Reliability and
Maintenance (RAM)
The Path to World-Class Performance
27th Brazilian Congress on Maintenance
Rio de Janeiro, Brazil
September 12, 2012
Al Poling
RAM Study Project Manager
HSB Solomon Associates LLC
Dallas, TX
Survival in Nature
“It is not the strongest of the species that
survives, nor the most intelligent that survives.
It is the one that is the most adaptable to
change.”
- Charles Darwin
2
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Survival in a Global Market
“It is not the strongest, nor the most intelligent
that survives. It is the one that is the most
adaptable to change.”
“Reliability and maintenance are tools in the
manufacturing survival tool kit!”
- Al Poling
3
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Reliability and Maintenance
Benchmarking
• Benchmarking is the use of actual operating data to
compare performance of multiple entities (e.g., companies,
sites, production units, etc.).
• A benchmark is a performance threshold used for
comparative purposes (e.g., first quartile, median, etc.).
• Benchmarks can be average values (e.g., overall average,
better half or poorer half average, etc.) of a peer group’s
performance indices.
• Benchmarks can also be any breakpoint used to
distinguish performance between better and poorer
performers.
4
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Reliability and Maintenance
Benchmarking
Reliability
Monetized margin loss (maintenance downtime
times standard margin) due to a facility’s
mechanical unavailability and failure to perform as
designed compared to peers in the same industry
Maintenance
The normalized cost of conserving a facility’s
physical assets so they operate at design
performance levels compared to peers in the same
industry
5
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
International Study of Plant Reliability and
Maintenance Effectiveness (RAM Study)
• Implemented in 1996 to compare company, site, and unit
 Maintenance Costs
 Mechanical Availability
• Process Industry
 Chemicals and Petrochemicals
 Refining
• Redesigned in 2010/2011
 Focused on Factors that Impact RAM Performance
 Utilizing Contemporary Measures of Performance
• Benchmarks Against Better Half Average Performance
6
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
RAM Study – Core Indices
Maintenance Cost Index (MCI)
• Maintenance Cost Type
 Expense
 Capital (replacements due to end of life)
• Maintenance Cost Categories
 Labor
 Material
 Overhead/Support
• Maintenance Work Types
 Corrective
 Preventive
 Predictive/Condition Monitoring
• Maintenance Work Categories
 Routine Maintenance
 Turnarounds Including Short Overhauls
7
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
RAM Study – Core Indices
Mechanical Availability Index (MAI)
• Captures all reliability and maintenance related downtime
 Breakdown
 Turnarounds and Short Overhauls
 Slowdowns and Rate Reductions
• Monetizes all reliability and maintenance downtime
 Assigns a standard margin for each production unit
 Plant replacement value (PRV) × 40% × annual RAM downtime
• Captures downtime by equipment category
 Rotating
 Fixed
 Instrument/Electrical
• Benchmarks Mean Time Between Failure (MTBF)
 Pumps, compressors, motors, heat exchangers, etc.
8
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
RAM Study – Core Indices
Reliability & Maintenance Effectiveness Index (RAMEI)
• Reports Net Performance Gaps
 Reliability
 Maintenance
• Highlights Areas of Excellence
 Where performance is equal to or better than first quartile
performance
 Need to understand what enables excellent performance and
replicate throughout the site
• Sums Total Improvement Opportunities
 Maintenance Cost Improvement Opportunities
 Mechanical Availability Improvement Opportunities
• Provides a Basis for a Performance Improvement Plan
9
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Reliability and Maintenance
Culture
• Behaviors are driven by the local culture
• There are two distinct cultures in the reliability and
maintenance community
 Traditional Culture – based on the belief that failures are
inevitable, so they focus on being good at reacting
 Contemporary Culture – based on the belief that failure-free
operation is the objective, so they focus on failure
elimination
10
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Traditional Culture
• High Maintenance Costs (Cost/PRV >1.4%)
• Low Equipment Reliability (<96.7% mech. avail.)
• Reactive Culture (reinforce reactive behaviors)
• Majority Corrective Maintenance (80/20)
• Annual Turnarounds (T/As) with Little Scope Management
• Change (Risk) Averse
• Focus on Optimizing Reactive Behaviors
• Reinforce the Current Culture and Related Behaviors
• Inefficient and Ineffective Organizations
11
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Consequences of Traditional Reliability
and Maintenance
• Increased risk of a catastrophic incident
• Higher recordable injury rate
• Increased downtime, therefore less production
• More off-spec product, thus lower margins
• Larger replacement capital requirements (4–10%)
• Reduced revenue, therefore lower profit
• Resource intensive
• Lower return on assets
• Cannot compete in a global marketplace
12
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Contemporary Culture
• Low Maintenance Costs (Cost/PRV <1.4%)
• High Equipment Reliability (>96.7% mech. avail.)
• Proactive Culture (reinforce proactive behaviors)
• Majority Condition-Based Maintenance (80/20)
• Efficient and Effective Organizations
• Failure Averse
• Low T/A Frequency (5–7 years) w/Scope Management
• Accept Failure-Free Operation as Normal
• Focus on Optimizing Overall Performance
13
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Benefits of Contemporary Reliability
and Maintenance
• Lower risk – both safety and environmental
• Uninterrupted operation
• Higher product quality
• Increased throughput
• Higher return on assets
• Smaller replacement capital requirements (0–2%)
• Increased revenue and profits
• Optimum resource requirements
• Competitive globally
14
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Traditional vs Contemporary
Reliability and Maintenance
Which one are you?
How do you know?
You know by measuring
and comparing performance!
15
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
The Relationship Between
Reliability & Maintenance
Reliability and Maintenance Are Inextricably Linked
Reliability
Cannot cost cut your way
to improved reliability
Maintenance
Maintenance costs are
driven by reliability…or
the lack thereof
Best performers achieve high reliability at low cost!
Poor performers have high cost with low reliability!
Each 1% increase in mechanical availability can
translate into a 10% reduction in maintenance cost!
16
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Traditional Approach
Pressure Applied Here
Maintenance
Costs
Reliability
(Margin)
17
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Initial Traditional Result
Pressure Applied Here
Lower
Reliability
(Margin)
Lower
Maintenance
Costs
18
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Long-Term Traditional Result
Higher
Maintenance
Costs
Lower
Reliability
(Margin)
19
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Contemporary Approach
Maintenance
Costs
Reliability
(Margin)
Apply Pressure Here
20
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Progressive Result
Higher
Reliability
(Margin)
Lower
Maintenance
Costs
Apply Pressure Here
21
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
RAM Optimization
Maintenance Costs
Total
Reactive
Proactive
Mechanical Availability
100%
22
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Profit Optimization
Costs
Total Cost
Maintenance
Cost
Lost Revenue
Mechanical Availability
100%
23
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Path to First Quartile
Effectiveness
Mechanical Availability, %
>98
98
97
97
High Mechanical Availability
and Low Cost
96
Low Mechanical Availability
and High Cost
96
95
Sustainable
Industry Leaders
Not Sustainable
95
<95
1
Facility
1.4
>10
Maintenance Cost, % (US $/PRV)
Efficiency and Cost
24
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
World-Class Manufacturers
• Recognize the value of reliable operations
• Focus on failure elimination (uninterrupted operation)
• Build reliability into their corporate strategy
 Engineering Design
 Procurement
 Operation
• Compete effectively in a global marketplace
25
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Summary
• If maintenance costs are not below 1.4% of plant
replacement value, you are not a world-class performer.
• If mechanical availability is not above 96.7%, you are not
a world-class performer.
• Best performers continue to get better while poor
performers continue to fall further behind.
• Regrettably, for some, it is already too late!
• The path to world-class performance begins with the first
step… what are you waiting for?
26
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com
Questions?
Thank You!
Al Poling
RAM Study Project Manager
Al.Poling@SolomonOnline.com
+1-972-739-1731
HSB Solomon Associates LLC
Dallas, TX
27
Proprietary and Confidential
© 2012 HSB Solomon Associates LLC
www.SolomonOnline.com