Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX Reliability and Maintenance (RAM) 27th Brazilian Congress on Maintenance Rio

Al PolingRAM Study Project Manager HSB Solomon Associates LLCDallas, TX

Reliability and Maintenance (RAM)

27th Brazilian Congress on MaintenanceRio de Janeiro, BrazilSeptember 12, 2012

The Path to World-Class Performance

2Proprietary and Confidential

© 2012 HSB Solomon Associates LLCwww.SolomonOnline.com

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

- Charles Darwin

Survival in Nature



“It is not the strongest, nor the most intelligent that survives. It is the one that is

the most adaptable to change.”

“Reliability and maintenance are tools in the manufacturing survival tool kit!”

- Al Poling

Survival in a Global Market



Reliability and MaintenanceBenchmarking

• Benchmarking is the use of actual operating data to compare performance of multiple entities (e.g., companies, sites, production units, etc.).

• A benchmark is a performance threshold used for comparative purposes (e.g., first quartile, median, etc.).

• Benchmarks can be average values (e.g., overall average, better half or poorer half average, etc.) of a peer group’s performance indices.

• Benchmarks can also be any breakpoint used to distinguish performance between better and poorer performers.



Reliability and MaintenanceBenchmarking

Reliability

Maintenance

Monetized margin loss (maintenance downtime times standard margin) due to a facility’s mechanical unavailability and failure to perform as designed compared to peers in the same industry

The normalized cost of conserving a facility’s physical assets so they operate at design performance levels compared to peers in the same industry



International Study of Plant Reliability and Maintenance Effectiveness (RAM Study)• Implemented in 1996 to compare company, site,

and unit Maintenance Costs Mechanical Availability

• Process Industry Chemicals and Petrochemicals Refining

• Redesigned in 2010/2011 Focused on Factors that Impact RAM Performance Utilizing Contemporary Measures of Performance

• Benchmarks Against Better Half Average Performance



RAM Study – Core IndicesMaintenance Cost Index (MCI)

• Maintenance Cost Type Expense Capital (replacements due to end of life)

• Maintenance Cost Categories Labor Material Overhead/Support

• Maintenance Work Types Corrective Preventive Predictive/Condition Monitoring

• Maintenance Work Categories Routine Maintenance Turnarounds Including Short Overhauls



RAM Study – Core IndicesMechanical Availability Index (MAI)

• Captures all reliability and maintenance related downtime Breakdown Turnarounds and Short Overhauls Slowdowns and Rate Reductions

• Monetizes all reliability and maintenance downtime Assigns a standard margin for each production unit Plant replacement value (PRV) × 40% × annual RAM

downtime

• Captures downtime by equipment category Rotating Fixed Instrument/Electrical

• Benchmarks Mean Time Between Failure (MTBF) Pumps, compressors, motors, heat exchangers, etc.



RAM Study – Core IndicesReliability & Maintenance Effectiveness Index (RAMEI)

• Reports Net Performance Gaps Reliability Maintenance

• Highlights Areas of Excellence Where performance is equal to or better than first quartile

performance Need to understand what enables excellent performance and

replicate throughout the site

• Sums Total Improvement Opportunities Maintenance Cost Improvement Opportunities Mechanical Availability Improvement Opportunities

• Provides a Basis for a Performance Improvement Plan



Reliability and MaintenanceCulture

• Behaviors are driven by the local culture

• There are two distinct cultures in the reliability and maintenance community Traditional Culture – based on the belief that failures

are inevitable, so they focus on being good at reacting

Contemporary Culture – based on the belief that failure-free operation is the objective, so they focus on failure elimination



Traditional Culture

• High Maintenance Costs (Cost/PRV >1.4%)

• Low Equipment Reliability (<96.7% mech. avail.)

• Reactive Culture (reinforce reactive behaviors)

• Majority Corrective Maintenance (80/20)

• Annual Turnarounds (T/As) with Little Scope Management

• Change (Risk) Averse

• Focus on Optimizing Reactive Behaviors

• Reinforce the Current Culture and Related Behaviors

• Inefficient and Ineffective Organizations



Consequences of Traditional Reliability and Maintenance

• Increased risk of a catastrophic incident

• Higher recordable injury rate

• Increased downtime, therefore less production

• More off-spec product, thus lower margins

• Larger replacement capital requirements (4–10%)

• Reduced revenue, therefore lower profit

• Resource intensive

• Lower return on assets

• Cannot compete in a global marketplace



Contemporary Culture

• Low Maintenance Costs (Cost/PRV <1.4%)

• High Equipment Reliability (>96.7% mech. avail.)

• Proactive Culture (reinforce proactive behaviors)

• Majority Condition-Based Maintenance (80/20)

• Efficient and Effective Organizations

• Failure Averse

• Low T/A Frequency (5–7 years) w/Scope Management

• Accept Failure-Free Operation as Normal

• Focus on Optimizing Overall Performance



Benefits of Contemporary Reliability and Maintenance

• Lower risk – both safety and environmental

• Uninterrupted operation

• Higher product quality

• Increased throughput

• Higher return on assets

• Smaller replacement capital requirements (0–2%)

• Increased revenue and profits

• Optimum resource requirements

• Competitive globally



Traditional vs Contemporary Reliability and Maintenance

Which one are you?How do you know?

You know by measuringand comparing performance!



The Relationship BetweenReliability & Maintenance

Reliability and Maintenance Are Inextricably Linked

Reliability

Maintenance

Cannot cost cut your way to improved

reliability

Maintenance costs are driven by reliability…or the lack thereof

Best performers achieve high reliability at low cost!Poor performers have high cost with low reliability!

Each 1% increase in mechanical availability cantranslate into a 10% reduction in maintenance cost!



Traditional Approach

Pressure Applied Here

Reliability(Margin)

MaintenanceCosts



Initial Traditional Result

Pressure Applied Here

LowerReliability(Margin)

LowerMaintenance

Costs



Long-Term Traditional Result

LowerReliability(Margin)

HigherMaintenance

Costs



Contemporary Approach

Reliability(Margin)

MaintenanceCosts

Apply Pressure Here



Progressive Result

HigherReliability(Margin)

LowerMaintenance

Costs

Apply Pressure Here



Main

tenan

ce C

ost

s Total

Reactive

Proactive

100%Mechanical Availability

RAM Optimization



Cost

s

Total Cost

Lost Revenue

MaintenanceCost

100%Mechanical Availability

Profit Optimization



Path to First Quartile

High Mechanical Availability and Low

Cost

Low Mechanical Availability and High Cost

<95

95

95

96

96

97

97

98

>98

1 1.4 >10

Maintenance Cost, % (US $/PRV)

Mech

an

ical A

vaila

bili

ty,

%

Not Sustainable

Eff

ecti

ven

ess

Efficiency and Cost

Industry Leaders

Facility

Sustainable



World-Class Manufacturers

• Recognize the value of reliable operations

• Focus on failure elimination (uninterrupted operation)

• Build reliability into their corporate strategy Engineering Design Procurement Operation

• Compete effectively in a global marketplace



Summary

• If maintenance costs are not below 1.4% of plant replacement value, you are not a world-class performer.

• If mechanical availability is not above 96.7%, you are not a world-class performer.

• Best performers continue to get better while poor performers continue to fall further behind.

• Regrettably, for some, it is already too late!

• The path to world-class performance begins with the first step… what are you waiting for?



Questions?

Thank You!

Al PolingRAM Study Project [email protected]+1-972-739-1731HSB Solomon Associates LLCDallas, TX

Documents

Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX Reliability and Maintenance (RAM) 27th Brazilian Congress on Maintenance Rio