Introduction to Physical Asset and Maintenance Management

8/13/2019 Introduction to Physical Asset and Maintenance Management

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Introduction to Physical Asset & Maintenance Management

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FREEBOOK, 2014, Guido Pydde, Please Distribute Freely

A note from the author.

The earth is a physical asset that we as a human race are

responsible to manage and the manner in which this is

performed can affect us on a global scale. How we utilize

the natural resources and maintain the cleanliness of the

land, water and air directly affects the delicate balanceand quality of life for present and future generations.


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Contents

Preface ............................................................................. 6

Introduction ..................................................................... 8

Physical Assets ............................................................... 11

Physical Asset Lifecycle .................................................. 16

Physical Asset Management System .............................. 17

Policy .............................................................................. 19

Plan ................................................................................ 19

Objectives ...................................................................... 20

Physical Asset Support ................................................... 21

Leadership & Stakeholder Support ................................ 23

Communication .............................................................. 24

Risk Management .......................................................... 25

Project Management ..................................................... 26


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Planning ......................................................................... 27

Engineering .................................................................... 28

Commissioning ............................................................... 29

Energy & Utility Efficiency .............................................. 30

Disasters & Emergencies ................................................ 31

Safety ............................................................................. 32Security .......................................................................... 34

Ergonomics .................................................................... 35

Quality ............................................................................ 36

Information Technology ................................................. 37Hazardous Materials ...................................................... 38

Waste Disposal & Recycling ........................................... 40

Maintenance .................................................................. 41

Environmental Maintenance ......................................... 45Maintenance Program ................................................... 47


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Maintenance Schedules ................................................. 54

Reactive Maintenance ................................................... 55

Computerized Maintenance Management .................... 57

CMMS Selection ............................................................. 58

CMMS Implementation .................................................. 59

CMMS Training............................................................... 62Audits ............................................................................. 63

Internal or External Maintenance .................................. 64

Multi Divisional Maintenance ........................................ 69

Maintenance Skills ......................................................... 71Budgeting for Maintenance ........................................... 72

Maintenance Costs ........................................................ 75

Maintenance Metrics ..................................................... 78

About The Author .......................................................... 80


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tasks and costs that are required to maintain these

conditions.

This book identifies WHAT functions and programs a

physical asset management system is comprised of and

WHY they are needed. However, it does not dwell on

HOW these functions and programs are to be

implemented. The need for them and how they are

implemented will vary based on several factors such as

what types of products and services an organization

provides, the size of the organization and the existing

infrastructure and culture.


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IntroductionThe majority of us perform physical asset management

related activities regularly and dont even realize it. We

rely on the effective management of physical assets in

our daily lives that are utilized in industries such as

utilities, transportation, waste & water treatment, oil,

chemical, automotive, electronic, construction,

pharmaceutical, health & nutrition, real-estate, medical,

food, aerospace, defense, manufacturing and

entertainment. We depend on the fact that physical

assets such as aircraft are managed and maintained

properly so that they will not fall from the sky or anuclear power plant reactor does not incur a meltdown.

The entire infrastructure in which we live depends on


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physical asset management and how effectively and

efficiently it is applied.

The simple fact is that just about every organization

performs physical asset related activities. The size of an

organization, quantity and complexity of physical assets

and type of products or services that an organization

provides directly affects the extent and complexity of a

physical asset management system. As with many things

in life, we can choose to ignore or even reject a

systematic approach as to how these activities are

performed or we can choose to embrace and organize

them. The organized implementation and management

of a physical asset management and how this is

implemented and maintained will directly and indirectly

affect the success of the organization.

This book will explain the different aspects of physical

asset management and briefly describe the

implementation of maintenance management as well. It

addresses the importance of a reoccurring activity that


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significantly affects the life of many physical assets which

is known as maintenance.


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Physical Assets

Lets begin with an analogy that the majority of us can

relate to. Many of us own, lease or rent an automobile

and a home within we live. These are both forms ofphysical assets. The majority of us like our physical assets

to be clean, nice looking and well maintained. When we

entertain friends and relatives, we like to impress them

with our physical assets. A dirty home or automobile

does not leave a good impression. They can look, feel

and smell unpleasant or even offensive and affect issues

such as safety, health and performance. When we plan


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factors such as price, appearance, quality, efficiency,

dependability, reliability and longevity. The fact is that

the initial cost or price alone should not be the only

influencing factor. There is a cost which is associated

with an automobiles life which is known as physical

asset lifecycle cost. In many instances, the most

significant cost associated with a physical assets life

besides the initial investment is the cost of maintenance.Maintenance includes activities such as cleaning, repairs,

inspections, servicing and periodic parts replacements. If

an automobile is not maintained properly at scheduled

intervals, the influencing factors which were initially

considered appealing prior to the purchase will

deteriorate thus affecting the value and reliability of the

automobile. In another example, the buyer might

purchase an automobile that has low quality ratings but

the lower initial cost is appealing. However, due to the

low quality rating, this type of automobile may

experience significantly more component failures whichaffect the reliability of the automobile. In both cases, the


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lack of reliability will have a severe impact on the owner

such as reactive repairs, excessive costs and

inconvenience.

We have clearly defined some of the important factors

that influence physical assets. The analogy that we used

with automobiles and homes can be directly applied to

organization environments. The majority of organizations

are housed in some form of a building. Additionally,

organizations usually purchase, rent or lease physical

assets such as computers, printers, furniture, vehicles,

machinery and equipment. In many instances, there

seems to be a separation of how we view and treat our

personal physical assets compared to the physical assets

that are utilized by our organization. In reality, the

physical assets of an organization should be treated with

a higher level of respect and care than our own personal

physical assets. This is due to the fact that the physical

assets that are utilized by the organization contribute toproviding the organizations revenue, success and the

income that funds our personal physical assets. So why is


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it that in many organizations this is not recognized? This

may be due to the manner and the method in which

physical asset management and more specifically

maintenance management is viewed, understood and

implemented within an organization and also

understanding the associated risks of not having a

system in place. The majority of organizations that

embrace physical asset management have a carefullyplanned, defined and structured implementation of it

with the accompanying strategies, plans, policies,

procedures, functions, programs and supporting systems.

These organizations have learned that not having a

system in place affects the performance, success and

competitiveness of the organization and can actually

jeopardize their existence.


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Physical Asset Lifecycle

A physical asset is typically exposed to each of the

following activities throughout its life.

1. Plan2. Design, Engineer3. Purchase, Lease, Rent, Acquire4. Construct, Build, Fabricate, Assemble5. Commission6. Maintain7. Audit, Inspect, Evaluate8. Rebuild, Dispose9. Replace


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Physical Asset Management SystemIt is extremely important that a scalable Strategic Asset

Management Plan (SAMP) is developed that includes the

involvement of stakeholders. This plan should define

how physical assets are managed throughout the various

lifecycle stages. A physical asset and maintenance policymust also be established that the stakeholders agree to

live by.


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Policy

The physical asset management policy must be

documented and provide a framework for setting the

asset management objectives and should include

commitments by top management towards satisfying the

applicable requirements and the continual improvementof the physical asset management system. This policy

should be consistent with the organizational plan and

other relevant policies.

Plan

The organization should develop and document a plan

that will assure that the physical asset management

system will achieve the original intentions of the policy

and prevent or reduce undesirable effects and integrate

continual improvement methods. This plan should also

be consistent with achieving the organizations objectivesand expectations of the stakeholders.


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Objectives

The asset management objectives should be consistent

with organizational objectives and the asset

management policy. They should also be measurable,

monitored, reviewed and updated as needed. The

organization will need to establish an infrastructure with

assigned responsibilities and appropriate authorities that

will accomplish, support, review and update the

objectives.


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Physical Asset SupportDepending on the size and business nature of an

organization, there are several support functions and

programs that may need to be put into place to ensure

that the physical asset management system is complete.

These include the following;

Disaster & Emergency Preparedness andRecovery

Energy Efficiency Engineering Ergonomics Hazardous Materials


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Information Technology Maintenance Planning Quality Risk Safety Security Waste Disposal & Recycling


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Stakeholders need to be involved in the establishment,

review and refinement of the physical asset management

system as a whole. This is what provides input as to how

this system will be formed and helps to ensure that

important functions and requirements are addressed and

included.

Communication

Physical assets are utilized for many different purposes

and by many different people within organizations.

Related activities should be communicated with the

individuals that rely on these physical assets toaccomplish their tasks and goals. In some cases these

activities require negotiations or alternative solutions to


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be put into place. Nevertheless, it should never be

assumed that the related activity does not require some

type of planning, scheduling and notification to be

performed. People tend to become much more receptive

and cooperative when they are included in the decision

making process and in many cases provide invaluable

input. Communication usually affects the success of the

required activity.

Risk Management

Identifying and addressing potential risks is a critical part

of any physical asset and maintenance management

system. The type of risk and the extent of the associated

effects will influence the manner in which it is addressed.

The cost of some physical asset failures pose such a

significant risk due to the associated costs that they must

be mitigated because failure is not an option. For

example, many physical assets rely on electricity tofunction. Some of these physical assets provide life

sustaining services or information and technological


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services that will cause unacceptable conditions without

their continued functionality. This associated risk may be

addressed by implementing a backup generator that

automatically continues to provide the electricity when

the main service fails. Another example is determining

which components of a continually used physical asset

are prone to failure and that may be very difficult to

acquire. In this case spares are usually kept readilyavailable and additional alternative solutions are

carefully evaluated and may be put in place. These are

both forms of risk mitigation.

Project Management

In many cases, physical asset and maintenance

management require the use of project management

skills or even a dedicated project management entity or

group. Many types of projects are encountered and must

be managed such as physical asset relocation, expansion,

setup, design, engineering, construction, fabrication,assembly and installation to name just a few. These


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projects require careful planning, coordination and

execution to be successful.

Planning

One of the most important activities that is sometimes

overlooked in physical asset management is the

continual need for effective planning. Planning should

occur throughout the lifecycle of many physical assets.

The planning process should include the stakeholders

which are involved directly and in some cases indirectly

with the physical assets. It is typically performed prior to

and in many cases during each stage of physical assetmanagement. Contributing factors such as end use,

utility, space and performance requirements, costs,


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maintenance requirements and expected longevity

should be considered. The lack of planning can cause

unnecessary delays with additional costs and can

jeopardize the effective implementation, commissioning

and use of a physical asset.

Engineering

Many organizations utilize one or more forms of

engineering regularly as it applies to physical assetmanagement. Reliability engineering is a skill that is used


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in many organizations to ensure that physical assets will

live up to their expectations and in many cases helps to

optimize physical asset performance. Engineering

functions are also utilized to comply with mandated

physical asset requirements. These requirements can

include fire, security, safety and health. Planned activities

such as expansions, relocations, construction,

fabrication, refurbishment, remodels, rebuilds,maintenance and upgrades also utilize engineering skills.

Required engineering skills include but are not limited to

mechanical, electrical, civil, architectural, maintenance,

reliability and structural to name a few.

Commissioning

The commissioning process involves ensuring that the

physical asset is ready for use. This is typically a quality

and compliance related activity that involves inspections

to ensure that the physical asset meets the definedrequirements, standards and expectations. The

inspections can include factors such as quality, health,


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safety, performance, reliability, efficiency as well as

meeting mandated federal, state and local requirements.

At the very least, the inspection process should involve a

checklist of items that need to be inspected and verified

prior to the release of the physical asset.

Energy & Utility Efficiency

Physical assets typically utilize one or more forms of

energy and utilities to perform their intended function.

Electricity, water and natural gas are commonly utilized.

All of these have their own associated costs. New

technologies and products continue to emerge that canprovide significant cost savings to organizations due to

increased energy efficiency. The manner in which utilities


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are distributed and utilized affect several different

physical asset factors such as operating and maintenance

costs, performance and longevity.

Disasters & Emergencies

A commonly overlooked and underestimated factor that

may cause a significant financial impact to an

organization is disasters and emergencies. The continued

success of an organization can be dramatically affected

by not being prepared for mishaps. Proper planning and

implementation of the related programs provides a

significant form of risk mitigation. Disasters such as fires,tornados, hurricanes and earthquakes can devastate an

organizations ability to operate and provide their


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intended services and products. All mission critical

systems should be evaluated and alternative solutions

need to be implemented that address how a disaster or

emergency will be handled and how the organization will

recover. Building and property maps that show locations

and waypoints are extremely useful for visitors and

employees. These maps should include evacuation

locations and routes.

Safety

The personnel that utilize physical assets are directly

affected by the way that these physical assets aredesigned, implemented, maintained and used. Safety

should be of major concern. Our environment can


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subject us to many hazards that are usually

unintentional. People should not be subjected to an

unsafe environment and conditions that could cause

injury or death. An organization that has environmental

dangers should ensure that appropriate measures such

as personnel protective equipment, showers, eyewash

stations, fire extinguishers, first aid stations, procedures,

signs and work instructions have been put in place, areenforced and monitored. Organizations within the United

States may also need to comply with Occupational Safety

and Health Administration (OSHA) standards as they

apply. This includes safety programs for operating

vehicles and using hand and power tools and procedures

such as Lockout/Tagout.

A relatively simple concept that we should remember is

the fact that people are the reason why our business

succeeds and every effort should be made to keep them

safe. Safety related incidences can be extremely costlyand should be perceived and treated as unacceptable.


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Security

Many physical assets require that security relatedmeasures, procedures, methods and infrastructure be

developed and put into place to help monitor and

protect the investments. These systems may include the

use of alarm, surveillance, access control and people.

These measures aid in controlling activities such as

vandalism, damage, theft and unauthorized access.


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Ergonomics

The manner in which physical assets are designed and

implemented can have a significant impact on the user in

a physical way. Repetitive motions, actions and

uncomfortable positions that the user is subjected to can

cause impairments that can affect the users attitude,

health and ability to perform and function properly. The

physical environment that the user is exposed to should

be carefully analyzed and considered.


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Quality

The quality of the individual components and theconstruction, fabrication, assembly methods and

workmanship that are utilized when creating, producing

and maintaining a physical asset will directly affect

factors such as reliability, dependability and longevity.

Continual physical asset failures will amount to excessive

costs. Poor quality will affect the success of an

organization and could eventually cause it to fail. The


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majority of people have high expectations when it comes

to quality. This is evident based on the success of

particular product sales compared to the price and

quality of similar products.

Information Technology

Computers, tablets, servers, telephones and networked

systems are all forms of physical assets and are used in

almost every organization in some way shape or form.

The majority of organizations cannot function properly

without the use of some or all of these. Data storage and

retrieval is of vital importance for organizations. Many


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types of physical assets employ the use of computer and

software technologies to function. These technologies

are also used to acquire physical asset performance and

utilization data.

Hazardous Materials

Some physical assets utilize, produce and are comprised

of hazardous materials. These materials can create

extremely dangerous situations that affect theenvironment and health of all living things. The


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organization should employ similar principles as was

described in the safety section to protect people.

Additionally, procedures and methods need to be

implemented that address the safe handling and disposal

of these materials as required by federal, state and local

agencies. The organization may also need to establish

Material Safety Data Sheet (MSDS) stations. These data

sheets provide important information about materialcharacteristics for handling and first aid purposes. The

majority of hazardous materials require the involvement

of specialized services for proper disposal.


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Waste Disposal & Recycling

The majority of organizations produce waste on a daily

basis. Portions of this waste such as paper, metal, plastic

and organic can be recycled. Recycling makes a lot of

sense. It conserves our natural resources and puts less in

the landfills. Organizations should have recycling

programs in place and provide the appropriatecontainers in designated areas for collection purposes.


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Maintenance

Much of this book is dedicated to defining the

maintenance function as it relates to physical asset

management. This is due to the fact that maintenance is

an ongoing activity that typically has the most significant

impact on a physical asset throughout the physical assets

life. It affects factors such as; appearance, safety, health,

comfort, efficiency, reliability, productivity, longevity,

value and quality.

When properly defined and implemented, a maintenance

program will provide a value added service that ensures


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one component can cause other components to fail as

well causing a domino effect. Reactive maintenance

scenarios are sometimes purposely put into place. This is

due to the fact that in some instances running to failure

does not have negative effects and it would be more

costly to have a preventive or predictive program in place

to counter the failure. The typical maintenance entity

within an organization is also utilized to performresponsive projects such as expansions, upgrades and

rebuilds to name a few.

We have identified four types of maintenance activities

that typically need to be accommodated as part of an

effective maintenance program. These are Preventive,

Predictive, Reactive and Responsive. A well planned

maintenance program will minimize any unwanted or

unacceptable reactive maintenance by implementing

preventive and predictive maintenance. It is extremely

important that these maintenance activities are trackedand recorded properly. The typical method for managing


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these activities is through the use of an inventory control

and work order system.

Many maintenance activities also require the use of

supplies and materials. Consumables such as cleaning

products, lubricants, paper products and spare parts for

buildings, machinery and equipment usually require

some type of inventory control system.

Personnel protective equipment and tools are also

needed to perform many maintenance activities. Many

organizations utilize a tool inventory system to monitor,

track and control the use of these.


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Environmental Maintenance

Based on the condition that the majority of schools,

parks, stores, casinos, hotels, banks, restaurants,

hospitals, airports and theaters are kept in, it is apparent

that people prefer a clean, organized, manicured and

comfortable environment. In many cases, environments

like these contribute to positive feelings and thoughts.

This type of environment also requires that regularly

scheduled maintenance activities be performed. The

environment in which we live affects the attitude,productivity and efficiency of people. It leaves us with

positive or negative thoughts, feelings and impressions.


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Maintenance Program

The way in which a maintenance program functions can

vary dramatically in different organizations. This is once

again influenced by the size and nature of the

organization. The required functions and activities can

vary considerably based on the types of physical assets

that are being maintained and the functions that they are

utilized for.

So where do we start? The success of a maintenance

program relies on several factors which we will discuss in

detail. Some of these factors include;


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Resources such as people, tools, materials andequipment.

Available and accurate information. Work flow structure and process. Accountability and traceability. Stakeholder support.

Resources are of vital importance. Lets face it, people

are your number one asset. The skills, experience and

knowledge that they possess should complement the

maintenance group and is a primary influencing factor

towards proper maintenance program implementation

and support. Collectively, and through proper guidance

and support, this group is what keeps the maintenance

engine running smoothly. People cant do the work

properly or efficiently without the right tools, materials,

parts and supplies. A properly managed, organized and

regularly monitored inventory control system is a must.Dont underestimate the amount of work that is required

to setup a detailed and functional inventory control


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system. Keep in mind that the objective should be to

provide true traceability and accountability for the

materials, parts, supplies and tools that will be used.

Accurate physical asset informationand documentation

is extremely important. This information is used to

determine a physical assets needs and requirements.

Preventive and predictive maintenance schedules are

typically derived through the use of this information. In

many instances, maintenance activities require service,

repair and support information. This information usually

includes specifications, documents, drawings and

manuals. The information that is collected and recorded

is invaluable. It provides historical data that can be used

to refine the maintenance program thus promoting

continual process improvement.

The following described work flow process or something

that resembles this description very closely is utilized in

many organizations. The maintenance work flowprocess

typically begins with either a regularly scheduled


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maintenance activity that has already been defined or a

work request that has been submitted by an individual

that has a need for a task or project to be performed. In

either case, a work order is created. The work order is

either assigned to or accepted by an individual that will

complete the work order. The work order is the heart of

the maintenance program and can be quite involved. It

provides the traceability for maintenance activities andtypically includes a considerable amount of information

such as;

Assigned work order number. Original work request number. Work requestor name. Date that the work request was submitted. Date the work request is due. Type of work request Physical asset information. Type of work such as preventive, predictive,

reactive and responsive.


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A detailed description of the work that isrequired.

Work and physical asset location information. Inspection and checklists. Safety and work related instructions. Actual work that was performed including

details such required skills, date that the work

was performed and task durations.

Services that were utilized. Material, supplies and parts that were used. Attachments such as photos and documents. Reactive work orders usually require additional

information such as failure type, investigativeobservations, problems, symptoms and findings,

root cause and recommended corrective

measures.


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Work Order

Automatically

GeneratedBy the CMMS or

ScheduledManually Entered By

The Requestor

(Work Request)

Preventive Predictive Reactive Responsive

Work Request

MAINTENANCE WORK FLOW


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Maintenance Schedules

The majority of physical assets require that some type of

regularly scheduled preventive or predictive

maintenance activity is performed. These activities

should be carefully evaluated and determined. There is

such a thing as too much and also not enough

maintenance. Too much maintenance causes

unnecessary excessive costs. On the other hand, too little

maintenance can cause excessive reactive maintenance

or physical asset deterioration which will also lead toexcessive costs. In some cases, the balance between too

much and not enough may take some time to figure out


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based on physical asset performance history. The nature

and type of physical asset including any supporting

information will usually aid in determining some or all of

the maintenance requirements.

Reactive Maintenance

In many cases, reactive maintenance, also known as Fire

Fighting, which is typically caused by a run to failure

scenario is the most costly form of maintenance. Many

physical assets are utilized in processes or for purposes

where they cannot be easily replaced due to significant

cost factors and play an important part in the image,success and reputation of the organization. It is usually in

the organizations better interest to minimize or even


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Computerized Maintenance Management

As you can probably imagine, if an organization has

hundreds or even thousands of physical assets, the

required maintenance activities can be extremely

difficult to manage without the use of some type of

computerized system. Computerized maintenance

management has become an essential tool for many

organizations. In most cases and when properly

implemented, the majority of organizations find these

systems indispensable and couldnt imagine functioningproperly without them.


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A Computerized Maintenance Management System

(CMMS) is typically based on some form of a database.

Databases collect information that is typically entered by

users. The database itself is usually comprised of a

frontend and a backend. The frontend is what is referred

to as the user interface. This is what the user sees and

utilizes to enter, view and extract information to and

from the backend. The backend usually consists of tablesor files that the information is stored in. Some form of

network connections are usually utilized to connect the

frontend (user computers and tablets) to the backend

(server).

CMMS Selection

The type of CMMS that is utilized is extremely important

towards the continued success and efficiency of a

maintenance group. A considerable amount of time and

money goes into the implementation of a successfulCMMS. Careful evaluation should go into physical asset

maintenance requirements and the maintenance


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program itself. It is best to take some time and make a

list of the type of data that the organization wants to

track. The various available systems are different and

internal organizational structures and requirements

differ as well. Sometimes the ideally suited CMMS

requires customization to meet the organizations

requirements. Some forms of CMMS are quite complex

and be intimidating at first. The organization andstructure of the system needs to be carefully evaluated

and should be user friendly due to the fact that this

system will most likely be used daily by many people with

many different skill levels.

CMMS Implementation

The most time-consuming part of implementing a CMMS

is collecting and entering the required data. But this is

also one of the most important steps. Be prepared,

depending on the size of the organization and thequantity and complexity of the physical assets, it can take

several months and in some cases much longer to fully


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implement a CMMS. But once implemented, the payoff is

realized relatively quickly. The amount of accurate,

detailed data or information that is entered into the

system is extremely important and will affect the

usefulness of the system. This step needs to be well

planned and not rushed. It is better to enter too much

data than not enough. This concept is also extremely

important once the CMMS is regularly utilized. Allpersonnel that utilize this system need to understand the

importance of entering detailed information whenever

using the system. The quality and usefulness of the

extracted information will only be as good as the

information that was originally entered.

The quality of a CMMS can vary dramatically based on

how it is designed. This design also affects the ease of

use, maintainability and the quality of data that can be

stored and extracted. The majority of CMMS systems

require that the following type of data is collected andentered into the system:


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Detailed physical asset information (assetregister).

Physical asset categories and identificationnumbers.

Personnel that will be using the system whichincludes requestors and resources.

Physical asset failure types. Physical asset locations. Reoccurring scheduled preventive & predictive

maintenance activities.

Inventories such as materials, supplies andtools.

Sources such as vendors and contractors. Skill types, resource qualifications and training

information.

In many cases, the CMMS also requires that a unique

numbering system is developed to identify items such as

physical assets, departments and inventory items.Careful thought should go into this identification system

prior to deciding what is best. It can be difficult and time


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consuming if this identification system needs to be

changed later. In the event that the organization has

their own accounting group, it may be wise to consult

them as well. The majority of organizations utilize the

CMMS data for multiple purposes including accounting.

Some forms of CMMS employ a purchasing system for

materials, supplies and parts. This can be advantageous

for small organizations or organizations that do not have

a dedicated purchasing function.

CMMS Training

Personnel training should be provided for the CMMS thatis selected. A good training program usually decreases

the learning curve that is required to get the CMMS up

and running. At a minimum, this training should be

provided to the personnel that are to configure and

administer the CMMS. This training is typically extended

to all of the users that will be processing work orders.


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Audits

It is difficult to determine how effective a process or

system is if it is not evaluated from time to time. A good

audit process accomplishes this very task. A regularly

scheduled internal audit process is a must for every

organization that implements a physical asset and

maintenance management system. Audits aid in

uncovering or finding major and minor problems. They

are definitely and integral part of any continual process

improvement program. The intent of the audit process is

to provide a report that reveals the state and condition

of the process or system. If the audited process is


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functioning properly, the report should reveal that the

process or system is in complete compliance with the

expected requirements. Any violations are documented

and addressed with defined completion schedules and

tasks.

Internal or External MaintenanceHaving a streamlined internal maintenance group will

provide the following benefits to an organization;

Quick response and reduced physical assetdowntime.

Flexible scheduling of maintenance activities. Centralized asset management system. Reduced reactive maintenance. Managed spare parts, consumables and tools

inventory control system.

Schedule proactive, preventive and predictivemaintenance.


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Maintenance activity traceability for historicalinformation such as asset cost, performance and

related audits.

Reduced maintenance cost compared tooutsourced services.

Cleaner, healthier, safer environment foremployees, customers and visitors.

Centrally managed, contractors, vendors andservices.

In some cases, quick response and reduced downtime

alone justifies the need for internal support. For

example, an organization could have a physical asset that

costs hundreds of thousands of dollars and it is almost

always utilized at near capacity. Or the situation could be

that several expensive physical assets are utilized in

series and depend upon each other to provide a service

or product. The unavailability of any of these physicalassets could present an unacceptable situation. This type

of scenario could easily justify the cost of having internal


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support. Due to the type of business that an organization

participates in and the associated risks which may

involve life and limb, some organizations have a zero

tolerance for reactive maintenance and must have an

internal maintenance resource. Not having an internal

maintenance support function is simply not an option for

these organizations.

The size of an organization and the quantity and

complexity of physical assets and the associated risks are

the primary contributing factors as to whether

maintenance functions are provided by external or

internal sources. Many small organizations absorb and

perform routine maintenance functions by utilizing

various personnel within the organization. In these small

organizations, the physical asset and maintenance

management function is actually an informal process and

in many circumstances is fragmented throughout the

organization. More involved or complex maintenancetasks are usually outsourced. As an organization grows

and expands, maintenance demands usually increase as


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maintenance group, it is highly recommended that a

professional be brought in to evaluate the organizations

maintenance needs and determine the best solution.

Some key issues that need to be considered are as

follows;

Justification based on individual physical assetmaintenance requirements which will translateinto labor, skill and material requirements.

The system that will be used to track the workthat is to be performed with labor and materials

traceability.

The manner in which the maintenance costs aredistributed through the organization.

The required leadership and stakeholdersupport.

Many medium to large organizations usually have a

refined internal maintenance entity within them.

Depending on the nature of the organization, this


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internal entity can be very sophisticated with individual

departments for functions such as planning, engineering

and fabrication. Many of these organizations have

learned to embrace the maintenance function and realize

that they could not function efficiently and effectively

without it.

Multi Divisional Maintenance

Another area that many organizations struggle with is

when expansions are required that involve additional

remote locations or divisions of the organization. Theadditional locations may not have the justification for an

Headquarters

Division Division Division


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internal maintenance staff due to the size of the new

entity. This can provide a challenge as to how this entity

is maintained and managed. In many instances, remotely

managed maintenance can provide the solution. The

physical assets are tracked in a centralized maintenance

system and maintenance personnel or outsourced

services are coordinated as needed to accomplish the

required maintenance activities. As the entity grows andacquires additional physical assets, it may eventually

justify the existence of an internally managed

maintenance group.


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Maintenance Skills

The skills that are required to perform maintenance tasks

vary considerably depending on the types of physical

assets that are to be maintained. The maintenance

personnel in small to medium size organizations usually

find themselves in situations where they have to be a

jack of all trades. This type of situation usually changes as

the organization grows because maintenance budgets

tend to increase accordingly as do quantities of similar

physical assets. This allows additional personnel to behired with more specialized skill sets. Skills such as HVAC,

machining, welding, mechanical, electrical, carpentry,


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plumbing, painting, pipe fitting, pneumatic and hydraulic

are commonly employed.

Budgeting for Maintenance

Budgeting is an essential tool that is utilized to manage

physical asset and maintenance management. Budget

requirements can vary significantly depending on the size

and nature of an organization. It is easier to formulate a

maintenance budget in some industries and

organizations than others. Creating a budget for the first

time can be a difficult and time consuming task due to a

lack of information. Many issues and influencing factorsneed to be considered when attempting to create a

budget for the first time. One of them is the amount of


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reactive maintenance that is performed regularly and the

true associated costs such as the potential lost revenue

due to a lack of physical asset availability. Efforts that will

mitigate these reactive costs such as preventive and

predictive maintenance will also cost money to perform.

The labor required to perform these tasks will need to be

added to the maintenance budget.

The cost of regularly used outsourced services and

service contracts can be placed directly into the

maintenance budget. Many service contracts do not fully

implement a complete and comprehensive preventive

maintenance program for physical assets. They merely

provide a reactive service response when a failure occurs

at a predetermined cost that covers a specific time

period. Some of these service contracts may cover some

materials as well. The time that is required to perform

maintenance related activities by individuals within the

organization and the coordination of them can also beput into this budget. Project related activities require


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Maintenance Costs

This is a topic that can be evaluated and applied in many

different ways and is once again influenced by several

factors such as the size and type of the organization, how

the maintenance function is structured and the types of

services or products that the organization provides.

Monitoring maintenance costs begins with implementing

a detailed system where these costs can be recorded.

This system should have different categories,

departments and areas where the costs can be assigned

as they occur. In many cases, a computerized system is


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utilized for this purpose. The system should provide the

ability to generate reports for labor time and material

costs. These numbers can be further broken down as to

which physical asset they belong to. Usually, physical

assets are assigned to various departments and the

system should have the ability to provide the associated

costs to the affected departments and accounting.


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Building

Labor - 30%

Department

Machine - C

Labor - 25%

Machine - B

Labor - 25%

Machine - ALabor - 20%

Maintenance Labor Distribution


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If the system is setup correctly, the accumulated labor

costs can be charged to the various departments as a

percentage of the total labor maintenance cost. Parts,

materials and supplies are billed separately to the

associated departments based on the physical assets that

they were used for.

Maintenance Metrics

One of the benefits that can be extremely helpful in

monitoring and managing a maintenance group is theinformation that can be derived and analyzed based on

physical asset maintenance history. Organizations differ


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as to which key performance indicators they wish to

measure. These could include indicators such as mean

time between physical asset failures, failures within

specific time periods, labor performance measurements,

etc. Measurements such as these help in managing a

maintenance group more effectively and efficiently but

require that accurate information be gathered over time.


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About The Author

My career has involved the development,

implementation and management of many activities and

programs that are required to manage physical assets. It

has spanned several different industries which has

provided me with a wealth of knowledge and experience

and has exposed me to many fascinating and interesting

opportunities, situations, realizations and challenges. I

enjoy sharing my knowledge and experience and learning

from others as well.

Documents

Introduction to Physical Asset and Maintenance Management