Getting the most for your money

Applying the least sum of all costs to maintenance

Maintenance organization
The organizational structure that you choose, or is chosen for you, has a direct impact on the amount of money that will be spent on maintenance activities. Typically, there are three choices of organization structure: central, assigned or distributed, or a combination of the two.

In the central structure, maintenance resources are located in a common group that assumes the responsibility for maintenance activities across the plant. In the distributed structure, maintenance resources are assigned to the area or division production manager. Each division then becomes responsible for maintenance activities within their assigned area. A hybrid or combination organization assigns routine maintenance tasks to a distributed workforce and uses a smaller central group to provide outage coverage and manpower for special projects.

A central maintenance organization is the most cost-effective approach to plant maintenance. Primarily, this type of organization requires fewer craftsmen and provides the flexibility to assign day-to-day tasks on an as-needed basis. In a distributed workforce, each division must staff their maintenance organization to cover day-to-day tasks, maintenance outages, and have enough surplus to compensate for vacations, sick leave and call-outs. When this surplus is multiplied by every division in the plant, the cost becomes prohibitive.

A central maintenance organization is the most cost-effective approach to plant maintenance.

A central organization is also easier to manage. Since a single maintenance manager and planning team control the maintenance resources, it is an easier task to coordinate maintenance tasks and manpower.

There are two disadvantages to this type of organization. First, maintenance personnel must be cross-trained on all types of equipment and systems used throughout the plant. Unlike the distributed organization, maintenance craftsmen in a central group must fully understand the maintenance requirements of the total plant.

The second disadvantage is the absence of ownership. Since the maintenance workforce is separated from the production divisions, neither the maintenance craftsman nor the division production workforce has a real sense of teamwork. As a result, the central organization tends to increase the adversarial relationship between maintenance and production.

Both of these disadvantages can be overcome by training and team-building efforts. The benefit in lower total maintenance cost is well worth the effort. The reduced manpower required and more effective planning and management of the central organization makes it the least sum of all costs for most plants.

Predictive maintenance
This is an area in which most plants waste a substantial percentage of their maintenance budget each year. There are ways to implement and sustain an effective predictive maintenance organization without bankrupting the company.

First, look at the organization. Most plants establish a team of technicians and engineers who are assigned responsibility for predictive maintenance activities. The actual organization may be either centralized or distributed, but most plants separate the team from other maintenance, production, or reliability functions.

The recurring costs associated with this group can be quite substantial. In more metropolitan areas, such as Chicago, entry level technicians may have a burdened cost of $80,000 or more each year. For a typical team of ten, this represents an annual labor cost of $800,000. If you hope to achieve least sum of all costs, these recurring costs must be reduced as much as possible.

There are two primary ways to reduce the recurring costs associated with data collection. First, critical plant equipment can be hardwired so that data acquisition can be accomplished without a technician. A few years ago, this option was not available. The average costs for a single channel of data could exceed $2,000. Today, the hardwiring costs is less than $200.

Before you discount this option, think about the return on investment. If you hardwire 1,000 channels of data, the average installation cost is about $200,000. Add to this an additional $250,000 for software and computer hardware to automate data acquisition and management for a total installed cost of about $500,000. If this approach replaced the ten technicians, with a recurring annual cost of $800,000, you could recover cost in less than one year. After that, the savings are $800,000 each year.

This approach also provides much better protection for critical plant systems and improves the effectiveness of the predictive maintenance program. These machines can be monitored on a much more frequent schedule and maintenance management can have a much better chance of detecting deviations from optimum operating condition.

Another way to reduce predictive maintenance costs without sacrificing effectiveness is to use these technologies more effectively.

In the Plant Services Predictive Maintenance survey conducted in May, it was clear that some technologies, such as lubricating oil analysis, are being over-used. Lube oil analysis is a great technology, but it must be used selectively, not as a primary condition-monitoring tool.

Maintenance is a controllable cost and effective management yields the least sum of all cost.

Used properly, it should be limited to large reservoirs of lubricating oils to determine when to reconstitute or replace oil inventories. Using lube oil analysis on every bearing and machine is like hunting a fly with an elephant gun. It simply is not cost-effective.

Preventive maintenance
Curtailment or elimination of routine preventive maintenance tasks, like lubrication, is typically the approach taken by plant management to reduce maintenance costs. Unfortunately it has the opposite effect.

In a recent evaluation, we found that a plant had followed this approach. Driven by an arbitrary management decision to reduce the maintenance workforce, none of the required preventive maintenance task schedules were being followed.

The organizational structure that you choose, or is chosen for you, has a direct impact on the amount of money that will be spent on maintenance activities.

As a result, the useful life of critical plant systems was reduced severely . In this example, useful life was reduced to a point that a substantial increase in manpower and material expenditures occurred. Over the next five years the increased expenses will negate the savings enjoyed over the three years that the plant operated with a smaller maintenance organization. When the increase in quality, capacity, and reliability problems are added into the calculation, the plant will lose almost ten times more than it saved by reducing the workforce.

To achieve least sum of all costs, preventive maintenance tasks must be performed religiously--on schedule and completely. Failure to adhere to a rigid schedule always increases total maintenance and reliability costs. There is no exception to this rule.

Useful life and life-cycle costs are directly impacted by a single, critical factor. No, predictive maintenance does not replace preventive tasks. While it can be used to adjust the preventive task interval, nothing eliminates the absolute need for regular lubrication, adjustments, and other preventive tasks.

Maintenance is a controllable cost and effective management yields the least sum of all cost. The potential control points discussed lower total labor and material costs.

In addition, they result in an increase production capacity, product quality and reliability that substantially lower total plant operating costs and raise net profit. All it takes is effective management and logical resource utilization.