ROI from RCM

Determining the return on investment from Reliability-centered maintenance is often a difficult thing to do. We so often get caught up in some of the myths out there on RCM that it is easy to lose sight of the fact that it remains the leading maintenance strategy development methodology in the world today.

Moubray, in his book RCM2, referred to the ability of RCM to get a reduction of between 20% and 70% of routine maintenance where there is an existing maintenance schedule in place. He stated this as a tangible benefit from RCM.

This immediately challenges one of the myths of RCM that we have tackled earlier in this Blog. That RCM should only be applied to critical assets. If we do not apply RCM widely, then we are not likely to get the full reduction in routine maintenance across the entire asset base.

There are always additional and intangible benefits such as the reduction of safety risk, or the reduction of risk to the environmental integrity of the assets. But there are also some more dramatic and tangible benefits available from most RCM implementations.

Have a look at the image below. This comes from the website of the Royal Australian navy and it details the benefits they have achieved from applying SAE compliant RCM throughout sections of their fleet.

In the second column, “% Reduction in PM Hours” we see immediate support for the statements Moubray continually made regarding RCM and its ability to reduce routine maintenance content and workload.

With extremes at 2% reduction up to 75% reduction there is no doubt that this alone would probably have provided the required ROI for implementation of RCM. But look at the third column, “% Reduction in Through Life Support Costs”.

With whole-of-life cost reductions ranging from 6-40% for target indicating radar, through to a gigantic 75% savings on sewerage systems, this project has at least returned a healthy benefit to the RAN.

What is not mentioned here, because it is not a profit generating enterprise, is the advantages gained through increasing the uptime and availability of the physical assets. Even though the benefits case mentioned here is impressive, it pales in comparison to the amount of additional value than can be generated through enabling a company to produce and sell more products.

Through the elimination of process losses we are able to achieve to dramatic changes in operating statistics. First, we can make the Best Achievable Rate possible throughout the entire Uptime periods, meaning that we can maximize the utilization, wiping out issues such as poor quality and partial shutdowns. Then we can drive to make sure that our Uptime is equal or close to our Planned Capacity.

Case studies like this, and others that are now out there in the public domain, only add to RCM continuing in its role as the central plank for Modern Asset Management programs throughout all asset-intensive industries.