From the Reliability Professionals
                                            at Allied Reliability




Are You Doing
Too...
Copyright Notice
Copyright 2007 Allied Reliability, Inc. All rights reserved. Any unauthorized use, sharing,
reproduction ...
Table of Contents
          Are You Doing Too Much PM?................................................................ 5

...
4 • Allied Reliability, © 2008   10 Powerful Lessons You Should Learn
Are You Doing Too Much PM?
         16 Ways to Save Time and Money on
         Preventive Maintenance

         Unless you...
1. The No. 1 Law You Should Know
The number one law of economics you need to know is based on a principle discovered over
...
2. The Real Truth About PM
          By definition, all PM’s are time-based. That means either calendar time or operating ...
The High Cost of Low Maintenance
                                                Let’s do the math. In essence, BP was
BP ...
The Hidden Costs of Maintenance and Reliability
                                                           	 •	Joe	Barton,...
The Most Expensive Word in Maintenance
The following is an excerpt from BP’s press   Why? Emergency maintenance means
rele...
The Second Most Expensive Word in Maintenance
         According to published reports, a BP operator      If your maintena...
Time is Money
                                                   Simply put, the earlier you can detect
Despite what you m...
The Truth About Equipment Breakdowns
         That	quarter-inch	hole	didn’t	suddenly	appear	in	BP’s	
         pipeline ove...
The following graph illustrates how repair costs increase according to the time a problem is detected:




In spite of the...
The Disconnect Between Management
and Maintenance
         Despite the enormous impact on the bottom line, you
         wo...
How Reliability Creates Wealth and
Competitive Advantage
Now for the good news.                            How did they do...
9. Must have support from the top, yet few
     senior managers are educated in the
     basic principles.

And that’s wha...
18 • Allied Reliability, © 2008   10 Powerful Lessons You Should Learn
Articles and References
          BP to Shutdown Prudhoe Bay Oil Field            Alaskan shutdown to cost BP at least
   ...
About Allied Reliability, Inc.
Allied Reliability helps companies build wealth and competitive advantage through world-cla...
Legal Notice
          While all attempts have been made to verify information provided in this publication, neither
     ...
Allied Reliability, Inc.
                                  624 South Boston Avenue ▪ Suite 250 ▪ Tulsa, Oklahoma 74119 USA...
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Doing Too Much PM Report

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Did you know most companies perform too much Preventive Maintenance? Check out this article and gain some great tips which may help you.

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Transcript of "Doing Too Much PM Report"

  1. 1. From the Reliability Professionals at Allied Reliability Are You Doing Too Much PM? 16 Ways to Save Time and Money on Preventive Maintenance A Must-Read Guide for Maintenance and Reliability Leaders Allied Reliability, © 2008 • 1
  2. 2. Copyright Notice Copyright 2007 Allied Reliability, Inc. All rights reserved. Any unauthorized use, sharing, reproduction or distribution of these materials by any means, electronic, mechanical, or otherwise is strictly prohibited. No portion of these materials may be reproduced in any manner whatsoever, without the express written consent of the publisher. To obtain permission, please contact: Allied Reliability, Inc. 4360 Corporate Road Suite 110 Charleston, SC USA Phone 888-414-5670 Fax 843-414-5779 info@alliedreliability.com www.alliedreliability.com http://www.alliedreliability.com/admin/files2/files/PMReport.pdf 2 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  3. 3. Table of Contents Are You Doing Too Much PM?................................................................ 5 1. The No. 1 Law You Should Know .......................................................6 2. The Real Truth About PM ................................................................... 7 3. If It Ain’t Broke, Don’t Fix It ................................................................. 8 4. Beware of “PM Creep” ........................................................................ 9 5. The First Question to Ask About PM................................................. 10 6. Consider PdM First ........................................................................... 11 7. Get Data You Can Trend .................................................................. 12 8. Check the History ............................................................................. 13 9. Approach Vendor Recommendations with Caution .......................... 15 10. Find out the Reasons Why ............................................................. 16 11. Do the Math .................................................................................... 19 12. The Problem with “Pencil-Whipping” .............................................. 20 13. Apply the 6:1 Rule .......................................................................... 20 14. Consider the Time Factor ............................................................... 20 15. Why Maintenance People Don’t Like PM ....................................... 20 16. Get a Professional, Independent Evaluation of Your PM Program ........................................................................... 20 Allied Reliability, © 2008 • 3
  4. 4. 4 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  5. 5. Are You Doing Too Much PM? 16 Ways to Save Time and Money on Preventive Maintenance Unless you’ve been living on another planet manpower to manage all of their PM’s along for the last fifty years, you already know that with the other important maintenance work, the case for doing preventive maintenance is too. watertight. Lack of Results Done right, preventive maintenance will Despite all of the time and money being spent preserve, protect and extend the life of your on preventive maintenance, there are still way equipment – and boost overall return on too many unexpected equipment failures. assets. Case in point: During a recent chemical plant So here’s the question: Why are most tour, the frustrated maintenance manager maintenance and reliability professionals so said, “We just PM’d that machine, and it failed unhappy with their PM programs? a short time later anyway. So why didn’t we catch the problem with the PM?” Surprisingly enough, according to the consultants at Life Cycle Engineering, just 22% Why indeed. of maintenance managers are satisfied with their current programs. So in a nutshell, the problem with preventive Here are the two biggest complaints: maintenance is that it takes too much time and produces too little results. PM Consumes Too Many Resources Many maintenance managers believe their That’s why we decided to publish this special PM program is simply bigger than it should report. So let’s press on. be. They feel like they don’t have enough Allied Reliability, © 2008 • 5
  6. 6. 1. The No. 1 Law You Should Know The number one law of economics you need to know is based on a principle discovered over 200 years ago. You’ve probably heard of it – it’s called the Law of Diminishing Returns. As any good MBA student can tell you, this law states that as one production factor increases while the others remain constant, overall production decreases after a certain point. In plain English, it means as you increase preventive maintenance, production output eventually decreases. The following chart illustrates: The Law of Diminishing Returns You see, there’s a fine line between doing too much, too little and just the right Production Output amount of preventive maintenance. Clearly, there’s a point at which increasing PM hurts the bottom line. Amount of Preventive Maintenance The reason? Simple. Most PM procedures require that the equipment is shut down. That means uptime goes down, so production output eventually goes down too. Meanwhile, maintenance costs go up. So how much preventive maintenance is too much? According to a private study, best practice programs generate 15% of their maintenance work from PM inspections. Another 15% is corrective work identified by those inspections. So preventive maintenance should account for about 30% of your total maintenance workflow. 6 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  7. 7. 2. The Real Truth About PM By definition, all PM’s are time-based. That means either calendar time or operating time dictates when an asset should be inspected, cleaned, adjusted, replaced or reconditioned. But is there really a direct relationship between the time equipment spends in service and the likelihood it will fail? In short, the answer is no. The truth is, most equipment failures are not age-related. In fact, for complex systems, the majority of failures will occur at random. Consider the facts. The following graphs demonstrate failure probabilities relative to the age of the equipment itself: First, it’s important to understand this data comes from the airline industry, where maintenance and operations standards are exceptionally high. That gives us a true picture of how equipment fails when it is maintained and operated correctly. The reality is, 89% of equipment failures are not age-related. Therefore, there’s no amount of time-based preventive maintenance which can manage these failures effectively. That’s why using time as the primary basis for your maintenance strategy is inherently flawed. It will have very little impact on overall reliability. From a risk standpoint, it’s much safer to assume that equipment failures can happen at any time. Allied Reliability, © 2008 • 7
  8. 8. The High Cost of Low Maintenance Let’s do the math. In essence, BP was BP budgeted some $71 million for battling spending $71 million to protect an asset corrosion in its Alaskan pipelines in 2006. that delivers about $10 billion in annual That’s 15 percent more than 2005 and 80 revenues. percent over 2001. And that doesn’t include money for replacement and repairs. Now even if you don’t know anything about Was it enough? Apparently not. After the maintenance and reliability, doesn’t that sound shutdown, BP admitted inadequate pipeline a little risky? maintenance procedures and “a gap” in their corrosion program. Shortchanging maintenance is like playing Russian roulette. Pay now or pay later. “We based our corrosion program in Lesson 3: Reliability is a long-term investment cooperation with agencies --- what we thought strategy. It is not the place for turning a quick buck. was an adequate program. Clearly it is not,” said Bob Malone, president of BP America. “Our program was insufficient and will be rectified going forward,” Steve Marshall, president of BP Alaska said during an August news conference. 8 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  9. 9. The Hidden Costs of Maintenance and Reliability • Joe Barton, a Texas Republican who The fallout from BP’s shutdown continues, now chairs the House of Representatives’ that the blame game has begun. Here are energy and commerce committee, said: just a few examples of the nasty criticism and • “If … one of the world’s most successful oil companies can’t do simple, basic finger-pointing aimed at BP: maintenance needed to keep the Prudhoe Bay field operating safely … • Whistleblowers inside BP accused the maybe it shouldn’t operate the pipeline.” company of skirting maintenance • Competitors started taking advantage, issues for years, while BP says it acted chuckling that BP stands for responsibly. “Big Problems”. • Internal audits pointed to problems with an understaffed maintenance and reliability team, along with management All this finger-pointing adds up to one big that was “fairly new” to the job. corporate black eye for BP. • Heads are starting to roll as one key manager was “put on leave.” Lesson 4: The hidden costs of poor reliability • BP’s top executives faced angry grilling far outweigh the direct costs of replacement from US lawmakers in Washington as and repairs. the company got blasted for its pipeline maintenance lapses. • The company was forced to respond to accusations that it engineered the shutdown to manipulate oil prices. “Nothing could be further from the truth,” said BP executive Malone. Allied Reliability, © 2008 • 9
  10. 10. The Most Expensive Word in Maintenance The following is an excerpt from BP’s press Why? Emergency maintenance means release on August 7, 2006 announcing the immediate shutdowns. Phone calls in the shutdown of Prudhoe Bay: middle of the night. Troubleshooting on the fly. Expediting spare parts. Rush jobs. Working “BP … has begun an orderly and phased around the clock until the repairs are made. shutdown of the Prudhoe Bay oil field In essence, emergency maintenance equals following the discovery of unexpectedly pure chaos. Does that sound like a cost- severe corrosion…” effective way to do maintenance to you? Lesson 5: The most expensive word in maintenance What’s the key word here? “Unexpectedly”. is “unexpected”. That’s what happens when you In maintenance, “unexpected” means don’t do maintenance right. “emergency”. And emergency maintenance is absolutely the most expensive form of maintenance possible. 10 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  11. 11. The Second Most Expensive Word in Maintenance According to published reports, a BP operator If your maintenance people are waiting for first discovered the leak that ultimately led to calls from operators, you’re skating on thin the shutdown. ice. Yet that’s exactly what’s happening at the majority of manufacturing plants in North The big problem here is the word “operator”. America right now. Because when operators are the first ones to notice equipment problems, it’s There’s still way too much maintenance that usually too late. That’s equivalent to waiting is emergency maintenance. As a result, many plants are one small failure away from a for cardiac arrest as the first sign of a heart major disruption in business. problem. Lesson 6: Reliability should not be triggered by an Listen, modern maintenance is not a repair “event”. The objective is to create a non-event. function any more. The image of the Maytag repairman sitting around playing cards, waiting for the phone to ring is long gone. Allied Reliability, © 2008 • 11
  12. 12. Time is Money Simply put, the earlier you can detect Despite what you may have heard, the basic problems, the faster, cheaper and easier it maintenance process is really simple: is to make repairs. 1. Detect problems 2. Plan and schedule the repairs You’ve seen the damage at BP – the costs of 3. Make the repairs emergency repairs can be astronomic. There is a huge difference between emergency And the secret to good maintenance is in the maintenance and planned, proactive first step: Detecting problems early. Why? maintenance: Because there is a direct correlation between Lesson 7: In maintenance, time is money. Late early detection and maintenance costs. detection means costly corrections. Emergency Maintenance Means: Proactive Maintenance Means: Late detection by operators Early detection by skilled maintenance technicians using advanced monitoring technologies Waiting for things to happen Thinking about things before they happen. Identifying problems that are still small and easy to fix Immediate shutdowns and indefinite Planned, scheduled shutdowns to keep downtime downtime to a minimum Expediting spare parts -- regardless of costs Planning and ordering spare parts in advance Working overtime, 24/7 until repairs are made Having everything prepared for – scheduling maintenance crews to do the job right the first time High costs Low costs High stress Low stress High safety risk Low safety risk Blame, finger-pointing, frustration, distrust, Confidence, pride, job security, teamwork, pessimism, waste optimism, rewarding 12 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  13. 13. The Truth About Equipment Breakdowns That quarter-inch hole didn’t suddenly appear in BP’s pipeline overnight. Like most failures, it developed over a period of weeks, months or years. Fact is, problems start small and get worse With advanced technologies in vibration with time. What’s important to realize is that analysis, infrared, ultrasound, oil analysis, the equipment will send off early warning motor current analysis and nondestructive signals along the way. testing -- trained technicians can routinely monitor and inspect equipment, and detect these early warning signals. These early warning signs might be slight changes in physical dimensions -- like pipe thickness at BP. Or they could be minor The difference between the time a PdM changes in temperature, vibration or sound. specialist detects problems and when an operator sees them are huge. Remember, Not all of these changes can be detected detection time equals money – big money. by human senses -- but they can be picked up with special equipment designed for that purpose. And that’s what the whole field of condition monitoring and predictive maintenance is all about. Allied Reliability, © 2008 • 13
  14. 14. The following graph illustrates how repair costs increase according to the time a problem is detected: In spite of the evidence, the reality is that most That leads to late detections, emergency asset-dependent companies are not doing maintenance, and all the painful costs that nearly enough predictive maintenance. come with it. Even though PdM has been around for over 40 Lesson 8: Predictive maintenance should be an years, it is still “new” to some organizations. integral part of your reliability strategy – and account for at least 50% of your maintenance work. 14 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  15. 15. The Disconnect Between Management and Maintenance Despite the enormous impact on the bottom line, you won’t find maintenance and reliability taught in many schools. Zero business schools, in fact. So, most senior managers really don’t they struggle to get the support they need know what’s going on in maintenance. for staffing, equipment and training. What’s worse, they don’t even know the right questions to ask. For example, a key reliability management position went unfilled at BP for almost a year What they do know is that maintenance is before the disastrous shutdown. What does usually the single largest controllable expense that tell you? in a plant. And if the equipment appears to be running “just fine”, they see maintenance The truth is, most maintenance people are as an easy way to cut budgets and save hard workers who care about doing good work. money. But they don’t always have the leadership and support they need to be successful. Trouble is, they don’t realize what the long- term impact is going to be. And they usually The bottom line is that everyone is get away with it – for awhile. Because it takes responsible for reliability, just like everyone about 18 months before shortchanging is responsible for safety. maintenance takes its toll. Lesson 9: Reliability must have support from the top. It is an investment to be optimized, not a cost Then again, those who do understand to be minimized. reliability aren’t running the companies. So Allied Reliability, © 2008 • 15
  16. 16. How Reliability Creates Wealth and Competitive Advantage Now for the good news. How did they do it? By understanding these ten basic truths about reliability. Done right, reliability can produce eye-popping gains on income statements and balance Reliability … sheets. Consider the following: 1. Has a huge impact on sales. 2. Has a huge impact on the cost of sales and A major pharmaceutical company slashed therefore drives big profit swings. maintenance costs by $33 million and 3. Is a long-term investment strategy. increased production rates – at just one plant. 4. Contains hidden costs not seen on your income statement. A steel maker went from the verge of bankruptcy to the most profitable steel 5. Should not be a reactive, emergency-driven maker in the world – cutting inventories by strategy. $40 million and maintenance costs by 50%, 6. Should not be triggered by a catastrophic while production shot up 17% and product “event”. The objective is to create a quality went up 20%. non-event. 7. Costs are directly related to early detection of A chemical company cut maintenance equipment problems. Sooner is always better spending by 22% and added 15 million than later. dollars to its bottom line in just two years. 8. Relies heavily on predictive maintenance for early detection. Most companies aren’t A food processing plant doubled production doing enough PdM. and achieved a $45 million swing in P&L in three years. 16 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  17. 17. 9. Must have support from the top, yet few senior managers are educated in the basic principles. And that’s what we’ve attempted to do in this report – get you thinking differently about your business than you have before. Hopefully, by now you understand how reliability impacts your company as an employer, business partner and community citizen. You’ve seen how it influences revenues, costs, profits and share price. And finally, that brings us to … Lesson 10: Reliability is one of the last frontiers for real breakthroughs in wealth and competitive advantage. Allied Reliability, © 2008 • 17
  18. 18. 18 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  19. 19. Articles and References BP to Shutdown Prudhoe Bay Oil Field Alaskan shutdown to cost BP at least $100m Press Release August 7, 2006 By Stephen Foley in New York, The http://www.bp.com/genericarticle.do?categoryI Independent (London) d=2012968&contentId=7020563 August 11, 2006 http://www.findarticles.com/p/articles/mi_ qn4158/is_20060811 BP shuts down Prudhoe Bay By Wesley and Richard Richtmyer, Anchorage BP’s hard road ahead Daily News August 7, 2006 By Steve Hargreaves, CNNMoney.com staff http://www.adn.com/money/industries/oil/ writer story/8052561p-7945629c.html August 14, 2006 http://money.cnn.com/2006/08/14/news/ economy/bp_fix/index.htm BP: Pipeline shutdown could last weeks or months Analysis: Congress probes BP corrosion USAToday.com August 7, 2006 By Donna Borak, UPI Energy Correspondent, http://www.usatoday.com/news/nation/2006- WASHINGTON 08-06-alaskan-oil-field_x.htm September 6, 2006 http://www.upi.com/Energy/view. php?StoryID=20060906-022918-7864r Pipeline Closure Sends Oil Higher; BP to Halt Production of 400,000 Barrels a Day in Alaska BP exec weasels out of testifying before congress; others admit BP failed in Alaska By Steven Mufson, Washington Post Staff Writer; Page A01 September 6, 2006 August 8, 2006 http://www.alaskareport.com/news11034.htm http://www.washingtonpost.com/wp-dyn/ content/article/2006/08/07/AR2006080700131. html BP corrosion expert job was unfilled more than year before spill September 8, 2006 http://www.alaskareport.com/news11038.htm Allied Reliability, © 2008 • 19
  20. 20. About Allied Reliability, Inc. Allied Reliability helps companies build wealth and competitive advantage through world-class predictive maintenance and reliability across global manufacturing enterprises. Founded in 1997, Allied has quickly become the largest engineering firm specializing in predictive maintenance and reliability engineering. Today, Allied serves some of the biggest names in manufacturing, including more than 200 plants and facilities in the U.S., Canada, Europe and Latin America. FREE Reliability Consultation Every year the gap between the companies who are taking advantage of reliability and the ones who aren’t gets wider. That’s why you can’t afford not to make significant reliability improvements in 2007. Those who prepare now will reap big dividends in the future … while others will struggle to survive. There are very few shortcuts. However, one is to make sure you get the right help. Now you can get answers to your most important questions about reliability with a free, 55- minute reliability phone consultation. There’s no hassle, no cost and no obligations. Any information you provide is confidential and will not be shared outside of our firm. To take advantage of this special offer, ask for Jeff: Phone: (918) 382-9400 Fax: (918) 382-0601 Email: info@alliedreliability.com 20 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn
  21. 21. Legal Notice While all attempts have been made to verify information provided in this publication, neither the author nor the publisher assumes any responsibility for errors, omissions or contradictory interpretation of the subject matter herein. The purchaser or reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, including federal, state and local, governing business practices and any other aspects of doing business in the U.S. or any other jurisdiction is the sole responsibility of the purchaser or reader. Allied Reliability, Inc. assumes no responsibility or liability whatsoever on behalf of any purchaser or reader of these materials. Allied Reliability, © 2008 • 21
  22. 22. Allied Reliability, Inc. 624 South Boston Avenue ▪ Suite 250 ▪ Tulsa, Oklahoma 74119 USA Phone 918-382-9400 ▪ Fax 918-382-0601 www.alliedreliability.com ▪ info@alliedreliability.com 22 • Allied Reliability, © 2008 10 Powerful Lessons You Should Learn

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