Chapter 1 - Maintenance Organization (Full Chapter) New

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

MAINTENANCE ORGANIZATION Prepared by: LIANA FAIRUZ BINTI ZAKARIA

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COURSE LEARNING OUTCOME (CLO) 1. Analyze the concepts of maintenance organization and strategies to solve related problems. 2. Apply the principles of maintenance strategies and elaborate on the significance of a system approach to maintenance. 3. Organize maintenance management plan and schedule that integrates the whole management processes and procedures by group in actual workplace.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

DEFINITION

MAINTENANCE  Maintenance is a set of organized activities that are

carried out in order to keep an item in its best operational condition with minimum cost required.  Activities required or undertaken to conserve as nearly,

and as long, as possible the original condition of an asset or resource while compensating for normal wear and tear.  Actions necessary for retaining or restoring a piece of

equipment, machine, or system to the specified operable condition to achieve its maximum useful life. It includes corrective maintenance and preventive maintenance. 3

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

DEFINITION

ORGANIZATION  A means for making people productive in working together and arranging resources (people, materials, technology, etc).

 A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems--they affect and are affected by their environment. 4

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

DEFINITION

MANAGEMENT  The organization and coordination of the activities in order to achieve defined objectives. Management is often included as a factor of production along with‚ machines, materials, and money.  Management consists of the interlocking functions of creating corporate policy and organizing, planning, controlling, and implementing an organization's resources in order to achieve the objectives of that policy.

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REQUIREMENT OF MAINTENANCE MANAGEMENT

Area of industry that requires of maintenance management :  Industrial / Factory  Transportation e.g. Automotive, Shipping, Aircraft  Hotel and Resorts  Plant  Hospital  Shopping Mall  Restaurant

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

OBJECTIVE OF MAINTENANCE MANAGEMENT The main objectives of having maintenance management are to make sure a business doesn't stop producing, and if it does, to rectify the situation in the safest and most expedient way possible. In addition, improperly maintained equipment can lead to safety hazards, employee abuse and misuse of machines that will lead to increased overhead costs and potential liability.

Costs of new equipment must be budgeted. Maintenance factors are part of the calculations done to consider return on investment when comparing costs and risks. 7

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

OBJECTIVE OF MAINTENANCE MANAGEMENT Maximizing production or increasing facilities availability at the lowest cost and at the highest quality and safety standards. Reducing breakdowns and emergency shutdowns. Optimizing resources utilization. Reducing downtime. Improving spares stock control. Optimize the use of available funds, personnel, facilities, and equipment through effective maintenance management methods.

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OBJECTIVE OF MAINTENANCE MANAGEMENT Provide accurate data for maintenance and construction program decision making. Systematically identify maintenance needs or deficiencies and capital improvement needs at all field stations. Enable preparation of service maintenance and construction budget requests using systematic, standardized procedures. Monitor and document corrective actions, project expenditures, and accomplishments. Keeping assets and equipment in good condition, well configured and safe to perform their intended functions. 9

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OBJECTIVE OF MAINTENANCE MANAGEMENT

Perform all maintenance activities including preventive, predictive; corrective, overhauls, design modification and emergency maintenance in an efficient and effective manner. Conserve and control the use of spare parts and material. Commission new plants and plant expansions; and Operate utilities and conserve energy.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

BENEFITS OF MAINTENANCE MANAGEMENT

Manages Control One of the most significant advantages of maintenance management is the management of control. Maintenance can be planned and serves a pre-active instead of a reactive (be put to action after an event has come to pass). Management control ensures timely schedules, well-defined job descriptions and the availability of standby equipment in times of disaster.

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BENEFITS OF MAINTENANCE MANAGEMENT

Reduces Overtime Maintenance management reduces and even eliminates overtime by reducing the chance of surprises. It ensures all loose ends are tied and enough contingency planning is done to manage operations in case of undesirable circumstances and situations. Management defines tasks and allocates resources effectively, ensuring that all objectives are met in a timely and orderly fashion.

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BENEFITS OF MAINTENANCE MANAGEMENT Improves Quality Effective maintenance management improves output and ensures quality. It gives a small amount of leeway to tolerances but within well established control limits. Employee productivity improves, improving the overall productivity of individual and collective processes. Investing in maintenance management pays off for a company by increasing its revenues. Increasing productivity such as quality product with maximum quantity will be producing with the lowest cost.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

BENEFITS OF MAINTENANCE MANAGEMENT Ensures Better Support & Service A well established and documented maintenance management system provides ample support to production managers, equipment operators, and other personnel and users. An effective maintenance management program needs to be made public (and/or published) for the benefit of everyone involved. End users can benefit from a better level of support provided by maintenance management. It allows for reliable, on time, and quality service.

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BENEFITS OF MAINTENANCE MANAGEMENT Allows Easy Error Spotting Since maintenance management details the goals and objectives of departments and employees, it make it easier for managers to spot errors and deviations from established and desired outcomes. Reduces Resource Waste Maintenance management ensures that labor, materials and equipment are well utilized, which reduces waste of allocated resources. Utility costs are lowered and the production of hazardous waste material is decreased with managed effort. 15

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

BENEFITS OF MAINTENANCE MANAGEMENT Improves Safety Maintenance management promotes safety and health. It ensures everyone involved knows safety procedures in case of a minor or major disaster. A well-implemented management program examines the risk of potential hazards and finds ways of addressing them before they pose a risk. Regular housekeeping programs promote fire prevention and safety measures.

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TYPES OF MAINTENANCE ORGANIZATION Centralized Maintenance All crafts and related maintenance functions report to a central maintenance manager. Best suited for small to medium size organizations. Under this type of organization, the responsibilities and accountability of work must be properly specified for production as well as maintenance personnel to successfully meet the project goals. If this is not taken care of, one department may blame other for any shortfall.

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TYPES OF MAINTENANCE ORGANIZATION The advantages of centralization are: (i) Provides more flexibility and improves utilization of resources such highly skilled crafts and special equipment and therefore results in more efficiency; (ii) Allows more efficient line supervision; (iii) Allows more effective on the job training; (iv) Permits the purchasing of modern equipment. (v) Allows economies of scale; (vi) Enables in-depth skill development; and (vii) Enables departments (i.e., a maintenance department) to accomplish their functional goals (not the overall organizational goals). 18

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION However it has the following disadvantages:(i) Less utilization of crafts since more time is required for getting to and from jobs; (ii) Supervision of crafts becomes more difficult and as such less maintenance control is achieved; (iii) Less specialization on complex hardware is achieved since different persons work on the same hardware; and (iv) More costs of transportation are incurred due to remoteness of some of the maintenance work. (v) It has slow response time to environmental changes; may cause delays in decision making and hence longer response time; (vi) Leads to poor horizontal coordination among departments and involves a restricted view of organizational goals. 19

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Centralized Maintenance

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Decentralized Maintenance All crafts and maintenance craft support staff report to operations or specific area maintenance. The maintenance organization works under the direct control of a chief engineer in-charge of production. This tends to reduce the flexibility of the maintenance system as a whole. The range of skills available becomes reduced and manpower utilization is usually less efficient than in a centralized maintenance. A decentralized structure would probably experience a lower utilization than centralized one but would be able to respond quickly to breakdowns and would achieve higher plant availability. 21

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Decentralized Maintenance 

    

The strengths of this structure are : it 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. Speedy decisions due to better line of communication under single control. Maintenance and production people understand each other’s problems better because of their common goals. Interchangeability of workforce, even at the managerial level, is also possible. Better training at the workers’ level can be arranged. 22

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION The weaknesses of this structure are that it has potential for excessive administrative overheads and may lead to conflict between departments.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Decentralized Maintenance

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Matrix Structure Maintenance A form of a hybrid structure. Crafts are allocated in some proportion to production units or area maintenance and to a central maintenance function that supports the whole plant. The hybrid structure organizes maintenance in areas and whatever exceeds the capacity of each area is challenged to a centralized unit The strengths are:  it allows the organization to achieve coordination necessary to meet dual demands from the environment and flexible sharing of human resources.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Matrix Structure Maintenance The weaknesses are:  it causes maintenance employees to experience dual authority which can be frustrating and confusing;  it is time consuming and requires frequent meetings and conflict resolution sessions. To remedy the weaknesses of this structure a management with good interpersonal skills and extensive training is required.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE ORGANIZATION Matrix Structure Maintenance

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

ROLES IN MAINTENANCE MANAGEMENT ORGANIZATION

A maintenance organization and its position in the plant/whole organization is heavily impacted by the following elements or factors: • Type of business ( whether it is high tech, labor intensive, production or service ) • Objectives ( may include profit maximization, increasing market share and other social objectives ) • Size and structure of the organization • Culture of the organization • Range of responsibility assigned to maintenance.

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ROLES IN MAINTENANCE MANAGEMENT ORGANIZATION

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF ROLES/RESPONSIBILITIES

It is still possible to group activities and responsibilities into two general classifications: (1) primary functions that demand daily work by the maintenance function and (2) secondary ones assigned to the function for reasons of expediency, know-how, or precedent.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF ROLES/RESPONSIBILITIES Primary Function Maintenance of Existing Plant Equipment Responsibility here is simply to make necessary repairs to production machinery quickly and economically and to anticipate these repairs and employ preventive maintenance where possible to prevent them. For this, a staff of skilled engineers, planners, and technicians who are capable of performing the work must be trained, motivated, and constantly retained to assure that adequate skills are available to perform effective maintenance.

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TYPES OF ROLES/RESPONSIBILITIES Primary Function Maintenance of Existing Plant Buildings and Grounds The repairs to buildings and to the external property of any plant—roads, railroad tracks, in-plant sewer systems, and water supply facilities—are among the duties generally assigned to the maintenance engineering group. Additional aspects of buildings and grounds maintenance may be included in this area of responsibility.

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TYPES OF ROLES/RESPONSIBILITIES Primary Function Equipment Inspection and Lubrication Traditionally, all equipment inspections and lubrication has been assigned to the maintenance organization or function. While inspections that require special tools or partial disassembly of equipment must be retained within the maintenance function, the use of trained operators or production personnel in this critical task will provide more effective use of plant personnel. The same is true of lubrication. Because of their proximity to the production systems, operators are ideally suited for routine lubrication tasks. 33

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF ROLES/RESPONSIBILITIES Primary Function Utilities Generation and Distribution In 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.

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TYPES OF ROLES/RESPONSIBILITIES Primary Function Alterations and New Installations Three factors generally determine to what extent this area involves the maintenance department: plant size, multi plant company size, company policy. In a small plant of a one-plant company, this type of work may be handled by outside contractors. But its administration and that of the maintenance force should be under the same management. In a small plant within a multi plant company, the majority of new installations and major alterations may be performed by a company-wide central engineering department. In a large plant a separate organization should handle the major portion of this work. 35

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF ROLES/RESPONSIBILITIES Secondary Function Storekeeping In most plants it is essential to differentiate between mechanical stores and general stores. The administration of mechanical stores normally falls within the maintenance engineering group`s area because of the close relationship of this activity with other maintenance operations.

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TYPES OF ROLES/RESPONSIBILITIES Secondary Function Plant Protection This category usually includes two distinct subgroups: guards or watchmen; fire control squads. Incorporation of these functions with maintenance engineering is generally common practice. The inclusion of the fire-control group is important since its members are almost always drawn from the craft elements.

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TYPES OF ROLES/RESPONSIBILITIES Secondary Function 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, such as scrap lumber, paper, containers, and so on, it should be assigned to maintenance. 38

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF ROLES/RESPONSIBILITIES Secondary Function Insurance Administration This category includes claims, process equipment and pressure-vessel inspection, liaison with underwriters’ representatives, and the handling of insurance recommendations. These functions are normally included with maintenance since it is here that most of the information will originate.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST OF MAINTENANCE Maintenance cost can be a significant factor in an organization’s profitability. Hence, maintenance department should treat the matters that make a profit on the industry by take into account the cost of maintenance. It is important to reduce the maintenance expenses to increase a profit by avoiding unnecessary expenditure. Among the factors associated with the maintenance expenditure are:Spare parts Maintenance labor (i.e., operator expertise and experience) Down time (production loss) 40

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST OF MAINTENANCE Overhead Consumables Hand tools, power tools and equipment Idle equipment or personnel due to equipment breakdown Missed delivery dates of equipment (including out of stock) Transportation due to remoteness of some of the maintenance work Asset condition (i.e., age, type, and condition) Losses due to inefficient operations of machines Capital requirement for replacement of machines 41

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

WHO WILL DO MAINTENANCE?

 In-house  Out-source

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

DECISION TO OUT-SOURCE

 Lack of expertise  Too hazardous  No experience  Bound by contract  Top management policy  When it is cheaper than recruiting your own staff and accessible at a short notice of time

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NEED TO CONSIDER

Customer service Loss of production Loss of customer goodwill, reputation Machine life Availability of spare parts and expertise Safety to the user / customer Environmental problem (pollutant discharge etc.)

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

SOURCE OF MAINTENANCE COST Criteria that can be employed to select sources for maintenance capacity:(i) Availability and dependability of the source on a long term basis; (ii) Capability of the source to achieve the objectives set for maintenance by the organization and its ability to carry out the maintenance tasks; (iii) Short term and long term costs; (iv) Organizational secrecy in some cases may be subjected to leakage; (v) Long term impact on maintenance personnel expertise; (vi) Special agreement by manufacturer or regulatory bodies that set certain specifications for maintenance and environmental emissions.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE COST

Relationship between quantity of maintenance and various costs

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

TYPES OF MAINTENANCE COST (a) Direct cost Direct costs are those costs required to keep equipment operable. These include periodic inspection and preventive maintenance, servicing costs, repair costs and overhaul costs. (b) Standby cost The total cost of operating and maintaining standby equipment needed to be put in operation when primary facilities are either undergoing a maintenance activity or are inoperable for some reason.

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TYPES OF MAINTENANCE COST (c) Lost production cost Costs due to lost production because primary equipment is down and no standby equipment is available. (d) Degradation cost Those costs occurring in deterioration in the life span of equipment resulting from inadequate and/or inferior maintenance.

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COST ANALYSIS METHOD

♣ Life cycle cost is the sum of all costs incurred during the life time of an item, that is, the total of procurement and ownership costs. ♣ Due to reasons including market pressure, life cycle costing is now often used in the procurement of expensive systems or equipment. ♣ Life cycle cost analyses involve evaluating the total cost of a product or system over its entire life span. ♣ Life cycle cost will consider the cost of developing or acquiring the asset, the cost of running, operating and maintaining, and the cost of disposal.

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COST ANALYSIS METHOD

♣ The aim of life cycle costing is to know the total cost of equipment accruing over its whole life period, which may include all the costs starting from the specification cost. ♣ It is also observed that reduction in one cost possibly will increase the other cost. ♣ Therefore the quality of the product is the major importance.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD The data to be input into a life cycle cost model include : ♪ the purchase price of the product ♪ mean time between failures (MTBF) ♪ mean time to repair (MTTR) ♪ average material cost of a failure ♪ labor cost per preventive maintenance action ♪ labor cost per corrective maintenance action ♪ installation costs ♪ training costs ♪ the warranty coverage period cost of carrying spares in inventory ♪ shipment forecasts over the course of the product's useful life 51

JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD When applying the life cycle cost analysis, several major advantages can be achieved:(a) It may result in selection of equipment that has lower operating and maintenance costs resulting in reduced cost of ownership; (b) The money saved can be used for some other works; (c) It is an excellent tool for comparing the cost of competing projects, controlling program costs, selecting among competing contractors, making decisions associated with equipment replacement, reducing total cost, and conducting planning and budgeting.

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD Disadvantages of cost analysis method : i) It is time consuming and expensive ii) Collecting the data needed for analysis can be a trying task iii) The data available is sometimes of doubtful accuracy

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COST ANALYSIS METHOD Total Cost

Maintenance cost (RM)

Preventive maintenance cost

Breakdown maintenanc cost Optimum

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD

Cost

Breakdown Cost Maintenance Commitment

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD

Cost

PM Cost Breakdown Cost Maintenance Commitment

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD

Cost

Total Maintenance Cost

PM Cost Breakdown Cost Maintenance Commitment

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JJ616 MAINTENANCE MANAGEMENT CHAPTER 1 : MAINTENANCE ORGANIZATION

COST ANALYSIS METHOD

Cost

Total Maintenance Cost

PM Cost Breakdown Cost

Optimal

Maintenance Commitment

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EXAMPLE

The record of computer breakdown for Company PCK for the past 20 months is shown below. # of breakdown

# of months breakdown occurs

0 1 2 3

4 8 6 2

Total

20 months 59

 Each time computer breakdown – estimated

loss is RM300  Contract preventive maintenance by company DK – RM200 per month  Should PCK contract out preventive maintenance to DK?

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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 61

SOLUTION

Step 4  Compare the two options and select the one which cost less

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SOLUTION

# of breakdown Frequency 0 1 2 3

4/20 = 0.2 8/20 = 0.4 6/20 = 0.3 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

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SOLUTION

Step 2 Expected breakdown cost = (expected # of breakdown) x (cost per breakdown) = (1.3) x (300) = RM390 per month

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SOLUTION Step 3 Calculate Preventive Maintenance Cost

= cost of expected breakdown + cost of service contract = (1 breakdown per month x 300) + RM200 per month = RM500 per month Step 4 Compare Less expensive to suffer breakdown without service contract. Breakdown = RM390 Service contract = RM500

Therefore, continue present policy which is the breakdown maintenance because its less expensive.

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END OF THIS SECTION

NEXT LESSON:

CHAPTER 2 : MAINTENANCE STRATEGIES 66