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Reliability Engineering and System Safety


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Business-oriented prioritization: A novel graphical technique


R. Pascual c,, G. Del Castillo a, D. Louit b,c, P. Knights d
a
Department of Mechanical Engineering, Universidad de Chile, Casilla 2777, Santiago, Chile
b
Komatsu Chile, Av. Americo Vespucio 0631, Quilicura, Santiago, Chile
c
Centro de Minera, Ponticia Universidad Cato
lica de Chile, Av. Vicun
a Mackenna 4860, Santiago, Chile
d
Division of Mining Engineering, Faculty of Engineering, Architecture and Information Technology, The University of Queensland, St. Lucia, Brisbane, 4072, Australia

a r t i c l e in fo abstract

Article history: Traditionally, Pareto analysis has been used to select the most critical components and failure modes of
Received 12 November 2008 a system. A clear disadvantage of this technique is that it requires preselecting a single criterion to
Received in revised form establish priorities. More recently, a graphical log-scatter diagram technique has been proposed. It
15 January 2009
considers three key performance indicators simultaneously: reliability (MTBF), maintainability (MTTR),
Accepted 29 January 2009
and unavailability (D). This technique considers only times and does not include economical effects
explicitly. This article extends both techniques to explicitly consider both direct and indirect costs to
Keywords: prioritize from the point of view of an asset manager or from a maintenance decision-maker, as
Prioritization required. Due to the economic-based approach of this article, cost discounting is also considered inside
Physical asset management
nancial costs such asbut not limited toreliability-related investments. Also, the results are
Maintenance decision-making
displayed on simple and accessible graphs which make them particularly useful for conveying results to
Resource assignment
Criticality non-technical managers. The methodology is illustrated by analyzing a shovel from the copper mine
Subset selection industry, and it clearly shows how the proposed technique facilitates business oriented decisions and
Multicriteria analysis how they should change under different market conditions.
& 2009 Elsevier Ltd. All rights reserved.

1. Introduction tactical decision making, as selection of critical systems is present


at both management horizons.
To meet the increasing challenges of current industrial reality, The paper is organized as follows: rst, we present a general
organizations require to continuously enhance their capability to review of priority setting in engineering problems and then to
add value and improve the cost-effectiveness of their decision PAM problems. From there, we consider Pareto and Jack knife
processes. The decision process includes the selection of those diagrams (JKD), which justify the introduction of the so-called
systems and actions that may render the highest overall savings, cost scatter diagrams (CSD). An extended case study from a
and then, their associated policy resolutions. previous reference is used to illustrate the advantages of the new
Decision making in physical asset management (PAM) is technique. Discussion and future work is presented in Section 4.
generally focused on two levels: strategic and tactic. Strategic
level analysis is of greater interest because it involves: (i)
identifying and ranking of candidate systems for improvements; 1.1. Priority setting in the context of engineering
(ii) system level budgeting and budget forecasts; (iii) system level
performance evaluation; (iv) forecast of future market and Decision problems in engineering can be classied as evalua-
operational conditions. The tactical level, on the other hand, tion or design problems. When facing an evaluation problem, the
concerns more specic technical management decisions for the decision maker analyzes a set of discretely predened alterna-
individual projects. It includes: (i) assessing the causes of tives. The evaluation step can be done using aggregate value
deterioration and determining/selecting candidate solutions; (ii) function approaches and/or outranking approaches. In the rst
assessing benets of the alternatives by life-cycle costing; (iii) group we may mention general techniques such as multi-attribute
selecting and designing the desired solutions. The prioritization utility theory methods [1], simple multi-attribute rating techni-
technique introduced in this work deals with both strategic and ques [2], inverse preference methods [3], and analytic hierarchy
process (AHP) [4]. In the group of outranking techniques we
include: ELimination Et Choix Traduisant la REalite (ELECTRE) [5]
and Preference Ranking Organisation METHod for Enrichment
 Corresponding author. Tel.: +56 2 9784906. Evaluations (PROMETHEE) [6]. Detailed comparison of these kinds
E-mail address: rpascual@ing.puc.cl (R. Pascual). of methodologies can be found in Zopounidis and Doumpos [7].

0951-8320/$ - see front matter & 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ress.2009.01.013

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For instance, drawbacks of outranking methods arise from the value of a KPI only from the most critical elements, i.e., Al-Hajj and
many rather non-intuitive inputs that are required, i.e., the Horner [22] propose a predictive total cost model built only from
preference functions of PROMETHEE. If the number of alternatives the costs of the most critical sub-systems. A problem with Pareto
is sizeable, a rank reversal problem may arise in the AHP method. is that it requires selecting a single classication criterion.
Previously mentioned generic evaluation techniques have been To overcome this, other classication schemes have been
used previously in PAM. Bevilacqua [4] describes an application of proposed, i.e., risk priority numbers [23,24] and criticality
the AHP for selecting the best maintenance strategy for an oil numbers [25]. Another example of this type of method is the
renery. Carnero [8,9], also uses AHP but combines it with factor multicriteria classication of critical equipments proposed by
analysis. As a drawback, the pairwise comparison required by Gomez and Ruiz [26]. These schemes build polynomials that
AHP may become fairly time consuming if a large number of assign a single classication number to each subsystem/failure
alternatives need to be evaluated. Karydas and Gifun [1] use it to mode. Beehler [27] proposes a decision matrix which includes a
prioritize maintenance in the context of facility management. set of parameters to rank and select the most critical systems.
Deshpande [10] studies the role of multicriteria priority codes in Labib [28] and Burhanuddin et al. [29] present a decision making
the military service parts system and the impact of these codes on grid and a case study considering both frequency and downtime
systems performance. Dekker and Scarf [11] describe a ranking as classication criteria. Knights [30] enhances the concept by
methodology that indicates the expected money loss by deferring adding total downtime isoquantas to the diagram (also known as
execution of maintenance tasks. They also describe the decision JKD and further described below). As a result, we nd a 2D scatter
support system where they implemented such technique and diagram that concerns three criteria simultaneously: frequency,
show a case study from the process industry. In the more general downtime, and unavailability. As it only contains time based
elds of risk assessment and vulnerability analysis, Hokstad and information, it is insensitive to economic effects on the business
Steiro [12] and Einarsson and Rausand [13] provide frameworks cycle, something that is known to affect decision-making
for priority setting. In the rst case, they use a broad denition of priorities. In order to overcome that, we propose the CSD
risk that accounts for up to 11 criteria simultaneously. methodology in the next section.
Cooke et al. [14] develop a ranking tool which uses failure data To be able to assess savings, a cost estimation process is
and structured judgment to rank and upgrade the basis for needed. Consequently, a cost structure is required. In this article
decisions regarding inspection and replacement of underground the global cost is used, as dened in Jourden et al. [25]. It is
pipelines. Chareonsuk et al. [15] propose a multicriteria approach composed of four terms: intervention costs, holding costs,
to the rank and select preventive maintenance intervals using the reliability related investments, and consequential costs. Interven-
PROMETHEE [6], one of the outranking methods for multiple tion costs include the value of spares and labour. Holding costs
criteria problems. represent the nancial cost of having spares available on-site. The
In an engineering design problem, the decision maker also reliability related investments term considers all acquisitions
faces the identication of the preferred alternative from a innite made to attenuate the effect of maintenance (i.e., redundant
set dened by a set of constraints. The latter case is usually solved equipment, stock piles, and insurances). The nal term refers to
by using mathematical programming techniques. Examples of downtime costs and other costs associated with move from/to a
design problems in the context of PAM are the multicriteria standard production method for maintenance reasons (Fig. 1).
project selection [16], the assignment of overhaul funding for
eet of diverse equipment under budget constraint [17] and the
1.3. Jack knife diagrams
design of maintenance intervention protocols [18]. Mathematical
programming is resource-intensive and relatively complex to
The total downtime MDT j of a system during a given period of
implement.
time T, due to an intervention code (or code), is the product of the
number of times nj that this code occurred and the mean time out
1.2. Priority setting in PAM of service MTOSj the system:

MDT j T nj T  MTOSj T (1)


Although previously mentioned methods have been used in
If all codes are displayed in an n vs. MTOS diagram, it is possible
the context of PAM, there are more intuitive techniques that use
the particular properties that relate common use key performance to discriminate those codes that cause the major downtime, but it
is also possible to assess if it is due to high frequency of to high
indicators (KPIs) and facilitate decision making (further described
below). In order to perform the systems selection, a holistic, time out of service. A disadvantage of using Eq. (1) directly is that
iso-downtime curves are drawn as hyperbolaes. This can be easily
life-cycle centered approach can be used. By doing so, the analysis
is not limited to points of view of the maintenance function. overcome by using the identity:
PAM considers ve sequential steps of the life cycle [19,20]: log MDT j T log nj T log MTOSj T (2)
conceptualization, design, implementation, operation (including
maintenance), and retirement. It must set, control and balance a
set of KPIs such as availability, reliability, productivity, overall Intervention
equipment effectivity (OEE), intervention costs, and global cost. costs
This set of KPIs must be balanced by setting maintenance policies Holding
that may range from corrective (run to failure) to proactive costs
(system redesign [21]). Of course, setting such policies requires
the availability of resources. As they are usually scarce, a Reliability related
prioritization process must be established. It must be at system investments
or subsystem level, or, if they have been selected, at prioritizing
failure modes. Traditionally, Pareto analysis has been used to set Penalty
decision priorities. Pareto analysis is highly useful to focus costs
decision making on a small set of systems/failure modes.
Complementarily, they can also be used to estimate the global Fig. 1. Components of the global cost.

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A con on using Eqs. (1) and (2) is that they depend on T. If it is the line of D 1%. Any code above that line eats more than 1% of
desired to compare the system performance at two different the system availability.
intervals of time (or two different systems), they would have to be We observe that, in general, codes related to preventive
of the same length to make a logical comparison. One way to maintenance affect the position of corrective codes. If this is not
overcome that is by using the unavailability, as it is explained occurring, the preventive action is not being technically effective.
below. Let us take for example the inspection of a hose of a shovel. If is
Unavailability (D) is the product of two factors; the frequency not done well or with enough frequency, the failure rate of this
of interventions (f ) that occurred in a particular time frame and component will probably increase.
the average associated time-out-of-service (MTOS), which, in the A modied version of the JKD is proposed in Karim et al. [31].
case of a failure corresponds to the mean time to repair (MTTR): In their case, the axes variables are number of defects and cost of
defects in a setting of evaluating construction contractors
Dj f j  MTOSj (3)
performance.
Eq. (3) offers the possibility to produce a diagram to show those
interventions that consume more availability and be able to
2. Cost scatter diagrams
discriminate if it is due to high frequency or to high time-out-of-
service. Again
As mentioned before, JKD consider only times and frequencies,
log Dj log f j log MTOSj (4) and correspondingly, no economic effect is explicitly taken into
account. In what follows, we propose the CSD. The intention is to
produces a straight line on a loglog diagram. This enhanced way
enhance the graphical analysis by adding the cost dimension.
of producing the diagram shown in Fig. 2, permits drawing iso-
unavailability lines which are easy to interpret; i.e., one can draw
2.1. Model formulation
0.2
The expected maintenance global cost per unit time cg of a
0.18 given system can be obtained by summing the gains from all
interventions (i.e., failures, preventive replacements, inspections,
0.16
and other shutdown actions):
0.14 X
n
cg ci;j cf ;j csi;j ca;j f j  MTOSj (5)
Unavailability

0.12 j1

0.1
X
n
cg cgj Dj (6)
0.08
j1

0.06 where MTOSj is the mean downtime associated to each interven-


0.04 tion j, f j corresponds to the frequency of intervention j, ci;j is the
direct cost per unit time of intervention j (spares, labour,
0.02 mobilization, planning, and administration), cf ;j corresponds to
the downtime cost per unit time, ca;j is the holding cost due to
0
spares and its amortizations per unit time, csi;j stands for the cost
1 2 11 3 10 7 12 8 5 15 6 9 4 17 14 16 13
for having redundancies and other reliability-related investments,
Code
per unit time.
Fig. 2. Pareto analysis for unavailability, taken from the case study. Individual and Notice that there are two terms that acknowledge investments,
aggregate contributions are shown. ca;j and csi;j . Each of these terms, in order to be considered in one

Table 1
Model parameters.

ID Description Qty. Duration (min) Int. cost (USD/int.) a Capital spares (104 USD)

1 Electrical inspections 30 1015 80 0 5.5


2 Damaged feeder cable 15 785 300 0 300
3 Change of substation 27 690 50 1 15
4 Coupling repairs or checks 15 225 500 0 7
5 Power cuts to substations 21 395 40 1 1.8
6 Rope limit protection 10 277 50 1 1.5
7 Auxiliary motors 13 600 300 1 35
8 Main motors 12 555 400 1 80
9 Lighting system 26 240 500 1 4
10 Overload relay 23 685 2000 1 70
11 Motor over temperature 36 745 800 1 1
12 Earth faults 7 575 50 1 5
13 Miscellaneous 9 115 100 1 12
14 Control system 7 165 600 1 23
15 Air compressor 8 355 700 1 1
16 Operator controls 5 155 200 1 8
17 Over current faults 6 220 400 1 3

Quantity recorded in a one-month period. Costs have been estimated arbitrarily.

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generic time unit, must be transformed in two senses: as an Let us observe in Eqs. (7) and (8) that JKD and CSD produce the
investment equally distributed over time and as a nancial cost same results when
[25]. The cost rate cgj can be considered as a weight for each
acf bci
unavailability. As MTOSj considers the full logistic cycle for each
intervention: such situation arises often in the mining industry as the
opportunity costs per unit time are large and no alternative
cij MTOSj C ij (7) production method is available: high unavailability means high
global cost.
where C ij is the mean cost charged for the work order or invoice.
The consequential cost per unit time out of service is expressed as

cfj acf (8) 3. Case study

where a is a factor between 0 and 1 according to the planning Table 1 is taken from Knights [30] and lists the unplanned
level of the intervention, the existence of stock piles and downtime recorded for electrical failures in a eet of cable shovels
equipment redundancy and alternative production methods at an open pit copper mine located in northern Chile, over a one-
[32]. a represents the attained level of opportunistic maintenance month period. The cost terms have been added and do not
of the action. For example, an inspection is an intervention that is represent the actual case.
planned to minimize effects for production, so a ! 0. In other The JKD is shown in Fig. 4(a). The ve most critical
cases, the estimation of a requires sensitivity analysis as it will be interventions when using the availability criterion are the
described in the case study. An example: what is the effect of a following codes: 1, 2, 3, 10, and 11. Fig. 3 shows the 3D version
haul truck failure on the production program when there is a haul of the CSD (Eq. (5)). It has been simplied to its 2D version
truck redundancy of 11 out of 10? (Eq. (6)) in Fig. 6(a). There, it can be observed that the intervention
codes most critical for the business are: 2, 7, 8, 10, 11, and 12
(highlighted in both gures). This information can be added to a
standard JKD in order to study the effect of the global cost in the
selection of the most critical components (Fig. 4(b)): it can be
10 noticed that codes 1 and 3 are important for the availability of the
104 11
8 2 system, but, they are not as critical for the business, so their
12 7
(USD/hour-out-of-service)

analysis can be postponed in front of components 7 and 2 which


15 are more critical for the global cost.
Specific global cost

5 9
17 14 6 The analysis can also be made using only intervention costs
16
13 (Fig. 5). In this case the most critical codes are: 4, 9, 10, and 11. Of
103 4 course, this approach would leave in a second plane various
components which are critical for the business and not so much
for the maintenance budget. Anyway, this version of CSD can be
13 very helpful for service-oriented organizations.
Fig. 6(b) shows the inuence of changes in the business cycle.
The product has reduced its price by 75% with respect to the
102
reference value. Points move to the left as the global cost has been
100.1
reduced, depending on the a factor for each intervention.
(h 0.05
ou MT Fig. 7 shows a sensitivity analysis W.R.T. a. The a values
r-o OS
ut- have been evaluated in the range 0; 1. Accordingly, it generates
of- r)
/hou lines instead of points in the CSD. They show the impact of
se
rvi nc y (1
ce 10-0.8 que moving from fully opportunistic interventions to fully unplanned
) 0.007 Fre
(and without contingency plan) interventions. This information
Fig. 3. Cost scatter diagram. 3D version. Points marked with a cross are the most provides new insight for prioritization. It can be taken as a version
critical for the global cost. of a Tornado diagram [33].

12 12
MTOS (hour-out-of-service)
MTOS (hour-out-of-service)

100 Feeder
Cable 2 D
100
=2 2
Iso 8 7 8 7
15 -u .3% 15
na
va
10-0.2 17 ila
bil
Inspections
1 10-0.2 17
1
16 ity 16 10
10
6 6
3 3
10-0.4 14 10-0.4 14
11 11
5 5

10-0.6 4 10-0.6 4
13 13

10-0.8 9 10-0.8 9
0.007 0.05 0.007 0.05

Frequency (1/hour) Frequency (1/hour)

Fig. 4. Jack knife diagrams. Cutting axes have been drawn in the mean value of each criterion. Notice that the enriched JKD corresponds to a special case of Fig. 3 when it is
observed above. Points marked with a cross are the most critical for the global cost. (a) Standard JKD. (b) Enriched JKD.

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The methodology has been implemented in a open-access 10-1


Web-based decision support system called PAM [34].

3.1. Trend analysis

Another benet from CSD is that they permit visualizing trends 1


2 11

Unavailability
in physical asset performance. Fig. 8 shows the evolution of the 3 10
ve critical case study during a period of time. This diagram can 127 8
be obtained by superposing CSDs from different periods of time. It 10-2 5 15
can be observed that: codes 2, 7, and 10 have reduced its global 6
cost per unit time from the rst period of analysis to the second. 4 17 9
Only code 10 has reduced its unavailability signicantly. Code 11 16 14
remains essentially at the same point, while code 8 has worsened 13
its situation both in unavailability as well as on its global cost.
Changes in the position of points are the result of modied asset
management policies and strategies, but they can also be the
result of changes in the business cycle as the specic global cost is 10-3
102 103 104 105
also a function of it.
Specific global cost (USD/hour-out-of-service)

3.2. Handling parameter uncertainty Fig. 7. Sensitivity analysis vs. a.

Uncertainty in the parameters for each code (i.e., the


economical effect on production or the frequency of occurrence)

10-1 10-1

8'
64
(U
SD

1
/h

2' 11'
r)

Unavailability
Unavailability

2 11
3 10
12 7 8 7'
10-2 5
10-2
15
10'
6
4 9
17

16 14

13

10-3 10-3
101 102 103 104 102 103 104
Intervention Cost (USD/hour-out-of-service) Specific global cost (USD/hour-out-of-service)

Fig. 5. Intervention costs scatter diagram. Fig. 8. Trend analysis using CSD.

10-1 10-1
15 10
3 3
(U (U
SD SD
/h 24 /h
r) (U r)
49 SD
(U /h
SD 1 r)
1
/h
Unavailability
Unavailability

r) 2 11 2 11
3 10 3 10
12 7 8 12 7 8
10-2 5 10-2 5
15 15
6 6
4 9 17 4 9
17
16 14 16 14
13 13

10-3 10-3 2
102 103 104 10 103 104
Specific global cost (USD/hour-out-of-service) Specific global cost (USD/hour-out-of-service)

Fig. 6. 2D-CSD for different market conditions. (a) Reference consequential cost. (b) 25% of reference consequential cost.

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Please cite this article as: Pascual R, et al. Business-oriented prioritization: A novel graphical technique. Reliab Eng Syst Safety (2009),
doi:10.1016/j.ress.2009.01.013

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