MAINTENANCE PERFORMANCE INDICATORS: AN ANALYSIS IN

THE MINING INDUSTRY

JK Visser & RLM Kotze

Graduate School of Technology Management, University of Pretoria 1

OUTLINE •  Introduction •  Objectives •  Theory and Literature •  Research Framework •  Methodology •  Survey Results •  Conclusion

2

INTRODUCTION •  Maintenance is an integral part of an

organisation’s long-term profitability •  Maintenance can add value through equipment

reliability and therefore availability

•  The mining industry is very capital intensive

•  Work is often done under extreme conditions

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Introduction •  The mining industry contributes about 6% of

South Africa’s GDP •  Mining is still a crucial industry for South

Africa, specially in job creation •  South Africa is also a top producer in the

world of many important commodities –  Platinum –  Chrome –  Vanadium

•  Maintenance cost 20-50% of production cost 4

Introduction •  Various indicators are used for measuring

maintenance performance in mining •  However, many managers have a short-term

focus (rat race syndrome) •  Some maintenance sections do mostly

breakdown maintenance – not pro-active! •  Some managers do not use a structured

process to derive performance indicators •  Performance measurement is not always

effective and beneficial for mining companies 5

The Maintenance System

Maintenance System

Inputs Outputs Feedback

Enterprise System

Environment

Materials Labour Spares Tools Money Technology Information Facilities

Capacity Quality System Image Maintainability Availability Reliability Safety Cost

Adjust Calibrate Inspect Repair

Replace 6

OBJECTIVES •  Overall objective was to determine whether

maintenance departments at South African mines utilise performance measurement efficiently and effectively

•  Sub objectives –  Do maintenance departments use a structured

approach to derive MPI’s –  Are the MPI’s applied correctly

•  Five propositions were defined

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Research Propositions 1.  MPI’s used in mining are not derived or developed from

the maintenance strategy and objectives through a structured process

2.  Maintenance performance management is not applied effectively in the mining industry

3.  MPI’s used in mining do not address all the important categories of maintenance management

4.  MPI’s used in mining maintenance have a high focus on lagging or reactive indicators

5.  Maintenance performance measurement is not utilised effectively and efficiently to create value for the mining companies 8

THEORY AND LITERATURE •  Various maintenance academic and

specialists have researched maintenance performance in the past decade, e.g. –  Wireman (1998 & 2005) –  Mather (2005) –  Parida (2006) –  Tsang (2000) –  Dwight (1998) –  de Groote (1995)

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Classical Feedback Control System

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SYSTEM

Feedback

Error

Signal

OUTPUT GOAL

The Balanced Scorecard •  The Balanced Scorecard approach takes into

account the fact that companies need to manage intangible assets and not only physical assets

•  Indicators should address four perspectives: –  Financial –  Customer –  Internal processes –  Learning and improvement

11 (Source: Kaplan & Norton,1996)

Holistic Approach of Tsang •  Performance indicators influence what people

do •  Indicators are a powerful motivational tool

that drives decisions •  To trigger effective change, indicators should

fulfill two conditions: –  They should relate to what is controllable by the unit

evaluated –  Favorable results on these measures should contribute

to specific business success factors 12 (Source: Tsang et al,1999)

Wireman’s Hierarchical Approach •  Performance indicators should highlight

opportunities for improvement •  Indicators can identify weak areas and point

to solutions for solving problems •  A system of multi-level performance

indicators are proposed •  A further classification of eleven categories of

maintenance performance indicators can be used for the selection process

13 (Source: Wireman, 2005)

RESEARCH FRAMEWORK Selection/Identification of

MPI’s

MPI’s for different hierarchical levels

Maintenance categories addressed by MPI’s

Balance of leading & lagging indicators

Purpose of performance management

Importance of CI

Communication/ Explaining of MPI’s

Integrity of maintenance data

Structured process followed to derive MPI’s

Efficient indicators utilised

Effective application of performance management

Performance management utilised effectively & efficiently

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METHODOLOGY •  Survey was targeted at 172 out of a total of

186 mines in South Africa •  Commodities investigated

–  Diamonds –  Gold –  Platinum metals group –  Coal –  Ferrous –  Non-ferrous

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Data Collection •  Questionnaire comprised 14 questions •  SurveyMonkey internet survey tool was

utilised •  E-mail message requesting participation was

sent to engineering managers of 172 mines •  72 responses were received, i.e. 42% return

rate

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Distribution of Commodities

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Type of Operation

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SURVEY RESULTS •  The responses to following 5 questions are

discussed in this paper: –  What method was used to identify maintenance

performance indicators, if any? –  Which indicators, out of a given list of 32, are the

most important? –  Which categories of indicators are the most

important? –  What are the maintenance indicators used for in the

organisation? –  How are the indicators communicated to the different

levels in the organisation? 19

Process for Defining MPI’s

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Process for Defining MPI’s •  About 75% of the respondents indicated that

some structured process was used to define MPI’s

•  About 30% of the respondents indicated that no structured process was followed

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MPI’s Used

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Most Popular Indicators •  The following 6 indicators are used by more

than 80% of the respondents: –  Availability –  Safety Score (audits) –  Reliability (MTBF & MTTF) –  Plant/equipment utilisation –  Lost time frequency rate (LTFR) –  Maintenance cost per unit

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Categories of MPI’s Used

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Categories for MPI’s •  Cannot measure a company or division on

financial indicators only •  Balanced set of indicators needed (Kaplan & Norton)

•  Seven categories of maintenance indicators were presented in questionnaire

•  90% of mines use the following 4 categories: –  Equipment/Process –  Safety, Health & Environment (SHE) –  Cost/Financial –  Maintenance Workflow

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Purpose of Using Indicators

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Purpose of Using Indicators •  More than 80% of the respondents indicated

that they use indicators for the following purposes: –  Declare deviations of operational performance –  Identify focus areas for maintenance groups –  Monitor progress of and study

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Type of Communication of MPI’s

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CONCLUSION

1.  MPI’s not derived using a structured process × 2.  Maintenance performance management is not

applied effectively 3.  MPI’s do not address all the important

categories 4.  MPI’s have a high focus on lagging or reactive

indicators 5.  Maintenance performance measurement is

not utilised effectively and efficiently 29

REFERENCES •  De Groote, P. 1995. Maintenance performance analysis: a practical

approach. Journal of Quality in Maintenance Engineering, 1 (2) pp4-24 •  Tsang, A. H. C., 2000. Maintenance performance management in

capital intensive organizations, PhD Thesis. University of Toronto •  Mather, D., 2005. The maintenance scorecard: Creating strategic

advantage. New York: Industrial Press •  Tsang, A.H.C., 1998. A strategic approach to managing maintenance

performance. Journal of Quality in Maintenance Engineering, 4 (2) p87-94

•  Wireman, T. 2005. Developing performance indicators for managing maintenance. 2nd Edition. New York: Industrial Press

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References (2) •  Parida, A. & Kumar, U. 2006. Maintenance performance

measurement: Issues and challenges. Journal of Quality in Maintenance Engineering, 12, (3) p 239-251

•  Alsyouf, I. 2006. Measuring maintenance performance using a balanced scorecard approach. Journal of Quality in Maintenance Engineering, 12 (2) p133-149

•  Visser, J.K. & Pretorius, M.W. 2003. The development of a performance measurement system for maintenance. South African Journal of Industrial Engineering, 14, (1) p83-97

•  Kaplan, R.S. and Norton, D.P. 1996, Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review, 74, (1), p75-85 31

References (3) •  Parida, A. 2006. Development of a multi-criteria hierarchical

framework for maintenance performance measurement: concepts, issues and challenges. PhD Thesis. Luleå University of Technology

•  Campbell, J.D. & Reyes-Picknell, J.V. 2006. Uptime: Strategies for excellence in maintenance management. 2nd Edition. New York: Productivity Press

•  Tsang, A.H.C., Jardine, A.K.S. & Kolodny, H. 1999. Measuring maintenance performance: A holistic approach. International Journal of Operations & Production Management, 19 (7) p 691-715

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