Lessons Learned from Reliability and Maintenance Benchmarking What Does World-Class Performance Look Like? Presented by: Tom Svantesson Senior RAM Consultant

Lessons Learned from Reliability and Maintenance BenchmarkingWhat Does World-Class Performance Look Like?

Presented by: Tom SvantessonSenior RAM Consultant

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Written authorization required before sharing IP with a third party

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Client IP

Input Data

Methodology, Metrics& Database

Aggregated IndustryResults

Client Results

Potential Third Parties

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Investment Community

Taxing Authorities

Consulting Firms

Non-Disclosure Agreement (NDA)Non-Disclosure Agreement (NDA)

Protecting Intellectual Property (IP)Mutual Trust and Obligations



Comparative Performance Analysis

• Solomon began its Comparative Performance Analysis (CPA) approach to benchmarking in 1980

• Comparative Performance Analysis Fuel Study (>85% of global refining) Olefin Study (>67% of global manufacturing) RAM Study (>1,000 process industry plants) Power Study (power generation) Pipeline and Terminal Studies Other Specialty Studies



• Solomon began benchmarking Reliability and Maintenance (RAM) in 1996

• Process industry Chemical/petrochemical Refining

International Study of Plant Reliability and Maintenance Effectiveness

Developed Equivalent Maintenance

Complexity (EMC) factor to enhance

data normalization

Adapted for refining using Solomon Fuels Study process

families (e.g., CDU, FCC, etc.)

20101995

RAM Study developed in response to a request from the Chemical Manufacturers Association

1996

Implemented in the chemical process industry using 17 process families covering >200 chemicals

2000

2008

RAM Study database contains >1,000 sites

with >8,000 process units

Re-designed RAM Study launched with increased

value and decreased client effort

2012

RAM Study redesign based on client feedback2011



RAM Study Indices

• Reliability and Maintenance Effectiveness Index (RAM EI) Lost margin (due to RAM causes) Maintenance cost

• Maintenance Cost Index (MCI) – cost improvement

• Mechanical Availability – reliability

• Direct Maintenance Cost (craft labor and material)

• Indirect Maintenance Cost (supervision and staff)

• Routine and Turnaround Maintenance

• Company and Contractor

• Maintenance Expense and Maintenance Capital



What is Benchmarking?

• The process of comparing performance against others in the same or similar industry to Confirm competitive position Gauge the opportunity for improvement Identify practices employed by best performers



What is Reliability Benchmarking?

• The measurement and comparison of downtime (mechanical unavailability) attributable to RAM causes

• Downtime translates into lost margin that is often overlooked while focusing on maintenance costs

• Margin loss should be monetized to gain an appreciation for the value of lost production



What is Maintenance Benchmarking?

• The measurement and comparison of routine and turnaround maintenance costs Includes direct and indirect costs for company and

contractors Also includes maintenance capital costs, which are

often ignored and can skew performance



RAM Benchmarking?

• Benchmarking is the use of actual operational performance data to track performance trends, to compare to others, and to identify best practices

• Benchmarks are fact-based and should not be confused with opinion

• Benchmark thresholds are realistic, having already been achieved by a subset of the total population



Why is RAM Benchmarking Valuable?

HIGH cost andPOOR reliability

• Every dollar of reduced maintenance spending goes to the bottom line; consider how much sales would be needed!

• Every hour of increased uptime increases capacity without capital investment – free capacity!

Historically, reliability and maintenance have not been managed well, resulting in…

Maintenance is the largest fixed (non-volume-related) cost in a refinery or chemical/petrochemical plant

Maintenance is the third largest overall cost behind raw materials and energy



Benchmarking Lessons LearnedMyths & Facts!



Reliability and Maintenance are Inextricably Linked

Reliability

Maintenance

Cannot cost-cut your way to improved

reliability

A 1% increase in mechanical availability can translate into a 10% reduction in maintenance cost

Maintenance costs are driven by reliability…or the lack thereof



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



Progressive Approach

Reliability(Margin)

MaintenanceCosts

Apply Pressure Here



Progressive Result

HigherReliability(Margin)

LowerMaintenance

Costs

Apply Pressure Here



Impact of RAM on Replacement Capital

Conclusion: Better maintenance of existing assets results in lower replacement capital cost requirements. Conversely, poor maintenance of existing assets results in higher replacement capital cost requirements.

QuartilePerformance

Average Maintenance Capital Spent, % of PRV

1 2.1

2 2.8

3 3.4

4 4.6



Factors that Influence RAM Performance >90% Confidence Level

• Reliability (failure avoidance)

• Direct costs (craft labor and repair materials)

• Maintenance support (e.g., foremen, planners)

• Turnarounds (frequency and duration)

• Unplanned failures



Factors that Influence RAM Performance >90% Confidence Level

• Maintenance planning and scheduling

• Craft skills and experience

• Spare parts availability

• Operator engagement



Factors that Do Not Influence RAM Performance >90% Confidence Level

• Plant or refinery age

• Site footprint (geographic size)

• Plant replacement value

• Labor rates



Factors that Do Not Influence RAM Performance >90% Confidence Level

• Contract versus in-house maintenance

• Production rates

• Support costs (maintenance/reliability engineers)

• Management years of experience

• Union versus non-union



24

Path to First-Quartile (Q1)RAM Performance

High Mechanical Availability and Low

Cost

Low Mechanical Availability and High Cost

Not SustainableE

ffecti

ven

ess

Efficiency

Industry Leaders

Facility

<94

95

96

97

>98

1 1.4 >10

Maintenance Cost, % (US $/PRV)

Mec

hani

cal A

vaila

bilit

y, %

Sustainable



Do You Need to Benchmark Your Reliability Performance?

Mechanical availability <96.7%

Unreliability (characterized by equipment failures) is your largest downtime contributor

Increased uptime would provide much needed capacity

Equipment failures are driving maintenance behaviors

Breakdown maintenance is your normal mode of operation

Total plant maintenance turnaround (shutdown) occurs more frequently than once every 10 years



Do You Need to Benchmark Your Maintenance Performance?

Maintenance costs are >1.4% of PRV

Maintenance costs are your highest fixed cost

Corrective maintenance costs exceed preventive and predictive maintenance costs

Maintenance costs are not effectively controlled

Reactive maintenance is your normal mode of operation

Maintenance activities are predominantly corrective in nature (something broke, now you must repair it)



0

2

4

6

8

10

12

Q1 Q2 Q3 Q4 Site 1 Site 2 Site 3

RAM

EI,

% o

f PR

V

Value of Lost Production Total Maintenance Cost

RAM Effectiveness IndexChemicals – Quartiles of Performance (Example)

Quartiles of RAM EI



RAM Study DeliverablesSite Detailed Opportunities Report (Example)

0

2

4

6

8

10Eq

uip

Failu

re P

rod

Loss

es

RT -

FP

Mat

l Cos

t

RT -

Ind

irec

ts

RT -

Wag

es

RT -

IE

Wor

k H

ours

RT -

RE

Wor

k H

ours

RT -

FP

Wor

k H

ours

RT -

IE

Mat

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t

T/A

- W

ages

T/A

- R

E W

ork

Hou

rs

Rat

e Red

uctio

ns

RT -

RE

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Ann

T/A

& S

hort

OH

s Pr

od L

osse

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T/A

- R

E M

atl C

ost

T/A

- F

P W

ork

Hou

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T/A

- I

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ork

Hou

rs

T/A

- F

P M

atl C

ost

T/A

- I

E M

atl C

ost

T/A

- I

ndirec

tsRAM

Opp

ortu

nitie

s, U

S $M Total Opportunities = US $40M



0

20

40

60

80

100

120

Q1 Q2 Q3 Q4 Site 1 Site 2 Site 3

Mea

ntim

e Be

twee

n Fa

ilure

s, m

onth

sMTBF – PumpsBy Quartiles of Pump MTBF (Example)

Quartiles of Pump MTBF



Summary

• You are not a world-class performer if Maintenance costs are not below 1.4% of PRV Mechanical availability is not above 96.7%

• 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?

Thank You!

Documents

Lessons Learned from Reliability and Maintenance Benchmarking What Does World-Class Performance Look Like? Presented by: Tom Svantesson Senior RAM Consultant