Applying Lean and RCM Principles to Implement a CostEffective Preventive Maintenance Program

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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_at_ch2m.com
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Discussion Topics
An electronic copy of this 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

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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.
Clair Hill
Holly Cornell
James Howland
Burke Hayes
Fred Merryfield
CH2M HILL Confidential and Proprietary -
Disclosure Prohibited
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CH2M HILL Denver based
24,000 people - 250 offices in 40 countries
Revenues exceeding 5 billion
Fortune Magazine Top 100 companies to work for
54 for 2008
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Industrial Rankings

• 1 in
• Industrial/ Manufacturing
• Semiconductors
• Program Management
• Construction Management
• Environmental Firms
• Marine and Port Facilities
• Site Assessment and Compliance
• Wastewater
• Water

Per 2007 Engineering News Record rankings
(McGraw-Hill)
CH2M HILL Confidential and Proprietary -
Disclosure Prohibited
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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)

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A Performance Perspective on Maintenance
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Maintenance Equality
INITIAL CAPABILITY (What it can do)
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Maintenance Cost Escalation
in Billions
2005
1979
Today 1/3 of all maintenance costs are spent
unnecessarily
Maintenance costs have risen 10-15 per year
Companies are wasting more today than they were
spending 25 years ago
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Preventive Maintenance Programs
PARTIALLY SATISFIED
NOT SATISFIED
SATISFIED
20 of companies believe their PM programs are
effective
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Root Cause Analysis
Only about 1/3 of all companies performed some
type of root cause failure analysis on equipment
breakdowns.
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Maintenance Planners Perspective
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
15
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W.O. Systems

• W.O. Systems - Majority of all maintenance
  organizations are not satisfied with their
  current system or do not have one
• Wrench time efficiency 2 to 4 hours per day are
  spent turning a wrench

Only 1/3 of all companies compared the actual
results to the work order plan
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Maintenance Cost Compared to Downtime Costs
Downtime costs average 41 compared to
maintenance costs for a repair. Surveys range
from 21 to as much as 141 with downtime costs
always the higher number
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Defining a Cost Effective Maintenance Strategy
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The Life of the Facilities Manager
Operational Im under pressure to keep my costs
down, building and production assets
99.999 available and continue to improve
Customer Satisfaction
Strategic The plant portfolio is my companys
second largest cost how do I more closely tie
my objectives to corporate strategy?
OPERATIONAL
STRATEGIC
P O R T F O L I O
B U I L D I N G
S I N G L E
Cost What do I need to do to preserve the
building assets, support manufacturing and reduce
cost?
Plant Optimization Every occupant is my customer
their needs and satisfaction must drive my
objectives.
FACILITIES OPTIMIZATION
COST
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The Motivating Factor

• The primary reason for this discussion is MONEY
  ()

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Maintenance Management Pyramid
Preventive Maintenance
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Rethinking Maintenance Strategy

• 1940

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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

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Blind Acceptance of OEM PM Input

• OEMs almost always deliver some form of OM
  manual
• Three problems
• OEM has not thought through equipments 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

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Proliferation of Solutions

• The Acronym Parade
• OEE, EVA, RAV, TPM, RCFA, TPR,TQM, etc
• TQM problem with Florida Power Light (Deming
  Award)
• 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

The key to an effective maintenance program is
couched in a simple solution
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An Effective Maintenance Program
1. Focus resources for best ROI
2. Measure results
4. Employ an effective management system
3. Avoid intrusive maintenance
5. View maintenance as a profit center
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Some Common Obstacles Myths

• Benchmarking Best Practices Help or
  Hindrance?
• Benchmarking others
• Direct apples-to-apples comparison?
• 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

Selectivity based on convenience
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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

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Reliability Centered Maintenance
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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
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RCM History
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(1) Reliability patterns for non-structural
equipment
The Maintenance Bathtub Curve (1)
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Preventive Maintenance Definition and Structure
Time between planned or maintenance outage and
forced outage vs. duration of forced outage
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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
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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
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RCM lite
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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

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RCM lite
Maintenance Classes
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RCM lite
5 Maintenance Classes

• 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.

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RCM lite
5 Maintenance Classes

• 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.

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Maintenance Management Pyramid
Preventive Maintenance
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Thank you for your time!
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CH2M HILL Overview

• 4.2 Billion Revenue in 2006
• 17,400 Employees
• 225 Offices Worldwide
• 100 Employee-Owned
• E,P,C, OM firm

Corporate headquarters in Denver, CO, USA
Fortune Magazine Top 100 companies to work for