Last time we examined the concept of cascading objectives when starting a condition based maintenance program. In this post we will explore some of the financial guidelines of maintenance, as well as some of the supporting KPIs.
Financial and metric guidelines
At the highest level, manufacturers need a relative means to evaluate maintenance expense. This becomes a basis for budgeting and is critical to understand when designing new programs. A commonly used measure is total maintenance cost as a percentage of the replacement value of the assets being maintained or %RAV.
“The annual maintenance cost for a facility or large group of assets expressed as a percent of the RAV (%RAV) is the most scalable, transportable, benchmark-able index or metric for measuring maintenance spending that is in wide use.” Sam McClair, Life Cycle Engineering
The %RAV can be easily expressed as [maintenance cost / replacement asset value] where:
Maintenance cost: Includes all maintenance costs. Parts, labor contractors and even capital expense driven by maintenance.
Replacement Asset Value (RAV): The total costs to replace all assets being maintained. This is likely what the assets are insured for.
There are commonly observed benchmarks for %RAV that companies use to evaluate their costs, which makes the metric very useful. When comparing, care must be taken to ensure that cost and assets are being evaluated consistently, as this may vary even within the same company.
Other metrics may also be used for evaluation, such as measuring maintenance per unit of product. Regardless of the metric, it is important to ensure the evaluation is made consistently.
“Our primary financial metric is maintenance cost per ton.” – Paper mill
When planning for justification of your program, ask:
- What measures are used to set the budget and evaluate the costs of maintenance?
- How does the site compare to peer sites or industry benchmarks?
- Are the benchmarks appropriate for the life cycle of the site?
- What budget goals are in place, and are they being met?
- How do the cultural values and behaviors impact budget performance?
- How does motor (full circuit) maintenance and reliability impact the budget?
Performance metrics of maintenance
What gets measured gets done, and so the priorities of maintenance should be reflected in its metrics (KPIs). These vary widely depending on the objectives of the business, state of assets, industry, and especially culture. A motor reliability program should either support the KPIs or, if justified, introduce additional KPIs to the maintenance program.
Professional maintenance organizations promote planned, proactive activities that identify problems before functional failure. They lead highly coordinated PMs that minimize required downtime and optimize resources. The planning and coordination is reflected in their KPIs:
- Unscheduled work % of total
- Planned work % of total
- Schedule compliance %
- % Overdue work orders
- PM+CBM hours as a % of total hours
- PM+CBM % schedule compliance
- Corrective maintenance hours created by PM/CBM hours
- Labor effectiveness – % hands on time / total time
When starting a motor reliability program, it is important to evaluate KPIs for priority, performance and relevance to motor reliability. Your selected KPIs should cascade upward to support department, operational and site objectives.
Consider the KPIs required to support your CBM program:
- What are the most important maintenance KPIs?
- Are they being met? Why or why not?
- How is motor reliability impacting these KPIs?
- How could improved motor reliability impact these KPIs?
So far in this series we have celebrated the industrial maintenance professional and explored the types of maintenance, reliability, finance and KPIs. The rubber meets the road in our next post, where we will get started on a condition based maintenance program.
For Additional Reading:
Maintenance Cost and Estimated Replacement Value
Give us a call at 800.993.3326 or email our motor team at eecomotorteam@eeco-net.com.
