Maintenance Basic Indicators 1586878017

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BASIC INDICATORS USED TO IMPROVE TECHNICAL AND ECONOMIC

DECISIONS IN MAINTENANCE MANAGEMENT
Technical Report · March 2020

DOI: 10.13140/RG.2.2.15612.36480
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IngeCon
Asesoría Integral en Ingeniería de Confiabilidad
www.confiabilidadoperacional.com
Serie técnica:
Reliability, Maintenance and Asset Management
Whitepaper # III:
BASIC INDICATORS USED TO IMPROVE

TECHNICAL AND ECONOMIC
DECISIONS IN MAINTENANCE MANAGEMENT
Authors:
**Carlos Parra Márquez & Adolfo Crespo Márquez
Dept. Industrial Management. University of Seville
School of Engineering, University of Seville, Spain
**Email: parrac@ingecon.net.in
www.linkedin.com/in/carlos-parra-6808201b
Grupo de Ingeniería de Confiabilidad Operacional:

https://www.linkedin.com/groups/4134220/
https://www.youtube.com/c/CarlosParraIngecon
Editado por:
www.ingeman.net
March, 2020
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III.1. BALANCE SCORECARD AND KEY PERFORMANCE INDICATORS

APPLIED TO THE MAINTENANCE MANAGEMENT
Taking MMM as a reference in Whitepaper 1, this section on the Balance Scorecardand

core indicators of performance of the maintenance management is part of phase 1 of the
MMM, Crespo 2007 and Parra and Crespo, 2015 (see Figure 3.1).
Figure 3.1. Process of maintenance management model (Crespo, 2007)
The Balance Scorecard- BSC proposed by (Kaplan and Norton, 1992) is a model that
translates the Mission and the strategy of a business unit into a set of objectives and
quantifiable measures around four perspectives:
1. Financial (the point of view of the investor);
2. Customer (the attributes of performance valued by customers);
3. Internal processes (procedures and existing short- and long-term means to meet the
financial and customers´ objectives), and
4. Learning and growth (capacity to improve and create value).
2
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It helps executives and business managers to focus on a handful of measures that are
the most critical for the continued success of the organization. The BSC has been
implemented in a number of large corporations engaged in the engineering, construction,
microelectronics and information technology industries, etc. (Kaplan & Norton, 1993).
The experience of these pioneering organizations indicates that control has its greatest
impact on the performance of the business only if it is used to drive a process of change.
Many have been the times that the BSC has allowed the development of strategic
management systems linking strategic objectives to long-term plans of action in the short
term (Kaplan & Norton, 1996).
Strategic Measures Targets Action Perspective

Objectives (KPIs)
Financial
Customer
Mission
& Internal
Strategy Processes
Learning &
Growing
Figure 3.2 . Balance Scorecard– BSC
The BSC approach provides a comprehensive framework for the establishment of the
corporate or business level management performance systems.
When the BSC approach is applied to the maintenance management, this requires a
process which usually consists of the following steps (Tsang, 1998):
1. Formulate the strategy for the maintenance operation. Here we consider strategic
options such as the development of certain capability, the procurement of
maintenance services, empowerment of first line operators for the practice of
autonomous maintenance, the development of a multipurpose workforce of
maintenance or the application of the condition-based maintenance- this will
always be done through a participatory process;
2. Implement the strategy. Maintenance strategy translates into objectives in the long
term. Key performance indicators (KPIS) that are considered relevant are included
in the BSC by setting its objectives. These measures are designed to attract people
to the global vision. They will be identified, and their objectives established,
through a participatory process, which requires consultation to internal and external
stakeholders, to senior management, to the key personnel in the operational units of
the function of maintenance and the maintenance service users. Thus measures of
performance for maintenance operations are related to the business organizational
success;
3. Develop action plans. These are the means to get to the purposes stipulated in the
objectives set out in step (2), taking into account changes in the supporting
infrastructure of the Organization, such as the structuring of maintenance work, the
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management of information, the reward and recognition systems, the mechanisms

of allocation of resources, etc.;
4. Periodic review of the performance and strategy. Follow-up shall be given and the
causal relationships between measures, which will be validated shall be
investigated. This way we will see the progress made in the fulfilment of the
strategic objectives. The result of the review may require the formulation of new
strategic objectives, the modification of the plans of action and/or the review of the
BSC itself (see Figure 3.2).
III.2. THE IMPORTANCE OF SELECTING APPROPRIATE INDICATORS
The selection of key performance indicators is an important decision that can have many
potential implications. A set of suggestions to enhance positive implications of our Balance
Scorecard are the following (Meekings 1995 and Parra and Crespo, 2015):
- The role of key performance indicators should be the future vision and
prediction, instead of the records of the past;
- The indicators should be used to provide information, promote understanding
and motivation, rather than as a tool for the control of the management from
top to bottom;
- Guide efforts towards a systemic thought, towards fundamental structural
change and organizational learning, rather than towards the fixing of pointless
objectives, the continuous fight against fires or the rigorous allocation of
blame;
- Ensure that the key performance indicators are a framework so that everyone
can understand which align with the objectives at the highest level of the
Organization, so that they can participate actively and enthusiastically in the
continuous improvement.
Taking into account these suggestions, KPIS must be developed in areas where
improvement is desired. Each KPI must have a level of current performance and future
objectives, away from volunteerism that set unattainable objectives and which then
demotivate the organization. These objectives should be specific, clearly measurable and
achievable (but demanding), realistic and based on time (i.e., improvement of performance
monitoring can be done over time).
The frequency at which the KPI will be measured will depend on the amount of
realistic time necessary to expect so that corrective actions can have an impact on the
metrics. Therefore, it is as wrong to measure too much as it is to allow out-of control
parameters for long periods of time. The time, cost and resources needed to develop,
maintain and manage key performance indicators should be an aspect to consider and
should help us to determine the number of key performance indicators used.
Figure 3.3 presents an example of the development of BSC for a certain department of
maintenance (Crespo, 2007). The Mission of this Department is to provide a high value
maintenance of assets, in case areas of the company's low level areas of maintenance were
found they would be considered as candidates for outsourcing this function. To this end,
the Mission has resulted in action plans in accordance with the table of Figure 3.3.
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Strategic Measures Targets Action Plans Perspective

Objectives (KPIs)
Improve - Maintenance - Current: 10% - Ensure proper Financial
maintenance cost (%) per - Target: 7% data acquisition
cost unit produced - Criticality
effectiveness analysis
- PM compliance
Improve - MTBF - 20% MTBF - RCM Program Customer
- Improve
equipment - MTTR - 10% MTTR maintenace time
Mission availability - OEE - 1 % OEE - Improve Quality
&
Strategy Improvement - ISO 9001 Maintenance - Develop all Internal
of compliance certification before remaining
maintenance 31.12.2007 procedures and Processes
process & technical
documentation specifications
Ensure - Training level Definition of the - Definition of the Learning &
suitable per each precise training level per
training levels maintenance maintenance maintenance Growing
to fulfill the level training level per level
mission maintenance level - Training level
assessment
Figure 3.3. Exanple. Case of application of the BSC to the maintenance management methodology
III.3. INDICATORS FROM KEY BUSINESS FUNCTIONAL INDICATORS
If we look at the table in Figure 3.3, the key to the financial prospects of maintenance is
summarized in the performance indicator: "cost of maintenance of the production unit".
With this KPI we are trying to figure out the way we are doing with respect to the
achievement of our objectives related with our cost-effectiveness relationship (Meekings
1995). In this sense it is possible to have a series of additional metrics in the areas of
planning, programming, quality or learning that we serve as support to this key indicator
(see Figure 3.4). Thus, if we detect a problem in our cost-effectiveness relationship, it is
possible to go in-depth to see what circumstances are occurring with respect to this series
of metrics. This new group of lower level metrics are commonly referred to as functional
indicators, and should be closest to the real and easy to control world through the
assignment of responsibilities to individual members of the organization.
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-
.
Maintenance
Cost Effectiveness
Maintenance cost (%)

per unit produced (7%)
Maintenance
planning Quality Learning
and scheduling
PM Accomplishment
Data integrity
Compliance of criticality analysis
(95%)
(98%) (Every 6 months)
Figure 3.4. Obtaining functional indicators for key indicators. Example 1
Another example could be the development of functional performance indicators to

improve the time to repair (MTTR) through a maintenance management process better
materials, based on figure 3.5, where the assessment of maintenance logistics or support
program is obtained through audits to suppliers, proper design of service level of each
spare, best material requirements planning and the improvement of the maintenance
planning. Performance indicators to monitor these action plans could be: the time and the
variability of redelivery of the supplier, the level of service of spare parts, the rotation of
spare parts and the urgent purchase orders made, respectively. These functional indicators
allow to further assess the real causes of the problems (Mather, 2005).
Maintenance
Materials Mngmt.
Performance
Average delay
due to lack of materials
(% MTTR - ↓50%)
Spare parts
Supplier Spare parts Maintenance
requirements
assessment levels design planning
planning
- Average Urgent purchase

Service level Stock turnover
procurement delay orders released
(95%) #10
(x days). (5%)
- Delay variability
(y days)
Figure 3.5. Obtaining functional indicators for the KPIs (Crespo, 2007). Example 2
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We must bear in mind that when we look into the key performance indicator to
obtain functional performance indicators, we must make sure that the resulting action plans
that are placed in the scorecard are in line with the chosen functional indicators.
A third example shows the possible functional indicators to be considered for the
measurement of the performance of a key metrics which suggests the implementation of
RCM to ensure the time of repair and improvement of reliability of the equipment.
Indicators in Figure 3.6 are examples of instruments suggested by Wireman (Wireman,
1998) to help monitor the implementation and results or effectiveness of the RCM. In our
case, special attention to the effectiveness of the program is paid, and therefore we are
going to demand the permanent evaluation of the criticality of assets, the root-cause
analysis, along with the effectiveness of preventative maintenance and the improvement in
the prevention of maintenance activities. These actions will be controlled through the
tracking of a number of critical assets, observing the number of repeated failures, the total
number of failures and the achieved reduction of preventive maintenance tasks.
Performance
of the
RCM program
Availability, MTBF and MTTR
Preventive and Preventive

Criticality Root cause failure
predictive maintenance audit
analysis analysis
maintenance design and re-design
Effectiveness of Reduction in # of
Number of selected Number of preventive
preventive maintenance.
critical assets (x%) repetitive failures maintenance
# Failures tasks (20%)
Figure 3.6. Obtaining functional indicators for the KPIs (Crespo, 2007). Example 3
III.4. USUAL MAINTENANCE INDICATORS IN BALANCE SCORECARDS
We discussed how the Balance Scorecard(BSC) can be defined as a provision of a set of

key performance indicators (KPIs), which in a clear and useful way report on the evolution
of the basic parameters of the business, thus facilitating structured decision making; the
focus of the BSC is to provide organizations with the metrics required to measure their
success translating the strategic map in interrelated, measurable objectives through these
indicators which, in short, allows to align the behavior and actions of all members of the
Corporation. The principle that underlies is "we cannot control what cannot be measured"
(Kaplan and Norton, 1992). The BSC should provide a way of dialogue and
communication in all areas of an organization including the maintenance area. Insofar as
this way of communication works greater participation, alignment and synergy are
achieved. Indicators of financists and technicians allow the company to use the same
language on the maintenance management (Parra and Crespo, 2015). Financial
perspectives, clients, processes and learning suggest regularly, for example, to make
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calculations such as availability according to the mean time to repair (acronym : MTTR:
mean time to repair) and the mean time to failure (acronym : MTTF: mean time to
failure), improving the relationship between parameters such as production, costs and
availability.
Then, we consider important to soon clarify the definition and the calculation of all
these indices we consider basic to set the maintenance strategy in the company. In this
respect and in order to understand the process of estimation of the key indicators of
maintenance, it is necessary to have the following terms clearly defined: failure, times of
operation (availability) and downtime (unavailability) of an asset of production (see Figure
3.7).
Figure 3.7 . Operational states (available/unavailable)
Failure means the cessation of the ability of an equipment to perform a required

function (Crespo, 2007, Parra and Crespo, 2015). Therefore, after the failure of the
equipment is in a state of failure. Failure is the step, the transition from one state to
another, as opposed to breakdown which is a state. When failure occurs, there is one or
more physical evidence (making the failure possible), i.e., the physical form that makes
evident the cessation of the capability of the equipment. This concept, associated with the
physical evidence found once the failure occurs is called the failure mode of the equipment
(repairable or replaceable part). The question that is performed to identify the failure mode
is: what physical evidence caused the failure (Moubray, 1997 and Parra, 2008). Besides
knowing what caused the failure of the element, it will be of huge interest to find out why
this took place, the reason which led to the failure or the cause of the failure. The causes of
the failure will be circumstances associated with the design, manufacture, installation, use
and maintenance of the element. There exist, therefore, design failures, failures of
manufacture, installation failures, failures for misuse, failure for improper handling or
maintenance, failures that are the result of inadequate or improper maintenance, or any
other cause arising from the interruption of the function.
It is essential that there is the ability of classification of the failure modes of the
elements that make up the premises to maintain. This will allow us, as it will be seen later,
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to associate them with patterns of behavior or, from a statistical point of view, failure
modes may be associated with functions of probability distribution that will generate
technical indicators of greater complexity. Obviously all failure modes are not equal,
because they may have very different effects on the production system and its
environment. The determination of the consequences of each failure mode will allow to
develop an indicator of economic impact that will guide the responses of the maintenance
manager to solve every problem of unavailability generated by different failure modes.
Obviously those failure modes called critics, capable of causing injury to people and the
environment, economic impacts on production, significant material damage or other
unacceptable consequences, will require greater attention from the maintenance function.
Moreover, states and times of operation and inactivity of an equipment (see Figure
3.7), are data deriving from the definition of the concept of failure mode, which is the
transition from a state in which the asset complies with its required function, to another one
that does not. If it is assumed that at all times which are necessary for the operation of an
element are supplied at all times, the external means necessary for the functioning of an
element are provided, there are two fundamental states of the equipment: the availability
state, or the unavailability state, or the state characterized by its inability to execute that
function (Crespo, 2007 and Parra, 2008).
If the ability of the element to comply with a required function ceases due to the lack
of supply of external means, it is said then that the element remains in state of availability,
but which is in a state of incapacity external (external failure mode). An equipment may
then be in a state of incapacity to perform a required function, as a result of the cessation of
the supply of the external resources necessary for its operation (external disability) or well
because it is in state of internal failure (internal failure mode), or state of an element
characterized either by a failure, or by a possible inability to perform a function required
for the maintenance. The state of internal failure therefore matches the unavailability state
of the equipment.
Below is the set of key indicators to be considered within a comprehensive Balance
Scorecard from the maintenance area (Crespo, 2007, Parra and Crespo, 2015, Jardine,
1999 and standard of indicators of maintenance UNE-EN-15341):
• MTTF: Mean time to failure (average operating time to failure), unit: time
(hours, days, weeks, months, etc.);
• FF: Failure frequency, unit: failure/time (failures/month, failures/year, etc.);
• MDT: Mean downtime (mean downtime), unit: time (hours or days);
• CDF: Cost of downtime due to failures, unit: money/time (dollars/month,
dollars/ year, etc.);
• A: Availability of the production process, unit: %;
• EVA: Annual economic value-added (profit level), unit: money/time (dollars or
euros/year).
III.4.1. INDICATOR OF RELIABILITY: OMT = MTTF (OPERATIVE MEAN

TIME TO FAILURE)
The average operating time to failure ("mean time to failure", acronym: MTTF), is a
technical indicator to measure the mean time to be able to operate a computer
without interruptions, it is the basic indicator of reliability or operational continuity
par excellence.
Unit of measurement: time (hours, days, months, etc.).
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Expression of calculation:
i =n
 TTF i
MTTF = i =1
(3.1)
n
Where:
TTFi = operating times to failure
n = total number of failures in the evaluated period
III. 4.2. INDICATOR OF RELIABILITY: FF (FAILURE RATE)
The failure frequency is equally a technical indicator of reliability that measures the
number of failures that appear in the considered evaluation period.
Unit of measurement: failures/time (failures/year, failures/month, failures/week,
failures/hour).
1
FF = (3.2)
MTTF
Where:
MTTF = average operating time to failure
Level of detail Utility

- Critical components (parts): seal, - Define maintenance plans
bearing, coupling, etc.
- Systems/equipment: pump, heat - Define production plans
exchanger, oven, etc.
- Plant: distillation, generation, etc. - Define overall budgets and allocation
of resources
MTTF and FF indicators represent the reliability (operational continuity and the rate
of increase or decrease of failures)
Table 3.1. MTTF (OMT) and FF indicators utility
III.4.3. INDICATOR OF MAINTAINABILITY: MDT = MDT (MEAN DOWN

TIME)
The mean downtime (MDT), ( "mean downtime", MDT), is a technical indicator

that measures the mean time that it takes to return a component to a suitable
operating condition after a failure. It is the most important indicator of
maintainability.
Unit of measurement: time (hours, days, week, etc.).
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i =n
 DT i
MDT = i =1
(3.3)
n
Where:
DTi = time out of service
n = total number of failures in the evaluated period

- Critical components (parts): seal, - Define the scope of the maintenance
bearing, coupling, etc. and the impact due to unavailability
due to failure parts
- Systems/equipment: pump, heat - Define the scope of the maintenance
exchanger, oven, etc. and the impact due to unavailability
at the systems/equipment levels
- Plant: distillation, generation, etc. - Define the scope of large maintenance
(overhaul) and impact due to
unavailability of plant
The MDT indicator represents the maintainability (times of restoration of the events
that generate unavailability)
3.2 table: Usefulness of the MDT (MDT) indicator
III.4.4. INDICATOR OF COSTS: CDF (COST OF DOWNTIME DUE TO

FAILURES)
The costs of downtime due to failures (CIF) is an indicator that measures the
economic impact caused by the effects that a failure mode in a specific period of
time brings with it.
Unit of measurement: money/time (dollars/year, dollars/month, etc.)
CDF = FF x MDT x (DC + PC) (3.4)
Where:
FF = failure frequency = failures/month, failures/year, etc.
MDT = mean downtime = hours/failure
DC = direct costs of correction for failures per hour =dollars/ hour (includes the
costs of materials and labor)
PC = cost of penalty per hour = dollars/ hour (includes opportunity costs caused
due to failure events (plant stoppages, delays of production, damaged products,
rework, low quality, impact on safety, environment, etc.)
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- Critical components (parts): seal, - Define the economic impact due to
bearing, coupling, etc. failures at the level of parts
- Systems/equipment: pump, heat - Define the economic impact due to
exchanger, oven, etc. failures at systems/equipment level
- Plant: distillation, generation, etc. - Define the economic impact due to
failures at plant level
The CIF indicator represents the economic impact of failures (economic risk
generated by the events of failure)
Table 3.3. Usefulness of the CDF indicator
III.4.5. INDICATOR OPERATIONAL: A (AVAILABILITY)
The availability indicator is a technical indicator that allows to estimate the

percentage of total time that an equipment is able to perform its required function,
assuming that the external resources necessary for its operation (fuel, power, etc.)
are supplied. Through the study of the factors influencing the availability (MTTF
and MDT), it is possible for the management to evaluate different alternatives for
increasing the availability of the production assets.
Unit of measure: % (ratio of operating times and downtime).
MTTF
A=  100% (3.5)
( MTTF + MDT )
Where:
MTTF = mean time to failure (average operating time to failure)
MDT = mean downtime (mean downtime)

- Critical components (parts): seal, - Availability of parts (not very useful)
bearing, coupling, etc.
- Systems/equipment: pump, heat - Define production plans
exchanger, oven, etc.
- Plant: distillation, generation, etc. - allows the managerial level to evaluate
the behavior of whole plant
availability
The D indicator represents the percentage of available time of the assets (integrating
the reliability indicators: MTTF and those of maintainability: MDT)
Table 3.4. Usefulness of the A indicator
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III.4.6. INDICATOR FINANCIAL: EVA (ECONOMIC VALUE ADDED)
The annual economic value added is the result obtained by calculating the difference
between the return on assets and their cost of financing (or capital required to own
those assets during a specific time period, usually a year). It is one of the best
measures of financial value creation in a company, because it summarizes the profits
obtained once the company is able to cover all its costs, including the cost of capital.
Unit of measurement: money/time (dollars/year, Euros/year, etc.).
Expression of calculation (mathematical representation):
VEW = IR - G (3.6)
IR = CP x VP x A x 365 days/year (3.7)
G = FC + OC + CPM + CCM (3.8)
Where:
IR = Actual income from the production process per year, unit: money/time
(dollars/year).
G = The production process expenses a year, unit: money/time (dollars/year).
CP = Amount of production per day, unit: amount of production/time (cars/day,
barrels/day, etc.).
VP = Unit sale value of the product, unit: money/unit sold (dollars/car, dollars/
barrel, etc.).
A = Actual average availability of operation plant per day, unit: %
FC = Fixed costs, unit: money/time (dollars/year).
OC = Operational costs, unit: money/time (dollars/ year).
CPM = Costs of preventive maintenance, unit: money/time (dollars/ year).
CCM = Costs of corrective maintenance, unit: money/time (dollars/ year).
III.5. RELATIONSHIP BETWEEN THE CORE INDICATORS OF

MAINTENANCE AND ECONOMIC PERFORMANCE OF AN ASSET OF
PRODUCTION
In the process of optimization of the maintenance management, it is of vital importance

that the maintenance area be able to integrate and correlate the core indicators of
maintenance with the economic indicators of the Organization (Woodhouse, 1996 and
Jardine, 1999). One of the most representative indicators at economic level is the so-
called: EVA (annual economic value-added), this indicator represents the relationship
between income and expenditure of a production process in a year of production. In the
math expressions that make up the EVA indicator (expressions 6, 7 and 8) we can
establish the relationship of the different indicators of maintenance and their influence
on the results of this indicator. These relationships are this described:
• The IR indicator (actual income per year), depends on the MTTF and MDT
indicators, these two technical indicators are the basis for calculation of the
availability (A) indicator, indicator that is part of the expression (3.7), which
represents the calculation of the actual income (IR) indicator.
• The G Indicator (costs of production per year) depends on the MTTF, FF, MDT
and CDF indicators, these four technical indicators are the basis for calculation
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of the indicator of costs of preventive maintenance (CPM, indicator which

depends on the MTTF) and indicator of costs of corrective maintenance (CCM,
indicator which depends on FF, MDT and CDF indicators). The CPM and CCM
indicators are part of the expression (3.8) which represents the calculation of the
costs of the production process indicator (G) per year.
III.6. Example of calculation of the indicators: MTTF, FF, MDT, CDF and A
Below are some examples of calculations of the proposed indicators (estimate at 3

levels: components, systems and plant).
Component level: seal
-Data:
TTF (months): 6, 2, 4, 3, 2
DT (hours): 7, 6, 8,7, 6
DC = $ 100/hour (direct costs: materials and labor equivalent per hour)
PC = $1000 / hour (penalty costs per hour)
-Results of the calculation of indicators at the parts level:
MTTF (seal) = 3.4 months (using equation 3.1)
FF (Seal) = 0.294 failures/month (use equation 3.2)
MDT (seal) = 6.8 hours (0,00931 months (reference: 730,39 hours/month),
for the calculation of availability) (use equation 3.3)
CDF (seal) = 2199,09 dollars/ month (use equation 3.4) **
A (Seal) = 0,9973 = 99.73% (use equation 3.5)
At system level: pump
-Data:
TTF (months): 6 (seal), 3 (bearing), 2 (seal), 2 (coupling), 4 (seal),
4 (bearing), 3 (seal), 4 (coupling), 2 (seal)
DT (hours): 7 (seal), 7 (bearing), 6 (seal), 3 (coupling), 8 (seal), 6 (bearing),
7 (seal), 5 (coupling), 6 (seal)
DC = $100/hour (direct costs (materials and labor) equivalents per hour)
CP = $1000 / hour (penalty costs per hour)
-Results of the calculation of indicators at the systems level:
MTTF (pump) = 3.33 months (use equation 1)
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FF (Pump) = 0,3003 failures/month (use equation 2)

MDT (pump) = 6,11 hours (0,00836 months (reference: 730,39
hours/month), for the calculation of availability) (use equation 3)
CDF (pump) = $2018,31 / month (use equation 4) **
A (Pump) = 0,9976 = 99,76% (use equation 5)
At plant level: distillation
-Data:
TTF (months): 0.4 (compressor), 0.6 (oven), 1.5 (exchanger), 0.5 (oven),
0.7 (tower), 1.3 (tower), 1 (pump), 1.8 (exchanger), 1.2 (pump),
1 (compressor), 1 (pump), 2 (pump), 1.6 (oven), 2.4 (pump), 2 (tower),
2 (pump), 1 (oven), 2 (pump), 1.3 (compressor), 0.7 (exchanger), 2 (pump),
1 (oven), 1 (pump)
DT (hours): 12 (compressor), 8 (oven), 3 (exchanger), 10 (oven), 7 (tower),
9 (tower), 7 (pump), 4 (exchanger), 7 (pump), 8 (compressor), 6 (pump), 3
(pump), 6 (oven), 8 (pump), 9 (tower), 6 (pump), 7 (oven), 7 (pump), 5
(compressor), 4 (exchanger), 5 (pump), 9 (oven), 6 (pump)
DC = $ 100/hour (direct costs (materials and labor) equivalents per hour)
PC = $1000 / hour (penalty costs per hour)
-Results of the calculation of indicators at the plant process level:
MTTF (plant distillation) = 1,304 months (use equation 3.1)
FF (plant distillation) = 0,766 failures per month (use equation 3.2)
MDT (plant distillation) = 6.78 hours (0,00928 months (reference: 730,39
hours/month), for the calculation of availability) (use equation 3.3)
CDF (plant distillation) = $5711,15 / month (use equation 3.4) **
A (plant distillation) = 0,9929 = 99,29% (use the equation 3.5)
** To simplify the examples of calculation of the CDF indicator, we are
considering the direct costs for failure correction (DC) and the cost of penalty
for failure (PC) as constant values for the components, systems and plants levels.
In real-world applications, these costs may vary in the three levels of evaluation
presented in the examples above.
III.7. FINALS CONSIDERATIONS ON INDICATORS
The true power of the systems of indicators and BSC´s appears when they become a key
tool for the improvement of the management. As more and more corporations apply the
Balance Scorecards in maintenance, organizations will realize that they can be used to:
- Clarify the strategy and achieve consensus on it;
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- Communicate the strategy to the whole organization;

- Align personal and departments objectives with the strategy;
- Link the long-term objectives and the annual maintenance budgets;
- Identify and align strategic initiatives;
- Carry out regular and systematic reviews, and get the corresponding feedback to
improve the business strategies.
The right use of the Balance Scorecards allows to optimally select:
- Frequency of maintenance and inspection;
- Stock levels;
- Management and optimization of budgets and technical proposals. Taking
objectively into account the impact they bring to get different failure modes on
operations, production, safety and the environment; helping to reduce production
costs and maximize the value of the life-cycle and in this way increase the
company's profits.
Finally, a set of efficient and effective indicators will provide a source of
information that will allow them to operate with a lesser degree of uncertainty and thus
successfully achieve the objectives raised by managers. Today, organizations are
competing in complex environments and, therefore, it is vital that they have an accurate
understanding of their objectives and the methods that need to use to achieve them. The
Balance Scorecards that are capable of integrating the financial indicators of the
business with the technical indicators of the maintenance can translate the strategy of an
organization in a broad set of performance measures more efficiently, that will provide
the appropriate structure to optimize decisions related to the maintenance of industrial
asset management processes. Technical-financial indicators in the area of maintenance
must be allowed on the one hand, identify the strategies that should be followed to
achieve a greater profitability of business (a high economic performance throughout the
lifecycle of the asset), and on the other hand, express such strategies in technical
improvement measures in the areas of reliability, maintainability and availability.
III.8. BIBLIOGRAPHIC REFERENCES
- Arata Andreani A, 2009. Ingeniería y Gestión de la Confiabilidad Operacional en

Plantas Industriales.RIL editors. Santiago, Chile.
- Crespo Márquez A, 2007. The maintenance management framework. Models and
methods for complex systems maintenance. London: Springer Verlag.
- Jardine A, 1999. Measuring maintenance performance: a holistic approach.
International Journal of Operations and Production Management, 19 (7): 691-715.
- Kaplan RS, Norton DP, 1992. The Balanced Balance Scorecard- measures that drive
performance. Harvard Business Review, 70 (1): 71-9.
- Kaplan RS, Norton DP, 1993. Putting the Balanced Balance Scorecard to work.
Harvard Business Review, 71 (5): 134-42.
- Kaplan RS, Norton DP, 1996. Using the Balanced Balance Scorecard as a strategic
management system. Harvard Business Review, 74 (1): 75-85.
- Mather D, 2005. The maintenance BALANCED SCORECARD. New York: Industrial
Press, Inc.
- Meekings A, 1995. Unlocking the potential of performance measurement: a practical
implementation guide. Public Money and Management, October-December: 5-12.
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- Moubray J, 1997. Reliability Centered Maintenance (2nd ed.). Oxford: Butterworth-

Heinemann.
- Parra, C., y Crespo, A. 2015. “Ingeniería de Mantenimiento y Fiabilidad Aplicada en
la Gestión de Activos. Desarrollo y aplicación práctica de un Modelo de Gestión del
Mantenimiento (MGM)”. Segunda Edición. Editado por INGEMAN, Escuela
Superior de Ingenieros Industriales, Sevilla, España.
- Parra C, 2008. Implementation reliability-centered maintenance (RCM) pilot in the
line 10 filler, plant San Joaquin - Empresas Polar. Report edited by INGECON: SN-
09-10-CCS, Venezuela.
- Tsang AHC, 1998. A strategic approach to managing maintenance performance.
Journal of Quality in Maintenance Engineering, 4 (2): 87-94.
- UNE-EN 15341, 2007. Main indicators of performance of maintenance. European
Standard. CEN (European Committee for Standardization), AEN/CTN, INGEMAN,
Spain.
- Wireman T, 1998. Developing performance indicators for managing maintenance.
New York: Industrial Press, Inc.
- Woodhouse j. 1996. Managing Industrial Risk. Chapman Hill Inc., London
Authors:
PhD. MSc. Eng. Carlos Parra Márquez**
PhD. MSc. Eng. Adolfo Crespo Márquez
E-mails: parrac@ingecon.net.in, adolfo@etsi.us.es
Gerente General de IngeCon (Asesoría Integral en Ingeniería de Confiabilidad)
Representante de INGEMAN Latinoamérica
www.confiabilidadoperacional.com, www.ingeman.net
E-mail: parrac@ingecon.net.in parrac37@gmail.com
www.linkedin.com/in/carlos-parra-6808201b
Grupo de Ingeniería de Confiabilidad Operacional
https://www.linkedin.com/groups/4134220/
Universidad de Sevilla, Escuela Superior de Ingenieros, Doctorado en Ingeniería de Organización
Industrial
www.ingeman.net, https://ingeman.net/?op=profesores
Programa cursos presenciales y virtuales 2020:

https://www.linkedin.com/pulse/programa-de-cursos-presenciales-2020-ingenier%25C3%25ADa-
riesgos-carlos-parra
https://www.linkedin.com/pulse/cursos-virtuales-2019-2020-%C3%A1reas-ingenier%C3%ADa-de-
riesgos-carlos-parra/
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BASIC INDICATORS USED TO IMPROVE TECHNICAL AND ECONOMIC

Technical Report · March 2020

Carlos Parra Adolfo Crespo Marquez

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BASIC INDICATORS USED TO IMPROVE

Grupo de Ingeniería de Confiabilidad Operacional:

Programa cursos virtuales 2020 Draft-#-01-Rev.Mar.2020

III.1. BALANCE SCORECARD AND KEY PERFORMANCE INDICATORS

Taking MMM as a reference in Whitepaper 1, this section on the Balance Scorecardand

Figure 3.1. Process of maintenance management model (Crespo, 2007)

Strategic Measures Targets Action Perspective

Figure 3.2 . Balance Scorecard– BSC

management of information, the reward and recognition systems, the mechanisms

III.2. THE IMPORTANCE OF SELECTING APPROPRIATE INDICATORS

Strategic Measures Targets Action Plans Perspective

III.3. INDICATORS FROM KEY BUSINESS FUNCTIONAL INDICATORS

Maintenance cost (%)

Figure 3.4. Obtaining functional indicators for key indicators. Example 1

Another example could be the development of functional performance indicators to

- Average Urgent purchase

Availability, MTBF and MTTR

Preventive and Preventive

III.4. USUAL MAINTENANCE INDICATORS IN BALANCE SCORECARDS

We discussed how the Balance Scorecard(BSC) can be defined as a provision of a set of

Figure 3.7 . Operational states (available/unavailable)

Failure means the cessation of the ability of an equipment to perform a required

III.4.1. INDICATOR OF RELIABILITY: OMT = MTTF (OPERATIVE MEAN

III. 4.2. INDICATOR OF RELIABILITY: FF (FAILURE RATE)

Level of detail Utility

Table 3.1. MTTF (OMT) and FF indicators utility

III.4.3. INDICATOR OF MAINTAINABILITY: MDT = MDT (MEAN DOWN

The mean downtime (MDT), ( "mean downtime", MDT), is a technical indicator

Level of detail Utility

3.2 table: Usefulness of the MDT (MDT) indicator

III.4.4. INDICATOR OF COSTS: CDF (COST OF DOWNTIME DUE TO

CDF = FF x MDT x (DC + PC) (3.4)

Level of detail Utility

Table 3.3. Usefulness of the CDF indicator

III.4.5. INDICATOR OPERATIONAL: A (AVAILABILITY)

The availability indicator is a technical indicator that allows to estimate the

Level of detail Utility

Table 3.4. Usefulness of the A indicator

III.4.6. INDICATOR FINANCIAL: EVA (ECONOMIC VALUE ADDED)

III.5. RELATIONSHIP BETWEEN THE CORE INDICATORS OF

In the process of optimization of the maintenance management, it is of vital importance

of the indicator of costs of preventive maintenance (CPM, indicator which

Below are some examples of calculations of the proposed indicators (estimate at 3

FF (Pump) = 0,3003 failures/month (use equation 2)

III.7. FINALS CONSIDERATIONS ON INDICATORS

- Communicate the strategy to the whole organization;

III.8. BIBLIOGRAPHIC REFERENCES

- Arata Andreani A, 2009. Ingeniería y Gestión de la Confiabilidad Operacional en

- Moubray J, 1997. Reliability Centered Maintenance (2nd ed.). Oxford: Butterworth-

Programa cursos presenciales y virtuales 2020:

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