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30 ORBIT [Vol.25 No.1 2005]

ROB BLOOMQUIST

Commercialization Manager, Reliability Services

GE [email protected]

JIM OLDACH

Field Applications Engineer, Reliability Services

GE Energy

[email protected]

M A C H I N E R Y M E S S A G E S

Optimizing Plant AssetsThrough Improved Reliabil i ty Practices


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[Vol.25 No.1 2005] ORBIT 31

IntroductionFaced with economic and regulatory pressures, businessesin many industries must meet the challenge of improvedreliability at lower costs in order to remain competitive.Because of this, maintenance and reliability programs areoften forced to cut costs while simultaneously sustaining oreven increasing plant availability and production levels. Theprospect of having to somehow do more with less can bediscouraging, but this need not be the case.

Benchmarking maintenance and reliability performance,now a common practice in many industrial sectors, shows

that a wide disparity still exists between average and top-quartile performers. The good news is that while some busi-nesses have figured out how to achieve and sustain improvedreliability at lower cost, significant opportunities forimprovement and cost savings exist for many others. Theformula for successful asset management lies in makingsmart improvements that optimize asset performance anddrive the characteristics shown in Table 1.


> >

>I M P R O V E D

Safety

Environmental compliance

Reliability, availability, throughput, quality

Craft effectiveness or wrench time

Return on investment for capital expenditures

> > R E D U C E D

Downtime

Energy consumption

Maintenance costs

Overtime

Spare parts inventory

TABLE 1: BENEFITS OF PLANT ASSET OPTIMIZATION

THE OPTIMUM LEVEL OF INVESTMENT

TARGETS THE RIGHT ASSETS WITH THE

RIGHT MIX OF PLANNED MAINTENANCE,

RESOURCES, AND TECHNOLOGY, THEREBY

REDUCING ASSET RISK TO A TOLERABLE

LEVEL AT MANAGEABLE PLANNED COSTS.


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32 ORBIT [Vol.25 No.1 2005]

What is Asset Optimization?Optimization: An act, process, or methodologyof making something (as a design, system, ordecision) as fully perfect, functional, or effective

as possible.

In the industrial setting, Asset Optimization is the processof maximizing the value of plant production assets to thebusiness through effective management of risk. A modelis helpful in describing this further.

The first part of the model involves balancing asset man-agement costs against the risks and liabilities the assetposes to the business. Under-maintaining or under-instrumenting a highly critical asset might ensure lowerplanned costs, but may also result in poor reliability, highreactive maintenance costs, poor asset performance, andunacceptably high overall risk to the business. Conversely,

over-maintaining or over-instrumenting a non-criticalasset will incur higher-than-necessary planned costscompared to the level of risk reduction that can beachieved. The optimum level of investment targets

the right assets with the right mix of planned mainte-nance, resources, and technology, thereby reducing assetrisk to a tolerable level at manageable planned costs.Put into simple terms, this means developing and imple-menting smart strategies so the right maintenance isperformed on the right assets at the right time. Theachieved result is the Point of Lowest Total Cost as shownin Figure 1.

The second part of the model focuses on implementing

proactive measures to further drive down the Point ofLowest Total Cost as shown in Figure 2. This can be donein two ways: by working both smarter/better, and byreducing risk exposure.

Working smarter and better

Planned costs can be reduced by doing it smarter.Methodologies such as Preventative MaintenanceOptimization (PMO) facilitate replacement of intrusivepreventative techniques with non-intrusive predictivemethods where feasible, and also help eliminatelow-value tasks.

Planned costs can further be reduced by doing it better.This means improving maintenance efficiency byincorporating better tools and technology, improvingplanning and scheduling, developing written proceduresfor complex or critical tasks, and emphasizing the impor-tance of ongoing training. Human factors must be con-sidered here with Key Performance Indicators (KPIs)aligned with program goals to drive the correct behavior.

Reduce overall risk exposure

Additional proactive measures, such as those directed byReliability Centered Maintenance (RCM), mitigate over-all risk by reducing the probability and/or consequencesof potential events/failures. Probabilitycan be reducedby maintaining assets proactively, replacing/redesigningsystems or assets with improved designs, and replacing


Point of lowest total cost

Sum

Planned costs

Asset Riskprobabl i l i t y x consequence

TOTAL

CO

STS&L

IABILITIES

$$ INVESTMENT IN ASSET MANAGEMENT

Point of lowest total cost

Planned costs

Asset Riskprobabl i l i t y x consequence

TOTAL

COSTS&L

IABILITIES

$$ INVESTMENT IN ASSET MANAGEMENT

Sum

FIGURE 1: ACHIEVING THE POINT OF LOWEST TOTAL COST

FIGURE 2: DRIVING DOWN THE POINT OF LOWEST TOTAL COST


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[Vol.25 No.1 2005] ORBIT 33

aging assets that have become unreliable. Consequencescan be reduced by using predictive technologies to planahead, improving mean time to repair, and developingresponse plans for anticipated failures.

Articulating the Business CaseDevelopment and articulation of the business case mustoccur before any significant improvement initiative canget off the ground. One way to achieve this is to employ

benchmarking to determine how well a plant or companyis performing relative to others in their industry. Table 2is an example of benchmark data for the power genera-tion industry. It describes various levels of annual main-tenance expenditures and spare parts inventory value as a

percentage of Replacement Asset Value (RAV). RAV isthe total cost to replace production capacity in present-day currency, and is used to normalize values and vali-date comparison between plants of different sizes andconfigurations. As can be seen in the example, improve-ment in maintenance costs from the middle 3 rd quartileto the middle 2nd quartile means a reduction in spendingfrom 8.1% RAV to 4.2% RAV nearly 50%. Even for asmall plant, this can quickly translate into savings of$2,000,000 to $3,000,000 or more. With a sustainableprogram, these become recurring savings realized year

after year.

Return-on-investment potential and payback period canbe derived using estimated savings extracted from bench-marking results using net present value cost/benefitanalysis.This analysis weighs recurring benefits of main-tenance cost reductions, availability improvements, andother items as defined in Table 1 against estimated costsfor implementing and sustaining an improvementprogram. In the example shown in Figure 3, a facilityinvesting in a comprehensive plant-wide reliability

improvement initiative can expect to see financial returnsshortly after one year (Q5), break-even at two years (Q8),


QUARTILE

Top 1st

Middle 1st

0.7%

1.7%

0.4%

0.9%

MAINTENANCE $

(as percent of R AV)

INVENTORY $

Top 2nd

Middle 2nd

2.7%

4.2%

1.4%

2.1%

Top 3rd

Middle 3rd

Top 4th

Middle 4th

Bottom 4th

6.2%

8.1%

3.5%

4.9%

6.3%

8.7%

10.2%

13.9%

18.7% 12.5%

$60,000,000

$50,000,000

$40,000,000

$30,000,000

$20,000,000

$10,000,000

$0

-$10,000,000

S I N G L E P L A N T R E T U R N O N I N V E S T M E N T E X A M P L E

Source: The Business Case for Rel iab i l i ty , Management Resources Group, Inc.

1 1 1 1 2 2 3

Calendar Quarters

Go Live

Break Even

7 yr ROI= $49,900,0007 yr RO I= 11.5 to 1Break Even in Quarter 8Total Initial Cost ~$1,300,000

Costs Benefits Funds Flow

TABLE 2: POWER GENERATION INDUSTRY BENCHMARK DATAThe Business Case for Reliability, Management Resources Group, Inc.

FIGURE 3: EXAMPLE COST/BENEFIT ANALYSIS


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34 ORBIT [Vol.25 No.1 2005]

and total return on investment seven years after goinglive exceeding 11 to 1. Overall, this is a very compellingbusiness case that reflects the reality of making smartinvestments as part of a long-term strategy.

Ingredients for SuccessThe recipe for success contains many key ingredients that

must be added into the mix at the right time and in theright proportions. The complexity of variables and rela-tionships that impact reliability in an industrial settingare frequently underestimated. Plant Asset Optimizationrequires strategic integration of technology, reliabilitymethodology, maintenance best practices and processes,and culture change in a coordinated and sustainable pro-gram. Consider the many elements shown in Figure 4,their relationships to each other, and their interdepen-dencies. It is ultimately how well these elements cometogether that determines the impact on critical success

factors and business results.

The 5-Phase ApproachGiven this background, the obvious question is, Whatis the process? First, we want to avoid a me tooapproach that adopts the latest popular methodology orsolution without giving proper consideration to issuesthat can impact program effectiveness. For example,many Reliability Centered Maintenance (RCM) pro-

grams and Computerized Maintenance ManagementSystem (CMMS) implementations fail to deliverexpected value. This is not because the methodologies orsystems are flawed (they arent), but because importantunderlying principles and required data quality are oftenoverlooked. To overcome these pitfalls, a strategicapproach is required which begins with carefully estab-lishing the building blocks and framework that will even-tually support the rest of the reliability improvementinitiative. The resulting structure then enables advancedmethodologies and technology solutions to deliver the

value they are capable of.


Technology

Methodology

Processes

Cul ture Change

Susta inabi l i t y

Work Management

IMPACTS

Plant Design

R E LI AB I LI TY STA FF/ PU BL ICSAFETY

PRODUCTIVITY QUALITY O & MBUDGET

REGULATORYCOMPLIANCE

Correct ive Maintenance

Capita l Planning

Inventory Conrol

PM/PdM Maintenance

Pol icies & Procedures

Performance Measures

Disposal/Surplus

Personnel Tra ining

Report ing

Data/ Informat ion

Problem Solv ing

Technical Documents

Rel iabi l i ty Analys is

FIGURE 4: INGREDIENTS FOR SUCCESSFUL PLANT ASSET OPTIMIZATION

Phase ILay The Groundwork

Phase IIBuild The Foundation

Phase IIISet The Framework

Phase IVEnclose The Structure

Phase VEnhance The Structure

Evaluate current situationsand develop strategy forsmart improvements

Begin executing thecore program

Add proactive elements forcontinuous improvement

Raise the program fromgreat to World Class

Establish data quality andfundamental processes

FIGURE 5: THE 5-PHASE APPROACH TO PLANT ASSET OPTIMIZATION


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[Vol.25 No.1 2005] ORBIT 35

A 5-phase approach (Figure 5) is described here usingthe analogy of building a physical structure from theground up, because this closely parallels what we aredoing. We want to build structures and processes, stepby step, that will support high reliability, reduced main-

tenance costs, and continuous improvement in a sustain-able program. This approach applies equally well tooptimizing existing programs and developing new pro-grams, whether at existing or new facilities.

Maintenance and reliability programs from one facilityto another vary from non-existent to best practice intheir evolution toward world-class status. The 5-phaseapproach treats each business and operating facilityuniquely, and acts to identify and implement improve-ments based on specific needs.

Phase Iof the process lays the groundwork for improve-ments by preparing the plan for smart improvements.It begins with a site assessment or gap analysis to iden-tify the current situation versus desired performance, andthen the strategy/tactics to close these gaps. It is at thisstage that all components of the plant asset optimizationprogram are evaluated and obstacles toward programimprovement are identified. The gap analysis results in adetailed process improvement plan or Reliability Action

Plan (RAP), that lays out the necessary actions to movethe program forward. Phase I activities also deal withstrategy development and the identification and controlof programmatic and cultural issues. Effecting positiveculture change is one of the most important ingredientsrequired for success and one all too frequently over-looked. A comprehensive action plan is obviously key tosuccess, but equally important, the plan must be clearlycommunicated throughout the organization. Ensuringthe entire plant staff understands project intent and the

role each individual will play is extremely vital to projectsuccess and sustained performance.

Phase IIestablishes data quality and puts in place best-

practice fundamentals. It begins the transition to a morecontrolled process, fortifying CMMS and technical infor-mation, incorporating training on program policies andwork management procedures, and setting the table withtools for Phase III activities. Phase II includes systematicscreening of all assets to determine relative criticality tosafety, environment, operations, product quality, andmaintenance costs these criticality rankings will be usedin Phase III to direct development of optimum PM,PdM, and spare parts strategies. Asset optimization pro-gram performance reporting is also set up in Phase II.

This involves the roll out of actions to meet the per-formance reporting requirements set out in the policiesdeveloped in Phase I.

In Phase III, we begin executing the core program andmaking real changes to daily work routines. PM and PdMroutines are developed and implemented in the CMMS.Since lubrication issues are often cited as root causeof failures, lubrication requirements are thoroughlydocumented and utilized during this process. It is also atthis point that the maintenance program will begin


Phase I Lay The Groundwork

Evaluate current situation:

Business case Practices, technology, culture

Develop strategy for smart improvements

Work management Techno logy Organization and culture change Program con trol

Phase I l Build The Foundation

Establish data quality and fundamentalprocesses:

Equipment data and l ibrary

Planner/scheduler t ra in ing

Cr it ica l i ty analys is

Condi t ion moni tor ing program

Po l ic ies and procedures t ra in ing

Performance report ing process

Phase I l l Set The Framework

Begin executing the core program:

PM/PdM tasks Lubrication data Work scheduling with CMMS Fix it Now (F IN) team Status reporting


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36 ORBIT [Vol.25 No.1 2005]

transition from reactive maintenance toward proactivemaintenance in a controlled manner. Here we imple-ment the Fix It Now or FIN team concept as a strategyto assist with this difficult transition. Initially a large por-tion of the maintenance team will deal with daily work

requests or Fix It Now items, allowing the balance ofthe maintenance team to begin executing preventive andpredictive tasks that will drive improved reliability. Asthe program matures, the proportion of personnelassigned to the FIN team will eventually be reduced toabout 20% of the total maintenance team, while theremaining 80% of the maintenance team will be devotedto ongoing proactive maintenance functions. Phase III isalso where actual program reporting begins that willenable ongoing measurement and tracking of overallproject impact.

In Phase IV, we are ready to add proactive elements tosupport continuous improvement. The program now hasall the necessary components to support higher level reli-ability initiatives such as Machine ImprovementStrategies, Technology Improvements, ReliabilityCentered Maintenance (RCM), Root Cause Analysis(RCA), and Spare Parts Optimization. Other reliability

methodologies such as Six Sigma may also be valuabledepending on the requirements of the facility. Some ofthe initiatives listed in Phase IV may be implementedearlier in the process depending on individual facilityneeds and resources available to support the initiatives.

For example, a formal RCA methodology and programmay need to be implemented early at a new facility sothat issues associated with initial plant startup can beeffectively analyzed and worked to successful resolutions.Ongoing maintenance training programs are also devel-oped in Phase IV as part of continuing development ofcraft skills.

In Phase V, we raise the program from great to WorldClass. The programmatic enhancements that occur inPhase V focus more on financial benefits than on relia-bility improvements. It is at this stage that energy con-sumption can be reviewed and areas of inefficiencies

identified and corrected. Also, developing a capital proj-ects prioritization process provides a structured method-ology for comparing costs and benefits of two competingcapital projects. The outcome of such a comparison isselection of the capital project that provides the highestrate of return to the facility over time. Asset replacementstrategies should also be developed and implemented inPhase V to address aging and obsolescence issues as theplant continues to operate.


Phase IV Enclose The Structure

Ad d pr oa ct iv e el ements for conti nu ousimprovement:

Machine improve ment Lube Opti mization

RCM RCA Spare parts optimization Maintenance training

Phase V Enhance The Structure

Raise the program from great to World Class:

Energy man agement Capital pr ojects Asset repla cement Design improve ments

SUCCESSFUL PLANT ASSET OPTIMIZATION IS ACHIEVABLE, AS PROVEN BY TOP QUARTILE PERFORMERS,

BUT IT REQUIRES A CAREFUL MIX OF MANY INGREDIENTS.


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[Vol.25 No.1 2005] ORBIT 37

Summary and ConclusionsMaximizing the value of production assets by optimizingthe way they are maintained and managed is essential toremaining competitive. The challenge is to take a step

back from the natural tendency to think a single solu-tion, once adopted, will solve all reliability problems.Instead, it is often numerous and persistent grassrootsissues that have been overlooked that drive a facility tosearch for a cure in the first place. Successful plant assetoptimization isachievable, as proven by top quartile per-formers, but it requires a careful mix of many ingredi-ents. An approach to smart improvements, much likebuilding a physical structure, is required that strategi-cally integrates technology, methodology, processes, andculture change in a coordinated and sustainable program.

The approach will lay the groundwork by articulating

the business case and developing the best strategy and

plan to close the gaps between current performance

and desired performance. It should stress effective com-

munication and culture change, and build a solid foun-

dation of data quality and fundamental best practices tosupport the remaining framework. Then, the framework

is erected and the transition from a reactive to proactive

culture, begins. Once the core program is firmly estab-

lished, the structure will be able to support proactive ele-

ments for continuous improvement. World-class

performance is then within reach and can be achieved

by enhancing the final structure with design improve-

ments, asset replacement strategies, capital projects pri-

oritization, and energy management programs.


Learn mo re ab o ut o ur re l iab i l i ty serv i ces

Interested in having your business real ize the k inds of rel iabi l i ty improvementsdiscussed in this art ic le? This can often best be achieved by enl ist ing the help ofpeople exper ienced in def ining and implementing such programs. GE Energy ispleased to of fer these serv ices to customers in any industry , spanning a l l types ofequipment, regardless of manufacturer . We use the proven 5-phase approachdiscussed in this art ic le as the centerpiece of these rel iabi l i ty serv ices of fer ings.Our suite of on-si te assessment and project implementat ion serv ices a lso includes:

i Maintenance and Rel iabi l i ty Gap Analysisi CMMS Implementat ion and Optimizat ioni Asset Cr i t ica l i ty Analysisi Condit ion-Based Maintenance Programsi Rel iabi l i ty Centered Maintenancei Preventat ive Maintenance Optimizat ioni Spare Parts Optimizat ion

We encourage you to learn more about our portfo l ioof rel iabi l i ty serv ices by contact ing any of theindiv iduals below for a personal discussionregarding your needs and our capabi l i t ies:

Larry CovinoProduct Line Manager,Reliabil ity ServicesGE [email protected](716) 693-1363

Rob BloomquistCommercialization Manager,Reliabil ity ServicesGE [email protected](303) 449-9635

Jim OldachField Applications Engineer,Reliabil ity ServicesGE Energy

jam es.o [email protected](781) 771-7817