MAINTENANCE

MANAGEMENT
Chapter 1:
MAINTENANCE ORGANIZATION
INTRODUCTION
• It is necessary to keep materials, tools and
equipment in good condition in order to
achieve desired result.
• If the working equipment are in good running
condition, the products obtained will be of
required quality and the process will be
reliable.
• Therefore it is necessary to maintain the plant.
DEFINITION:
• Some defines maintenance as:
“A combination of all technical and administrative
actions, including supervision actions, intended to
retain an item in, or restore it to, a state in which it
can perform a required function”

• Others defines it as:

“A set of organised activities that are carried out in
order to keep an item in its best operational
condition with minimum cost acquired.”
 MAINTENANCE MANAGEMENT
• Maintenance = All actions appropriate for
retaining an item/part/equipment in, or
restoring it to, a given condition
• Maintenance Management = orderly and
systematic approach to planning, organizing,
monitoring and evaluating maintenance
activities and their costs
MAINTENANCE ORGANIZATION

OBJECTIVE OF MM

BENEFIT OF MM

MAINTENANCE ORGANIZATION

MAINTENANCE COST
 OBJECTIVES OF MM
Max prod Max
capacity performance
Prevent hazards
of production
Max lifespan
of
Enhance safety equipment

OBJECTIVES Increase
reliability
Prevent
breakdown / OF MM
failure
Increase
Min functional
Achieve reliability
production
product Q &
cost Min
Customer
production
satisfaction
loss
 OBJECTIVES OF MM
• maximize production capacity – through high
utilization of facility
• maximize performance of production equipment
efficiently and regularly
• maximize the useful life of equipments
• increase reliability of the operating systems
• increase functional reliability of production
facilities
• achieve product quality and customer satisfaction
through adjusted and serviced equipment
 OBJECTIVES OF MM
• minimize production loss from failures
• minimize cost of production
• minimize frequency and severity of
interruptions
• prevent breakdown or failures
• enhance the safety of manpower
• keep equipment safe and prevent safety
hazards
 BENEFITS OF MM
Manages
control

Improves Reduce
safety overtime

BENEFIT
Reduces Improve
resource
OF MM quality
waste

Better
Easy error Support &
spotting Service
 BENEFITS OF MM
• Manages control:
– Maintenance can be planned and served as pre-active
instead of reactive
– Ensure timely schedules, well-defined job descriptions
& availability of standby equipment in time of disaster
• Reduce overtime
– Reduce/eliminate overtime by reducing the chances
of failures.
– Management define tasks and allocate resources
effectively to ensure objectives are met in timely &
orderly manner.
 BENEFITS OF MM
• Improve quality
– Effective MM improve output & ensure quality
– Gives only small amount of leeway to tolerances
but within well established control limit
• Ensure better support & services
– A good MM system provide support to
staff/personnel & end users.
– Allows reliable, on time and quality service
 BENEFITS OF MM
• Easy error spotting
– MM details the goals & objectives of department and
employees, hence easier to spot errors/failures
• Reduces waste
– MM ensures labor, materials & equipment are well
utilized-> reduce waste
• Improve safety
– MM examines the risk of potential hazards and ways if
addressing them before they pose a risk
– Regular housekeeping program promote fire
prevention & safety measure.
 MAINTENANCE ORGANIZATION
• Organizing = process of arranging resources
(people, materials, technology, etc) together
to achieve the organization’s strategies &
goals
• Structure of MO depends upon both size &
product of the enterprise
• Any structure must allocate tasks through a
division of labor & facilitate coordination of
performance results.
 MAINTENANCE ORGANIZATION
• Elements that must be considered in
designing maintenance organizations:
1. Capacity of maintenance
- Determines the required resources of maintenance
including the crafts, administration, equipment, tools
and space to execute the maintenance load efficiently
2. Centralization vs decentralization
- Depends on organization’s maintenance philosophy,
maintenance load, size of plant and skills of craftsmen.
MAINTENANCE ORGANIZATION
3. In-house maintenance vs outsourcing
- Management consideration on the sources for building
the maintenance capacity
- Criteria to select sources for maintenance capacity:
o Availability & dependability of the source on a long time basis
o Capability to achieve maintenance objectives
o Ability to carry out maintenance tasks
o Short & long term costs
o Organizational secrecy
o Long term impact on maintenance personnel expertise
o Special agreement by manufacturer/regulatory bodies that
set certain specifications for maintenance & environmental
emissions.
 MAINTENANCE ORGANIZATION
• Examples of maintenance tasks which could
be outsourced:
– Work for which the skilled specialist is required on
a routine basis, eg:
• Installation, periodic inspection and repair of fire
fighting systems
• Inspection & repair of HVAC systems
• Inspection & report of server/computer mainframe
systems
– When it is cheaper than recruiting own staff and
accessible in short notice of time.
 TYPES OF MO

TYPES OF MAINTENANCE
ORGANIZATION

Centralized De-centralized Matrix Structured

 TYPES OF MO
• All crafts and related maintenance functions
Centralized report to a central maintenance manager
• Best suited for small-med size organizations

• All crafts and maintenance craft support staff report to

De- operations or area maintenance
• To reduce travel exists bet production & maintenance
centralized worker when working in same generalized area
• Suited for much bigger organization

• Hybrid structure
• Crafts are allocated in some proportion to production
units or area maintenance AND to a central maintenance
Matrix function that support the whole plant
• Used in large / very large plants
 Centralized Maintenance
• Work assigned to various craftsmen throughout the
entire plant is channel through the same head of
maintenance.
Centralized Maintenance
 Centralized Maintenance
+Strength
• allows economies of scale;
• enables in-depth skill
development; and
• enables departments (i.e., a
maintenance department)
to accomplish their
functional goals (not the
overall organizational
goals).
–Weakness
• it has slow response time to
environmental changes;
may cause delays in
decision making and hence
longer response time;
• leads to poor horizontal
coordination among
departments and
• involves a restricted view of
organizational goals.
 Decentralized Maintenance
• Separate maintenance group is assigned to either
specific area or some unit such as department.
Decentralized Maintenance
 Decentralized Maintenance
+Strength –Weakness
• closer supervision • has potential for excessive
• workmen can familiarized with administrative overheads
complex sophisticated facilities
being reassigned to service • may lead to conflict
same equipment between departments
• allows the organization
to achieve adaptability and
coordination in production
units and efficiency in a
centralized overhaul group
• facilitates effective
coordination both within and
between maintenance and
other departments.
Centralized VS Decentralized
 Matrix Structured
• Management with good interpersonal skills and
extensive training is required.
 Matrix Structured
+Strength
• allows the organization to
achieve coordination
necessary to meet dual
demands from the
environment and flexible
sharing of human resources.
–Weakness
• causes maintenance
employees to experience
dual authority which can be
frustrating and confusing;
• time consuming and
requires frequent meetings
and conflict resolution
sessions.
 EXAMPLES OF MO
• Case 1: Process Industry
– In a continuous process industry (i.e. oil refinery,
cellulose work, steel works etc.) it is of vital
importance to keep stoppages at a minimum.
Production units require capital and are
complicated and thus call for first-class
maintenance.
– In such companies, the above rule would result in
the head of maintenance activities being placed at
top level under the local manager or the
production manager.
 EXAMPLES OF MO
• Case 2: Production / Manufacturing
– In the shoe factory, electronics industry etc.,
maintenance is of less economic significance. A
machine stoppage does not have an essential
influence on production and the machinery units
are uncomplicated, reliable and require very little
maintenance.
– In such company, maintenance does not have a
key function. In accordance with the above rule,
maintenance should be place on the fourth or
fifth level.
TYPES OF RESPONSIBILITIES/ROLES IN
MAINTENANCE ORGANIZATION

2 general classifications of Maintenance

Practice

Primary Functions

Secondary Functions
 TYPES OF RESPONSIBILITIES/ROLES IN
MAINTENANCE ORGANIZATION
PRIMARY FUNCTIONS
• Maintenance of existing Plant Equipment
• Maintenance of existing Plant Buildings & Grounds
• Equipment Inspection & Lubrication
• Utilities Generation & Distribution
• Alteration & New Installation

SECONDARY FUNCTIONS
• Storekeeping
• Plant Protection
• Waste Disposal
• Salvage
• Insurance administration
• Others
 Primary Functions
• Maintenance of existing Plant Equipment:
– to make necessary repairs to production
machinery quickly and economically
– to anticipate these repairs and employ preventive
maintenance where possible to prevent them
– staff of skilled craftsmen capable of performing
the work must be trained, motivated, and
constantly retained to assure that adequate
maintenance skills are available to perform
effective maintenance
– adequate records for proper distribution of
expense must be kept
 Primary Functions
• Maintenance of existing Plant Buildings &
Grounds:
– Responsible to the repairs to buildings and to the
external property of any plant (e.g. roads, railroad
tracks, in-plant sewer systems, and water supply
facilities)
– If many of the buildings are dispersed, the care and
maintenance of this large amount of land may warrant
a special organization (or outsourcing)
– Includes;
• Repairs and minor alterations to buildings (e.g. roofing,
painting, glass replacement)
• Service electrical or plumbing systems
• Road repairs and the maintenance of tracks and switches,
fences, or outlying structures may also be so assigned.
 Primary Functions
• Equipment Inspection & Lubrication:
– all equipment inspections and lubrication have
been assigned to the maintenance organization
– inspections that require special tools or partial
disassembly of equipment must be retained
within the maintenance organization for effective
use of plant personnel
– operators are ideally suited for routine lubrication
tasks
 Primary Functions
• Utilities generation & distribution:
– any plant generating its own electricity and
providing its own process steam, the powerhouse
assumes the functions of a small public utilities
company and may justify an operating
department of its own.
– this falls within the responsibility of maintenance
engineering.
– however, it can be administered either as a
separate function or as a part of some other
function, depends on management’s requirement
 Primary Functions
• Alterations and new installation:
– Three factors generally determine to what extent
this area involves the maintenance department:
• Small plant of a one-plant company – this type of work
may be handled by outside contractors, but
administration do the maintenance force should be
under the same management
• Small plant within a multi-plant company – majority of
new installations and major alterations may be
performed by company-wide central engineering
department
• Large plant – separate organization should handle the
major portion of this work
 Secondary Functions
• Storekeeping:
– most plant separate between mechanical stores
and generals stores
– mechanical stores usually administered by
engineering group because of the close activity
with other maintenance operations.
• Plant protection:
– usually consists of 2 existing subgroup; guards/
watchmen and fire control squads.
– incorporation of these two functions with
maintenance engineering is common practice
 Secondary Functions
• Waste disposal:
– this function and that of yard maintenance are
usually combined as specific assignments of the
maintenance department.
• Salvage:
– if a large part of plant activity concerns off grade
products, a special salvage unit should be set up.
– but if salvage involves mechanical equipment,
scrap lumber, paper, containers, etc., it should be
assigned to maintenance.
 Secondary Functions
• Insurance administration:
– this includes claims, process equipment and pressure-
vessel inspection, liaison with underwriters’
representatives, and the handling of insurance
recommendations.
– this function normally included with maintenance since it
contain most of the information.
• Other services:
– maintenance engineering department often seems to be a
catchall for many other odd activities that no other single
department can or wants to handle
– whatever responsibilities are assigned, it is important that
they be clearly defined and that the limits of authority and
responsibility be established and agreed upon by all
concerned.
 MAINTENANCE COST
• Because of breakdowns, both the machinery
as well as the manpower are left idle, per
force.
• This results in production, delay in schedules
and emergency repairs.
• The downtime costs generally exceed the
preventive maintenance costs of inspection,
service and scheduled repairs.
SOURCES OF MAINTENANCE COST
Downtime (due to equipment breakdown

Idle equipment/personnel due to equipment breakdown

Missed delivery dates of equipment

Cost of spare parts & materials for repairs

Maintenance
Cost
Maintenance labor

Overhead cost

Losses due to inefficient operations of machines

Capital requirement for replacement of machines.

 TYPES OF MAINTENANCE COST
• Costs required to keep equipment operating
Direct cost • Include periodic inspection and preventive
maintenance, servicing, repair and overhaul costs

• Total cost of operating and maintaining standby

equipment need to be put in operation when primary
Standby cost
facilities are either undergoing maintenance activity or
inoperable

• Cost due to lost production because primary equipment

Lost Production cost is down and no standby equipment is available

• Occurring during the deterioration in the life span of

equipment resulting from inadequate and/or inferior
Degradation cost
maintenance
 ELEMENTS OF COST
Direct (raw material, eg: steel,
charcoal)
Material
Indirect (eg: cutting oil, coolant)

Direct (eg: machinist, welder)

COST
Labor
ELEMENTS
Indirect (eg: manager, supervisor)

Direct (eg: toolbit, jig, fixtures)

Expenses
Indirect (eg: banner, advertisement)
 ELEMENTS OF COSTS
• DIRECT COST
 Expenditure that involves direct in a production.
 A cost that can be directly traced to producing specific goods or
services.
 For example, the cost of meat in a hamburger can be attributed
directly to the cost of manufacturing that product. Other costs, such as
depreciation or administrative expenses, are more difficult to assign to
a specific product, and so are not considered direct costs.
• INDIRECT COST
 Expenditure that involves indirect in a production.
 Manufacturing cost that cannot be easily seen in the product.
Electricity, hazard insurance on the factory building, and real estate
taxes are indirect costs.
 The cost not directly attributable to the manufacturing of a product.
opposite of direct cost.
 ELEMENTS OF COST
• DIRECT MATERIAL COST
Expenditure towards raw material which involves direct in
production.
All the material that becomes an integral part of the
finished product.
Examples :
Steel for producing the component of cars.
Charcoal to produce activated carbon
Wood to make furniture

INDIRECT MATERIAL COST

Expenditure towards raw material which involves indirect
in production. Examples:
Cutting oil
Coolant
 ELEMENTS OF COST
• DIRECT LABOUR COST
Expenditure towards labor which involves direct in
production.
Labours which involves from the beginning of the raw
material process until the finish goods.
Work directly involved in making the product
Examples:
 The wages of assembly workers on an assembly line
 The wages of a machine tool operator in a machine shop.

• INDIRECT LABOR COST

Expenditure towards labor which involves indirect in
production. Example :
Office clerk
Manager
Supervisor
 ELEMENTS OF COST
• DIRECT EXPENSES COST :
Expenditure towards expenses that involves direct in
production.
Example:
Tool Bit
Jig & Fixture

• INDIRECT EXPENSES COST:

Expenditure towards expenses that involves indirect in
production.
Example:
Advertisement
Office Management
 COST ANALYSIS METHOD

Cost-of- Cost- Cost- Cost-utility Cost- Cost-benefit

illness minimizatio effectivenes analysis consequenc analysis
analysis n analysis s analysis (CUA) e analysis (CBA)
• determination • determination (CEA) • form of cost- • a form of cost- • compares
of the of the least • a comparison effectiveness effectiveness costs and
economic costly among of costs in analysis that analysis that benefits, both
impact of an alternative monetary compares presents costs of which are
illness or interventions units with costs in and outcomes quantified in
condition. that are outcomes in monetary in discrete common
assumed to quantitative units with categories, monetary
produce non-monetary outcomes in without units.
equivalent units terms of their aggregating or
outcomes utility weighting
them
 MAINTENANCE COST
Total Cost

Preventive
maintenance cost
Maintenance cost (RM)

Breakdown
maintenance
cost

Optimum
 COST OF MAINTENANCE
• Spare parts
• Labor
• Down time (production loss)
• Overhead
• Consumables
• Hand tools, power tools and equipment
 WHO WILL DO MAINTENANCE?
• In-house
• Out-source
– Decision to out-source depends on:
• Lack of expertise
• Too hazardous
• No experience
• Bound by contract
• Top management policy
 EXAMPLE
The record of computer breakdown for
Company PCK for the past 20 months is shown
below.
# of breakdown # of months breakdown occurs
0 4
1 8
2 6
3 2
Total 20
 IMPORTANT NOTE!
• Each time computer breakdown – estimated
loss is RM300
• Contract preventive maintenance by company
DK – RM220 per month
• Should PCK contract out preventive
maintenance to DK?
 SOLUTION
Step 1
• Calculate expected number of breakdown (based
on past records) if the company continue without
service contract.
Step 2
• Compute expected breakdown cost per month
with no preventive maintenance contract
Step 3
• Compute the cost of preventive maintenance
Step 4
• Compare the two options and select the one
which cost less
 SOLUTION
# of breakdown Frequency

0 4/20 = 0.2
1 8/20 = 0.4
2 6/20 = 0.3
3 2/20 = 0.1

Step 1
Expected # of breakdowns = ∑(# of breakdown) x (frequency)
= (0)(0.2)+(1)(0.4)+(2)(0.3)+(3)(0.1)
= 1.3 breakdown per month
 SOLUTION
Step 2
Expected breakdown cost = (expected # of
breakdown) x (cost per
breakdown)
= (1.3) x (300)
= RM390 per month
 SOLUTION
Step 3: Calculate Preventive Maintenance Cost
PM Cost = cost of expected breakdown + cost of
service contract
= (1 breakdown/month x 300) +
RM220 per month
= RM520 per month
 SOLUTION
Step 4: Compare
• Less expensive to suffer breakdown without
service contract.
• Breakdown = RM390
• Service contract = RM520
**Therefore, continue present policy.
 -END-

Q&A
REFLECTIVE SESSION