Performance Measures in
Plant Maintenance
A case from a hydrocarbon maintenance organization
BY
Wail A. Al-Sabbali
An engineering report presented to the
DEANSHIP OF GRADUATE STUDIES
In partial fulfillment of the requirements
For the degree
MASTER OF ENGINEERING
IN
CONSTRUCTION ENGINEERING & MANAGEMENT
KING FAHAD UNIVERSITY
OF PETROLEUM AND MINERALS
Dhahran, Saudi Arabia
December 2004
ABSTRACT
WAIL A. AL-SABBALI
STUDENT
PERFORMANCE MEASURES IN PLANTTITLE OF STUDY
MAINTENANCE – CASE STUDY
MASTER OF ENGINEERING IN
MAJOR FIELD
CONSTRUCTION ENGINEERING AND
MANAGEMENT
DATE OF DEGREE
P
2004
lant maintenance is one of the most challenging businesses.
The challenge is even more aggressive in the hydrocarbons
facilities. Maintenance expenditures occupy a major part of
the overall operation expenses. Hence, improving the performance of
the maintenance function is very important for the success of an
Operation and Maintenance hydrocarbon facility, and therefore,
measuring performance is the information system that maintenance
managers rely on for taking decisions.
This report will go through the literatures and theories for developing
performance
measurement
systems
in
plant-maintenance
organizations. In chapter one, the reader will explore the
complications and issues that surround the maintenance function.
Chapter two will review the theories for developing a good
performance measurement system. Moreover, chapter two will show
the limitations and strengths of performance measures in maintenance
services. In chapter three, a case study shall be presented. The case
study describes the development of a performance measurement
system in a hydrocarbon maintenance organization.
From the report, we conclude the importance of a good and efficient
performance measurement system for the success of maintenance
services. We also conclude the need for management commitment for
a successful development of performance measures. The report also
shows how good performance measurement systems help to improve.
In the case study, maintenance function has been improved
dramatically due to the use of the performance measures.
ACKNOWLEDGMENT
My appreciations go to my mentor and director, Dr. Mohammad AlKhalil, who gave me all the help and encouragement. My
appreciations are also due to my wife, who supported me –day by
day- throughout my research.
CONTENTS
Chapter I Plant Maintenance Management
1.1 The Maintenance Function
1.2 Maintenance Management
1.2.1 Maintenance Management Goals and Means
1.2.2 Proactive vs. Reactive Maintenance
1.2.2.1 Corrective Maintenance
1.2.2.2 Preventive Maintenance
1.2.2.3 Predictive Maintenance
1.2.3 Planning and Scheduling
1.2.4 Work Order System
1.2.5 Maintenance Productivity
1.2.6 Support Services
1.2.6.1 Material System and Storehouse
1.2.6.2 Heavy Equipment and Transportation
1.2.6.3 Contracting and Outsourcing
1.2.6.4 Training
1.2.6.5 Information Technology
1.2.6.6 Waste Disposal
1.3 Expenditures and Budgeting
1.4 Continuous Improvement
1.5 Benchmarking
1.6 Summary
Chapter II Performance Measures in Plant Maintenance
2.1 Why Measuring Performance
2.2 What to Measure
2.3 Performance Measures Hierarchy
2.3.2 Human Resources Measures
I-2
I-5
I-8
I-11
I-13
I-14
I-18
I-21
I-23
I-26
I-28
I-29
I-33
I-34
I-36
I-39
I-41
I-42
I-45
I-47
I-52
II-2
II-5
II-7
II-10
2.3.3 Internal Procedures Measures
2.3.4 Customer Measures
2.3.4 Performance Measures Presentation
2.5 How to Make Performance Measures Most Efficient
2.6 Establishing Meaningful Measures
2.6.1 Define the Objective
2.6.2 Identify The Process to Be Measured
2.6.3 Identify The Criteria to Be Used
2.6.4 Update The Measures
2.6.5 Benchmarks
2.7 Statistical Process Control (SPC)
2.8 Benefits of Having a Good Performance Measurement
System
2.9 Summary
Chapter III Case Study: Developing Performance Indices
at ABC Plant Maintenance Department
3.1 The Facility
3.2 Organization Chart
3.3 Maintenance Process
3.3.1 Routine Maintenance
3.3.2 Preventive Maintenance
3.3.3 Contracting
3.3.4 Material System
3.4 Development of Performance Measures
3.4.1 Forming a Team
3.4.2 The Thinking Process
3.4.3 Financial Indices
3.4.4 Internal Procedures Indices
3.4.5 Customer Indices
3.4.6 Learning and Growth Indices
3.5 Presentation and Reporting
3.6 Summary and Conclusion
II-11
II-12
II-13
II-16
II-22
II-26
II-27
II-28
II-29
II-30
II-32
II-35
II-36
III-1
III-2
III-5
III-5
III-6
III-7
III-8
III-9
III-10
III-10
III-13
III-17
III-24
III-28
III-30
III-32
LIST OF FIGURES
Chapter I Plant Maintenance Management
1.1 The relationship between maintenance function and
production function. Both functions –together- form a
reliable production function
1.2 The work order generation in maintenance departments
Chapter II Performance Measures in Plant Maintenance
2.1 Pyramid used at all levels of the company
2.2 Time series graph for percent nonconforming
2.3 Control chart for percent nonconforming
2.4 Different statistical process control charts
Chapter III Case Study: Developing Performance Indices
at ABC Plant Maintenance Department
3.1 ABC maintenance department organization chart
3.2 Area-X O&M team – organization chart
3.3 Routine maintenance workflow
3.4 Preventive maintenance workflow
3.5 Contracting workflow
3.6 Material ordering workflow
3.7 Performance index data sheet
3.8 from ABC indices web page. The status of the urgent
material index at the utilities areas. The target here is always
zero. However, the user use these figures in conjunction with
other indices to assess the planning function in the respective
area
3.9 from ABC indices web page. The status of the average
I-3
I-24
II-8
II-15
II-15
II-33
III-3
III-4
III-5
III-6
III-7
III-8
III-12
III-31
III-35
age of work order index at the processes areas. The index
was first published in October 2003. The figure shows an
improving progress in November and the following months
LIST OF TABLES
2.1 Best Practices Maintenance Benchmarks
3.1 MCI for ABC Maintenance Dept.
3.2 Overtime index in ABC Maintenance Dept,
3.3 Excess Material Index for ABC Maintenance Dept.
3.4 Average age index for three different areas at ABC
facilities
3.5 Emergency work orders index for two area in ABC
facilities
3.6 Backlog for three different crafts at ABC maintenance
dept.
3.7 PM compliance index for last eight months in ABC
maintenance dept.
3.8 PM hours compliance index for three different area at
ABC facilities
3.9 Urgent material index at different areas in ABC
maintenance dept.
3.10 MTBF for pumps, motors, and turbines at ABC
facilities
3.11 Availability index at ABC facilities
3.12 Trip index facilities
3.13 Basic training for crafts at ABC maintenance dept. The
status from beginning of year 2004 to March 2004
3.14 Tasks completion status (Apr 2004) for two crafts units
at ABC maintenance dept.
II-31
III-14
III-15
III-16
III-18
III-19
III-20
III-21
III-22
III-23
III-25
III-26
III-27
III-29
III-30
INTRODUCTION
lant maintenance is one of the most challenging businesses. The
P
degree of uncertainty, the tough working conditions, the tied
time-schedules, the highly paid resources, and the conservative
quality requirements; all these factors come together to form a
real challenging business.
According to Levitt (1997), plant maintenance is unique because of
five factors; greater resources, high cost of downtime, diversity of
systems and types of equipment, high technology, and market focus.
Maintenance management in its current shape goes back to the
beginning of this century. The development in the manufacturing
industry has maturated maintenance services.
Maintenance in the past has been looked at as the “necessary evil” of
the business. Nowadays, maintenance is part of the production
process. Manufacturing firms look at maintenance services as part of
their core business.
Ikhwan and Burney (1994) wrote “as the technology has advanced,
sophistication of all man-made machines and system has grown and,
with that, the nature and needs of maintenance have drastically
changes. Maintenance function has become not only more technical,
more scientific and more complicated, but also more prominent, more
pressing and more paying. Gone are the times when maintenance was
considered “a necessary evil” or managers were contented even if all
the profits went to maintenance”.
The objective of Chapter one is to give an exposure to the function of
maintenance service in the manufacturing industry. This chapter will
work as an introductory for the next chapter.
1.1
THE MAINTENANCE FUNCTION
M
aintenance function is normally a secondary function for a
production firm. The function of production or operations is
to produce or to manufacture a raw input. In the other hand,
the function of maintenance is to maintain the capacity of
the production function. In other words, production’s output
is the product itself; maintenance output is the capacity to produce.
See Figure 1.1 (Ben-Daya and Duffuaa, 1995).
In (Arts et al. 1998), maintenance is a supporting function in any
organization, especially an industrial one. It is part of the production
process that transforms raw materials into final products.
Maintenance of equipment is a significant fraction of the total
operating costs in many industry sectors (Murthy et al. 2002).
Maintenance
Demand for
Production
maintenance
Capacity
Production
Product
Primary production input
Figure 1.1: The relationship between maintenance function and production function.
Hence, maintenance service can be defined as the service provided by
a certain entity to assure the availability of production capacity to
satisfy the demands.
According to Zhu et al. (2002), The business goals of the maintenance
process are:
- To increase primary process capability
- To improve primary process performance such as quality,
profit, etc…
- To satisfy regulatory requirements, such as safety, hazards
and environmental standards in a cost effective manner
For Higgins (1995), maintenance function is a science and an art. It is
a science since its execution relies on most or all the sciences. It is an
art because seemingly identical problems demand and receive varying
approaches and actions and because some managers, foremen, and
technicians display greater aptitude for it that others show or even
attain
In traditional organizations, maintenance is a department responsible
for the function of maintenance (Levitt, 1997). As managers of a
function we are more like owners of a business than members of a
department. A smart organization identifies the customer’s needs, and
services them with the least amount of wasted effort. (Levitt, 1997)
1.2
MAINTENANCE MANAGEMENT
M
aintenance Management is the management of all assets
owned by a company, based on maximizing the return on
investment in the asset (Wireman, 1998).
The purpose of maintenance management is to reduce the
adverse effects of breakdown and to maximize the facility availability
at minimum cost. (Lofsten, 1999)
Levitt (1997) listed some of the excellent reasons to manage the
process of maintenance:
- Managing maintenance will reduce long-term costs;
- Maintenance management will help meeting a competitive
challenge;
- Maintenance management will help preserve your physical
assets.
It is clear that the primer goal of a production organization is
continuing its operations, and to assure that, production managers are
forced to pay attention to their maintenance services.
As explained earlier, maintenance service is a secondary function in
the production function. Nonetheless, it is of an essence that very
often it becomes the real obsession of production managers. The
reason behind that is the nature of the business. Maintenance service
comes to attention whenever something wrong happens!
However, it is very common to have a separate organization
(department)
to
handle
the
maintenance
function.
In
such
organizations, maintenance deals with the production as a customer.
In (Westerkamp, 1997), the customer service relationship is the
foundation of a successful organization.
As per Murthy et al. (2002), maintenance management involves three
steps:
1. Understanding the equipment being maintained.
2. Planning optimal maintenance actions. This involves the
following sub-steps:
- Collecting relevant data;
- Analyzing data to assess the equipment state;
- Building models to predict the consequences of different
maintenance actions and operating loads;
- Deciding on the optimal maintenance actions.
3. Implementing the optimal maintenance actions.
Maintenance management has –dramatically- developed during the
last two decades, and in their continuous quest for improvement, plant
maintenance organizations have incorporated many management
techniques. Things like the Total Quality Management TQM, the
Total Productive Maintenance TPM, and the Reliability Centered
Maintenance RCM… etc.
Continuous improvement is the ultimate objective of any manager. In
maintenance, continuous improvement can evidently be shown by
looking at the life cycle cost of the assets (equipment). At the end of
the day, the ultimate performance measure is the dollar value!
1.2.1 MAINTENANCE MANAGEMENT GOALS AND
MEANS
A
s mentioned earlier, the primer goal of maintenance
management is simply to maintain the capacity of the plant.
To achieve this goal, maintenance department managers must
provide means to lead the maintenance organization to
achieve the goal.
Many sub-goals can be extracted from the primer goal of maintenance
management. Many such as repair of equipment, lubrication and PM
activities, modifications and upgrades, reliability programs…etc. As
per Westerkamp (1997), the goal of maintenance activity is to provide
the optimum quantity and quality of maintenance service, safely, on
time, and at a reasonable cost.
To achieve these goals, maintenance managers must provide means
like, manpower, equipment, tools, the right training, materials…etc.
Hence, maintenance managers must achieve the goal and must also
watch for their means (resources) to achieve the goal. Although, this
might look very clear and reasonably logical, yet, many maintenance
managers loose track. In many cases, maintenance management
focuses on the means and forgets about the goal. The reason behind
that is lack of good management practices.
Many maintenance organizations have incorporated management
techniques like Total Quality Management TQM, Reliability Centered
Maintenance RCM, Total Productive Maintenance TPM or many
others. Those organizations have improved their efficiency by being
more focused on the primer goals of their organization.
Carefully prepared policies and strategies can be of a real help. Many
organizations insist on having their policy published for employees to
see. Westerkamp (1997) stated that policy is the driving force behind
any successful maintenance department.
Maintenance departments are obligated to provide their customers
with a good maintenance service. According to Westerkamp (1997),
the customer service relationship is the foundation of a successful
organization.
A guiding strategy is essential for a maintenance department. In
(Kelly, 1997), maintenance strategy is concerned with:
- Formulating the best life plan for the plant equipment;
- Formulating a maintenance schedule for the plant;
- Establishing the organization to enable the scheduled,
and other, maintenance work to be resourced.
In summary, maintenance management involves many activities.
Good maintenance managers bring all the efforts together to
accomplish the main goal, which is maintaining the production
capacity.
1.2.2 PROACTIVE VS. REACTIVE MAINTENANCE
W
e can divide maintenance approaches into two areas,
breakdown maintenance and preventive maintenance.
Believers
of
the
first
philosophy
“Break-down
Maintenance” argue that maintenance need is not
predictable. It is also not efficient to interrupt the operation
of a piece of equipment just to check on it. If a machine is working,
then, why do we stop it?!! It is better to leave the machine running
until it breaks down.
Believers of the second philosophy believe that leaving the machine
until it completely breaks down is a big mistake. They argue that the
cost of a regular check on the machine is much less than a major
overhaul when the machine breaks down.
Those are the two extremes. The right thing to do is to reach the mid
point. No check at all, means huge loses. Too much check, means
unnecessary costs.
The naive understanding of maintenance jobs is that maintenance
work comes after the machine collapse or looses capacity. In today’s
world, maintenance philosophy has switched to a more efficient
approach. Up to about 1940, maintenance was considered unfavorable
cost and the only maintenance was corrective maintenance (Murthy et
al. 2002).
Maintenance organizations are becoming more proactive on attacking
the failure before it occurs. Using technology, inspections, trend
analysis, and other techniques, maintenance organizations can foresee
a possible failure before it happens. This approach resulted in a
number of maintenance management techniques, things like
Preventive Maintenance Programs, Corrective Maintenance Plans,
and Predictive Maintenance…
The main advantage for Proactive Maintenance over Reactive
Maintenance is the total maintenance cost. Reactive Maintenance
typically costs two or four times what Proactive Maintenance costs
(Wireman, 1998).
In the following, a verity of maintenance techniques shall be explored.
1.2.2.1 CORRECTIVE MAINTENANCE
orrective maintenance should be categorized under proactive
C
maintenance. It simply starts with the discovery of a situation
that could harm the plant operations.
The primary difference between corrective maintenance and
preventive maintenance is that a problem must exist before corrective
actions are taken. (Higgins, 1995)
Corrective maintenance, unlike breakdown maintenance, is focused
on regular, planned tasks that will maintain all critical plant
machinery and systems in optimum operating conditions. (Higgins,
1995)
1.2.2.2 PREVENTIVE MAINTENANCE
I
n (Levitt, 1997), preventive maintenance is a series tasks
performed at a frequency dictated by the passage of time, the
amount of production, machine hours or condition that either
extend the life of equipment or detect that the asset has had critical
wear and is going to fail or breakdown.
As per Westerkamp (1997), preventive maintenance is the systematic
planning, annual scheduling at regular intervals an on-time
completion of needed repairing and replacing of components to:
- Minimize operating losses caused by breakdowns;
- Prolong the useful life of capital assets;
- Lower overall costs.
The objective of preventive maintenance is to reduce e the probability
of failure in the time period after maintenance has been applied.
(Lofsten, 1999)
Preventive maintenance has long been recognized as extremely
important in the reduction of maintenance costs and improvement of
equipment reliability. Two major factors that should control the extent
of a preventive program are first, the cost of the program compared
with the carefully measured reduction in total repair costs and
improved equipment performance; second, the percent utilization of
the equipment maintained (Higgins, 1995).
It is a fact that a good Preventive Maintenance Program is the key to
any successful asset management process (Wireman, 1998).
Higgins (1995) stated that preventive maintenance program is
committed to the elimination or prevention of corrective and
breakdown maintenance tasks.
Like so many things, PM programs must be continuously maintained
and checked to insure effectiveness. Wireman (1998) wrote; “the
preventive maintenance program should be evaluated to insure proper
coverage of the critical equipment of the plant or facility. The
program should include a good cross section of inspections,
adjustments, lubrication, and proactive replacements of worn
components”.
However, keeping a PM program focused is not as easy as it looks.
Surveys have shown that only 20% of the companies in the United
States feel their PM programs are effective. (Wireman, 1998)
PM is boring according to Levitt (1997). Many people choose the
maintenance field because of the variety. They are attracted to the
excitement of the breakdown and the ability to distinguish themselves
“under fire”. (Levitt, 1997)
Westerkamp (1997) stated that many PM programs fail because their
cost is not justified or they take too long to show results.
In (Raouf and Ben-Daya, 1995), a comprehensive PM system
requires:
- Well-trained PM inspector who are dedicated to PM
work;
- Well-maintained equipment history.
Raouf and Ben-Daya (1995) also added that a PM system should
consist of:
- PM checklists specifying lists of PM work for each piece
of equipment;
- PM routes showing the sequence of equipment to be
worked on in a given period;
- PM schedule specifying the PM frequency;
- PM reports covering the PM work actually done on a
daily basis.
In summary, PM programs are very important for a good plant
maintenance management. However, PM programs are not flaw-free
systems. They must be maintained. A very essential factor for the
success of a PM program is the commitment of management.
1.2.2.3 PREDICTIVE MAINTENANCE
redictive maintenance is a management technique that uses
P
regular evaluation of the actual operating condition of plant
equipment, production
systems, and plant
management
functions to optimize total plant operation. (Higgins, 1995)
In (Levitt, 1997), predictive maintenance is the application of advance
technology to detect when failures will occur.
As per Westerkamp (1997), predictive maintenance is the
measurement of equipment, under operating conditions, to detect
symptoms that are “out of line” with physical parameters and classify
the causes.
Another definition for Predictive Maintenance is the extrapolation of
graphic trends of measured physical readings against known
engineering limits for the purpose of detecting, analyzing, and
correcting equipment problems before failure (Raouf and Ben-Daya,
1995).
Higgins (1995) stated that predictive maintenance is perhaps the most
misunderstood and misused of all plant improvement programs. Most
users define it as a means to prevent catastrophic failure of critical
rotating machinery. Others define predictive maintenance as a
maintenance scheduling tool that uses vibration and infrared or
lubricating oil analysis data to determine the need for corrective
maintenance actions. A few share the belief, precipitated by vendors
of predictive maintenance systems, that predictive maintenance is the
panacea for our critically ill plants. (Higgins, 1995)
The objective of predictive maintenance is reducing the maintenance
cost of certain equipment by assessing its condition and shaping it up
before a major costly failure take place. Predictive maintenance uses
analytical methods to predict failures on equipment.
However, being wise in spending money is always recommended.
Wireman (1998) stated that the focus of Predictive Maintenance
Programs is not to purchase all the technology available, but to
investigate and purchase technology that solves or mitigates chronic
equipment problems that exist.
Some of the most common problems in predictive maintenance
programs are; lack of focus to the program, insufficient data, and
organization reactive culture (Wireman, 1998).
The benefits of predictive maintenance vary between lessening the
equipment downtime and reducing the number of emergencies jobs, to
building a better historical record for equipment.
1.2.3 PLANNING AND SCHEDULING
lanning is probably the most critical factor in the success of a
P
maintenance department.
Planning and scheduling are usually compressed into one title.
However, they are two different functions. Planning is the core
activity that gathers the information from all other parties and
generates a harmony. When the planning is done, execution must take
place. That’s when the scheduling function takes place. The schedule
determines when a job should be done. The scheduling function also
stages materials, tools, and sub-projects (Levitt, 1997).
The most difficult obstacle that faces maintenance planners is the
uncertain nature of most of the maintenance operations. Nonetheless,
many techniques are available to help planners to minimize risk
associated to uncertainty.
Westerkamp (1997) stated that the most important part of
maintenance planning is communication.
The goal of planning and scheduling is to optimize any resources
expended on equipment maintenance activities, while minimizing any
interruption the activities have on the production schedule (Wireman,
1998).
Raouf and Ben-Daya (1995) listed the functions that should be carried
out by the planning group:
- Determining the job content and duration;
- Determining work plans using appropriate methods;
- Determining the number and skill of the workers
required for the job;
- Determining spare parts, tools and materials required;
- Planning and scheduling work orders;
- Estimating costs.
One of the difficult tasks that planning and scheduling usually handle
is coordinating
with the operation (production) department.
Operations demands very often interrupt maintenance schedule.
Coordinating a shutdown for maintenance work is subject for
conflicts between maintenance and operations departments.
Planning and scheduling are very important to the success of a
maintenance organization. A very huge investment of staffing,
training, and monitoring is usually spent on the planning and
scheduling function.
1.2.4 WORK ORDER SYSTEM
he work order system is the information system for the
T
maintenance organization (Wireman, 1998).
The objective of the work order is to provide optimum
maintenance
and
construction
service
through
uniform
requesting, authorization, planning, scheduling and assignment of
work and to provide a written record of actual day-to-day work done
(Westerkamp, 1997).
A well-designed work order procedure is a must for maintenance
management. The work-order systems in most of the plants follow the
diagram shown at Figure 1.2.
OPERATIONS SUPERVISOR
REPORT A PROBLEM
MAINTENANCE PLANNER
OPEN A WORK ORDER
MAINTENANCE PLANNER
PLAN THE JOB
OPERATIONS SUPERVISOR
APPROVE THE BUDGET
MAINTENANCE PERSONNEL
EXECUTE THE WORK
A good work-order procedure helps in planning and in history
recording. When we have sufficient history and knowledge of the
short and long-range production requirements, we can intelligently
select the best course of maintenance action (Higgins, 1995)
Wireman (1998) listed some of the reasons for poor work order,
planning and scheduling satisfaction:
- Poor skills of planners
- Lack of organizational discipline to adhere to schedule
- Poor recording of data
- Lack of management support
1.2.5 MAINTENANCE PRODUCTIVITY
M
aintenance productivity is a very serious issue. The nature of
the business doesn’t allow the luxury of doing a planning
job with a high degree of certainty.
The best way to define productivity is doing exactly the
right work in exactly the right way at exactly the right time.
(Stephens, 1997)
As per Westerkamp (1997), the best productivity results when each
individual in an organization has a definite job to do in a definite time.
Hartmann (1987) stated that only 35 percent of the time available is
productively utilized in the average United States plant.
Davis and Hemming (1998) have listed the major causes of lost
maintenance productivity as follows:
1. Waiting Time:
- Job is not set up properly
- Equipment is not available
- Permits are not ready
- Crafts are not scheduled in the proper sequence
- Work request is not clear
- Parts are not readily available
2. Traveling Empty:
- Part or materials are not centrally located or described
in a work order job plan
- Special tools are not indicated on a work order job plan
or not available
- Work request or job plan is not clear
- Maintenance personnel are deployed to jobs without
specified tools
3. Idle Time:
- Excessive break times
- Early quits and late starts
- Work order manpower estimates are too high or too
low
- There is not enough work on the schedule
However, planning and scheduling still is the major contributor in this
matter. Stephens (1997) stated that productivity is the result of good
planning and scheduling.
1.2.6 SUPPORT SERVICES
S
ection 1.2.1 explained the difference between the goals and the
means for a maintenance department. However, some more
supporting services must be taken care of by maintenance
management. Support services are not less essential than the
core maintenance operations. Actually, they are in some cases,
much more essential for maintenance departments.
1.2.6.1 MATERIAL SYSTEM AND STOREHOUSES
arts consist of 40% or more of all maintenance costs (Levitt,
P
1997). Westerkamp (1997) stated that materials represent one
third to one half of the operational budget. Therefore, a good
material management system is very essential for the success of
a maintenance organization.
A plant’s maintenance storeroom is set up to provide maintenance
personnel with the parts and materials needed to keep the plants
facilities and production machinery running efficiently. (Davis and
Hemming, 1998)
Inventory and procurement programs must focus on providing the
right parts at the right time for the asset repairs and maintenance
(Wireman, 1998).
Material system is very essential for maintenance management.
Actually, it is probably the most critical thing in most of the
maintenance activities. In maintenance material planning, overlooking
the smallest, most inexpensive part can shut down a very costly
operation (Westerkamp, 1997).
Material system must be reliable and efficient. Many organizations
use a very sophisticated computerized system to manage their
materials procurement, transporting, & delivery.
One of the problems in materials management systems is that those
systems usually involve more than one organization. In many cases,
the material management system interacts with three organizations at
least; user, purchasing, and accounting… A good computerized
system will definitely help in such situations.
Material procurement systems face a verity of problems. Wireman
(1998) stated some of the common problems that prevent the cost
effective optimization of inventory and procurement practices. In
(Wireman, 1998), uncontrolled stores, lack of recording transactions,
poor inventory and procurement discipline, lack of management
support, and poor stores locations and conditions; were considered
common problems that face material storehouses in maintenance
organizations.
Storehouses are very challenging to manage. It is very important to
avoid the two extremes, unnecessary inventory and critical spares
shortage. Storehouses must be utilized efficiently. An optimization
plan for the use of storehouses could dramatically reduce the overall
maintenance cost. Levitt (1997) wrote; “if you could get the parts you
need, at the lowest cost, without downtime (due to parts) and without
inventory, then you don’t need to maintain much of maintenance
stockroom”.
Storerooms are very costly to maintain. According to Westerkamp
(1997), the best way to reduce inventory is to centralize it in one
location. However, centralization is not always an available approach
–especially- in big-size organizations.
Extra care must be taken when centralizing storerooms. Higgins
(1995) stated that it is essential to differentiate between mechanical
stores and general stores. The administration of mechanical stores
normally falls within the responsibility of the area maintenance
department because of the close relationship of this activity with
maintenance operations.
In (Higgins, 1995), some of the costs associated to storeroom activity:
- Plant space occupied by the storeroom;
- Labor costs of required storeroom attendants, clerks,
or material handlers;
- Storeroom facilities involved (cranes, forklifts…etc.)
- Obsolescence of stored parts;
- Depreciation and depletion of stock material;
- Costs of insurance and applicable taxes.
In summary, material management system for maintenance services
depend totally on the philosophy of management. Managing the spare
parts is a difficult but important task. Computerizing, using statistics
and recording are very essential tools for a good material management
system.
1.2.6.2 HEAVY EQUIPMENT AND
TRANSPORTATION
eavy equipment like cranes and trailers are very often needed
H
during plant maintenance operations. Lifting and transporting
big machines is very common in plant maintenance.
Some organizations have their own heavy equipment
department. Many others have local contracting service providers.
The key factor here is the size of the plant and the amount of
maintenance operations.
1.2.6.3 CONTRACTING AND OUTSOURCING
he primer goal of using contractors is to get a maintenance job
T
done at a higher quality, faster, safer, or lower cost than would
be possible with your own crews.
In (Higgins, 1995), the primary factor in deciding whether to
use an outside contractor is cost.
According to Levitt (1997), there are several types of work that are
commonly contracted:
1. Seasonal (grounds, snow removal)
2. One-time work (construction)
3. Specialized work such as tank cleaning…
4. Low-skill work (floor care, security…)
5. High-skill work (electronics…)
6. Work requiring a license
7. Work where the contractor takes legal responsibility (fire
safety systems…)
However, outsourcing is a decision to be assessed by the manager of
the facility. Outsourcing is not a flaw-free approach. Some of the
maintenance services are very essential for the business that
outsourcing them might not be recommended.
Kelly (1997) stated that the decision to contract a service would
usually be decided on economic grounds. Nonetheless, there are some
influencing factors:
- The availability of contractors;
- The complexity of the repair;
- Quality assurance needs;
- Security of supply. (Kelly, 1997)
Murthy
et
al.
(2002)
differentiate
between
“maintenance
management” and “maintenance implementation”. Maintenance
management involves planning maintenance strategies and the
implementation of the strategies. Therefore, it is absolutely crucial
that the maintenance management and planning is not outsourced for
many reasons. The most important reason is that maintenance and
production must be closely linked. This necessary link is weakened
with outsourcing. (Murthy et al. 2002)
As per Westerkamp (1997), the basic principle applied to contract
services is the same for any investment: it must be a win-win situation
with a satisfactory return on the investment and reasonable pay back
period.
1.2.6.4 TRAINING
I
t was mentioned earlier that maintenance is a science and an art. It
is a science that its execution relies on all sciences, an art because
different people deal with situations differently.
Training is very essential to prepare qualified people to deal with
maintenance operations. A good training system is a life savior for a
maintenance department.
The training function of maintenance insures that the technicians
working on the equipment have the technical skills that are required to
understand and maintain the equipment (Wireman, 1998).
As per Higgins (1995), there are several methods for training
personnel in a maintenance department. The simplest and most
effective is an established and recognized apprentice-training
program. Many other plants do not have any formalized training
program and depend entirely upon exposure, supervisory job
coaching, and association with experienced workmen for their
training.
In (Westerkamp, 1997), there are five steps in developing a master
training plan:
1. Needs assessment for current employees;
2. Needs assessment for new employees;
3. Periodic update of training needs;
4. Master list of function skills required;
5. Documenting the master training plan.
Levitt (1997) divided training into three domains; knowledge, skill
and attitude. Maximum effectiveness must come from competence in
all three areas.
In maintenance organizations, there are more types of training other
than the training meant to improve the technical skills of the
maintenance personnel. Other types of necessary training like safety
and health care training, management training, interpersonal skills
training, general skills training such as driving cars … etc.
In their consistent quest for good training programs, maintenance
organizations face a lot of difficulties. In many cases, training
programs lose their efficiency and become outdated. There is verity of
reasons behind a failure in a training system; lack of motivation for
students, lack of skills of trainers, lack of management commitment,
and unfocused training programs are the most common reasons for
failure of a training program (Wireman, 1998).
1.2.6.5 INFORMATION TECHNOLOGY
W
e computerize to lower or avoid costs, improve service,
control costs, ensure uptime, improve quality, etc. (Levitt,
1997)
The use of computerized systems
in
maintenance
organizations has become part of the business. Computerized systems
help on storing data, keeping history for maintenance jobs, keeping a
record of engineering recommendations, planning and scheduling,
ordering materials…etc.
In most companies, sufficient data is accumulated by the maintenance
and engineering functions to require the computerization of the data
flow (Wireman, 1998).
In (Higgins, 1995), the benefits of computer-automated maintenance
can be classified into four basic types:
- Reduced costs
- Greater access to information
- Better planning
- Increased control
However, computerized systems are subject to failure. (Wireman,
1998) mentioned several reasons for this:
- Lack of organization’s dedication
- Lack of training
- Lack of resources
In (Levitt, 1997), the first issue in computerization is training,
knowledge, attitude, and access for all people involved.
The IT applications in maintenance organizations have grown rapidly
in the past ten years. Applications of electronic businesses have been
incorporated in maintenance management. Many organizations have
implemented electronic networks to connect them to their suppliers
and service providers. This approach has increased the efficiency of
material systems and many other services needed for maintenance
organizations.
1.2.6.6 WASTE DISPOSAL
peration & Maintenance organizations usually have their own
O
procedure for disposing waste. This becomes even more
essential when we talk about chemical waste.
The function of waste disposal is usually assigned to
maintenance departments (Higgins, 1995).
In (Westerkamp, 1997), waste disposal is handled in four ways:
- Land disposal;
- Incineration;
- Recycling;
- Sea disposal.
In the oil industry, the waste disposal matter gains more weight
because of the environmental issues. In many countries around the
world, authorities forced environmental codes and standards.
Operation and maintenance organizations have responded to that by
establishing good and safe procedures to dispose hazardous waste
materials.
1.3
EXPENDITURES AND BUDGETING
he budgeting process in maintenance departments is very
T
challenging. This is due to the fact that maintenance activities
enjoy high level of uncertainty. Levitt (1997) stated that one of
the problems with maintenance budgeting is that history can
only predict a small part of maintenance expenditures.
In (Westerkamp, 1997), there are two types of maintenance budgets,
the operation budget and the projects budget.
Maintenance expenses occupy the largest portion of production
expenses. The cost of maintenance is part of the overall cost of
operations and, therefore, funds for this activity are budgeted to the
operating departments (Westerkamp, 1997).
Maintenance costs vary with many factors. Levitt (1997) wrote; “it is
very difficult to determine all of the contributors to particular
maintenance exposure”.
Size and age of the facility affects the overall maintenance
expenditure. There could be economics in scale in the maintenance
function. Larger companies are likely to use more specialized testing
equipment and skilled people to perform specialized maintenance
functions. However, smaller companies may have to rely on outside
contractors to do the same. Specialized testing equipment will be
severely underutilized by smaller companies. Better utilization of
specialized instruments, training, ability to hire maintenance workers
with varied skills and so on can help large companies to be more
efficient than smaller ones. (Bhat, 2000)
Cost of maintenance function can be divided into two categories:
1. Direct Cost: cost of labor, material and services assigned to
repairs or maintenance jobs.
2. Indirect Cost: cost of poor quality, downtime cost, poor
productivity, poor planning…etc.
We can add to the previous two categories a third category that is the
overhead cost. Overhead includes the cost of planning, IT support,
engineering support and other supporting entities. As per Levitt
(1997), overhead costs tend to be fixed except for major changes in
the department’s size or role.
In addition to what is mentioned above, maintenance expenses
involve the cost of complying with safety and environmental
regulations. Penalties for violations to regulations are also part of
maintenance costs.
1.4
CONTINUOUS IMPROVEMENT
ontinuous improvement is one of the primer objectives of
C
maintenance management. The desire to continuously enhance
the maintenance service and reduce the maintenance expense is
driven by the desire of shareholders to maximize their wealth.
Wireman (1998) wrote, “Continuous improvement is the process of
never accepting the status quo of an organization”. Indeed, this is not
easy.
The process of continuous improvement involve in addition to the
performance measurement system, two other pillars, information and
action (Levitt, 1997).
In (Levitt, 1997), the mission of maintenance includes the idea that
maintenance should work endlessly to reduce, and where possible,
eliminate the need for maintenance.
Performance measurement systems and benchmarking techniques are
the fuel for any improvement. However, organizations have created
many programs to spot opportunities for improvement. In almost all
maintenance organizations, managers have implemented programs to
involve employees. Innovations banks, feedback meetings, reliability
suggestions, reward programs… and others…
However, continuous improvement like any goal is not very easy to
achieve. Wireman (1998) considered lack of true management
commitment as one of the common problems facing continuous
improvement efforts.
One of the goals of a continuous improvement approach is reducing
costs. Some organizations have the strategy of spending nothing. The
consequences of such a strategy could be catastrophic (Levitt, 1997).
An efficient continuous improvement program must not encourage
cutting costs blindly, but rather it must encourage optimizing the
processes.
In summary, maintenance managers have no option but to
continuously seek opportunities to improve. The market demands play
a role in this. However, the major contributor here is the fact that you
cannot keep static in a dynamic world. If you don’t improve, you
loose.
1.5
BENCHMARKING
enchmarking is a systematic method by which organizations
B
can measure themselves against the best industry practices. It
can be defined as follows;
“Benchmarking is measuring performance against that of the
best-in-class organizations, determining how the best in class
achieve those performance levels, and using the information as the
basis for goals, strategies, and implementation.” (Besterfield et al.
2002)
Mitchell (2002) defined benchmarking as follows; “a systematic
process for measuring “best practice” and comparing the results to
corporate performance in order to identify opportunities for
improvement and superior performance.”
According to Raouf and Ben-Daya (1995), benchmarking in
maintenance is the search for the best maintenance practice, which
will lead to exceptional maintenance performance through the
implementation of best maintenance strategies.
Benchmarking and developing performance measures are two
different processes. Nonetheless, they are very much related to each
other. Benchmarking process uses the data provided by the
performance indicators in the organization.
As per Levitt (1997), the difference between maintenance
measurement and maintenance benchmarking is in the publication of
the results to motivate the teams to change. Maintenance measures
have always been used to privately evaluate a manager or a
department. A benchmark is widely publicized to the rank and file to
be of maximal benefit.
Benchmarking is one of the most effective continuous improvement
tools in maintenance services. In short, benchmarking is the ongoing
process of a company comparing itself with another company
anywhere in the world that is considered the best and then taking
knowledge gained to continually improve. (Wireman, 1998)
In (Besterfield et al. 2002), the following six steps contain the core
techniques that form the benchmarking process:
1. Decide what to benchmark;
2. Understand current performance;
3. Plan;
4. Study others;
5. Learn from the data;
6. Use the findings.
As per Wireman (1998), there are six steps for benchmarking:
1. Understanding your organization;
2. Identifying partners;
3. Analyzing differences;
4. Developing and implementing improvements;
5. Evaluating and quantifying results;
6. Starting over.
Mitchell (2002) suggested four steps in the benchmarking process:
1. Select a comprehensive set of parameters for comparison
2. Select reliable internal and external sites for comparison, based
on performance
3. Compare own parameters with “best-of-best” measures
4. Identify areas of greatest opportunity.
There are two main types of benchmarking:
1. Internal benchmarking: comparing two processes inside one
organization.
2. External benchmarking: comparing two processes in two
different organizations.
Levitt (1997) classified benchmarking into three categories;
- Internal benchmarking;
- Best-in-class with the best in your industry;
- Best-in-the-world, which is the ultimate comparison
between functions.
Benchmarking is not a flaw-free technique. According to Besterfield
et al. (2002), the most persistent criticism of benchmarking comes
from the idea of copying others. How can an organization be truly
superior if it does not innovate to get ahead of competitors?
(Besterfield et al. 2002)
In (Yam et al. 2000), one of the critical success factors in
benchmarking is to avoid direct transfer of the best practices from the
best performers without refining to meet individual company’s
requirements. In many cases, blindly resembling the best practices
may even lead to the suppressing of creativity by being confined too
much to the practices of the others. (Yam et al. 2000)
Benchmarking is one tool for managers to spot opportunities for
improvement. Managers must support the results of a benchmarking
process by indications and outputs from other processes.
1.6
SUMMARY
ike all customer services agencies, the biggest challenge that
L
faces maintenance departments is customer satisfaction.
Excellent customer service is the holy grail of all service
organizations (Levitt, 1997). Westerkamp (1997) stated that the
customer service relationship is the foundation of a successful
organization.
In oil processing plants, operation and maintenance services are
usually combined into one organization. This is due to the nature of
the business. For oil operations, it is very important to keep running,
and hence, maintenance services must be nearby. This close
relationship between operations and maintenance in the oil industry
has always raised more challenges. Maintenance departments are put
into rest in a non-competitive environment!
In his study, Cooke (2000) emphasized the importance of balancing
the efforts of the operations and maintenance departments. This
relationship is often weakened by the demand of operations
department for continuous operations and the need for proactive
maintenance activities. In (Cooke, 2000), maintenance should be
treated as a strategic function to be more closely linked with other
activities in the firm such as quality improvement strategies and
corporate strategy.
Operation and Maintenance departments (O&M) have incorporated
management techniques like TQM, RCM… to compensate for the
loss of quality caused by the absence of competition. In many cases,
people in the industry have experienced success in this approach.
In many other organizations, O&M have taken a different approach
by outsourcing many of the maintenance operations.
Many other approaches were attempted by O&M organizations in the
industry.
Another challenge that faces maintenance organizations is culture.
Whenever, an opportunity of improvement is discovered, a change is
required. Without the change, no improvement is possible. The
problem with change is that it disturbs people, and that is when the
role of culture comes. Managers must not save efforts to keep the
organization’s culture open, flexible, educational, and orientedtoward-improvement.
The performance of the maintenance service in an O&M plant is a key
factor for the viability of the plant. It is also a direct contributor to the
net income generated by the production process. Because of that,
many techniques were introduced to the people in the field to help
improving the performance, reducing the cost, and maintaining the
production capacity.
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