Physical Asset Management as a Profit Driver-A Back to Basics Approach

Dean GriffinDivisional Manager – Utilities & Facilities

17th October 2007 – Durban ICC

AMEU 60th Convention – Phezu Komkhono

Overview

IntroductionThe Challenges at HandLack of MaintenanceEffective Utilisation of ResourcesAsset Management as a profit driver?The Way forward

Introduction

Asset Provision – making sure that the most appropriate asset is acquired for a specific application and also making sure that the asset is effectively disposed of (in a responsible manner) at the end of its useful life.

Asset Operation – making sure that assets are operated in the most appropriate way that allows the asset to perform to its maximum capacity.

Asset Care – making sure that assets are looked after in the most appropriate way that will ensure continued performance at its originally intended design capacity.

The Challenge at hand

Labour, Materials, Operation, & ContractsVisible - Direct

Hidden - Indirect Poor asset reliability andperformance

Waste through inefficientprocesses

Poor teamwork

Incidents, Reputation Damage, Recovery Costs

Lack of CommunicationBetween Groups

Current Challenges

Backlog Maintenance estimated at R 5 BillionLabour Shortage / high turnoverMost organisations have organisational gaps at all levelsPoor Asset ReliabilityLow Public Perception of serviceLack of Asset informationInaccurate Asset informationUnder estimation of Asset ValueQuality of Work3-4 years of capacity problems aheadComplexity of solutions employed

Lack of Maintenance

There are 2 types of MaintenanceWhat we say we are going to doWhat we actually do

Tactic creation performed by consultants or by in house staff

RCM, OMM, BCM etcTechnical ability is high Developed tactics are comprehensive

Proactive tasks are scheduled weeklySchedule attainment is often low due to reactive interruptionsComprehensive IT management systems are in place

Maximo, On Key, SAP, Ellipse, GIS, MIS, Reporting tools, Scheduling tools

Refurbishment programs existTasks in place Failure Modes

No Effect

Good TasksManaged Failures

New Tasks

Current Breakdown and Ad hoc

items

Maintain the Maintenance Program

Maintenance Program Maintains the Assets

Preventative tasks are established with the best intentions

However!!

Organisational Culture invariably rewards reactive actions when problems arise

‘You worked through the night to get the supply back’ well done!‘My team know how to pull out all the stops when the chips are down!’

When did you last hear this sentence?Well done for that inspection, we haven’t had a failure in the last 6 months!

Lack of Maintenance cont

BP/KPI Maturity Matrix

PERF.LEVEL 1

PERF.LEVEL 2

PERF.LEVEL 3

PERF.LEVEL 4

PERF.LEVEL 5

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5

ENABLING Best Practice

RE

SU

LT

ING

KP

I

Back ofthe packBack ofthe pack

Can’t go thedistanceCan’t go thedistance

PromisingPromising

World ClasscontendersWorld Classcontenders

Most organisations have gaps in their resource structuresThere is a country wide shortage of skilled labour across all industriesRefurbishment funding has been made available in a number of casesThere are no quick fixes to plug the organisational gapsAs Engineers we compensate

Over engineer and / or automateImplement complex technical solutionsOutsource

Lack of detailed planning, Scheduling and Execution managementPeople are asked to perform tasks that they should not (Planning, expediting etc)The level of actual job supervision is often low

Mainly due to constraints on supervisors to perform administrative duties, chasing tools, materials, labourNot enough time in the day to inspect work which results in artisan acceptable quality

Lack of Resources

Lack of Resources

Available Workforce

Simple WP&C in Context

Planned WP&C

ExecutionResources

Data Collection

Unplanned

Asset Register

History

Condition-based Feedback

Scheduled Work Orders

Resources available

Work to be done

Wrench time is the measure of productivity within the workforce

Average wrench time for industry is between 25 -35%For a 10 hour day the person is productive for 3½ hours.

Non-productive activities account for 6½ hours.

• Necessary break times

• Job delays• Waiting for spares• Waiting for instruction• Travel• Waiting for Tools

World class wrench time is between 55 - 60%

Implement a fundamental planning & scheduling system – 45%

Keep records and learn from previous mistakes – 50%

Detailed Asset register & CMMS – 55%

Lack of resources or low utilisation?

MisconceptionsBeing busy is not necessarily being productive or effective

Labour is invariably busy

Lets put in terms of people and cost

If we can take the productivity of a person from 35% to 55% by adding a planner then a planner increases productivity by 1.57

Breakeven point = take 1 of every 3 workers and make them a planner

Without Planner = 3 x 35% = 105% productivity

With Planner = 2 x 55% & 1 x 0% = 110% productivity

Experiences states that a planner can plan for between 20 & 30 people

Therefore for a 30 man workforce 1 planner adds 17 extra workers making an effective total of 47 workers without adding heads.

What does it mean?

If you take 90 workers the you get an effective headcount of 141. That’s 51 extra people!!

If the organisation is predominantly reactive in nature then the workforce can be split into a proactive team and a reactive team.

The majority of the people reside on the fire fighting side initially

The ratio of the split can be adjusted as the organisation moves from reactive to proactive.

In a more proactive organisation the extra pople can be used to perform tactical tasks ensuring fires don’t occur.

In world class organisations where reactive and proactive work is well in hand then the extra resources are used for training and development of processes or projects to further improve the performance of the assets.

What does it mean?

Indirect benefitsIf we have an effective support or care function then we should be performing the right task at the right time to the right quality at the right frequency.

Reliability will be high as will availability

Customer perception will change

Impact on industry and business will be reduced

Direct benefitsMaintenance backlog is reduced

Capital investment can be deferred

Saving in cost to perform maintenance due to planning & scheduling

More engaged work force

Lower turnover

AM as a profit driver

In the late 90’s at Jacksonville Electric Authority in the USA the following was found

For their 1000Mw steam system

1% increase in availability equated to $300 000/yr power transaction capability

Each 100 Btu/KWH improvement in efficiency equated to $400 000/yr

1% increase in availability for 1000Mw system means 10Mw of future power plant that does not have to be built. At $1200/KW construction prices that equates to $12 Million

Reference - The Leverage effect of Work order Planning – R.D. (Doc) Palmer, Jacksonville Electric Authority

Example - Jacksonville Electric Authority

The way forward - Asset Care Centre

Methodology

TechnologyPeople

Performance Improvement

Asset Base

Methodology

TechnologyPeople

Performance Improvement

Execution (In-House)Execution (External)

Planning & Scheduling

Execution Control (Supervisor)

FeedbackF

eedb

ack

Asset Base

ACC

The way forward - Asset Care Centre

Reactive Urgent work

…..and finally

Thanks & Questions?

Can you do it again?