Saturday, 14 November 2009

Maintenance and Management - The root of the problem (Pt 2)

If we are ever going to get around The Budget Game, and build budgets that truly reflect our real spending for a desired level of performance and risk, then we need to get to the base of how it is done nowadays.

When a maintenance manager starts thinking about what she will need for maintaining the plant over the next twelve to twenty four months their first port of call is often a combination of the anticipated routine activity for the future, and the near past.

Routine forecasting

Future proactive activity generally comes from the forecast planned maintenance tasks held in the companies CMMS / ERP system. If an organization has its act together, then this will include both the OPEX maintenance and the Capital maintenance planning. (And surprisingly few actually do have this stuff together)

But...  where did this stuff come from in the first place? If your plant is anything like most plants then job-expectancy is around 5 years. meaning that few people even realize why these activities are being done and even fewer have the foggiest as to where they came from.

Once you star to dig into it a little, you find out that the routine OPEX stuff, operating maintenance lets call it, generally is a combination of manufacturers recommendations and experience. (Experience meaning "Ouch that hurt, lets not do that again")

There have been reams of articles written on this, but there are many issues with manufacturers guidelines. One particularly nasty issue is the facts of a manufacturers business model. This is generally something like; "move as quickly as possible to the next model, rush through the basic engineering, make sure all maintenance recommendations are conservative, and above all DO NOT GET SUED!"

So it isn't too much of a leap in logic to work out that building and relying on a maintenance strategy that comes from this background, or waiting until things go wrong and force our hand, is both undesirable and possibly even unethical.

And then there is the real fun stuff...the capital maintenance plans. For the sake of this article we will say that these are all the major refurbishments, replacements and overhauls.

Where does this come from? Does anybody ever really know?

My experience, again after researching into the dim dark pasts of many plants, sites and companies, is that it is often provided by either accountants or the initial contractor.

And the logic is often tied to either the depreciation dates of the assets, which is a bit of financial black arts once you get into it, or it is tied to something a contractor put into his / her spreadsheet because "thats what they were asked to deliver".

Thats a bit frightening isn't it? Not something you would want to bet you career on is it? (or worse, the lives of those working with or near these assets)

Forecasting Corrective Maintenance

This is where things really go haywire. Every person who has had anything to do with Life Cycle Modeling, or Whole-of-Life asset planning, has generally encountered this problem.

How do you forecast corrective maintenance? Most people generally arrive at the point where they decide to take an average of the past 2 years (pick a number) and then use this, minus 10% (because you're going to get better right?) as the means of forecasting corrective actions.

And the problem is???... It is absolute sheer and utter garbage.

What happened last year, or in the last five years, may have little or nothing to do with what will happen next year. There are failure modes that have not yet occurred, corrective actions that have been eliminated totally, and a whole range of additional considerations on the efficiency front.

The size of the prize

So we are now facing the point where we know:

a) The routine maintenance may, or may not have anything to do with the levels of performance and risk we require from our assets.
b) Not only that but they came into being in under dubious circumstances to say the least.
c) Our routine capital maintenance is probably overly conservative or some other derivative of fairy land forecasting, and
d) Our corrective forecasts are, at the very least, dead wrong.

Comforting isn't it? Took me a while to get to this point in my thinking some years ago.

But if we get it right what could happen?

1) On the local front the Budget Game turns from an annual competition and negotiation to a discussion about performance and risk.

2) We get strategies designed to deliver the performance and risk we are chasing, and most importantly...

3) We start down a path that will get us a greater level of confidence, dramatically greater, about our net present costs. (All of the costs we will ever have in todays money)

The last one is a kicker, and we went into the real value of high confidence Net Present Value forecasts in the last article.

In short, it takes maintenance from something we think (because everyone is telling us) is a strategic initiative - through to a firm board room topic and long term competitive advantage.

Not bad for bunch of grease monkeys (like me) and technicians is it?

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