Applying Lean and RCM

Principles to Implement a Cost-

Effective Preventive Maintenance
Program
IFMA Industries Forum
April 2008 Denver, Colorado

Presented by: Paul Ring, Vice President – CH2M HILL; paul.ring@ch2m.com

 An electronic copy of this
Discussion Topics
presentation will gladly be provided
upon request.
 Introductions

 A Performance Perspective on Maintenance

 Defining an Effective Maintenance Strategy

 Reliability Centered Maintenance

 Reliability Centered Maintenance (RCM lite)

 Close
 Our Founders
Established in 1946 by three engineers and a professor, CH2M HILL operated
from its very beginning on four simple values: take care of clients, deliver great
work, do right by employees, and stay true to our integrity and honesty.

Holly Cornell James Howland Burke Hayes Fred Merryfield Clair Hill

CH2M HILL Confidential and Proprietary - Disclosure Prohibited

 CH2M HILL – Denver based
24,000+ people - Revenues exceeding Diversified
250 offices in 40 $5 billion business base
countries
By Client Category
Civil Infrastructure
28%
Federal 34%

Industrial 38%

100% Employee-owned
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companies to work for…
# 54 for 2008
Industrial Rankings*
#1 in:
 Industrial/ Manufacturing
 Semiconductors
 Program Management
 Construction Management
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 Water
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Objectives

Mine
Promote the open discussion of ideas and concepts that
challenge the norm or status quo

Yours
Leave this presentation with 2 great take-aways (ideas)
A Performance Perspective
on Maintenance
Maintenance Equality
INITIAL
INITIAL CAPABILITY (What itit can
CAPABILITY (What can do)
do)

So maintenance
Maintenance
The objective of achieves its
cannot raise the
maintenance is objectives by
capability of the
to ensure that maintaining the
asset above this
capability stays capability of the
level
PERFORMANCE

above this level asset in this zone

DESIRED PERFORMANCE (What the user wants it to do)

Maintenance Cost Escalation

2000
1800
1600
1400
1200
$ in Billions
Wasted
1000
800
600 Necessary
400
200
0

1979 2005

Maintenance costs have Today 1/3 of all maintenance

risen 10-15% per year costs are spent unnecessarily

Companies are wasting more today than they were spending 25 years ago
Preventive Maintenance Programs

PARTIALLY SATISFIED NOT SATISFIED

SATISFIED

20% of companies believe their PM programs are effective

Root Cause Analysis

Analyzed

Changed Parts

Only about 1/3 of all companies performed some type of

root cause failure analysis on equipment breakdowns.
Maintenance Planners Perspective

Use Planners

No Planners

Use of maintenance planners is one of the

largest potential areas for cost savings.

Planned vs. unplanned work may have a cost ratio

as high as 1:5
 W.O. Systems

 W.O. Systems - Majority of

all maintenance
organizations are not
satisfied with their current
system or do not have one Compared

 Wrench time efficiency; 2 to No

Comparison
4 hours per day are spent
turning a wrench

Only 1/3 of all companies compared the

actual results to the work order plan
Maintenance Cost Compared to Downtime Costs
14
12
10
8
Maintenance
6 Downtime
4
2
0
low high
Downtime costs average 4:1 compared to maintenance costs for a repair.
Surveys range from 2:1 to as much as 14:1 – with downtime costs always
the higher number
Defining a Cost Effective
Maintenance Strategy
 The Life of the Facilities Manager
Operational Strategic
I’m under pressure to The plant portfolio is
AL

ST
keep my costs down, N my company’s second
IO

RA
building and production largest cost – how do I
AT

TE
assets 99.999% R more closely tie my
E P

G
available and continue P B objectives to corporate

IC
O S O
to improve Customer U strategy?
I R
Satisfaction I
N T
L F
G D
L O
I L
Cost E N Plant Optimization
I
What do I need to do to
preserve the building
G O IES ON Every occupant is my
IT I customer –
CO

assets, support IL AT their needs and

C IZ
ST

manufacturing and FA TIM satisfaction

reduce cost? P must drive my objectives.
O
The Motivating Factor
The primary reason for this discussion is MONEY ($$$)
Maintenance Management Pyramid

Continuous
Improvement

Total Productive Financial

Maintenance Optimization

Reliability
Predictive Operations
Centered
Maintenance Involvement
Maintenance

Technical and
Stores and Work Flow
CMMS Interpersonal
Procurement System
Training

Preventive Maintenance
 Rethinking Maintenance Strategy
Second Generation:
 Scheduled overhauls
First Generation:  Maintained everything the
same
 Maintained it because it was
 Fix it when it broke
there
 Conservative maintenance
practices
1940 1950 1960-70 1980
Third Generation:
The coming of Maintenance
Optimization (80/20 rule) with less
resources
 Downsizing overwhelmed our
ability to “DO IT ALL”
 Higher plant availability and
reliability
 Condition monitoring
 Failure modes effects analyses
 Expert systems
 Greater safety
 Better product quality
 No damage to the environment
 Longer equipment life
 Greater cost effectiveness
1990 2000 Today
Some Common Maintenance Problems
 Insufficient proactive maintenance
 Frequent problem repetition
 Erroneous maintenance work
 Sound maintenance practices not institutionalized
 Unnecessary & conservative PM
 Sketchy rationale for PM actions
 Maintenance problems lack traceability or visibility
 Blind acceptance of OEM inputs
 PM variability between like or similar units
 Ineffective PdM maintenance technology
 Failure to employ the 80/20 rule
 The construction paradigm
Blind Acceptance of OEM PM Input
 OEM’s almost always deliver some form of O&M manual

 Three problems

 OEM has not thought through equipment’s role in a comprehensive and

cost effective manner
 PM is designed to protect manufacturer in warranty work

 OEM equipment is used in many ways by different companies (e.g.,

cyclic versus steady state)

 Equipment may be used for high reliability applications and low reliability
requirements without consideration to maintenance times

 The basis for many PM programs is blind, unknown or legacy

acceptance of OEM recommendations
Proliferation of “Solutions”
 The Acronym Parade
 OEE, EVA, RAV, TPM, RCFA, TPR,TQM, etc……
 TQM problem with Florida Power & Light (Deming Award)

The key to an effective maintenance

program is couched in a simple solution…

 Simple means NO
 Complex organizational experiments
 Overnight attempts at cultural changes
 Unrealistic expectations of dramatic & highly visible payoffs for a small or
short term investment
An Effective Maintenance Program

1. Focus 2. Measure
resources for results
best ROI

3. Avoid 4. Employ an
intrusive effective
maintenance management
system

5. View maintenance as a profit center

Some Common Obstacles & Myths
 Benchmarking & Best Practices – Help or Hindrance?
 Benchmarking others Selectivity based
 Direct apples-to-apples comparison? on convenience
 Difficult to benchmark against a competitor
 Nearly impossible to benchmark against an industrial plant for costs that
count
 One spends more time on process than results over time
 Benchmark YOURSELF
 This is an apples-to-apples comparison
 Apply your time and energy gathering BEST PRACTICES
 Best practices positively impact your bottom line over time
 Best practices include effective measuring and reporting tools and
methodology
The 80/20 Rule – Focusing Resources

 20% of equipment accounts for 80% of CM & DT

 80% of CM & DT costs comes from 20% of equipment

 Based on industry Pareto analyses

 Maintenance focus must be on 20% of equipment

 Basis for Reliability Centered Maintenance

Reliability Centered Maintenance
Reliability Centered Maintenance

Maintenance – Ensuring that physical assets

continue to do what their users want them to do

Reliability-Centered Maintenance – A process used to

determine what must be done to ensure that any physical
asset continues to do what its users want it to do in its
present operating context
RCM History
The Maintenance Bathtub Curve (1)

(1) Reliability patterns

for non-structural
equipment
Preventive Maintenance Definition and Structure

Time/Duration <1 Week 1 to 2 weeks 2 to 4 weeks >1 month Total

<1 week 1705 35 16 16 1772
1 to 2 weeks 358 5 5 2 370
2 to 3 weeks 258 8 0 1 267
3 to 4 weeks 176 0 0 1 177
1 to 2 months 324 12 2 2 340
2 to 3 months 137 3 0 1 141
>3 months 73 3 0 3 79
Total 3031 66 23 26 3146

Time between planned or maintenance outage and

forced outage vs. duration of forced outage
RCM – Four Features
 Preserve function

 Identify failure modes

 Prioritize function need (via failure modes)

 Select applicable and effective PM tasks for the high failure modes

You do not want to apply RCM to every system in

a plant; using the 80/20 rule apply classical RCM
to 20% of the plant systems
RCM Implementation Cost ($$$)
 For a simple plant with about 30 systems (e.g., fossil power plant)
 $200,000 to $300,000 over 1-2 years

 For a complex plant with 100 systems (e.g., nuclear power plant)

 $1,200,000 over 3-5 years

An alternative approach is even more cost effective

RCM lite
RCM lite
RCM lite
 A cost effective Tier Three means to reduce cost

 Classical Method ($$$)

 Abbreviated Classical Method ($)

 RCM lite
 Preserve function

 Identify failure modes

 Prioritize function need (via failure modes)

 Select applicable and effective PM tasks for the high failure modes
 Maintenance Classes RCM lite
Classes Failure Effect Desired Result Analysis Deployment

A - Mission Critical Significant financial, Risk Mitigation; RCM Analysis inc Appropriate PM and
safety or operational Maximize the FMEA; PdM strategies
impact availability of Risk assessment
equipment and
systems
B - Optimize Life Cycle Costs Minor impact on core Minimize equipment RCM Analysis inc Appropriate PM and
business activities life cycle costs over FMEA; PdM strategies
time Risk assessment (including run to failure)

C - Minimize Short-term costs No impact on core Short-term costs Risk assessment Risk Mitigation
business. minimized measures, Visual
inspection and PMs

D - Industry Standard No impact on core Short-term costs Risk assessment RS Means or OEM Job
Maintenance business. minimized Plans, PM

E - Out-Of-Service No impact on core Ability to operate Risk assessment Minimum Maintenance

business
5 Maintenance Classes RCM lite
Class A – Mission Critical
 Failure has a significant effect financially or on the safety of the environment of the core
business activities
 Focus on maximizing the reliability of the equipment and systems, and hence the up
time of the facility.
 Conduct RCM analysis, including a Failure Modes and Effects Analysis (FMEA) and a
comprehensive risk assessment, to determine most effective method of maintenance at
the system and asset level.
 Deploy appropriate PM and /or PdM strategies that mitigate unacceptable risk and
maximize availability.
Class B – Optimize Life Cycle Costs
 Failure has generally a minor impact on the core business activities.
 Focus on minimizing the life cycle costs of the equipment and systems over time.
 Conduct RCM analysis, including a Failure Modes and Effects Analysis (FMEA) and a
comprehensive risk assessment, to determine most cost effective method of
maintenance at the system and asset level.
 Deploy appropriate PM and /or PdM strategies that mitigate unacceptable risk and
minimize cost. RCM analysis outcome may include decision to run asset to failure.
5 Maintenance Classes RCM lite
Class C – Minimize Short Term Costs
 Failure does not impact the reliability of the core business and owner is willing to
minimize costs at the expense of increasing the life cycle costs.
 Focus on minimizing short term costs.
 Conduct risk assessment to determine impacts of system and asset failure on
personnel, community, and EHS compliance only.
 Deploy unacceptable risk mitigation measures. Where appropriate perform scheduled
visual inspections and TLC (Tighten, Lube, and Clean) PM to minimize unacceptable
risk. RCM analysis outcome may include decision to run asset to failure.
Class D – Industry Standard Maintenance
 This class is the national industry standard for typical office space environments using
the RS Means database.
 Assign appropriate RS Means recommended preventive maintenance schedules.
Where RS Means is not available, use OEM recommended or appropriate customized
preventive maintenance schedules.
 Conduct risk assessments or deploy advanced maintenance techniques.
Class E – Out-of-Service
 Associated with out-of-service equipment. The equipment remains with the ability to
operate and minimum maintenance is performed.
Maintenance Management Pyramid

Continuous
Improvement

Total Productive Financial

Maintenance Optimization

Reliability
Predictive Operations
Centered
Maintenance Involvement
Maintenance

Technical and
Stores and Work Flow
CMMS Interpersonal
Procurement System
Training

Preventive Maintenance
Thank you for your time!
CH2M HILL Overview
 $ 4.2 Billion Revenue in 2006
 17,400 Employees
 225 Offices Worldwide
 100% Employee-Owned
 E,P,C, O&M firm

Corporate headquarters in Denver, CO, USA

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companies to work for…