will get started andrequest specific management actions

IMPLEMENTING STRATEGIC ASSET MANAGEMENT

We identify major stages of improved asset manage-ment, illustrated by the Operational Reliability Matu-rity Continuum. This tool helps us identify the neces-sary building blocks to improve our operational reliabil-ity. The major steps include:

1. Gain control of the work (Stage 1, DailyMaintenance)

2. Gain control of the equipment condition(Stage 2, Proactive Maintenance)

3. Create the environment to maximize thecontribution from your people (Stage 3, Organizational Excellence)

4. Systematically eliminate sources of poten-tial system failure (Stage 4, EngineeredReliability)

5. Assure alignment of financial operations,corporate leadership, sales and marketing,and customers (Stage 5, OperationalExcellence)


GAINING CONTROL OF THE

WORK

While there are manytheories about maintenancebest practices, most consult-ants will advise that planningand scheduling is the neces-sary starting point. We takea broader perspective,however. Improving Stage 1is implementing plannedmaintenance. The compo-nents of planned mainte-nance are illustrated below.

The results of implementingplanned maintenance are amuch better utilization of theworkforce, creating capacityto work on proactive mainte-nance activities.

Each additional stage buildson the successes and capabilities developed in theearlier stage. The most important part to emphasize,however, is that there is a logical and optimum progres-sion to all these pieces to improving asset managementpractices. In our experience, any other order bringssuboptimized results.

The First Step in Gaining Control of the Work is theDiscipline of Planned Maintenance

MRO MaterialsManagementMRO MaterialsManagement

Work InitiationWork Initiation PrioritizationPrioritization Planning andSchedulingPlanning andScheduling

WorkExecution &

History

WorkExecution &

HistoryMeasures &Follow-upMeasures &Follow-up

EmergencyWork

EmergencyWork ApprovalApproval

BacklogManagement

BacklogManagement

ContractorManagement


Preventive &Predictive

Maintenance


Maintenance

Integrated T/APlanning &Execution

Integrated T/APlanning &Execution Failure AnalysisFailure Analysis

Work Initiation/Prioritization

Planning& Scheduling

Work Execution/Review

MaterialsManagement

PreventiveMaintenance CMMSWork Management

Processes

PdMCMMS Integration

Craft Skills Enhancement

Equipment History

PredictiveMaintenance

Failure ModeAnalysis

Proactive Maintenance

Craft Flexibility

Maintenance/OperationsIntegration

ExternalBenchmarking TPM

ReliabilityFocus

Concurrent EngineeringLife CycleAnalysis

RAMAnalysis

RCMEquipment

Simplification/Standardization

AssetManagement

Stage 5Operational Excellence

Stage 3Organizational Excellence

Stage 4Engineered Reliability

Stage 2Proactive Maintenance

Stage 1Daily

Maintenance


BENEFITS OF STRATEGIC ASSET MANAGEMENT

For all of this effort, what kind of payback can weexpect? From a non-financial perspective we will havea plant that runs as expected, fulfills customer orders aspromised, and where call-outs will be an exceptionrather than the norm.

As an example of the benefits achievable, we examinethe progression through the Operational ReliabilityMaturity Continuum for a refinery.

We choose a refinery example because it is creating apure commodity. There is little differentiation in rawmaterials price (sweet vs. sour crude prices generallyreflect the costs of refining) nor product price, whichare set by international markets. How then does onerefinery become dramatically profitable, while the leastviable barely break even? The difference is how wellthe assets are used, and the systems and peopleinvolved in the process.

This 150,000 nominal barrels/day refinery has a re-placement asset value of $1 billion, the cost of replacingthat amount of capacity, and a book value of $500million. The spread between the cost of crude and theprice of gasoline (for example) is $3.00 per barrel.Thus our maximum profitability is $3.00/barrel. Ourjob is to capture the greatest portion possible.Note that the maintenance budget evolves from $40

Refinery Example of Strategic Asset Management150,000 nominal bbls/day plant. RAV = $1,000M. Book value - $500M. $3.00 market spread.

Maturity Continuum Stage

11 22 33 44 55

Maintenance Expense BudgetMaintenance Expense Budget$40M $30M $26M $20M $16M4% 3% 2.6% 2% 1.6%

Annual VolumeAnnual Volume30M bbls 35M bbls 40M bbls 45M bbls 50M bbls

Margin/BblMargin/Bbl$.10 $.50 $1.00 $1.50 $1.80

Annual Operating ProfitAnnual Operating Profit$3M $18M $40M $68M $90M

Return on Invested CapitalReturn on Invested Capital.6% 3.6% 8% 13.6% 18%

million to $16 million in traversing from Stage 1 to Stage5. But more importantly, the volume of product in-creases with each stage. By lowering the cost (thenumerator) and increasing output (the denominator) therefining cost per barrel declines, and our margin in-creases. The product of increased margins and outputin each stage creates a geometric growth in profitability,returning excellent results on our invested assets.

SUMMARY

Improving maintenance alone seldom brings resultsworth the efforts made. Strategic Asset Managementis a comprehensive program, exercised over a strategicplanning horizon, that systematically creates value fromthe plant investment.


8



SAMI

The Central Issue:How to Make Distributed

Maintenance Work

by S. Bradley PetersonPresident of Strategic Asset Management

ABSTRACT

During the 90’s, many plants have decentralizedmaintenance to a greater or lesser extent. While theseplants have seen many gains from being closer to theconsumer of their maintenance services, they also seeissues emerging. What are the criteria to choosecentral vs. decentralized maintenance? Which func-tions and activities are candidates? Finally, what doesthis consultant recommend?

HISTORICAL CONTEXT

Maintenance through the last several decades, untilrecently, was a relatively monolithic central function. Itwas usually staffed for peak activities, and often hadexcess capacity waiting for the breakdown to occur.With the advent of international competition in the 80’s,many maintenance staffs were cut dramatically, andover several layoffs became smaller than half theiroriginal size. These cuts were often made strictlyaccording to either financial rules (non-union companieslaid-off the most senior, expensive workers) or seniorityrules (union shops left seniority in place). In neithercase were skills and experience the major consider-ation.

Simultaneous with reducing costs, companies wereforced to increase quality, productivity and safety.These efforts focused on the manufacturing unit,looking to reduce variation in product, reduce productionbottlenecks, and assure safe work practices. Quality

theory told us to define who our customers are and getclose to them. Most plants defined operations as themaintenance customer, and in increasing accountabilityfor operating unit managers, gave them more control ofthe resources.

The initial result was a surge in machine operability, asoperations managers directed resources towardsequipment problems that had been chronic problems.The craftsmen dedicated to the units felt needed andlike they were making a more direct contribution thanbefore as part of a pool. They learned their unit’sequipment intimately, and became more proficient andcommitted to unit performance.

What could possibly be wrong with that scenario?

EMERGING CONCERNS AND LIMITATIONS

In speaking with maintenance and operating leaders indozens of plants in this past year, we have heard anumber of repeated concerns:

· There is no consistency to how units areperforming maintenance.

· In most cases the dedicated crews are workingon schedule breakers because of the ease ofdeploying them. If there is a plantwide prioritysystem, it has no application to these crews.Rather, work is done to the same urgency asthe production schedule.

· Planners dedicated to units do very little routineplanning. Instead they are expediters, on-callsupervisors, and when they do plan, it is foroutages.

· Maintenance craft skills are deteriorating. Noone in the organization is assuring the continu-ing development of craft skills

· The CMMS data quality is highly compromised.Some units may use the CMMS, and othersdon’t.


10

· The remaining central force feels alienatedfrom the unit-based maintenance crew.

· The Reliability Engineering Team (usually thosewho perform the PdM function) are frustratedthat their success is limited to those units whosemanagers understand their value.

· Important measures of planned maintenance,such as % planned work, schedule conform-ance and %PPM are declining or very stub-born at improving. Operating units have nostandard definitions of these measures, andmay or may not even measure and recordthem.

The first question to ask is, “So what?” If the produc-tion schedule is being met, is there any cause forconcern?

There is, of course, in any industry where cost is aconcern. How do you stay ahead of your competitionin most businesses? Produce to a quality standard forless than everyone else. No one we’ve spoken withconsiders the current practices to be efficient, even ifthey are seen as effective.

Is there a better way? If so, what is it?

Option 1Require operating unit managers to be better managersof the maintenance function and process

Option 2Recentralize maintenance

Option 3Develop an organization that optimizes efficiency andeffectiveness

We can rule out Option 1. Operating unit managersseldom have strong maintenance backgrounds, andwould be required to make balanced decisions. Pos-sible, but unlikely. Option 2 would bring back thebureaucracy, and would not benefit the overall organiza-tion. It may temporarily improve the control of thework (efficiency), at the expense of production (effec-tiveness).

A MODEL FOR ORGANIZING MAINTENANCE

The answer we suggest is based, in general, on cen-tralizing functions that create efficiency and controlof work, and decentralizing functions of workeffectiveness.

Functions of efficiency and control in maintenanceinclude:

· Work prioritization for global resources· Work planning· Work scheduling for global resources· Analysis of work done· Preventive and predictive processes· Maintenance of information tools· Compliance with standards· Central reporting· Skills assurance

Functions of work effectiveness in maintenance include:· Response to immediate needs· Recognition and alleviation of equipment

chronic problems within the operating context· Prioritizing and scheduling area resources

Based on this criteria, we see the following organizationmeeting both criteria:

Work Identification. Only the area can be expectedto identify the totality of the work. Problems notrecognized do not get attention.

Work Prioritization. Prioritization is a shared func-tion. The unit places a relative prioritization on thework. A global system of prioritization must be main-tained that works across all units, however, or there isno assurance that resources will be working on the“right stuff”.

Work Planning. The planning function is done prima-rily to improve efficiency. Planned work is typicallymeasured as requiring 1/3 of the labor time as un-planned work. The best model we have seen is to haveplanners centrally located, centrally managed, butdedicated to a unit(s). The planner is less likely to bediverted to other responsibilities, and more likely to havethe time for careful analysis. There are other benefits.During times such as vacation, there are backupsavailable to plan.

Planning is a discipline that is difficult to achieve anddifficult to maintain. It needs to be nurtured anddeveloped carefully. This is the greatest issue tomaintenance improvement in most plants.


Work Scheduling. Work scheduling is a sharedfunction between the the dedicated planner, the poolresource manager (usually the manager of centralmaintenance) and the unit leader/supervisor. Thesupervisor is free to schedule his own dedicatedresources against the planned work (allowing forunplanned work), and will receive additional resourcesfor work that is identified as global priority.

Work Documentation. A key to developing a valu-able history is complete documentation of the actualwork performed. This is done by the craftsman at theend of each job (to avoid the quit early syndrome), andreviewed by the planner for the area. The planner mustbe the coach to assure that work is documentedaccording to plant standards.

Work Analysis. Planners are the only staff in positionto understand and review the work. Part of workanalysis is done by simply reviewing the work docu-mentation. Standard job plans may be updated, chronicproblems flagged, materials and parts issues noted, andfuture RCM, FMEA or Root-Cause analysis needsidentified. In addition, planners become very familiarwith the analysis and reporting tools available throughthe CMMS, and can most readily scan history forrecurring equipment problems.

Preventive and Predictive Work. To assure thatPPM work gets done consistently, we have seen theReliability Team most effectively used reporting to acentral leader. As in planning, these people mustbecome specialists, and learning and helping each otheris a key to success. This function would report cen-trally.

Information Tools, Reporting and Compliance/Performance Audits. Providing information tools,such as maintaining the CMMS, reliability tools, makingthe reports for reliability and Key Performance Indica-tors, performing analysis and audits are all functionsthat would have central oversight or performed cen-trally.

AREA MAINTENANCE

One of our clients calls the craftsmen reporting directlyto the area “Min. Crews”, short for minimum crews.The concept is that they are able to handle the minimumaverage workload of the unit. One method to identifythe appropriate staffing level would be to examine the

amount of work done in the units during the 10 weeksduring the year in which the least hours are recorded bythe unit and staff to that level. The objective is to keepas many available to the central group as possible foroutage work, etc., and to staff just enough to keep theunits operating at an optimal level.

This group becomes identified with the unit where theywork. Their goals have less to do with typical mainte-nance KPI’s, but directly with the production goals ofthe unit. As such, the often act as the SWAT team tohandle immediate work. They also work on the annoy-ing problems of the unit that would never hit the highpriority list of the central priority system.

Their interaction with operators is mutually beneficial.Operators more readily participate in “maintenance”tasks when the crafts performing the work are “theirguys”. The craftsmen learn the intimate details andidiosyncrasies of the unit’s equipment, and becomeexpert in restoration of function. In the best cases, theyroutinely remove the sources of work (chronic prob-lems) from the units.

The downside of this union is twofold. First, thecraftsmen are not maintaining their skills because theirwork is “Jack of all trades”. Second, there becomes aschism between the area and central groups. We haveseen this problem resolved through a periodic rotation ofstaff through the area.

Scheduling of work is a primary responsibility of thearea. This is typically handled in a weekly planningmeeting between the unit-dedicated planner, the as-signed maintenance coordinator, and the unit productionsupervisor. The planner has issued a list of plannedwork available for work to the parties ahead of time.They come to the meeting with prioritized work liststhat they reconcile, creating the work list and schedulefor the following week.

CONCLUSIONS

Area maintenance has contributed a great deal to theeffectiveness of manufacturing among our clients inNorth America. In many cases, however, these plantshave dismantled the central organization. Reestablish-ing the efficiency and control functions under a centralorganization can help the plant improve the total amountof value-added work contributed by the maintenancestaff.

The Central Issue

Defining Asset Management

S. Bradley Peterson, USAStrategic Asset Management Inc.

Asset management is a term that has been getting a lotof press recently. The term implies many things tomany people, and there is no industry standard forapplication. Implied in the term, however, are somebasic concepts:

• Business goals drive decisions regarding the useand care of equipment assets

• Asset strategy is determined by operational consid-erations

• Maintenance and reliability are means to a definedgoal, not an end in themselves

• The intent is to optimize the application of allresources, not just maintenance

We have seen attempts to define asset management aslife-cycle cost management; it has been used in thephrase “asset management reliability”, which seems tobe redundant or confusing; we have seen the termsubstituted for maintenance or reliability practices. Wedefine asset management as a global managementprocess through which we consistently make andexecute the highest value decisions about the useand care of our assets.

Our approach is based on the Operational Reliability



SAMI


Maturity Continuum. This empirical model describesfive stages of mastery that create a foundation ofimproved performance with growth potential continuingover a strategic horizon. This model was described insome detail in the September 1997 issue of Mainte-nance Technology magazine entitled Developing anAsset Management Strategy.

BACKGROUND

Mobil has identified reliability as a primary competitiveopportunity. Prior to working with SAMI, they haddeveloped the concept of “Business-Driven Reliability”,or employing reliability improvement where businessvalue is created. The opportunity lay in developing anoverall business process where the business plan wouldbe achieved by statistically assuring the underlyingreliability of people, processes and equipment necessaryto achieve the goals. And this would be assured at thelowest cost. While the goals may seem no differentthan other plants, the difference comes in the process,specifications and decisions necessary for implementa-tion, and ultimately the new behaviors exhibited by theworkforce.

THE ASSET MANAGEMENT MODEL

In addition to the asset management concepts identifiedin the first paragraph, we identify several more:

• TEAMTM must completely align the businessplan with plant realities, identifying specificequipment condition and performance gaps toovercome to achieve the plan

• All of the work starts with an asset perfor-mance specification, based on supporting thebusiness plan; we perform the necessary workto sustain the performance specification, neithermore nor less

• All measures, from a corporate ROIC (ReturnOn Invested Capital), to plant contribution, tounit production rates, to specific equipmenthealth requirements, to the supporting mainte-nance strategy, all cascade in alignment

• The central focus of TEAMTM is the operator.He/she understands the manufacturing processand goals, understands and manages equipmenthealth to meet requirements, and gathers theresources necessary to achieve productiongoals

Implementing asset management is a process. Itcontains in it the following elements, and the decisionmodels to determine when to use them:

• Empowered Workforce• Reliability Centered Maintenance• Work Management Processes• Predictive and Preventive Maintenance• Self-managed Work Teams• Measures of Leading and Lagging KPI’s

PeopleReliability

ProcessReliability

EquipmentReliability

ProductionReliability

LeadershipTraining & DevelopmentCommunicationPerformance Management

Business ProcessesWork Management ProcessesProduction Processes

Tools(RCM, PdM, PM, Statistical Analysis)AssessmentReliability Teams

Process Control



14

• Reliability Leadership and Planning• Safety, Health and Environment• Continuous Improvement• Reliability Modeling and Equipment Risk

Assessment• Cost of Unreliability Tracking• Root Cause Failure Analysis• Capacity/Business Objectives Modeling• Lifecycle Costing/Engineering• Activity-based Management

THE TEAMTM PROCESS MODEL

The TEAMTM process model is illustrated here. Theflow is generally as follows, and explained in greaterdetail below:

1. We identify equipment criticality, condition,FMEA’s, maintenance requirements

2. This information is taken into the annualplanning process. Plant-wide goals are set andpassed to the production units for validation

3. The production units prepare their productionand expense plans, identifying what resourcesare required to meet the plant goals. They alsoidentify improvement opportunities and re-sources. This information is passed back to theplant-level plan for review and consolidation

4. When budgets (activity-based now, not histori-cal) are set, the units create an annual plan forall work in the unit (not just maintenance, butoperations and engineering)

5. The work is done to the schedule6. Results are measured7. Corrective actions are identified and prioritized

with the currently identified work8. Any changes to the plant are modeled for

impact on reliability, and new configurations areincorporated into Plant Capability

PLANT CAPABILITY

In the Plant Capability segment we do “front-endRCM” on a processing unit. That is, we identifysystem and component hierarchy, we classify processand component criticality, we identify system failuremodes and effects analysis, determine critical equip-ment condition, and assign a maintenance strategy foreach system or component based on criticality andvalue. This positions us to prepare activity-basedmaintenance budgets, begins to identify equipment

conditiongaps,

MEASUREMENT&

FEEDBACK

ModifyProductionCapability

ANNUALUNIT/DEPARTMENT

BUSINESS PLANDEVELOPMENT

PERIODIC PLANTPLAN UPDATE PERIODIC UNIT

PLAN UPDATE

PERFORMTHE WORK

3

12

4

5

67

8

9

3

11

TEAM Flow Model

BUSINESSSTRATEGY

CONTINUOUSIMPROVEMENT

ANNUAL PLANTBUSINESS PLANDEVELOPMENT

PLANTCAPABILITY

TM


and provides the basic data to prepare a reliabilitymodel for the unit.

The operators and their supervision do all this work,after significant training. Initial training includesparticipating in The Manufacturing Game, which servesas a highly leveraged orientation and change manage-ment tool. It also initiates Action Teams, which modelthe type of team behaviors that will be necessary tooperate the units in the future.

We have simplified the equipment condition assessmentby equipment class type to be in a yes/no questionchecklist format that provides the basis for operatordaily care practices. The maintenance strategy isassigned via a simple matrix based on component valueand criticality.

Plant Capability, as shown by the diagram, is doneinitially and provides input to the annual businessplanning cycle.ANNUAL PLANT BUSINESS PLAN DEVELOPMENT

Typical annual plans begin with Corporate setting afinancial target for the plant, followed by efforts of theplant to justify a lower target, or deciding how to livewith the goal. Most often this follows the “I wish”principle of goal-setting: in spite of not having made planlast year, we look for an increase of, for instance, 8%production this year, while decreasing the operatingbudget by 5%. Since the plant leadership team are“tough guys”, they are left to figure out what to do

differently. In most plants, decreasing budgets leads toless equipment attention, decreased equipment health,and declining production.

The process for capital investment is often even lessstructured; plant management finds out the capital planis due in corporate by Friday, and meets all day Thurs-day to determine which projects will be proposed, basedsignificantly on emotional commitment to specificprojects. This lack of structure is not seen as important,however, since this only allocates a “bucket of money”,and projects will be decided in earnest during the courseof the year.

Unit goals are often specified by numbers for whichthere is little accountability during the year. Rather, welook for record shift goals, or running wide open, notknowing the consequences on equipment, safety orcost.

Under TEAMTM this process changes dramatically.The first step is to determine the effects of increaseddemand on the units for throughput. What is theprobability of achieving the increased throughput goal?The chart below gives a viewpoint for productionprobability:

Depending on the unit’s production volume requirement,we can select the appropriate maintenance strategywith to meet the probability of production required. Ifthe unit at its healthiest equipment condition is unable to

Maintenance Is Assigned According To This MatrixCriticality Proactive Maintenance ActivitiesHigh-1High-2Medium-1

Medium-2Low-1Low-2

High-3Medium-3Low-3

0 - $5,000

Time Based Useful Life,Schedule & Replacebefore Failure

Time Based Useful Life,Inspect, PM & ConditionMonitoring

RCM, ContinuousMonitoring, PredictiveMaintenance, PM &Root Cause Analysis

Predictive MaintenanceRoot Cause Analysis

Inspect, PreventiveMaintenance

Inspect, Run to Failure

Run to Failure Operational Maintenance Preventive Maintenance

$5,000 - $50,000 Greater than $50,000

(1) (3)

(4) (5) (6)

(7) (8) (9)

(2)

High Criticality- A process in which a service interruption would result in a CoUR event.Medium Criticality- A process in which loss of service for less than 8 hours and would

not cause a CoUR event.Low Criticality- A process, which operates intermittently and service interruptions, will

not result in a CoUR violation

ComponentValue



16

produce at that required rate, we design the capitalproject, along with the cost/benefit calculation. This isfed back into the planning process, to determinewhether the cost of maintenance or capital project isjustified to meet the rate requirement.

Thus we are able to iterate the goal setting process,based on facts and probabilities of achieving the goals.For instance, an 80% likelihood of achieving productiontargets would probably not be considered adequateassurance, and engineering steps would be taken inincrease the probability to acceptable limits.

We will have a list of capital projects, each having aspecific return on investment, from which the manage-ment team will choose. The guessing game is elimi-nated; it is actually likely that more capital will beapproved since the justifications are so clear, and theplant debottlenecking efforts will be based on maximumutilization of existing assets, rather than substituting acapital project for good asset health practices.For each capital project we will review RAM, MORand MOC (reliability, availability, maintainability, man-agement of reliability, and management of change).The Management of Reliability will assure that theprobability of performing at specified productionvolumes for the unit is not negatively affected by theproject work.

ANNUAL UNIT/DEPARTMENT BUSINESS

PLAN DEVELOPMENT

The unit will set objectives based on the overall plantobjectives, coming out of the initial pass of Prepare/Update Annual Business Objectives.

At this point the unit will determine the likelihood andbarriers to achieving the production goal, as well as themaintenance budget. They will model in detail the unit’scapabilities, creating performance specification for eachsystem and subsystem, all the way to identifying therequired MTBF for components. Where there exists agap, we identify equipment upgrades, capital projects,and any changes in the maintenance program necessaryto meet the goal. We will create an activity-basedmaintenance and operating budget, since we know thespecific maintenance and operating strategies for eachsystem and component in the unit.

The unit then signals the plant leadership what the costsand barriers may be to achieve the goals, and decisionsare made regarding the variations. The importantaspect here is the precision with which decisions aremade. We know our capacity and probability ofoperation; we have a rationale strategy and associatedcost with every maintenance activity, and will report onthose activities and specific variances.

Given this level of specificity by the units, a planner willhave most of the information necessary to begin hiswork, and can prepare most work packages ahead oftime.

Maintenance and Capital Spending are Matched to Meet theProduction Volume Requirement

Probability

%

P r o d u c t I o n V o l u m e

100%

UnitProduction

Targets

1 23

Low Cost Maintenance Approach for 1

Higher Cost Maintenance for 2

Capacity Increase/DebottleneckingRequired


CONTINUOUSLY MANAGE WORK

In the Continuously Manage Work segment, weintroduce some new concepts. First of all the WorkManagement System, in addition to holding the mainte-nance work and resources, plans and schedules opera-tions and engineering work and resources. For in-stance, if an RCM study is planned for a piece ofequipment for this year, resources will be loaded againstthat as a task. The operators’ daily rounds are identi-fied as routine tasks, and reported as they are com-pleted. Engineers in most plants are critical pathresources, yet we don’t schedule their time; in theTEAMTM process their tasks and priorities would bemanaged like the work of the craftsmen.

Another opportunity we grasp is scheduling all thework; this includes routine maintenance, responsivemaintenance; operator performed maintenance; majormaintenance, outages and shutdowns; engineeringwork. Fundamentally we need to plan everyone’swork, and by doing so, we are making judgements aboutthe priority and value of each task, start and stop times/dates, and performance expectations, measures andreviews.

At this time the reader may ask, “Isn’t this terriblystructured and data driven?” “Where is there room forspontaneity and interest?” Our primary intent inmanufacturing is to set a standard that meets custom-ers’ needs, and to manage work and product to mini-mize variation. That can only be done with data andplanning. The fun comes in through the feeling ofcontrol and contribution by the hourly workforce, butbeing able to complete a planned task before startingseveral more, and by being consistently successful.More people than have participated in the past requirecreativity and better decision-making. Reducingvariation in the manufacturing process is everyone’s job,not just the managers and superintendents.

Because there are clear specifications for equipmenthealth and work management, measurement becomesmuch easier. It is performed by the hourly staff, whoare motivated to improve, as performance is directlyrelated to rewards and recognition. We will need tomake meeting performance targets pay well for thehourly ranks, just as management is measured andrewarded.

MEASUREMENT AND FEEDBACK

Review of results is an ongoing task. Variances aretreated as opportunities to understand more about theequipment and the process. Because we have a directknowledge of cause and effort in our equipment, wewill identify necessary changes in our equipment, ourknowledge, and our processes. Most failures will beseen as caused by the management system, rather theindividuals who willfully fail to perform.

CONTINUOUS IMPROVEMENT

Based on the analysis of the variance, we may find thatour maintenance routines are under- or over-maintain-ing equipment, that we are not eliminating systemicfailure modes and effects, that engineering projects aremore or less robust that anticipated. Any changes wemake need to be reflected back in the Plant Capabilitydatabase. We may also make changes that affect ourAnnual Profit Plan, which will be updated.

We also recognize that many failures are effects oflacking of understanding of equipment function, so wetake action to reduce our staff’s actions as a source ofvariation.

PLAN UPDATES

Control may be seen as desirable, but impossible, in ourever-changing world. Even a Stage 5 company hasunplanned downtime. Customers’ needs change.External forces buffet the plant, especially reactiveresponses to events. The question is not whether wewill respond to change, but how to do so most produc-tively.Our approach suggests that keeping to a monthly plan ishighly desirable. We can say in tune with the entireplant, and make changes in a planned fashion. One ofthe greatest causes of variation in production andequipment come when changes are made with littlecommunication, with little planning, and little consider-ation for other effects. For instance, we often hear thatdriving a process beyond prior limits without safeguardscaused an equipment outage. Or that one part of theplant made a change without informing the rest of theplant, and led to unexpected results.


The TEAMTM model calls for changes to be reflected inboth the annual plan and the unit production plan. If wehave a product that is currently selling at a high margin,and we want to adjust production levels, great! Butlet’s make the change in a planned fashion. We revampour annual plan to reflect volume changes; the unitshave a chance to respond to the efforts of the change,and to prepare for them. If we have been through thisparticular change before, we can safely make theproduction adjustments based on prior history. If ourequipment configuration has changed, or our workforcehas turned over, proceeding deliberately will maximizethe likelihood of achieving the desired goals, andminimizing unintended consequences.

Specifically, in addition to changing our annual plan andthe unit plan, we will work to understand the systemstresses that will result from the change. We will runthe appropriate models of RAM, MOR and MOC, aswell as our unit reliability models to try to foresee andaccommodate effects of the change.

RESULTS EXPECTATIONS

Mobil has made some very good gains, even though weare very early in the implementation process. From afinancial perspective, teams have identified more than$1 million is benefits, and the Cost of UnReliability hasa reduction trend in 1999 to yield $8-10 million. Astelling, though, is the enthusiasm and dedication of thehourly workforce. Their leadership recognize thebenefits of greater contribution, control and satisfactionthat comes to the workforce with this process.

The unit teams receive more training than ever before,and they are applying the training immediately. Be-cause this process leads to fundamental changes inmanaging activities, there are changes in virtually everyjob and core process in the plant. It is not a path for thetimid or those unwilling to change. Some of the resultsof the process include:

• Corporate is using this project as part of themodel for all manufacturing facilities

• The Operations manager has said, “This is thebest return on any money I could have spent!”

• Union Official: “We want our employees toshare in the profits, because they will be takingmuch more responsibility”

• Operator: “For the first time I feel like I am notasked to check my brain at the door.”

SUMMARY

Aligning plant resources to continuously maximizevalue and minimize variation has been an industry goalfor decades. Technology and human factors havefinally provided the tools necessary to close in on thisachievement.

Advanced and sophisticated plants, able to success-fully change and which have excellent leadership, arecandidates for the process we call asset manage-ment, or TEAMTM. We suggest that companiescomplete a minimum of Stage 3 performance beforethey embark on this program.

Recognizing that the concepts of asset managementwill grow and mature over time, we offer TEAMTM asa stake in the ground that provides a basis for discus-sion. We welcome reader’s input to continue to betterdefine this process.


18



SAMI

Designing the BestMaintenance Organization

S. Bradley Peterson, USAStrategic Asset Management Inc.

BACKGROUND

We find a lot of uncertainty about optimizing plantorganization among maintenance and plant leadership.This is manifest by frequent change in the organizationdesign, typically swinging from centralized maintenanceto decentralized maintenance, and back again.

The result of this frequent change is the uncertainty ofleadership, responsibility channels and direction (otherthan the familiar and maligned reactive maintenance) ofthe new organization’s accomplishments versus theaccomplishments of the former structure.

Improvement initiatives usually lose momentum aspeople get acquainted with the change of relationship,and look for new cues for how to act. If there hasbeen no communication plan executed as part of thechange, the craftsman has time to adjust to the newrole, and finds no reason to initiate anything new.Reactive maintenance maintains its tenacious grip.

Is there an objective method we can use to design theorganization? What are the major factors that influencethe design? We present a model in this article that usesorganizational competencies and improvement strategyas the driving considerations behind organization design.

CURRENT CRITERIA FOR ORGANIZATIONAL CHANGE

We find many organizations designed to fix a perceivedproblem, that in many cases raise more issues that theysolve. Rather than having a clear rationale, the designis made reactively. The intent of the design is moreimportant, actually, than the structure. (consider re-phrasing: The intent of the design actually becomemore important that the actual structure.)

Among the reasons we see for specific design are:

1. We see a lot of dissatisfaction with maintenance bythe plant manager or production. Results: Distrib-uting of decentralizing resources. “Give me thecrafts”, says Mr. Production Manager. “I’ll showyou how maintenance should be done”.

2. In a desire for increased accountability, many plantshave gone to an autonomous unit-based structure,and divide all resources among the units to eliminateexcuses. Results: Decentralized resources. Itnow becomes virtually impossible to move re-sources between units.

3. In order to minimize costs, maintenance resourcesare moved to report to a production supervisor,eliminating the (perceived) need for the mainte-nance supervisor. Results: Distributing or decen-tralizing resources. Usually the production supervi-sor had a full-time job, and no maintenance experi-ence, leaving crafts on their own to find work to do.Over a period of time, craft skills deteriorate andincidents outside the unit increase (e.g. utilities).

4. Many plant managers are frustrated that mainte-nance seems monolithic, slow paced, every jobrequires excessive time to get done. Maintenancepeople fail to understand the business of manufac-turing, and don’t seem part of the team. Results:Decentralize or distribute resources. Maintenance


20

becomes more responsive to unit or department needs.They learn the equipment, work to eliminate chronicfailures (because they are so tiresome), and nowfeel a part of the core business.

5. Maintenance costs seem to rise each quarter.More and more contractors are brought in forlarger jobs that used to get done in-house. Expedit-ing parts becomes more common, and plannersdon’t seem to find time to plan.Results: Resources are centralized, perhaps to thechagrin of the craftsmen, who often feel more partof the business out in the unit or department.

CRITERIA TO JUDGE ORGANIZATIONAL

EFFECTIVENESS

Rather than designing the organization to solve aspecific problem, we need a set of criteria to identify aneffective organization. We propose the following as astarting point:

1. You Have Control Of The Work• Work is accurately and completely identified• When work is written up, there is confidence it

will be done in a reasonable timeframe• Activity is performed according to the priority

of operational criticality and safety• Work scheduled is consistently work done• Work is executed efficiently. Little waste

during the course of the craftsman’s day• Results of the work are properly recorded and

periodically analyzed for opportunities toimprove the system, or an individual’s perfor-mance

2. Defects Are Routinely Being Eliminated• Prevention is the bias of the maintenance

department (PM, PdM)• Operations takes responsibility for equipment,

including routine surveillance, proper operatingprocedures (to minimize breakage), rawmaterials are appropriate for the equipmentapplication

• Equipment health in maintained (lubricantsapplied, alignment checked, tensions main-tained, critical operating performance levels arecharted)

• Materials management assures appropriate

service levels are maintained and lifecycle cost,rather than purchase price, is the primaryconsideration

• Failures events are evaluated, prioritized,analyzed and failure modes eliminated

3. Maintenance Costs Are Minimized• Jobs and skills are matched in the scheduling

process• Jobs are planned (estimated, parts & tools

reserved, drawing available) & materialsavailable prior to scheduling

• Equipment is prepared prior to crafts arrival tojob:a Cleaned, isolated mechanically & electri-

callyb Safety procedures observedc Proper shutdown and start-up procedures

observedd Operators perform tasks according to their

ability and the level of sophistication of thefacility (see Developing an Asset Man-agement Strategy, Maintenance Technol-ogy, September 1997, for a description ofthese stages.)

e Stage 1: Prepare equipment, identify work,learn equipment function, act ascraftsman’s helper

f Stage 2: Perform Operational Maintenance(Surveillance, Lubrication, Adjustments,Cleaning)

g Stage 3: Perform simple maintenance (e.g.packing valves), troubleshooting, partici-pates in repair

h Stage 4: Work with defect elimination,participating in RCFA’s, RCM’s, etc.

BASIC TYPES OF ORGANIZATIONAL MODELS

What are our options, then, to consistently provide thecapabilities listed above? Simply put, there are threetypes of organization design.

- Central Maintenance. All crafts and relatedmaintenance functions report to a centralmaintenance manager.

- Decentralized. All crafts and maintenancecraft support staff report to operations

- Distributed. A combination of the above.Typically centralized maintenance leadershipfunction, with maintenance and reliability stafffunctions reporting here. Crafts are in some


proportion allocated to production units and to acentral maintenance function.

MODELS FOR DECISION-MAKERS

All quality theory suggests one study the value chain,that is, where is value created in the organization.What value does maintenance (and its counterpart, thereliability team) create? And what organization enablesthat value?

While this list may not be comprehensive, it doesindicate that neither a centralized nor decentralizedorganization is ideal to accomplish all the value-addedrequirements of maintenance and reliability functions.

THE RELIABILITY MATURITY CONTINUUM

Stage I, Planned Maintenance, has as its primarygoals to gain control of the work and to minimizemaintenance cost. Often referred to as planning andscheduling, it attempts to maximize the effective use ofthe craftsman’s time. This is done by assuring acomplete work package, tools, parts and permits areready before work is started. Also, by careful schedul-ing, we may perform several jobs on a piece of equip-ment when it is down, instead of just one. Defect

elimination is a by-product as well. By prioritizing jobs,and assuring the right parts and tools are available, wespend our time doing the most important things right thefirst time, rather than patching a patch.

Stage I Optimal Organization. Establishing andenforcing a common system across all units in a plantrequires strong central authority. Important new skillsmust be learned and continuously reinforced. Planners

VALUE MEASURE BEST ORG. STRUCTURE

1. Repairs Equipment Mean time to repair DistributedMaintenance Rework Distributed

2. Trouble-shoots Mean time to repair DistributedMaintenance Rework Distributed

3. Improves Operability Throughput Distributed

4. Improves Maintainability Mean Time to Repair Distributed

5. .Monitors Equipment Condition Throughput CentralizedMean time between FailuresMaintenance Cost

6. Overhauls, Capital Projects Efficiency, Schedule CentralizedCompliance

7. Controls Cost Maintenance Cost Centralized

8. Manages Materials Availability, Cost Centralized

9. Increases Reliability Throughput Centralized/DistributedMean time between FailureMaintenance Cost

Designing the Best Maintenance Organization


22

must be dedicated to their jobs, and while assigned byarea or unit, their concentration cannot be scattered bya variety of extra assignments. So until this newsystem is firmly in place as a way of doing business, thebest organization, we believe, is centralized.

Stage 2, Proactive Maintenance, is aimed at defectelimination, which of course reduces costs. It alsoincreases control of the work, because schedulebreakers decline as failure modes are eliminated. Thegoal of proactive maintenance is to eliminate commonfailure modes and effects across the entire facility. Wehave seen concerted efforts on rotating equipment, forexample, increase mean time between failure of pumpsfrom six months to four years, or one-eighth as manyjobs to perform. Consider this stage operating underthe 80/20 rule: 80% of the failures come from 20% ofthe failure modes.

Stage 2 Optimal Organization. Since we are lookingfor failure modes across the entire plant, and not in onlyone area, the reliability teams continue to be organizedcentrally. New skills must be acquired for crafts andengineers. Costs for acquisition of condition monitoringequipment need to be carefully evaluated for bestapplication and value. These decisions are best madecross-functionally, and executed centrally.

Stage 3, Organizational Excellence, now engages therest of the operation in Asset Health Care activities. InStage I, operators prepared equipment for maintenance;in Stage 2, operators helped to identify and diagnosechronic problems. Now in Stage 3, we ask operators tobegin to take ownership for equipment condition. Partof this ownership is to perform Basic Care activities,including lubrication, adjustments, obervation andrecording of operating parameters, and other tasks wemight label operational maintenance.

In addition, we now move a portion of the maintenancecrews to work under production. Why can we do this?We are in control. Our work management processclearly identifies, plans, schedules and assures properexecution of the work, and our proactive maintenancehas eliminated most of the common failures in the plant.We are now set to focus on cross training, craftsmenlearning the equipment from operators, and operatorslearning equipment care from craftsmen. We stillmaintain, at least for some time, the maintenance

supervisor, but the role changes to that of facilitator andcoach.

Stage 3 Optimal Organization. While we havemoved a portion of the craftsmen to the areas, wecontinue to maintain a central group for overhauls,turnarounds, shops, and common services. Planningand engineering continue to report centrally, but getincreasingly specialized as to their equipment responsi-bility. This is possible because there are fewer fires(schedule breakers) to put out. This organization is bestdescribed as distributed.

Stage 4, Engineered Reliability, is primarily unit-based, working on defect elimination on specificsystems, rather than common failure modes. As muchof this work is equipment unique, it further requires unit-based collaboration. At this point process engineers andplanners may report in to the units, depending oncomplexity of the equipment, and the amount of work tobe done.

Stage 4 Optimal Organization. While we havedistributed more resources to the unit or department, wecontinue to have a central maintenance manager whooversees systems. Examples of these systems may becraft training systems, the CMMS, a reliability reportingsystem, a maintenance cost system, etc. At this point,the size of shops or turnaround teams may diminish, andit is a good time to review outsourcing certain functions.This organization is best described as distributed.

Stage 5, Operational Excellence, adds a dimension ofbusiness goals driving and determining all maintenanceand reliability efforts. We are now truly trying tooptimize the plant, and the role of the shift-basedteams increases. They now have primary charge ofmonitoring and maintaining asset health, as well asoptimizing production and yields. By this point, thereare few unanticipated equipment breakdowns, workmanagement is a way of life as is continuous improve-ment. Responsibilities are clear, but work practice isvery fluid, calling upon resources flexibly, but in acompletely planned manner.

Stage 5 Optimal Organization. The ownership ofresources is now a minor issue. Since nearly allmaintenance is preplanned, as much as a year inadvance, resources are assigned by priority of the work


needing to be accomplished. Much work will continueto be unit based, but the opportunity to share acrossunits is available, since the planning horizon is long, asthe discipline to make value-based resourcing assign-ments is in place. We think the best way to character-ize this organization is actually decentralized ormatrixed, but the level of self-management, disciplineand planning is so high, that organization charts arereplaced by a work management process that accountsfor all the resources in the facility.

SUMMARY

In summary then, the organization needs to account forthe intent of the managers. If a systems orientation forcontrol and cost are an issue, or if the solutions we arelooking for transverse the entire facility, we believe thesuccessful strategy will be centralized. If the issue isunit-based, then distributed is the highest value strategy.Finally, we believe that only a very mature, high-performing organization can be optimized with adecentralized structure.

Most of our readers will not have the luxury of makingimmediate organization changes to reflect this philoso-phy. Nor do we think they should, as the application ofthese rules must be done in the context of the capabili-ties, attitudes and history of the plant. We do think,however, that setting out a list of objectives before anyorganization change, and identifying how these will beaccomplished in a revised organization, is the key to anysuccess.

Designing the Best Maintenance Organization

Work Initiation/Prioritization

Planning& Scheduling

Work Execution/Review

MaterialsManagement

PreventiveMaintenance CMMSWork Management

Processes

PdMCMMS Integration

Craft Skills Enhancement

Equipment History

PredictiveMaintenance

Failure ModeAnalysis

Proactive Maintenance

Craft Flexibility

Maintenance/OperationsIntegration

ExternalBenchmarking TPM

ReliabilityFocus

Concurrent EngineeringLife CycleAnalysis

RAMAnalysis

RCMEquipment

Simplification/Standardization

AssetManagement

Stage 5Operational Excellence

Stage 3Organizational Excellence

Stage 4Engineered Reliability

Stage 2Proactive Maintenance

Stage 1Daily

Maintenance



SAMI

Creating An AssetHealthcare Program

How to Assure YourPM Program is Effective

by S. Bradley PetersonPresident of Strategic Asset Management

ABSTRACT

A key question in operating any plant is this: Are wedoing the right amount of maintenance? Are we doingthe right type of maintenance?

How do you know? Most plants we visit have devel-oped preventive maintenance programs over the yearsfor a hodge-podge of reasons. In some cases equip-ment PM’s have been based on OEM recommenda-tions. In some cases, PM’s have been developed inresponse to major failures. But we almost never findthat a systematic approach, based on manufacturingvalue, has been deployed to develop the care programfor the asset.

This article gives a step-by-step method to systemati-cally develop an asset healthcare program, resulting inthe necessary reliability to meet your business plan, atthe lowest cost. It discusses the concepts of assethealthcare, gives an overall closed-loop process todevelop your program, and identifies how to measuresuccess and make required adjustments

.TRADITIONAL DIFFICULTIES

For many years as I have given public and industrypresentations I have asked the question: “How many ofyou (the audience) believe you have a good or excellentPreventive Maintenance program?” Without exceptionthere are no hands raised in the audience.

What makes developing such a program so difficult?Other difficult things are accomplished in maintenanceimprovement: sometimes planning and scheduling areimplemented plant-wide with good results. Frequently astoreroom offers good service, while minimizing totalinventory cost. So why is preventive maintenance sodifficult?

The elements of PM’s are well known. You need a setof tasks performed at a certain frequency, and thesetasks are scheduled and performed thoroughly byqualified craftsmen or operators. Some of the problem,of course, is simply trying to implement prevention in areactive environment. Work isn’t planned, parts aren’tavailable, or the equipment isn’t made available due tomissing production schedules. That isn’t the problem,though, where good planning and scheduling exist. Sothe issue comes down to identifying the right tasks,and the proper frequencies.

Reliability Centered Maintenance (RCM) is oftenselected as the tool of choice for plants advancedenough to understand that the prevention tasks must beaimed at correcting specific defects or failure causes.This fails, too, because there is no plant in my experi-ence that has the resources or fortitude to performRCM studies on every piece of equipment or aspect ofthe facility. Risk-based RCM comes closer to themark as a tool, but still tends to look at specific equip-ment. It is not used to develop the plant-wide preven-tion plan.

REPLACING “PREVENTIVE MAINTENANCE” WITH

“ASSET HEALTHCARE” AS THE OPERATIVE CONCEPT

We think the first part of the issue is semantics ordefinitional: the term preventive maintenance, or eventhe more encompassing “preventive-predictive” mainte-nance fails as a concept. It connotes for most people,activities more than intent. For that reason we preferthe term Asset Healthcare.

When we examine the concept of healthcare as itapplies to people, we understand it to mean maintain-ing function, or the condition of the body to per-form certain activities. Likewise, we understand thatour objective in maintenance is to assure the likeli-hood (probability) that equipment can perform acertain function when required. We understand, too,that reactive maintenance cannot assure that probability,but only minimize the impact of failure. For thesereasons, we encourage a new concept (not of ourinvention, but not commonly used) of equipment orasset healthcare. Our preference is to use the word“asset” because it applies to the facility as well as theproduction equipment. In most cases, failure of thefacility degrades our production capability in a similarmanner to equipment problems. Thus we encourageclients to start with the concept of assuring assethealthcare.

INTRODUCING “PROBABILITY” AS A NECESSARY

CONCEPT IN DEVELOPING THE ASSET HEALTHCARE

PROGRAM

Another concept we need to introduce is that ofprobability. We know that decreasing the frequency ofa failure mode increases the probability of performingthe intended function.However, without an intimate understanding of molecu-lar strength of every aspect of every component, andthe forces to which it will be subjected, we are left withuncertainty about the timing of a given failure mode.Thus our goal is to manage the probability of equip-ment performing its intended function.

Why is this distinction important? Because as weapproach the ultimate (100% assured availability) costsfor maintenance go up exponentially. Our goal is beingable to answer the important question: “What is theappropriate type and amount of maintenancenecessary to assure a specified level of performancefor the asset?”

All of our asset healthcare tasks (preventive mainte-nance) need to answer this question, or we will never

know if we have succeeded in our goals.THE ASSET HEALTHCARE CLOSED-LOOP PROCESS

In this figure we see a five-step process that describesa self-improving method for Asset Healthcare develop-ment and exection. Steps 3 and 4, Load and ScheduleWork and Prepare and Execute Scheduled Mainte-nance are typical processes in the Planned Mainte-nance Cycle, and won’t get separate attention here.Steps 1 and 5, Create Measurement Process andReview and Analyze Variation, are also typical of anyclosed-loop process, but we will be identifying somenew concepts here, so they will be covered, though notin great detail. Obviously the step that will get the mostattention is number 2, Develop the Asset Care Pro-gram.

DEVELOPING THE ASSET HEALTHCARE

MEASUREMENT PROCESS

We know we can’t permanently improve what we don’tmeasure. But in the plant environment the plethora ofindicators that can be measured are overwhelming.There is a compelling need to simply the measurementprocess, to make this manageable in an era ofdownsized workforces.

There are, of course, leading or process measures thatare required. These include PM (Asset Healthcaretask—or AHT) compliance, % AHT to total workhours, etc. We need a measure of results as well.

We won’t dispute the value of those who measure“Uptime”, or “Overall Equipment Effectiveness”.These are excellent measures and give an overview toany plant that deploys them. Where they may haveshortfalls is in identifying the cause of a problem. Theydon’t do much to identify the “delta” which needs work.

We have seen only a single plant that has maintained aplant-wide measure of “Mean Time Between Failure”.This requires a lot of data and continuous effort forreporting. It fails, however, to guide one from a busi-ness perspective: Where do we place our efforts andemphasis?

Figure 1

Review &AnalyzeVariation

CreateMeasurement

Process

DevelopAsset CareProgram

Load &Schedule

Work

Prepare andExecute

ScheduledMaintenance

Creating an Asset Healthcare Program



26

Instead of the above measures, we’d like to introduce aconcept we learned from one of our clients: Cost ofUnReliability (CoUR). This is an extension of theCost of Quality concept used to measure deviations inquality theory. Figure 2 shows a graph of four years oftracking CoUR in a major facility with many operatingunits. One can quickly grasp, with clear evidence,where to place attention!

Fundamentally, CoUR measure the production value ofthe downtime for a department or a unit, and adds in thecost of repair, both labor and materials. We record andmaintain a database for those CoUR events greaterthan X dollars. X, of course, depends on the productionvalue of your plant, and your visibility and dedication torecording incidents.

Key data elements include:

1. Date and time of incident2. Location (Department, equipment center or

unit) and specific equipment number that failed3. Downtime and valuation of downtime4. Repair costs (usually the work orders that

apply)5. Failure reason code6. Failure description

Using the power of the database, all failures can besorted by location, size, reason code, etc. Also, for thisclient, when the cost of the failure hit a threshold (e.g.$100,000), a Root Cause Failure Analysis is required.

The advantage to CoUR is in the planning process.Practically, what has cost us money? Are therepatterns? Where do we focus our efforts? It becomesa practical scorecard overall, to see if our CoUR isdeclining, while also directing our work towards specificfailure causes. It records history in a way this isimpractical for a CMMS, without the limitation of ahuge data collection workload.

So, on to the task of creating the Asset Healthcaretasks appropriate for a plant or facility.

TYPICAL ASSET HEALTHCARE TASK

DEVELOPMENT AND RATIONALE

We might spend a moment considering two questions.First, in the history of this plant, when were assethealthcare tasks created? And second, by whatmethods were they created?

We seldom find that greenfield plants develop theirprevention program before the plant starts operations.Usually this simply hasn’t been part of the start-up plan.When it is, there isn’t sufficient time or money given toits development. And where in isolated cases AHT’swere created for specific equipment, it was usuallydone according to the vendor’s specifications, withoutthe benefit of experience within the operational context.

The next time we might see PM’s developed is whenthere are significant failures that gain lots of attention.Sometimes these are one-time events, but reactionrequires we dwvelop a PM, and it gets generated every

Total Cost of Unreliability1995 to 1998

$0

$5,00

$10,00

$15,00

$20,00

$25,00

$30,00

PROCESS UNITS

M$

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Figure 2


month, forever. We may also put a team together todevelop PM’s. These are done as well as possible, withbest guesses as to appropriate tasks and frequencies.These are usually the most valuable of the PM collec-tion that gets printed out each period and distributed tothe craftsmenWe want to change these methods forever. What weseek is an effective, simple, measurable system thatenables us to create a proactive maintenancestrategy for every piece of equipment in the plant.Currently RCM, in its many flavors, is identified as themethod to accomplish this task. In most applications,however, it is too cumbersome to apply to all theequipment in the plant. We propose a hybrid methodthat meets these characteristics:

· Covers the entire equipment spectrum· Applies easy to understand rules that can be

modified with experience· Adds value during it’s development, not just in

the future state· Minimizes data reentry· Can be implemented by the hourly workforce

with minimal guidance beyond training

THE SEVEN STEPS TO DEVELOPING ASSET HEALTHCARE

TASKS

Our Asset Healthcare System used employs thesesteps:

· Select and Install the Software Tool (AssetHealthcare System, or AHS)

· Develop Hierarchy· Develop Criticality· Develop Equipment Condition· Establish Strategies for Component Care· Develop Failure Modes and Effects· Develop Maintenance Activities

Working with one unit or department at a time, thesesteps develop the system of proactive AssetHealthcare. We discuss each one in overview.

1. Acquire, Install and Train in AHS Software.After working in many situations without a fullyfunctional software tool, we have found that thereis a better way. Find a good tool and use it to itsmaximum capability! We searched for andreviewed over 200 “RCM” software tools, andfound a handful that met our requirements:

• Easy to use.• Easy to learn.• Complete training and documentation.• RCM Cost/Benefit capabilities.• Documents component and system criticality.• Quick to implement plant-wide.• Upgrades to the software.• Links to CMMS• Migrate CMMS info into RCM tool.• Meet/comply with Corporate IS standards &

requirements.• Applicable libraries of failures/tasks (specific to

the industry).• Allows as much or little FMEA (Failure Modes

and Effects Analysis) detail as needed (not allplants need the same level of detail).

• Uses Pareto analysis tool.• Ability to conveniently group PA’s (mainte-

nance tasks that can be completed at the sametime).

• Monitors effectiveness of RCM with keyperformance indicators.

• Convenient software support.

We use this tool for all purposes in the following steps.

2. Develop the Equipment Hierarchy. In manyinstances an equipment hierarchy exists inelectronic form somewhere in the plant, andusually is embedded in the CMMS. We suggestgoing as many as four to five levels in describingthe equipment hierarchy, depending on how fardown it is necessary to go to get to a maintainablecomponent. This may be a pump, motor, gearbox,or electrical panel. This initial identification of theequipment gives us the basis to develop a proac-tive maintenance strategy for every component.

One of the benefits of this step is the equipmentowners, the operators and the maintainers,perform this task. In doing so, they educatethemselves about the equipment, going overdrawings, listings, and manuals. We hear manypositive comments by the team during this task,which takes several days: “I didn’t know thatwas how it worked!”, or “Is there really a filterthere? We’ve never cleaned it!” Anotheropportunity is to identify to engineering where thedrawings are out-of-date, where changes haven’tbeen documented.

Figure 3



28

3. Develop Criticality. In order to determine thelevel of maintenance a component should receive,we need to understand its value in the operatingcontext. To keep it simple, we ask “How criticalis the process to which this is a part? Ouranswer set would be: a) Must be running all thetime, b) Must run most of the time and on de-mand, or c) Must run occasionally. One can alsouse CoUR as a gauge of process criticality: forinstance, using the value of any hour of downtimeas the range of criteria.

Once the process has been classified on critical-ity, we classify the component. In this case, weuse a number instead of a letter.

If, in any mode... Then:Shutdown of any duration causes a CoURevent of $100K per day

• Assign the sub-system a criticalitycode of "H"

Shutdown causes a CoUR event of $10Kto $100K per day.

• Assign the sub-system a criticalitycode of "M"

Any incident $1K to $10K per day • Assign the sub-system a criticalitycode of "L"

Any incident below $1K per day • Assign the sub-system a criticalitycode of �N�

If ThenFailure of the componentwill cause personnelinjury or a reportableenvironmental release

• Assign the component a criticality code of"1"

The component’s failurewill result in a failureevent of $100K or greaterper day


The component’s failurewill result in a CoURevent between $10K and$100K per day


The component’s failurewill result in a loss ofbetween $1K and $10Kper day.


The component�s failurewill results in a loss ofless than $1K per day

• Assign the component a criticality code of�5�

Figure 5

Figure 4


The result will be a table of equipment withassociated criticalities, all entered into the AssetHealthcare System, as shown in Figure 6.

4. Develop Equipment Condition. For severalreasons we now take time to evaluate thecondition of the highest segment of criticalequipment, at a minimum, all H-1’s and H-2’s.Our reasons to do this:

· We can get an immediate impact on plant perfor-mance and safety where we can eliminatedefects on this highly critical equipment.

· In some cases we will identify conditions thatrequire a longer term solution, e.g. a motor that isrun beyond its limits. This gives time to plan andschedule intervention before the equipment fails.

· Evaluating the equipment, by the operations staff,creates the basis of ownership, and developingoperator’s inspections “rounds”.

· This information is part of the annual planningprocess, to help determine the material and laborcosts and schedule required to meet plan for thenext year.

Once again we take a simplified approach. Foreach class of equipment, we create a templatefor evaluating component condition. Using asimple yes/no evaluation for each category wecan evaluate the overall condition of the equip-ment. An example is shown in Figure 7. Anyequipment whose composite health falls below athreshold, say 70%, is written up for attentionwith a work request.

Component Description TypeSystemCriticality

ComponentCriticalit

81LV00 Level Control Valves for C-8105 hydrocarbon Control H 581FC01 Flow control valve to C- Control H 581LV00 Control valves Sour water to injection Control H 5E- Trim Exchange H 3E- Overhead Fin-Fan H 1E- Overhead Fin-Fan H 1E- Overhead Fin-Fan H 181TC00 Overhead temperature Instrumentatio H 5Overhead Recvr Process instrumentation for C- Instrumentatio H 5GM810 Motor for coker reflux/gasoline Motor H 4GM810 Motor for coker reflux/gasoline Motor H 4

Figure 6



30

Component Condition Worksheet

Asset Area Region 5 Classification Pressure Vessel (Spheres,bullets, separators, filters,reactors, fractionators)

Operating Unit Coker 2 Criticality H1System Fractionater Manufacturer Electro Welding Co Inc.Sub-System Frac Overhead Serial Number Natl Bd # 1046Equipment Number C8105 Overhead Rcvr

Done By Steven Kuckley Date 6/30/99

Operating Function/Standard/RangeTo collect condensed liquids and gases from the frac overhead cond coolers and provideAdequate NPSH for reflux and sw pumps.

Comments/Observations

Evaluation Criteria# Criteria Yes No Method/Measurement1 Does the component�s care appear to meet

plant standards?X • Visual inspection

• Check cleanliness & overallcondition, valves, gauges,etc.

2 Has it been worked less than once within thepast turnaround cycle?

X • Tabware/SAP/Work Orderhistory

3 Are the relief valves set at the proper pressurerelease?

X • Are they pulled off andtested/inspected asscheduled

• Visual inspection4 Is the equipment free of process leaks including

man-ways?X • Visual inspection

5 Are there test records available for testedpressure vessels?

X • Check at engineering

6 Is corrosion under insulation not a problem? X • Check records of previousinspections and work withinspection personnel

7 Is the pressure vessel grounded and protectedfrom lightening?

X • Visual inspection

8 Are the studs free of corrosion? X • Visual inspection9 Is the existing insulation in tact? X • Visual inspection10 Is the foundation and supports in good

condition?X • Visual inspection

Condition 70%

Figure 7


5. Develop Strategies for Component Care. Atthis point we have created the equipment list forthe unit down to the maintainable component; wehave classified the component’s criticality, and weknow its condition and operating requirements.We are now in a position to classify the type ofcare (maintenance) it should receive.

Types of maintenance include:

· Run-To-Failure· Inspect· Preventive· Predictive based on Time or History· Condition Monitoring· Predictive base on Condition Projections· Continuous Monitoring· Requires FMEA or Tap-Root Analysis

We identify which type of maintenance toperform based on a simple matrix, once againapplied by the unit team. Figure 8 show a modelthat uses CoUR as a basis to make the mainte-nance strategy.

6. Develop Failure Modes and Effects. Forequipment whose criticality is high, we catalogthe ways in which it has failed in the past, basedon experience of the team, and identify the causeand effects of those failures. Where there is highcriticality, we need to specially design our mainte-nance activities based on the failure modes andcauses.

FMEA is a significant part of performing anRCM study, which we identified as being a largeand often tedious effort. The methods we arepresenting here don’t change the nature of thetask; they do, however, create a structure whereonly those items that require the analysis get theeffort. In addition, every other component in thesystem has a clearly considered maintenancestrategy at the same time. The Asset HealthcareSystem we are using does simplify the task ofperforming RCM analyses, however, and gives usan audit trail that identifies how we made ourdecisions.

Criticality Proactive Maintenance ActivitiesHigh-1High-2Med-1

Med-2Low-1Low-2

High-3Med-3Low-3

0 - $5,000

Time Based Useful LifeSchedule & ReplaceB/4 Failure

Time Based Useful LifeInspect, PM & Cond.Monitoring

RCM, FMEA, Cont.Monitoring, PdM,PM &Root Cause Analysis

PM, PdM,& Root CauseAnalysis

Inspect, PreventiveMaintenance

Inspect, Run toFailure

Run to Failure OperationalMaintenance

PreventiveMaintenance

$5,000 - $50,000 $50,000 ++ComponentValue

Figure 8



32

7. Develop (Asset Healthcare) MaintenanceActivities. We now have identified the appropriatestrategy for every component in the equipment system.We proceed to design the healthcare task according tothe strategy. This makes run-to-failure a legitimateproactive AHT, because it is the best identified actionfor the business need.

Each strategy implies a set of activities that will opti-mize its use within the unit. Thus for each component,we proceed to design its specific care needs, and if wehave performed a Failure Modes/Effects Analysis wedesigned specifically to mitigate the failure cause.

It would be the subject of another article to cover insufficient detail the specific design process for assethealthcare tasks. However, our software tool, ifappropriately chosen, has industry-specific equipmenthealthcare tasks that serve as templates in this design.In many cases the existing preventive and predictivetasks, if they have been found to be the best strategy,can be used as a starting point as well.

Front End FMEA Task selection & implementation

Hierarchy

Criticality

Condition

FailureModes

Causes

Tasks for critical failure modes

Review remaining components

Effects

Critical Only

Full Blown RCM

Figure 9

Review &AnalyzeVariation

CreateMeasurement

Process

DevelopAsset CareProgram

Load &Schedule

Work

Prepare andExecute

ScheduledMaintenance

Figure 10


COMPLETING OUR CLOSED-LOOP PROCESS

Load and Schedule Work is the next activity after wehave completed the development of the AssetHealthcare Program. In this activity we:

• Finalize jobs, with tasks, parts, skills, tools ,etc.• Load into CMMS• Set and optimize schedules as identified

To Prepare and Execute Scheduled Maintenancewe:

• Develop the Weekly Schedule• Identify that jobs have parts available• Assure that the labor and equipment will be

available• Perform the scheduled asset care tasks and

record the results (e.g. Conditions found,corrective maintenance required)

To Review and Analyze Variation we:• Prepare Performance Indicator Reports (e.g.

PM compliance, downtime)• Review trends• Review completed work orders for issues and

opportunities• Adjust frequencies as appropriate• Flag failure modes for investigation & identify

required changes in maintenance

BENEFITS WE HAVE SEEN

Operators and maintainers who apply this method totheir production areas gain a much greater understand-ing of the equipment and production process, including:

· Equipment Function· Component Criticality· Proper maintenance activities and division of

responsibilities· Current condition of components

An other benefit is immediate improvements in operat-ing procedures, equipment condition (through SWATTeams), and levels of productivity. Improved coopera-tion between maintenance and production lead tosignificant gains in many areas. Finally, increasedprecision of maintenance or performing the rightprevention for problems results in increases efficiencyand decreased downtime.

Results from a recent engagement

� Equipment database (1,948 pieces of equipment) has been "cleaned up" byremoving 351 components (18%) that no longer exist

� P&IDs have been completely revised and reconciled with equipment database� Total risk for credible failure modes for each critical component have been assessed� Relative criticality have been documented for each system and component� Documented technical basis for each component’s care strategy� 3 design change recommendations were proposed to mitigate risk of failure� 209 PM maintenance tasks were validated, deleted, or created for critical equipment� 460 condition-based operator rounds and console operator type tasks were

validated, deleted, or created for critical equipment� Also, other care tasks for non-critical equipment required by regulatory

commitments were validated or created to satisfy these commitments� This proposed strategy involves no marked increase relative to current workloads,

but large improvements in effectiveness by applying the proper care tasks for allequipment

Figure 11


Financial results include:• Action Teams documented $1.5 million in

benefits, more than enough to cover all theoutside services

• A single large unit is producing at an increasedrate valued at $15,000,000 in annual product

• Another refinery customized the process withour help, and identified $30,000,000 opportunityachievable with this process. Once we trainedthem, they are implementing successfullywithout SAMI’s help

SUMMARY

A new language can help us break the paradigm ofpredictive and preventive maintenance as suitable forall types of risks and conditions. The Asset Healthcareframework will simplify the effort to create a compre-hensive maintenance program for equipment, and matchthe effort and type of intervention specifically to thecriticality of the system and the component.

Our results include proactive maintenance for allcomponents, an ability to create an activity-basedmaintenance budget, gaining control of the workschedule, improved equipment health and lower costs.


34



SAMI

Creating a SuccessfulCorporate MaintenanceCouncilby S. Bradley Peterson, President

Most large, multi-plant companies have launchedcorporate “Maintenance Councils” in the past decade.While some have achieved a significant success, mostare still floundering for direction and concrete results.What are the differences that make some successfuland some status quo?

Types of Maintenance Councils

There are a number of models we have observed thatwork successfully to add value to a multi-plantcompany. These include:

• Networking & Competency Development• Coaching for Change• Agents of Change

The Networking ModelThe Networking Model

�Low Cost�Builds Organizational Knowledge�Increases Technical Skills�Leads to Functional Improvements�Can be done on a part-time basis

�Slow to Build Value�Strengths may not exist in company�May not influence operations/eng.�Knowledge may not be implemented

What is it?The council�s primary purpose is education; learning from each other, creating specialist teams, problem-solving, sharing practices, etc.

Model�s Strengths Model�s Weaknesses

Successful Examples: Mobil Oil (Walter Jones, Beaumont); Lyondel l-Equistar (Joe Fluder); International Paper (Ken Collins)


36

The Coaching ModelThe Coaching Model

�Can lead to significant value creation�Cost billed to plants that want help�Creates examples of success�Raises visibility of maintenance incompany

�Where to acquire & maintain skills?�Change may be quite slow or nil�Too limited assistance to drive change�May not get high priority in plants�Maintaining organizational visibility

What is it?The council sets up a direct assistance organization, leading memberplants in assessing their gaps, and coaching for change


Successful Examples: Alcoa (Bill Mathews); DuPont (Ralph Tewksbery);Weyerhaeuser (Rick Nelson, Pat DiGiuseppe)

The Consulting ModelThe Consulting Model

�Highest Value to Company�Works best with large number ofplants to support on-goingorganization�Significant change agency forcompany�Replaces need for externalconsulting

�High Cost�High Leadership and OwnershipRequirements�High Skill Requirements�May lose staff to outside interests

What is it?The council�s primary purpose is developing a corporate plan andstructure for change and significant value creation


Successful Examples: Rohm & Haas (Dick Pettigrew), DuPont (in theearly 90�s)


Development Lifecycle for the CorporateMaintenance Council

Whichever model applies to you, there are threephases in the lifecycle of the Corporate MaintenanceCouncil: Initiation, Growth and Maturity. Successfulcompletion of each is a requirement to move to thenext. We explore each phase, including theobjectives, success factors, what to do, and what tomeasure.

Figure 1

The Lifecycle of the Corporate Maintenance Council

Initiation Growth Maturity

�Objective: Set-up for Success

�CSF: Leadership, orientation,structure, philosophy

�Activities:�Create Excitement�Recruit Sponsor andleaders�Develop Charter�Create Structure�Assure Visibility�Identify Business Value�Initiate, educate members

� Measures:�Level of Sponsorship�Value of Business Case

�Objective: Early Successes

�CSF: Leadership, methods,value creation, visibility

�Activities:�Identify Initial plant site�Assess plant status�Develop Business Case�Plan Implementation�Implement changes�Measure success�Market Success

� Measures:�Quantitative Results�Qualitative results andsupport generated

�Objective: Repeat Success

�CSF: Leadership, flexibility,marketing, financial integration

�Activities:�Create Permanent Team�Routinize assessment &Implementation methods�Develop & executeinternal/external mkt plan�Increase scope of valuedelivery�Integrate results withleadership rewards

� Measures:�Total value created�Increasing responsibility

Creating a Successful Corporate Mainteance Council


38

Initiation Phase.Our objective in initiating the Council is to structure itfor long-term success. The consequences of failinghere are a council that is not respected, has nocooperation from the rest of the manufacturingcommunity, and fades away into that sunset ofcommittees unable to create value. So all efforts hereshould be directed towards a successful launch.

What is critical in this early stage?

• Top leadership must endorse the need, thegoals and the methods of the Council

• A champion of sufficient stature needs tomake a priority of establishing the Council

• The Council leader must be respected as adoer, probably the person who is too busy forthis job. Experience shows that other thingsbeing equal, it is better if the leader comesfrom production rather than maintenance

• The structure of the group needs to supportongoing scrutiny and visibility, and willingnessto be accountable for its actions

• The Council must represent production in asignificant manner, if necessary to the exclusionof maintenance staff. If possible get more thanone representative per facility, as peoplechange jobs often and lose continuity. Getinvolvement by a balanced group (includingmaintenance, production, engineering, staff),and don’t be afraid of having hourlyinvolvement. It may take more time at thispoint to achieve union or hourly ownership,but it will pay-off in implementation

• The Council must be seen as action- andgoal-oriented, and can’t spend its start-upcapital (goodwill in the formation of anythingnew) by having meetings that don’t seem toget anything done

• Certain methods and deliverables will yieldsuccess. These include developing a charter,developing an estimate of value to becaptured, and developing a communicationsplan

• Identifying how group funding will work, bothfor the time and travel expense, as well as anyoutside services

Delivering ValueThree successful internal maintenance consultingorganizations we have known or been involved with(Rohm & Haas, Dupont and Alcoa) have greatlysimplified the identification of value. Each uses a singlemeasure for maintenance cost and product throughput.While each uses a slight variation of definition, theycome down to this concept:

Cost is measured as Maintenance Expense as aRatio of Replacement Asset Value.

In some industries this is routinely benchmarked,especially in Refining, where the Soloman Study is astandard measure that a majority of companies use togauge their performance. In others there may be nostandard of performance and even measuringReplacement Asset Value (RAV) is difficult todetermine. So the Council needs accounting involvedto assure a consistent measure of maintenanceexpense among all plants exists, and secondly thatthere is a consistent means of valuing RAV. This issometime taken from the Maximum Probable Losscalculation of the property and casualty insurer if nobetter measure exists.

Throughput, or capacity utilization, or uptime or OEEmeasures how well the plant is making use of theinherent utility of the equipment assets undermanagement. Each of these measures can be tied to afinancial amount.

A concern on this point is that sometimes only a smallamount of downtime is mechanical or unplanned.The Council needs to decide if all sources ofdowntime are going to be reviewed, or only thosedirectly affected by maintenance. For instance,sometimes a plant in not sold out, or is sold outseasonally; whatever result the team and plant comeup with needs to be justifiable, and owned by the plantleadership.

Typically, for a company whose overall maintenancecosts might be $100 million, we have seen that 15-25% savings is available by meeting a reasonableexpectation of performance by every plant. Capacity


utilization can usually be improved by 10-20% as well,although we have been seeing steady improvements inmany industries, especially those that routinelybenchmark performance such as chemicals andrefining.

Summary of Initiation PhaseGetting started in a way that creates enthusiasm,support and expectations of good things to come willmake or break the overall effectiveness of theCorporate Maintenance Council. We would suggestthat from the first meeting of the Council, no more than12 months pass before beginning work at a plant site.

Growth Phase.Having successfully gained the attention of leadership,recruited movers and shakers to the Council, andcreated the structure for success; it’s now time tobegin meeting expectations. That means successfulchange at a plant location.

It will be clear early on that there are three types ofplant managers the Council will deal with. First, andmost apropos to this section, are the leaders whowelcome improvement, seeking out methods andsources of continuously making their plants moreeffective. Second is the plant manager who is introuble and knows he needs to do something(anything?) to improve, because his money or his jobis on the line. Finally, there is the plant manager whowants no part of this program. His reasons may beseveral: we have too much on our plate already; timingisn’t good because of construction or a turnaround;we are already very good and don’t want or needcorporate interference; or we don’t want to exposeourselves to measurement and comparison becausewe won’t look very good.

Where do we start? The Golden Rule in corporatelife: first impressions will last forever! That meansthere is only one chance to do this right, to make apositive difference, and for the work to be viewedpositively (these are not quite synonymous!) So webegin by looking for a site champion with thesecharacteristics:

• He is considered successful already; his patinaof success will rub off to the Council’s

activities• He knows how to run projects, how to take

the personal interest necessary to make thingssuccessful

• There is a defined business opportunity whosescope is neither too small to matter, or too bigto be an unqualified success.

• This project is personally and professionallyimportant to the plant manager

Next the Council needs to have a method to proceed.One very important deliverable from the InitiationPhase is an assessment method and an implementationmethod. Rohm and Haas used an outsidemaintenance consulting firm to help them create anassessment methodology and an implementationapproach(es). Dupont embarked on a globalmaintenance cost benchmarking study with aconsulting firm. So this is a proven way to get started.

Getting plant ownership goes beyond the plantmanager’s support; before starting, the entireleadership team will need to understand the outcomes,the resources required and any out-of-pocket costsassociated with the project. There needs to be aworkplan, sample documentation, and delineation ofresponsibilities.



40

Figure 2 Summarizes the Implementation Phase.

• During this process we set goals for changesto our leading indicators (such as changingschedule compliance from 25% to 80%), aswell as changes in results (lagging indicators)such as % overtime, or the availability of aunit.

• We employ change management techniquesto assure that people are ready to proceed.Two methods we like include employing TheManufacturing GameTM and beginningimplementation with a redesign activity, todevelop a complete work managementprocess. In this activity we use plantparticipants from every function and everylevel, all working together, resulting in greatownership.

• The first result we seek is efficiency; gettingmore work done with our staff, and takingover work currently done by contractors. Themethod to accomplish this is better workmanagement processes, as shown in Figure 3

• Efficiency creates work capacity, which in turncan be invested in other activities.Optimization will look at inventory levels,PPM frequencies, etc. Optimization reduces(usually) costs, and further increaseseffectiveness.

• We also invest the work capacity we createinto reducing defects. Most frequentlyreducing defects in Stage 1 is simply to assurethat the PPM’s you have are getting scheduledand properly executed. This further reduceswork, and as we catch up on our backlog ofpreventive work, we increase availability ofequipment. We can also plan and optimizestores better because there are feweremergencies.

Figure 2


Figure 3

Figure 3—Elements of Planned Maintenance,Stage 1

Typical results of implementation in Stage 1 activitiesare cutting overtime in half or more; reducingcontractors to only specialty work; and improvingavailability of specific equipment centers by as muchas 10%. It is true that getting to these levels mayrequire 6-12 months of continuous support, butwithout such results the Maintenance Council is seenas little more than a group who meets andaccomplishes very little.

Most Plant Managers would give their first-born childfor these results! A plant manager who has made themade the efforts and gained the results is anexceptionally strong advocate among his peers toinvest in similar efforts. The role of the Committee isnow to assure that the success is presented far andwide within the company, preferably by people fromthe successful plant itself. This sets the stage for thenext Phase, Maturity.

Maturity Phase.Sometimes the greatest predictor of failure is success.A great deal of time and attention went into the initialeffort to make the Pilot Plant have great results. Thereis a tendency to forget the lessons that got us here tostart with and to relax.

The Pilot Plant was chosen because of the strongleadership, and bias for measuring results and holding

MRO MaterialsManagementMRO MaterialsManagement

Work InitiationWork Initiation PrioritizationPrioritization Planning andSchedulingPlanning andScheduling

WorkExecution &

History

WorkExecution &

HistoryMeasures &Follow-upMeasures &Follow-up

EmergencyWork

EmergencyWork ApprovalApproval

BacklogManagement

BacklogManagement




Maintenance


Maintenance

Integrated T/APlanning &Execution

Integrated T/APlanning &Execution Failure AnalysisFailure Analysis

people accountable. Less able plants will now comeforward looking for similar results but without a fullunderstanding of what it takes to change that wasdemonstrated by the Pilot.

How does the Council overcome this barrier?

The answer has several parts. First is documenting themethods and lessons employed to get the results thefirst time. The path has been developed, and it can beimproved each time the group goes to another site towork. The second success factor is to continue towork with volunteers who have demonstratedsuccessful ability to change. In other words keepstacking the deck to the extent you are able.

We have observed a third factor that appears to bevital in institutionalizing change; that is the creationof an internal consulting organization, dedicated toguiding change at the plant level. Essentially the groupbecomes semi-professional, with:

• marketing strategies to develop and execute,• methods to develop and refine,• relationships to create among the field

managers,• recruiting within the company for those unique

individuals who can lead change• ability to attract a permanent funding method

by reselling their services• creative ability to work on new problems and

situations throughout the plant



42

Both DuPont and Rohm & Haas developed an internalconsulting capacity to meet maintenance and reliabilityopportunities head-on. In doing so, they created anew language and awareness within the SeniorManagement Community of their company. As theunderstanding of the value to be created grew,management compensation programs were changed toreflect progress on maintenance expense and“Uptime”.

Rohm & Haas—An Example of the Best We’veSeenDick Pettigrew led the formation of Rohm & Haas’Maintenance Council. While with another consultingfirm I participated in their initial formative efforts.Most of the steps we have discussed here were stepsDick led. He had a Champion, Tom Archibald, who isa manufacturing executive, and a strong supporter ofthe programs.

Dick learned by doing, experimenting, and tirelesslypromoting their efforts both inside and outside of theircompany. He used consultants, engineeringspecialists, SMRP and other professional associationsto educate his internal team. As time went on, Dickrelied less on outside experts and more on his owncadre of internal experts.

As their successes grew, so did their influence in thecompany. Getting additional funding for morepositions wasn’t easy, but by demonstrating andmarketing results, they have become an integral part oftheir leadership’s toolkit for change. More recently,the internal consulting group has been asked to takeon other challenges of lean manufacturing, in additionto their work on Reliability and Maintenance.

ConclusionsWith careful attention to methods and communication,Maintenance Councils can be vehicles for changewithin your company. The results will easily be worththe extra effort, because so often today we observefew results from a lot of hard work.