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. References Mitchell, J.S. and Contributors. (2002). Physical asset management handbook. 3rd Edition, Higgins, L. (1995). Maintenance engineering handbook. Fifth edition. McGraw-Hill, Inc. Levitt, J. (1997). The handbook of maintenance management. First edition. Industrial Press, Inc. NY. Wireman, T. (1998). Developing performance indicators for managing maintenance. First edition. Industrial Press, Inc. NY Kelly, A. (1997). Maintenance strategy: business-centered maintenance. First edition. 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