M AC H I N E RY

M E S SAG E S

Optimizing Plant Assets

Through Improved Reliability Practices

ROB BLOOMQUIST
Commercialization Manager, Reliability Services GE Energy rob.bloomquist@ge.com

JIM OLDACH
Field Applications Engineer, Reliability Services GE Energy james.oldach@ge.com

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Introduction
Faced with economic and regulatory pressures, businesses in many industries must meet the challenge of improved reliability at lower costs in order to remain competitive. Because of this, maintenance and reliability programs are often forced to cut costs while simultaneously sustaining or even increasing plant availability and production levels. The prospect of having to somehow do more with less can be discouraging, but this need not be the case. Benchmarking maintenance and reliability performance, now a common practice in many industrial sectors, shows that a wide disparity still exists between average and topquartile performers. The good news is that while some businesses have figured out how to achieve and sustain improved reliability at lower cost, significant opportunities for improvement and cost savings exist for many others. The formula for successful asset management lies in making smart improvements that optimize asset performance and drive the characteristics shown in Table 1.

THE

OPTIMUM LEVEL OF INVESTMENT

TARGETS THE RIGHT ASSETS WITH THE RIGHT MIX OF PLANNED MAINTENANCE,
RESOURCES, AND TECHNOLOGY, THEREBY

REDUCING ASSET RISK TO A TOLERABLE

LEVEL AT

MANAGEABLE PLANNED COSTS.

>>

IMPROVED

>>

REDUCED

Safety Environmental compliance Reliability, availability, throughput, quality Craft effectiveness or wrench time Return on investment for capital expenditures

>

Downtime Energy consumption Maintenance costs Overtime Spare parts inventory

TABLE 1: BENEFITS OF PLANT ASSET OPTIMIZATION

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What is Asset Optimization?

TOTA L C O ST S & LIA B I LIT I E S

Optimization: An act, process, or methodology of making something (as a design, system, or decision) as fully perfect, functional, or effective as possible.
In the industrial setting, Asset Optimization is the process of maximizing the value of plant production assets to the business through effective management of risk. A model is helpful in describing this further. The first part of the model involves balancing asset management costs against the risks and liabilities the asset poses to the business. Under-maintaining or underinstrumenting a highly critical asset might ensure lower planned costs, but may also result in poor reliability, high reactive maintenance costs, poor asset performance, and unacceptably high overall risk to the business. Conversely,

Po i nt o f l o w es t t o t a l co s t

Sum A s s et Ri s k
probablility x consequence

P l a nned co s t s
$ $ I NV E S T M E NT I N AS S E T M ANAG E M E NT

FIGURE 2: DRIVING DOWN THE POINT OF LOWEST TOTAL COST

The second part of the model focuses on implementing proactive measures to further drive down the Point of Lowest Total Cost as shown in Figure 2. This can be done in two ways: by working both smarter/better, and by reducing risk exposure.

TOTAL C O S T S & L IAB I L IT I E S

Working smarter and better

Poin t of lowe s t t ot al c os t Asset Ris k
p ro b a blilit y x consequence

Sum

Planned costs can be reduced by doing it smarter. Methodologies such as Preventative Maintenance Optimization (PMO) facilitate replacement of intrusive preventative techniques with non-intrusive predictive methods where feasible, and also help eliminate low-value tasks. Planned costs can further be reduced by doing it better. This means improving maintenance efficiency by incorporating better tools and technology, improving planning and scheduling, developing written procedures for complex or critical tasks, and emphasizing the importance of ongoing training. Human factors must be considered here with Key Performance Indicators (KPIs) aligned with program goals to drive the correct behavior.

P lan n e d c os t s
$ $ I NVE STM E NT I N AS S ET MANAG E M E N T

FIGURE 1: ACHIEVING THE POINT OF LOWEST TOTAL COST

over-maintaining or over-instrumenting a non-critical asset will incur higher-than-necessary planned costs compared to the level of risk reduction that can be achieved. The optimum level of investment targets the right assets with the right mix of planned maintenance, resources, and technology, thereby reducing asset risk to a tolerable level at manageable planned costs. Put into simple terms, this means developing and implementing smart strategies so the right maintenance is performed on the right assets at the right time. The achieved result is the Point of Lowest Total Cost as shown in Figure 1.

Reduce overall risk exposure

Additional proactive measures, such as those directed by Reliability Centered Maintenance (RCM), mitigate overall risk by reducing the probability and/or consequences of potential events/failures. Probability can be reduced by maintaining assets proactively, replacing/redesigning systems or assets with improved designs, and replacing

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aging assets that have become unreliable. Consequences can be reduced by using predictive technologies to plan ahead, improving mean time to repair, and developing response plans for anticipated failures.

Articulating the Business Case

Development and articulation of the business case must occur before any significant improvement initiative can get off the ground. One way to achieve this is to employ
MA I NTE NA N C E $ Q UARTI LE ( as per c ent of R AV) Top 1st Middle 1st Top 2nd Middle 2nd Top 3rd Middle 3rd Top 4t h Middle 4t h Bot t om 4t h 0.7% 1.7% 2.7% 4.2% 6.2% 8.1% 10.2% 13.9% 18.7% 0.4% 0.9% 1. 4% 2.1% 3.5% 4.9% 6.3% 8.7% 12 .5% I NVE NTO RY $

benchmarking to determine how well a plant or company is performing relative to others in their industry. Table 2 is an example of benchmark data for the power generation industry. It describes various levels of annual maintenance expenditures and spare parts inventory value as a percentage of Replacement Asset Value (RAV). RAV is the total cost to replace production capacity in presentday currency, and is used to normalize values and validate comparison between plants of different sizes and configurations. As can be seen in the example, improvement in maintenance costs from the middle 3rd quartile to the middle 2nd quartile means a reduction in spending from 8.1% RAV to 4.2% RAV nearly 50%. Even for a small plant, this can quickly translate into savings of $2,000,000 to $3,000,000 or more. With a sustainable program, these become recurring savings realized year after year. Return-on-investment potential and payback period can be derived using estimated savings extracted from benchmarking results using net present value cost/benefit analysis.This analysis weighs recurring benefits of maintenance cost reductions, availability improvements, and other items as defined in Table 1 against estimated costs for implementing and sustaining an improvement program. In the example shown in Figure 3, a facility investing in a comprehensive plant-wide reliability improvement initiative can expect to see financial returns shortly after one year (Q5), break-even at two years (Q8),

TABLE 2: POWER GENERATION INDUSTRY BENCHMARK DATA The Business Case for Reliability, Management Resources Group, Inc.

SINGLE PLANT RETURN ON INVESTMENT EXAMPLE

$60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0

Q1 Q5 Q9 Q13 Q17 Q21 Q25 Q29 Q32

7 yr ROI= $49,900,000 7 yr ROI= 11.5 to 1 Break Even in Quarter 8 Total Initial Cost ~$1,300,000

Break Even Go Live

-$10,000,000

Calendar Quarters

Costs

Benefits

Funds Flow

Source : The Business Case for Reliability, Management Resources Group , Inc .

FIGURE 3: EXAMPLE COST/BENEFIT ANALYSIS

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Wo rk M a n a g e m e n t P l a nt D es i gn C or r ecti ve Ma i ntena nce C a pi t a l P l a nni ng I nventor y C onr ol PM / P dM Ma i ntena nce D i s p o s a l / S u rp l u s Pe rs o n n e l Tra i n i n g

Technology Methodology Processes

R e p o rt i n g D a t a / I n f o rm a t i o n P ro b l e m S o l v i n g

Culture Change
Po l i ci es & P r ocedur es Per for ma nce Mea s ur es

Sust ainability

Te ch n i c a l D o c u m e n t s Reliability Analysis

I M PAC TS R E LI AB I LI T Y STAF F/ P U B LI C SA F E T Y PRODUCTIVITY Q UA L I T Y R E G U L ATO RY C O M P LIAN C E O & M B U DG ET

FIGURE 4: INGREDIENTS FOR SUCCESSFUL PLANT ASSET OPTIMIZATION

and total return on investment seven years after going live exceeding 11 to 1. Overall, this is a very compelling business case that reflects the reality of making smart investments as part of a long-term strategy.

The 5-Phase Approach

Given this background, the obvious question is, What is the process? First, we want to avoid a me too approach that adopts the latest popular methodology or solution without giving proper consideration to issues that can impact program effectiveness. For example, many Reliability Centered Maintenance (RCM) programs and Computerized Maintenance Management System (CMMS) implementations fail to deliver expected value. This is not because the methodologies or systems are flawed (they arent), but because important underlying principles and required data quality are often overlooked. To overcome these pitfalls, a strategic approach is required which begins with carefully establishing the building blocks and framework that will eventually support the rest of the reliability improvement initiative. The resulting structure then enables advanced methodologies and technology solutions to deliver the value they are capable of.

Ingredients for Success

The recipe for success contains many key ingredients that must be added into the mix at the right time and in the right proportions. The complexity of variables and relationships that impact reliability in an industrial setting are frequently underestimated. Plant Asset Optimization requires strategic integration of technology, reliability methodology, maintenance best practices and processes, and culture change in a coordinated and sustainable program. Consider the many elements shown in Figure 4, their relationships to each other, and their interdependencies. It is ultimately how well these elements come together that determines the impact on critical success factors and business results.

Phase I Lay The Groundwork

Evaluate current situations and develop strategy for smart improvements

Phase II Build The Foundation

Establish data quality and fundamental processes

Phase III Set The Framework

Begin executing the core program

Phase IV Enclose The Structure

Add proactive elements for continuous improvement

Phase V Enhance The Structure

Raise the program from great to World Class

FIGURE 5: THE 5-PHASE APPROACH TO PLANT ASSET OPTIMIZATION

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A 5-phase approach (Figure 5) is described here using the analogy of building a physical structure from the ground up, because this closely parallels what we are doing. We want to build structures and processes, step by step, that will support high reliability, reduced maintenance costs, and continuous improvement in a sustainable program. This approach applies equally well to optimizing existing programs and developing new programs, whether at existing or new facilities. Maintenance and reliability programs from one facility to another vary from non-existent to best practice in their evolution toward world-class status. The 5-phase approach treats each business and operating facility uniquely, and acts to identify and implement improvements based on specific needs.

role each individual will play is extremely vital to project success and sustained performance.

Phase Il

Build The Foundat ion

Est ablish dat a qualit y and fundament al proc e sse s : Equipment dat a and librar y Planner/scheduler training Criticality analysis C ondition monitoring program Policies and procedures training Performance reporting process

Ph a s e I

L ay The Groundwork

Evaluate current situation: Business case Practices, technology, culture Develop strategy for smart improvements Work management Technology Organization and culture change Program control

Phase I of the process lays the groundwork for improvements by preparing the plan for smart improvements. It begins with a site assessment or gap analysis to identify the current situation versus desired performance, and then the strategy/tactics to close these gaps. It is at this stage that all components of the plant asset optimization program are evaluated and obstacles toward program improvement are identified. The gap analysis results in a detailed process improvement plan or Reliability Action Plan (RAP), that lays out the necessary actions to move the program forward. Phase I activities also deal with strategy development and the identification and control of programmatic and cultural issues. Effecting positive culture change is one of the most important ingredients required for success and one all too frequently overlooked. A comprehensive action plan is obviously key to success, but equally important, the plan must be clearly communicated throughout the organization. Ensuring the entire plant staff understands project intent and the

Phase II establishes data quality and puts in place bestpractice fundamentals. It begins the transition to a more controlled process, fortifying CMMS and technical information, incorporating training on program policies and work management procedures, and setting the table with tools for Phase III activities. Phase II includes systematic screening of all assets to determine relative criticality to safety, environment, operations, product quality, and maintenance costs these criticality rankings will be used in Phase III to direct development of optimum PM, PdM, and spare parts strategies. Asset optimization program performance reporting is also set up in Phase II. This involves the roll out of actions to meet the performance reporting requirements set out in the policies developed in Phase I.

Phase Ill

S et The Frame work

Begin executing the core program: PM / PdM tasks Lubrication data Work scheduling with CM MS Fix it Now (FI N) team Status reporting

In Phase III, we begin executing the core program and making real changes to daily work routines. PM and PdM routines are developed and implemented in the CMMS. Since lubrication issues are often cited as root cause of failures, lubrication requirements are thoroughly documented and utilized during this process. It is also at this point that the maintenance program will begin

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transition from reactive maintenance toward proactive maintenance in a controlled manner. Here we implement the Fix It Now or FIN team concept as a strategy to assist with this difficult transition. Initially a large portion of the maintenance team will deal with daily work requests or Fix It Now items, allowing the balance of the maintenance team to begin executing preventive and predictive tasks that will drive improved reliability. As the program matures, the proportion of personnel assigned to the FIN team will eventually be reduced to about 20% of the total maintenance team, while the remaining 80% of the maintenance team will be devoted to ongoing proactive maintenance functions. Phase III is also where actual program reporting begins that will enable ongoing measurement and tracking of overall project impact.

methodologies such as Six Sigma may also be valuable depending on the requirements of the facility. Some of the initiatives listed in Phase IV may be implemented earlier in the process depending on individual facility needs and resources available to support the initiatives. For example, a formal RCA methodology and program may need to be implemented early at a new facility so that issues associated with initial plant startup can be effectively analyzed and worked to successful resolutions. Ongoing maintenance training programs are also developed in Phase IV as part of continuing development of craft skills.

Phase V

Enhance The Structure

P h as e I V

Enclose The Structure

Raise the program from great to World Class: Energy management Capital projects Asset replacement Design improvements

Add proactive elements for continuous improvement : Machine improvement Lube Optimization RCM RCA Spare parts optimization Maintenance training

In Phase IV, we are ready to add proactive elements to support continuous improvement. The program now has all the necessary components to support higher level reliability initiatives such as Machine Improvement Strategies, Technology Improvements, Reliability Centered Maintenance (RCM), Root Cause Analysis (RCA), and Spare Parts Optimization. Other reliability

In Phase V, we raise the program from great to World Class. The programmatic enhancements that occur in Phase V focus more on financial benefits than on reliability improvements. It is at this stage that energy consumption can be reviewed and areas of inefficiencies identified and corrected. Also, developing a capital projects prioritization process provides a structured methodology for comparing costs and benefits of two competing capital projects. The outcome of such a comparison is selection of the capital project that provides the highest rate of return to the facility over time. Asset replacement strategies should also be developed and implemented in Phase V to address aging and obsolescence issues as the plant continues to operate.

SUCCESSFUL PLANT ASSET OPTIMIZATION BUT IT

IS ACHIEVABLE, AS PROVEN BY TOP QUARTILE PERFORMERS, REQUIRES A CAREFUL MIX OF MANY INGREDIENTS.

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Summary and Conclusions

Maximizing the value of production assets by optimizing the way they are maintained and managed is essential to remaining competitive. The challenge is to take a step back from the natural tendency to think a single solution, once adopted, will solve all reliability problems. Instead, it is often numerous and persistent grassroots issues that have been overlooked that drive a facility to search for a cure in the first place. Successful plant asset optimization is achievable, as proven by top quartile performers, but it requires a careful mix of many ingredients. An approach to smart improvements, much like building a physical structure, is required that strategically integrates technology, methodology, processes, and culture change in a coordinated and sustainable program.

The approach will lay the groundwork by articulating the business case and developing the best strategy and plan to close the gaps between current performance and desired performance. It should stress effective communication and culture change, and build a solid foundation of data quality and fundamental best practices to support the remaining framework. Then, the framework is erected and the transition from a reactive to proactive culture, begins. Once the core program is firmly established, the structure will be able to support proactive elements for continuous improvement. World-class performance is then within reach and can be achieved by enhancing the final structure with design improvements, asset replacement strategies, capital projects prioritization, and energy management programs.

Learn more about our reliability services

I n t e r e s t ed in having your business realize the kinds of reliability improvements d i s c u s sed in this article ? This can often best be achieved by enlisting the help of p e o p l e e xperienced in defining an d implementing such programs . G E Energy is p l e a s e d to offer these ser vices to customers in any industr y, spanning all types of e q u i p m ent , regardless of manufacturer. We use the proven 5-phase approach d i s c u s sed in this article as the centerpiece of these reliability ser vices offerings . O u r s u i t e of on-site assessment and project implement ation ser vices also includes :

i i i i i i i

Maintenance and Reliability Gap Analysis CM M S Implement ation and Optimization Asset Criticality Analysis C ondition- B ased Maintenan ce Programs Reliability Centered Mainte nance Prevent ative Maintenance Optimization Spare Parts Optimization

We e n c ourage you to learn more about our portfolio o f r e l i a bility ser vices by cont actin g any of the i n d i v i d u als below for a personal discussion r e g a r d i n g your needs and our capabilities :

Larry Covino Product Line Manager, Reliability Services G E Energy lawrence.covino@ge.com (716) 693-1363

Rob Bloomquist Commercialization Manager, Reliability Services G E Energy rob.bloomquist@ge.com (303) 449-9635

Jim Oldach Field Applications Engineer, Reliability Services G E Energy james.oldach@ge.com (781) 771-7817

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