PHYSICAL ASSET MANAGEMENT

APPLICATION OF THE PHYSICAL ASSET MANAGEMENT IN THE CITY OF CAPE TOWN WATER SERVICES

THABANI MHLONGO

Research report presented in partial fulfilment of the requirements for the Degree of Masters in Business Administration at the University of Stellenbosch

Supervisor: Dr. J Smith

Degree of Confidentiality: A

Graduation December 2010

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Declaration By submitting this research report electronically, I Thabani Shadrack Mhlongo, declare that the entirety of the work contained therein is my own, original work and I am the owner of the copyright thereof (unless to the extent explicitly otherwise stated) and that I have not previously in its entirety or in part submitted it for obtaining any qualification.

7207075613087 Thabani Mhlongo

13 October 2009

Copyright © 2009 Stellenbosch University All rights reserved

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Acknowledgements I would like to thank my family, Mayibongwe, Ndumiso and Langelihle for their understanding, patience and support throughout my studies. I also like to thank Victoria, Charity and Zama who provided me with technical support and assistance during my research. I also wish to thank the people from the City of Cape Town who contributed a lot of information towards this report. Lastly, I would like to thank Dr Johan Smith for his willingness to accept me as his student for this research report.

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Abstract The City of Cape Town water services is currently operating on the reactive mode and their maintenance system is not effectively and efficiently utilized. The lack of proper utilization of Physical Asset Management (PAM) has resulted in the technical department failure to meet the departmental objectives of providing planned and scheduled maintenance activities, reducing equipment downtime and ensuring planned delivery of quality spares at the appropriate time. The aim of the report is to provide guidance in the implementation of physical assets management. The report looks at different maintenance strategies available and evaluates the current operating scenarios for the department and further recommends the relevant strategy that will suit the department. Physical asset management as a maintenance program provides an effective planned and scheduled maintenance system to reduce labor and downtime. This ensures that the correct materials and parts are utilized and that the workmanship is of a high quality. A Maintenance Plan provides documented and sequenced tasks with labour and types of material required to execute the plan. Infrastructure assets are systems that serve defined operational needs, where the intention is to maintain the asset for continual use on a certain level. One of the main aspects in infrastructure network is the degree of interdependency not only within a particular asset network but also among networks. The failure of one component within a network may undermine the performance of other networks. One of the major objectives in an infrastructure network is to maintain the necessary service level through continuous maintenance while ensuring cost effectiveness The initial step is to choose certain maintenance tactics and then decide how often these tactics will be performed. The frequency of maintenance, its actions or tactics depends on the current condition of the equipment which is linked within the technical characteristics of failure and specific monitoring technique. “Regardless of the system you select, you must start from where you are and then develop an orderly series of steps to get where you want to end up, so start by assessing your current situation. The most essential ingredient in your maintenance management system is the people. An excellent system run by poorly trained or unmotivated people will be adequate at best but well trained people with positive attitudes can make an excellent system world class.”-Thomas Westerkamp

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TABLE OF CONTENTS Declaration…………………………………………………………………………………….. Acknowledgements…………………………………………………………………………... Abstract..………………………………………………………………………………………. Table of contents...………………………………………………………….……..…….…… List of figures………………………………………………………….………….….…….….. List of tables…................................................................................................................. List of appendices........................................................................................................... List of acronyms..............................................................................................................

ii iii iv v x xi xi xii

CHAPTER 1- Introduction and background…………………................………………… 1.1 Introduction…………………………………………………………………..………………. 1.2 Statement of the problem…………………………………………….......…………..….. 1.3 The research objectives…………………………………………………….....…………. 1.4 Assumptions and delimitations…………………….……………………………….…… 1.5 Plan of study…………………………………………….………………..……....……….. 1.6 Research design and methodology…………………..………………………....………

1 1 2 2 4 4 5

CHAPTER 2 – Literature and physical asset management strategy perspectives…. 7 2.1 Introduction……………………………………………...…………………………....……… 7 2.2 Defining physical asset management …… ………………………………………………. 7 2.3 Different physical asset models…………………………………............…………….....…9 2.3.1 Campbell uptime strategy………………………………………….......………….…….. 9 2.3.2 Pragma asset management improvement plan strategy…………………………… 11 2.3.3 International infrastructure management manual strategy…………………......….. 12 2.3.4 Worley international………………………………………………………….........…… 15 2.3.5 Why is physical asset management economically important?............................... 17 CHAPTER 3 – General asset management plan framework…..….………………… 3.1 Introduction………………………………………………………….…………………. 3.2 Maintenance management framework …………………………………………..... 3.3 Developing an asset management plan…………………………………………… 3.4 Strategy development………………………………………………………………… 3.4.3 Status analysis…………………………………………………………………........... 3.4.4 Asset management objectives……………………………………………................ 3.4.5 Asset data classification………………………………………………………………. 3.4.6 Data prioritization………………………………………………………………………. 3.5 Asset register………………………………………………………………………….. 3.5.1 Asset register set up…………………………………………………………………. 3.5.2 Managing asset register……………………………………………………………… 3.5.3 Data capturing…………………………………………………………………………. 3.5.4 Replacement program and costing…………………………………………………. 3.5.5 Provisional asset management plans………………………………………………. 3.6 Physical asset management development……………………...………………….. 3.6.1 Attributes………………………………………………………………………………… 3.6.2 Basic condition assessments………………………………………………………... 3.6.3 Prioritization based on condition…………………………………………………….

18 18 18 20 21 21 21 22 23 23 23 24 24 24 24 25 25 26 26

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3.6.4 Critical asset identification…………………………………………………………….. 3.6.5 Maintenance history data collection……………………………………………....... 3.6.6 The next generation maintenance plans…………………………………………… 3.6.7 Documentation for decision making…………………………………………………. 3.6.8 Determining the target level of service…………………………………………….. 3.7 Physical asset management implementation and monitoring………………………….. 3.7.1 Maintenance Procedures…………………………………………………………….... 3.7.2 Work order system…………………………………………………………………….. 3.7.3 Creating a job card……………………………………………………………………. 3.7.4 Planning and scheduling tools……………………………………………………….. 3.7.5 Materials management………………………………………………………………… 3.8 Maintenance tactics………………………………………………….………………. 3.8.1 Condition based maintenance………………………………………………………… 3.8.1.1 Vibration……………………………………………………………………………….. 3.8.1.2 Lubricants……………………………………………………………………………… 3.8.1.3 Temperature………………………………………………………………………….. 3.8.2 Preventative maintenance…………………………………………………………….. 3.8.3 Expected cost of maintenance……………………………………………………….

26 26 27 27 27 27 27 30 31 33 34 35 37 38 38 38 39 39

CHAPTER 4 – Measuring maintenance performance……………….………………. 4.1 Introduction……………………………………………………………………………… 4.2 Measuring maintenance productivity….……………..……………………..……….… 4.3 Equipment performance measurement…………………………………….…..……. 4.4. Process performance measurement…………………………………..…………… 4.5. Information management system………………………………………...………… 4.6 The balanced score card………………………………………………………..……. 4.6.1 Financial perspective………………………………………………………………….. 4.6.1.1 Direct financial benefits…………………………………………………………….. 4.6.2 Customer perspective…………………………………………………………………. 4.6.3 Internal business process…………………………………………………………….. 4.6.4 Learning and growth……………………………………………………………………

41 41 41 41 42 43 44 44 45 47 47 49

CHAPTER 5 – Assessment of the maintenance strategy for water and sanitation services ………………………………………………………………………….. 5.1 Introduction………………………………………………………………………………….. 5.2 Organizational climate and culture……………………………………………………..… 5.3 Expertise and competence…………………………………………………………..……. 5.4 Maintenance management systems and procedures…………………………………... 5.5 Fixed asset register…………………………………………………………….................. 5.6 Computerized maintenance management system……………………………………… 5.7 Maintenance planning, scheduling and control…………………...............................… 5.8 Reliability maintenance management…………………………………….................….. 5.9 Material management……………………………………………………………............. 5.10 Fleet management…………………………………………………………………........ 5.11 Contracts……………………………………………………………………………........ 5.12 Conclusion……………………………………………………………………………......

51 51 53 55 56 61 62 65 68 70 74 77 80

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CHAPTER 6 – Proposed strategy for technical services within water and sanitation.83 6.1 Introduction……………………………………………………………………………..…….. 83 6.2 Implementation approach……………………………………………………………. 84 6.2.1 Phase 1: Assessing the current asset management status and framework…… 84 6.2.2 Phase 2: Condition assessment and performance monitoring……………………. 86 6.2.3 Phase 3: Reliability and monitoring…………………………………………………… 90 6.3 The maintenance management planning……………………………………........ …... 93 6.3.1 Important elements of maintenance planning……………………………………….. 93 6.3.2 Maintenance categories………………………………………………………………… 94 6.3.3 Process of maintenance analysis……………………………………………………… 95 6.3.4 Creation of the maintenance plan…………………………………………………….. 97 6.3.5 Maintenance system……………………………………………………………………. 98 6.4 Conclusion………………………………………………………..………………………........99

CHAPTER 7 – Summary, conclusion and recommendations.........…………….......... 7.1 Chapter introduction……………………………………………………..………………. 7.2 Summary of research results…………………………………………..………………. 7.3 Conclusions……………………………………………………………………………….. 7.4 Recommendations…………………………………………………….…………………

100 100 100 102 105

List of sources……..…………………………………………………………………………...…109 Appendices..........................................................................................................................111

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List of Figures Figure 2.1: Uptime maintenance strategy model………………………………………………………..10 Figure 2.2: Asset management process…………………………………………………………………14 Figure 3.1: Asset life cycle…………………………………………………………………………………18 Figure 3.2: The relationship between maintenance and operations..………………………………...28 Figure 3.3: Maintenance analysis process…….….……………………………………………………..29 Figure 3.4: The required information on a job card……………………………………………………..31 Figure 3.5: The space where the required task or work required is entered…………………………33 Figure 3.6 Material management process……………………………………………………………….34 Figure 3.7: Probability of failure…………………………………………………………………….……..37 Figure 3.8: Relationship between different maintenance related cost………………………….…….40 Figure 4.1: Cost strategies………………………………………………………………………………...46 Figure 4.2: Measures to benchmark performance……………………………………………………...49 Figure 5.1: Maintenance backlog per section……………………………………………….…………..59 Figure 5.2 Backlog of job cards per month………………………………………………………………60 Figure 5.3: Average reactive versus proactive work percentage for 2008…………………………...61 Figure 5.4: Maturity Graph………………………………………………………………………………...64 Figure 5.5: Planning and review process………………………………………………………………..67 Figure 5.6: Staff utilization due to lack of planning……………………………………………………..68 Figure 5.7: Maintenance management tactics…………………………………………………………..79

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Figure 6.1: Condition monitoring process……………………………………………………………….88 Figure 6.2: Decision matrix………………………………………………………………………………..89 Figure 6.3: Computerized Maintenance Management System objectives………………….…….....91 Figure 6.4: Reliability Centered Maintenance implementation………………………………………..92 Figure 6.5: Turning cost centre into profit centre………………………………………..……………...96 List of Tables Table 3.1: Development of an asset management plan...................................................................20 Table 3.2: Implementation and Monitoring phase............................................................................21 Table 3.3.Classification of an asset on the system for horizontal and vertical identification.........23 List of Appendices Appendix A: Maintenance and Equipment Audits………………………………………………….…111 Appendix B: Maintenance Strategy Overview…………………………………….……….……….....116 Appendix C: Maintenance Strategy tree........................................................................................117

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List of Acronyms AM

Asset Management

AMP

Asset Management Plan

AMiP

Asset Management improvement Plan (Pragma)

CMMS

Computerized Maintenance Management System

DCF

Discounted Cash Flow

EAMS

Enterprise Asset Management System

ELEC

Electrical

ECSA

Engineering Council of South Africa

IIMM

International Infrastructure Management Manual

JIT

Just In Time

KPA

Key Performance Areas

MRP

Material Requirement Planning

M &O

Maintenance and Operation

MM

Material Management

MTTR

Mean time to repair

MIS

Management Information System

NPV

Net Present Value

NIMS

National Infrastructure Management Strategy

OEE

Overall Equipment Effectiveness

PAM

Physical Asset Management

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PCS

Process Control Systems

PM

Plant Maintenance

RCM

Reliability Centered Maintenance

ROI

Return on Investment

SMAM

Strategic Municipal Asset Management

SOP

Safe Operating Procedure

SWP

Safe Working Procedure

TQM

Total Quality Management

USA

United States of America

WSDP

Water Services Development Plan

WSP

Workplace Skills Plan

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CHAPTER 1 INTRODUCTION AND BACKGROUND 1.1 Introduction

The National Infrastructure Management Strategy (NIMS) was adopted and approved by the Parliament of South Africa in August 2006. The primary objective of the strategy was to strengthen the regulatory framework in governing, planning and maintenance in the public infrastructure and more importantly to assist in the process of continuous improvement. The key process of NIMS is to create an emphasis beyond operational issues of infrastructure including reliability and sustainability within the industry. Production capacity is a function of engineering design, physical constraints and established managerial practices. Production results from the application of physical assets. The effective output of the operating environment can be increased through a systematic analysis and alteration of the physical asset. The responsibilities for such effectiveness are held by management, operations and the maintenance system. The desired effect of this analysis is an increase in production capacity, without the requirement for additional capital asset investments. Maintaining an asset cannot reduce the inherent probability of failure produced by the interaction of physical limiting factors. However, the incorporation of dependability oriented innovations centered in engineering produces a mechanism for systematic analysis that improves the reliability of operating within the environment.

Furthermore, the implementation of resulting programmes

reduces the inherent probability of failure, increases the availability of production capacity and optimizes asset performance (Bleazard & Khu, 2001:36). The inefficient use of resources for infrastructure has placed a major burden on public finances, diverting resources that could be used for social upliftment in the form of education, healthcare and other social development initiatives. Most organizations tries to meet the infrastructure needs through investment in infrastructure creation without recognizing the long term life-cycle costs associated with the on-going operations, maintenance and renewal of infrastructure (Urquhart & Bush, 2000:3) Understanding which assets are mission-critical to a plan will ensure the need to focus and assist in prioritizing the allocation of limited resources. Asset managers need to understand the failures of each asset because this directly influences the type of maintenance required. An advanced and

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co-operative partnership between production and maintenance will produce a better planning schedule. With the help of a skilled planner, the plan can be implemented and developed. Valuable and precious resources are lost when not enough time is allocated for maintenance. Having proper information and a management system with strong supporting systems can help to plan and control a business ensuring that accurate information, analytical capabilities and skills are in place for value-added improvement (Coetzee, 2009:2). 1.2 Statement of the problem This research aims to establish the relationships between physical asset management strategies and business objectives. The study will analyze current models used in the industry, especially in the water department within the City of Cape Town that maintains, operates and manages the physical assets. The analysis will aim to establish the gaps within the current asset management strategy and the best practices which should be followed. The research questions are as follows: 

Can physical asset management models that are established and recognized internationally be used in the water and sanitation companies and organizations in South Africa?

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What are the fundamental requirements for the implementation of sustainable asset management practices?

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Are the applications of physical asset management models beneficial to organizations and companies?

1.3 The research objectives This research will review the literature in the field of physical asset management which includes different models developed for this purpose and maintenance management philosophies. The study‟s aim is to provide a clearer understanding of the role of physical asset management in medium or large organizations and how this impacts and influences the quality of management in their operational asset base.

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The key elements of physical asset management are: 

A well defined service level and performance standard which are linked to strategic goals and objectives



Equipment condition and life cycle approach



Investment objectives (IIMM 2006 Version 3: 1.6)

These key elements provide the platforms to develop the basic design and techniques to manage and provide replacement programmes as well as project financial outlays. The next approach involves the collection and analysis of detailed information concerning the asset condition, performance, life cycle cost and any management options. The highlighted challenges faced by waste water and water treatment plants in water utilities provide an opportunity for the development of an asset management plan (AMP) which will enable water utilities and municipalities to manage and maintain the infrastructure as well as develop an infrastructure life cycle programme. AMP is a long term tactic for managing infrastructure to achieve the organization‟s strategic goals. The plan provides mechanisms for long term strategic planning and capital budgeting. The plan also includes the following: Organizational strategic goals; Level of service delivery and performance standards to be used for measurement; Growth and demand projections; Asset management strategies/tactics; Financial projections including cash flow forecast; monitoring, control and review mechanisms for an asset improvement plan. The objective of physical asset management (PAM) is to develop and maintain the infrastructure to ensure that asset requirements and asset management strategies are driven by defined service levels and performance standards. Scarce financial resources must be properly allocated and managed to optimize investments in the infrastructure. The life cycle of an asset is considered when determining asset operations, maintenance, renewal and development strategies (Schneider, 2000:2)

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The requirements to fund depreciation and corroding of waste water infrastructure have resulted in an intensive drive to focus on both valuations of infrastructure and improvement of physical asset inventories and skills. The life span of waste water infrastructure is far below that of any other water or electricity infrastructure due to the corrosive nature of waste water and the operating conditions. Most plants contain

outdated infrastructure built over 30 years ago and the

unavailability of compatible spares for most of the equipments poses a serious danger to human life and the environment. The average life span of a wastewater treatment plant according to the sanitation department of the City is about 20 years whereas some of the current operational plants are currently over 30 years old. In most waste water organizations there is no standard equipment list, especially those of vital sewer networks. The inventory and spares become obsolete creating a major problem when, for example, pumps need to be repaired or replaced. The responsibility and challenges faced by the company are to develop a sustainable infrastructure asset management. This system must provide planning and have an appropriate improvement programme for applying and delivering the best practices while moving towards a reliable asset management system. The strategy aims to address the most difficult challenges faced by the company, with the main challenge being the successful identification of gaps and how to implement action plans within the current system. 1.4 Assumptions and delimitations The study focuses on water and wastewater treatment plants that are operated and maintained by the City of Cape Town. The focus will be on the operations and maintenance systems in the water and sanitation departments. 1.5 Plan of study The research will develop systems and mechanisms to be used for maintenance planning, measuring performance, productivity and resource utilization to ensure equipment and resource reliability. The study will develop the following three research propositions that aim to model the requirement of an integrated asset management framework in an organization.

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

The requirement for an appropriate linking mechanism in considering asset management for business decisions is by encouraging discussions between planners, operators and maintenance personnel.



The requirement for management processes to monitor the relevance of physical asset management requirements and monitoring their performance.



The requirement for appropriate skills and competencies within organizations to monitor and continuously review procurement or management strategies and take advantage of advances in technology development. The analysis will look at the organizational structure, communication processes, work flow and resources available against the work load for different teams. Issues of management will also be examined. The responses from all relevant stakeholders will be analyzed and information will be gathered from operations and maintenance manuals.

The information on the status of the equipment will be prioritized and categorized once all data on the current status conditions of the equipment/maintenance system have been assessed. The next step would be to select a maintenance option for the particular plant and machinery and then enter the option into a maintenance system. 1.6 Research design and methodology This research made use of structured interviews, discussion forums and system analyses to determine the current practices used by the water and sanitation department within the City of Cape Town. The literature review traced the evolving role of physical asset management and management practices against a background of rapid technological change and changing emphasis in management thinking about how best to manage business resources in fulfilling corporate objectives. The research will be structured into three parts: Literature review: The first part will provide an historical overview of (i) the role of physical asset management by water and sanitation organizations and, (ii) a review of the economics of operational asset management with regards to resource management and asset life cycle.

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Models for physical asset management: The second part is an overview of developments in business management that affects the practice of physical asset management. In this section the research will also examine the various models and variables and current options of asset management. Currently, practices are not in line with internationally recognized procedures. The researcher will use qualitative data that will be collected through interviews and interactions with the relevant stakeholders within the City of Cape Town. Physical asset management: The last section will identify the gaps and recommend ways of implementing the best practices in the water and sanitation organizations.

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CHAPTER 2 LITERATURE AND PAM STRATEGY PERSPECTIVES 2.1 Introduction The benefits of maintaining physical assets correctly includes financial and capability gains. An asset is meant to provide a required service on a continual basis. The cost of maintaining physical assets vary, depending on the life stage and usage. Several different strategies are employed by various experts to ensure that the equipment is reliable. 2.2 Defining PAM An asset management system represents the latest evolution in the traditional facility management approach and focuses on maintenance services and reliability. The services concentrate on achieving long term maintenance cost reduction based on applying innovative maintenance strategies in a total cost approach. (Heinemann, 2002:1) Rather than relying on the bidding process in its requests for proposals, asset management relies on a more strategic and long term asset management system with cost control in mind. This can help municipalities to standardize their systems and reduce the inefficiencies of managing multiple systems, components and technologies from a variety of vendors which immediately reduces process cost (Garibay & Ronsivalli, 2008:36). Computerized maintenance management systems (CMMS) and enterprise asset management systems (EAMS) have changed little conceptually in the past 25 years. Unlike their operational counterparts, enterprise resource planning packages which have undergone several significant changes continue to receive a lot of attention. Insufficient attention is given to extending the core functionality to take real advantage of EAM system‟s potential, not only for maintenance functions within organizations but also for the entire business. Developing such a strategy requires the correct data and monitoring equipment. It also requires a departure from the break–fix maintenance strategies (Dunks, 2007:17). An issue related to operational excellence that frequently arises is that of physical asset management. A number of articles covering this topic have developed excellent ideas. But these articles are typically related to maintenance management rather than true asset management. Calling the process described asset management does not lend it greater business credibility and

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is therefore an important shift in thinking. For one to excel in asset management, it is essential to ensure that business expectations for the assets are operational in the short and long term. Furthermore it is vital to understand the assets‟ current condition and capacity relative to the business requirements now and in the future (Moore, 2006:35). The majority of asset management software applications focus only on the maintenance and availability of plant equipment especially instrument assets. Although instrument maintenance is the key element of plant asset maintenance strategy, maintenance improvements by themselves do not maximize the performance of the overall manufacturing asset base. Demands to optimize plant operations with this limited asset management focus may result in a degradation of performance. Optimizing plant assets to meet business objectives requires a holistic approach to asset management that goes well beyond the traditional focus of asset management software and contemporary means (Fitzgerald, 2005:34). Asset management is an evolving process that improves in condition, performance and operational cost requirements which can then become better understood. To ensure that supporting activities are improved and incorporated into asset management plans, an improvement plan is required to accomplish this in a planned and progressive manner. A typical methodology for preparing an asset management improvement programme is to review its current status and level of sophistication within the organization and the implementation of asset management activities, asset data and knowledge, reliability and accessibility, information systems to support asset management process and plans to identify the optimum life cycle of management tactics and resources (Worley International, 2000:9). Initially asset management begins by asking why the asset is required and how it relates to the business plan. Subsequently a closer examination sets the purpose, function(s) and standards of performance. It is then justified by comparing costs to benefits and ranked as an investment option by the company. After company approval, a detailed design and the specifications are described, after which the asset is constructed or procured, installed, and finally operated and maintained. Physical Asset Management (PAM) can be described as a set of processes, tools, performance measures, cross functional collaboration and teamwork to optimize the complete life cycle impact of the physical asset on the business performance (Campbell, 1995:13).

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The reliability centered maintenance (RCM) is the method for determining the most appropriate policy for any given asset in its present operating context. (Campbell 2006: 224). The benefits of reliability centered maintenance (RCM) is that it can work for any type of utility including electric, gas, water and waste water. It can increase efficiency and cut costs while providing regulated utilities with the evidence they need to prove compliance with stringent guidelines covering basic quality of service and service delivery (Geraghty, 2001:37). 2.3 Different PAM models PAM focuses on performance-based maintenance systems. The two major benefits derived from PAM models are reliability and quality of service. The type of maintenance focuses on two strategies: reliability centred maintenance and quality management. The following section looks at various strategies recommended by asset management specialists. 2.3.1 Campbell uptime strategy Maintenance improvement fails when there is little or no understanding of the situation at hand. There may be a strong inclination in the department to retain the status quo or this could lead to friction between production and maintenance. Technically, it may imply a lack of knowledge about automation or how to predict probable failures (Campbell 1995:13) Campbell (1995:12) described the maintenance strategy as shown in Fig. 2.1. The foremost requirements in any business plan are the needs of the customers, shareholders and other stakeholders. The key objective for each function and element in the business strategy is drafted with those elements in mind. Maintenance is likely to have the following targets: Maximise the production rate of a particular product Phase out the operation of a plant or product line Add productive capability (assets) for another plant Eliminate stores inventories through vendor collaborating.

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Campbell (2006:21) described the following four objectives as the foundation of the maintenance vision as it would shape the annual plans and budgets of the department. To re-engineer the entire maintenance management process with particular emphasis onpreventative and planned work To select and implement a computerized maintenance and inventory management system To introduce a multi-skilling pilot project in conjunction with the local union To augment the short, medium and long range maintenance planning capabilities

Fig. 2.1 Uptime Maintenance Strategy Model (Source: Campbell, 1995:12)

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2.3.2 PRAGMA AMIP Strategy Pragma is an asset management specialist organization that have developed various strategies to deal with asset management challenges, one of the strategy they have developed is called asset management improvement plan (AMIP) strategy (2005) is based on a set of comprehensive framework pillars. Pillars are the areas in which the asset management function must excel in order to achieve their goals of optimising asset effectiveness and performance. The four pillars are based on the original thirteen (13) pillars or the building blocks of the PAM model. The model is divided into different phases or focus areas. Each phase has its own objective and key performance areas that need to be achieved within the phase. Phase 1- Strategy alignment- the aim of this phase is to develop and align the maintenance and business strategies. Phase 2- Framework selection- once the strategies have been aligned the next step is to select the correct framework. This works as a guide towards the implementation of the strategy and takes place within the assessment, development and planning of the asset improvement plan. Phase 3- Asset management maturity mapping- the maturity growth process is a mapping of the maturity of the asset in relation to industry standards. The aim is to establish a common understanding of the field of asset management, the AMIP framework to be used and what is each of the key Performance Areas (KPA). Phase 4- Setting targets- after consideration of the specific operating environment and strategic focus, improvement targets can be set for prioritised pillars. This requires a careful analysis and understanding of asset management audits. Phase5- AMIP Master plan- this is a facilitated process where a customised asset management and improvement programme is developed. The phase takes into consideration the resource constraints that might hamper the process. Here the required actions and targets are determined, documentation developed, responsibilities allocated and target dates set. Phase 6-Implementation of the master plan- the execution phase: this phase ensures that all the required actions that have been developed during the master plan are completed. All the constraints and bottlenecks must be removed to ensure success of the master plan.

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Pragma has identified a number of areas that leads to inefficient and ineffective operation: 

Reactive maintenance i.e. time and effort spent fixing breakdowns, rather than investing in the preventive tasks.



Over – maintenance i.e. running maintenance schedules too frequently



Lack of good planning and scheduling which causes ineffective utilisation of resources



Not measuring the correct performance indicators to support strategic direction

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Incorrectly devised maintenance tactics (preventive maintenance plans)

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Repetitive mistakes i.e. the absence of failure analysis in order to learn how to prevent similar future events



Inadequate skills levels

2.3.3 International Infrastructure Management Manual strategy Infrastructure assets are stationary systems that serve defined communities where the system as a whole is intended to be maintained indefinitely to a specified level of service by the continuing replacement and refurbishment of its components. The international infrastructure management manual (IIMM) (2006 Version 3:1.3) refers to the following as infrastructure assets: 

Transportation networks (roads, rail, ports, airports)



Energy supply systems( gas, electricity, oil production, transmission and distribution)



Parks and recreation facilities



Water utilities (water supply, wastewater and storm water systems)

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

Flood protection and land drainage systems



Solid waste



Education and health sector



Manufacturing and process plants



Telecommunications

The IIMM provides the most comprehensive coverage of asset management practices. Section 2 of the manual provides a detail process for producing asset management plans whilst section 1 provides the asset management plan and the process of structuring the maintenance plan. It provides the step by step process of developing an asset management plan by providing a guiding framework; the initial sections concentrate on writing an asset management plan, developing an asset improvement plan with information systems, and data management strategy. The overall structure reflects the asset management philosophy and framework, setting the direction and plans for implementation of asset management (section 2), the optimal programme of capital or asset renewal, operational, maintenance and management activities. Section 3 of the IIMM reflects the enabling process of asset management and supporting systems as well as data analysis applied to identify needs or levels of service demand and optimal programme design (section 4).

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The figure 2.2 shows the IIMM framework, the pillar that drives the maintenance philosophy:

Fig. 2.2 Steps in the Asset Management Process( IIMM 2006 Version 3:1.3) The tactical asset management plan needs to identify strategic outcomes that the plan specifically supports and focuses on. It also needs to have performance measurement and monitoring systems. The key elements of the asset management approach for ensuring effective and integrated planning include: 

Providing a robust process and corporate strategic plan to which an asset management is linked. This is achievable through a process of formalising the desired customer outcome and identifying the strategic plan, the adopted outcomes and the specific asset management plans, associated budgets and actions which support them. The assessment of the progress and monitoring is accomplished through performance management systems.



Development and implementation of a performance development process to complement and support both the strategic plans and asset management plans. A hierarchy of performance measures decentralized from the strategic outcome statement is developed

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for use at different levels of decision-making. The process requires managers to link annual work programmes back to specific strategic plans outcomes via a business plan. 

Ensuring the process of strategic monitoring and review provides flexibility to advance identified changes in the asset management plans into strategic plans.



Reviewing of the existing asset plans includes a discussion on how asset plans contribute to desired strategic outcomes, linking the asset management service to the managers‟ business plans and a focus on improving AM practices that influence the quality of strategic decision making.

2.3.4 Worley international Circa 2000, the World Bank introduced new urban and local government strategies. The strategy was in response to the increased demand for World Bank assistance from the level of local government as well as an understanding that effective urban development is directly linked to the raising of living standards and promotion of equity (Circa 2000:2). The four objectives for urban and local government strategy based on sustainable cities are: 

Liveable: committed to ensuring that the poor achieve a healthy and designed living standard that provides a system for housing, secure land tenure, credit and transportation.



Competitive: providing a supportive framework for productive firms, to promote buoyant, broad based growth of employment, incomes and investment.



Well governed and managed: with representation and inclusion of all groups in the urban society, with accountability, integrity and transparency of government actions in pursuit of shared goals and with strong capacity of local government to fulfil public responsibilities based on knowledge, skills, resources and procedures that draw on partnerships.



Bankable: financially sound and credit worthy, financial health of municipalities requires the adoption of clear and internally consistent systems of local revenues and expenditures, transparent and predictable inter-governmental transfers, general acceptable accounting

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procedures, asset management and procurement practices and prudent conditions for municipal borrowing. Improving the management of municipal infrastructure can bring major benefits by ensuring that scarce resources are used in the most cost effective manner, thereby enhancing economic growth, improving living standards and improving environmental sustainability. Inefficient use of resources and infrastructure can place a major burden on public finances, diverting resources that might otherwise go to the most critical areas of meeting social objectives. Strategic municipal asset management (SMAM) is an approach to develop and maintain municipally owned infrastructure assets to ensure that: 

Asset requirements and the management of municipal assets is driven by defined service level and performance standards linked to strategic planning.



Scarce financial resources are properly allocated and managed to optimise investment in infrastructure.



A long term approach is taken when determining asset operation, maintenance, renewal and development strategies.

Water services and water boards are responsible for management of water a commodity used in many different processes including fabrications, processing, washing and cooling, industries in power generation, steel mining, manufacturing and high technology. Agriculture and tourism are important beneficiaries of clean water supplies throughout the country. The maintenance sector forms an integral part of South Africa‟s total construction delivery capacity; its activities are on-going and substantially local in nature. The adoption of asset management practices will lead to the growth of the maintenance sector which, together with its inherent labour intensity will stimulate sustained job creation, skills development and broad-base black economic empowerment. Poor operation and maintenance practices can increase the demand of limited water resources and further alter water quality which in extreme cases can deprive natural environments of its water requirement; which leads to changes in habitats and occasionally a loss of habitats.

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The application of asset management practices is aimed at improving the quality, integrity and operational efficiency of water supply systems. Infrastructure within the water sector is not being managed due to the lack of political will, management systems, knowledge, resources and appropriate skills. 2.3.5 Why is PAM economically important? When a business is not doing well, especially in the midst of an economic downturn, most business organizations have a tendency of cutting back on „non essentials‟. In most cases those expenses represent the current expenditure for which the benefits are realised later. The question that arises is how a business can cut PAM costs without undermining the long-term prospects of the business. The following actions are extremely important to consider when ensuring that correct decisions are taken that will have the long-term benefits for the business: 

Extend the Asset life to delay capital expenditure or cost of replacement.



Reduce the risk of failures that result in catastrophic effects.



Managing and minimising risk that have financial implications for the business.

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CHAPTER 3 GENERAL AMP FRAMEWORK 3.1 Introduction It is important to describe the creation of a practical vision for maintenance and development of an asset management plan (AMP) that can be integrated into the business plan. This chapter looks at effective leadership for gaining control of the maintenance functions and advancing to continuous improvement activity, which translates to asset productivities. The chapter also looks at the procedural aspects of ensuring equipment life cycle productivity including processes of planning, scheduling, determining the level of maintenance and deciding which types of maintenance best ensures equipment performance and productivity. 3.2 Maintenance management framework Maintenance forms one part of the asset life cycle; it is one step in a nine step asset management process described in Fig. 3.1. Asset management begins by asking why the asset is required and how it relates to the business plan. The business plan includes the purpose, function and standards of performance. The life cycle involves comparing cost to benefit and can be listed as an investment option by most companies. From the time of procurement, the asset has disposal or replacement value; there are several steps or processes that need to take place to ensure that the equipment life cycle is preserved and prolonged.

Dispose

Asset Strategy Plan

Upgrade

Evaluate

Maitain Operate

Design Procure

Fig. 3.1 Illustration showing stages in Asset life cycle. (Source: Uptime strategies for maintenance management 2000: 4).

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The benefits of asset management requires the involvement of all departments from maintenance, operations, engineering, finance, design and any other relevant departments. The maintenance framework aims to maximise the production rate of a particular equipment or asset while increasing its productive capacity and eliminating wastage by reducing the inventory or procurement cycle. Maintenance objectives are the foundation of maintenance vision and should outline the annual plans and budgets of the department. The first step in developing maintenance plans and budgeting processes is to understand the current condition of an asset. A typical maintenance objective would include the following: 

To align the maintenance management process with a focus on pro-active and planned corrective maintenance.



To develop short- , medium- and long-term maintenance planning.



To train and develop employees in line with their job requirements, career progression and attrition rate.



To implement maintenance management systems to assist with work and resource management.

Evaluating the current condition and processes enables the maintenance person to develop and implement correct maintenance tactics by understanding the weaknesses and strengths of the current process. The evaluation and assessment could take the form of a questionnaire, process evaluation through observation or structured interviews. The assessment of equipment status and condition is done through condition monitoring, equipment performance analysis and normal periodic checks. These results will assist in developing the asset improvement plan.

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3.3 Developing AMP The development of an asset maintenance plan (AMP) needs to be classified into different stages with targets, basic requirements and objectives at each stage. Table 3.1 shows a three-stage initial process of developing the asset management plan. Table 3.1 Stages in the Development of an Asset Management Plan:

Stage: Stage 1

Target: Strategy development

Stage 2

Asset register

Stage 3

Asset management

Requirements: Current status analysis Setting the asset management objectives Asset data classification

Prioritization of data collected Set up the asset register Set up how the register will be managed Capturing of data Replacement program and costing Provisional asset maintenance plans Attribute data Basic condition assessments Prioritization based on condition Critical asset identification Maintenance history data collected Prepare the next generation maintenance plans Documentation of decision making process

Determine the target levels of service required Table 3.1 provides the fundamental requirements for the developmental phase of the asset management. This is the foundation of asset management and if not developed correctly, the physical asset management will be incomplete or incorrect. The second phase of asset management development covers the implementation and monitoring. Table 3.2 summarises the stages, targets and requirements.

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Table 3.2 Implementation and monitoring phase of asset management

Stage: Stage 4

Target: Asset improvement/upgrade plan

Stage 5

Techniques required

Stage 6

Management system

Requirements: Maintenance procedures Decision and process flow Failure analysis Risk analysis Identify where equipment is in its life cycle Develop plan for replacement Decision making based on life stage and budgets Performance management Performance evaluation

3.4 Strategy development The development of a maintenance plan for an existing asset will be based on best practices and the current state of the equipment. This should highlight the objective, the asset requirement and the current analysis of an asset. 3.4.3 Status analysis The status of the equipment can be measured by performing an equipment survey, performance analysis and feedback process from a data registry. Information can also be collected from user feedback and surveys, and the age and condition of the equipment. The status of the equipment should be based on the types of problems or failures. 3.4.4 Asset management objectives The objective of asset management is to develop and create a system that will ensure optimum utilisation of an asset or infrastructure. This can be achieved by implementing the best practices that will ensure that: 

Asset requirements and asset management strategies are driven by defined service levels and performance standards.

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

Life cycle approach is used when determining asset maintenance, operations, design and renewal strategies.



Proper management and correct allocation of financial resources should optimise the investment in infrastructure.

Asset management is not a fixed process but evolves as the condition of operation and infrastructure status changes over time.

This ensures that the equipment delivers as expected.

The objectives assist the asset owners during decision-making processes with regards to the condition of the asset so that changes can be implemented for corrective measures when required. 3.4.5 Asset data classification Asset classification is done to ensure a common understanding between all asset users. The first step is to define the asset or equipment and classify it. There is always a debate between finance and maintenance staff on exactly what an asset is and this impacts on the depreciation or capitalisation of the asset or equipment. The asset must be classified into different classes and sub-classes with each class having a class code and sub-class with sub-class codes. This simplifies the operation when one needs to investigate and report on both a horizontal and vertical basis and when there is a need to check similar classes of equipment through the organization or within a particular area. Table 3.3 indicates the different classes that can be used to classify assets:

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Table 3.3 Classification of asset on the system for horizontal and vertical identification

Number 1

2

3

Class BLOWERS

BLR

Sub - Class Code

Sub – Class

Class Code

Blower-centrifugal fan type. Blower-roots type, beltdriven.

BLR01 BLR02

BELT PRESSES

CENTRIFUGES

CENTRIF

Centrifuge- horizontal spinner type.

CENTRIF01

3.4.6 Data prioritization Once the analysis has been completed, the condition of all the assets and equipment confirmed, the database created, and the data prioritized in terms of asset classes the next stage may commence. The data is prioritized to ensure that maintenance interventions are correctly developed and are based on the current condition of the asset and the performance requirements. This also ensures the proper utilization of resources. 3.5 Asset register Asset register is a record of asset information considered worthy of separate identification including inventory, history, technical and financial information (IIMM 2006 Version 3: xii). 3.5.1 Asset register set up The basic requirement for implementation of PAM is that the company must have a correct asset register reflecting all assets for the company. The asset register provides the functional location of an asset. This functional location describes where the asset is or installed in a hierarchical format with its attributes (make, model, size etc). The register will also have the serial numbers of the equipment to identify them during maintenance or when they are sent for repairs. A properly developed asset register simplifies the process of developing historical information of the asset and recording all the repair costs and usage data. This will assist maintenance personnel

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to ascertain the time it has been running and what type of maintenance is required at any particular time. 3.5.2 Managing asset register The management of an asset register is an important function within the business. It ensures the integrity of the asset database and if there is one central control point that nobody tampers with the asset database. An authorized person should control the process of registering or removing an asset as well as updating the master data. 3.5.3 Data capturing To ensure that the master data is updated, the person in charge of the asset register needs to develop a process flow that will be known throughout the company so that everybody is aware of the process. It will highlight the flow of responsibility from the time a new asset is purchased. The data entry person is authorised to remove or scrap an asset when necessary. 3.5.4 Replacement programme and costing Accurate information of the asset‟s condition, usage and expected life will enable the planning section to estimate a replacement period and cost of the asset. The basis for the correct replacement programme needs to be developed by the maintenance and replacement section. This will depend on the accuracy and the integrity of the master data. 3.5.5 Provisional asset management plans The information gathered so far will enable planning for the basic maintenance and replacement of an asset. The available status of an asset will include the current usage and expected life span of the equipment. This will enable the development of an infrastructure maintenance programme showing required maintenance frequency and the type of repairs. Although it is difficult to estimate accurately the cost of maintenance, which includes the labour and material costs, estimated costs can be calculated for planning purposes.

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For efficiency, the provisional asset management plan must contain information that will assist in decision-making and the planning process for repair or replacement. The following information must be included: 

Labour- all wages and benefits of the traders and assistants.



Materials- all the supplies, parts, components, consumables and other vital items that will be required by the maintenance personnel.



Services- engineering workshops, facilities and stores or warehouses where equipment can be stored or repaired.



Technical support- supervision, planning, materials coordination, administrative support and data capturing.



Outside services- all contracted services, specialty services, training and consultants that maybe required.



Functional location and equipment cost.

3.6 PAM development 3.6.1 Attributes The structuring of attributes follows a pre determined pattern that puts them into hierarchical structures with functional locations and equipment registers, the next step is to group them into classes of assets. In each class, the attributes of the assets such as model, size, capacity, maintenance intervals, serial numbers and date commissioned are indicated. This information is crucial in developing the schedules that meets the asset requirement and performance expectation. The performance of the asset is measured against these attributes.

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3.6.2 Basic conditions assessments The condition of the class of assets must be established and the basic assessments can be classified as poor, satisfactory or good. The condition establishes the basic step in developing the asset plans. A poor rating would indicate that the asset requires immediate remedial attention. An asset that is rated satisfactory will require normal routine maintenance, while an asset in good condition will require routine maintenance exceeding the service level required. 3.6.3 Prioritization based on condition After establishing the classes and condition of the assets it is necessary to develop different categories of interventions based on their condition. Internationally recognized standards that classify maintenance tactics into three categories of maintenance services, A, B or C will be utilised. The different service levels depend on the usage, intervals, duration of service and the activities that need to be performed for each category. 3.6.4 Critical asset identification Identification of the critical assets minimises delays during asset malfunction and speeds up the replacement process. The lead-time for most of the assets is very long and the procurement process can increase that lead-time due to delays in ensuring that all approval processes are followed. Classifying critical items minimises the delays and assists the maintenance personnel in identifying all assets that have an impact on service delivery when malfunction occurs. 3.6.5 Maintenance history data collection The work order system which involves all the activities including the type of work and resources required, functional location and the cost for the work are logged to create historical data for the asset. The history makes it easier to analyse the performance and introduce the required maintenance intervention for an asset. The first step in historical data collection is to assess the initial condition and examine owner manuals. Once the provisional maintenance plans have been executed, the data is logged into the system to create historical data.

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3.6.6 The next generation maintenance plan Once the provisional maintenance plans are carried out, asset classes grouped, basic condition assessment carried out, and all the data logged into the system, the next step is to use all that information including the historical data to develop a proper asset maintenance plans. The plan will represent the base-line for creating the maturity target profile for the asset, asset classification, critical analysis and maintenance tactics. 3.6.7 Document for decision making The asset maintenance plan is a definite requirement for decision making processes in asset management. When the asset malfunctions a decision needs to be made as to whether the cost of repairs is justified. The replacement cost must be evaluated against the renewal cost. This decision making process includes the cost benefit analysis which can be achieved by looking at the condition, cost and history of an asset. The PAM strategy for asset management requires that enough information on an asset be available for decision-making. Lack of data makes this process difficult. Provisional maintenance may be recommended based on the initial condition of an asset. 3.6.8 Determining the target level of service The target service level provides an idea of the required level expected from an asset. If the level of service is not satisfactory a decision needs to be made whether to alter the maintenance intervention or to replace the asset. It is important to determine whether an asset that will be measured against performance meets the required level; measurement against the set of standards will determine whether a replacement or renewal is required. 3.7 PAM implementation and monitoring 3.7.1 Maintenance procedures The success of the PAM strategies depends on correct implementation and monitoring. This includes developing proper procedures to be followed by the technical and operations personnel. Best practices must be implemented and the operators must ensure that the equipment is well

28

operated. The safe working procedures ensure that there is a common understanding between the different departments .Newly appointed personnel must understand how the equipment operates to reduce maintenance costs. Figure 3.2 indicates the relationship between the departments involved in asset management.

Operation

Management

Maintenance

Fig. 3.2 The relationship between maintenance and operations The maintenance plan includes the tasks and its key activities. Planning and scheduling includes identification, prioritization, materials, labour/skills required, safety considerations, execution and reporting. The maintenance plan also includes the estimated time required to complete certain tasks for optimum performance. The objective of asset management is to create a programme that is effectively planned and scheduled to reduce labour and downtime. When a malfunction occurs, the programme will ensure that the correct parts and materials are used and that the work quality is higher than that of an unplanned one (John Campbell 2000). The key steps in maintenance work starts with identifying what has to be done and ends with analysing the results of what has been done. The six steps are shown in Fig 3.3: 

Identify- the need for maintenance work from a simple noisy bearing to the complexities of interpreting a vibration analysis and trends. The probability of identifying the real problem before it becomes serious increases from simple inspection to complex analysis.

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

Plan- this step ensures that all the resources necessary to execute the job are accounted for. The planning personnel determine what has to be done, the resources required and the sequence of activities required for safe working procedures. The planner must be a technically orientated person who is able to determine the sequence of events to complete the activity, including the estimation of required time.



Schedule- to schedule the work, the planner needs to know who is available, what resources and material will be required and the availability of the resources. It is important to have knowledge of which jobs are mandatory, the procurement system and the lead-time for procurement of various materials.



Assign- the assignment of the task depends on the maintenance policy and the process in place for prioritizing work. The maintenance system will schedule and assign job cards with details of activities to relevant teams for execution. The job card system makes it easier to track the progress and re-schedule the work.



Execute- the maintenance process is a revolving one and the execution is the easiest part if the initial steps are followed correctly. When the work scheduled on the job card is completed the information is captured by the data capturer.



Analyse- the information captured from the job card for completed work is entered back into the system. It becomes the history of an asset and is analysed for further action if required. This analysis can estimate the life span and expected problems of an asset to implement further maintenance activities and performance analysis.

Fig. 3.3 Maintenance analysis process (Source: Campbell 1995:46)

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3.7.2 Work order systems Two types of work order systems are currently being used by different companies. One is paper driven and the other is computer driven. A typical work order will include the originator, the planner, the supervisor, accounting officer, the scheduler, production and the tradesman. The work order will have a number for referencing and audit purposes. The benefits derived from a work order system are: 

Planning and scheduling mechanisms for complex jobs.



Cost collection mechanism for labour, stores requisitions, purchase orders and services to charge against a piece of equipment or cost centre.



Way to capture delays and measure productivity.



Tool to manage and determine work backlogs.



Assist to manage equipment history and to analyse the failures and effectiveness of maintenance efforts.

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3.7.3 Creating a job card An example of how a work order or job card is created and the process of creating a work order on the maintenance system are shown in Fig. 3.4 and 3.5. A job card is created and then work details are entered into the system and saved. How to create a job card:

On your work order screen, click on

; a blank job card screen will open, with the following

available job number.

Fig 3.4 Required information on a job card (Source: ERWAT On key system 2009: 4) All dates will default to the current date. The date for completion of the work will be indicated.

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Click on

to open the asset tree, select the relevant asset.

Type in the work required, select the type of work. The GL code and cost centre code are linked to the asset and will change accordingly. However, please check if it should be mechanical or electrical, as they differ.

Add the responsible trade (click

to see which trades are available), select staff member and

select work order importance (1 – most important, 4 least important)

Click

to save job card.

Job card – labour required tab Use the labour required tab to view the labour requirements for each task and assign labour resources to the job request, together with estimate time durations and dates. Note! ● The section and trade are mandatory but the staff member can be assigned at a later stage. ● If a staff member is assigned before the section and trade, then the section and trade are populated with the staff member‟s section and trade. ● If the section and trade are assigned before the staff members, then the staff members assigned to execute the work must be associated with that section or company and belong to the selected trade. The staff lookup list is limited to persons who work for the selected section or company and belong to the selected trade. ● Each labour item‟s date required must be within the work order‟s start on date and complete by date. How to assign labour resources to a work order: 1. Click on the labour required tab. The labour required tab appears. 2. Enter the required data. 3. Add any notes that might be relevant to the labour required.

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4. Click

to save the data.

Labour required tab

Fig. 3.5. The space where the required task or work required is entered. (Source: ERWAT On key system 2009: 5) 3.7.4 Planning and scheduling tools Different planning tools are available on the market. Most commercially available systems have comprehensive modules that include work order management, equipment records and history, preventative maintenance tasks and scheduling, costing and budgeting, material management and labour capacity planning. Some of the tools that can be used for planning are the Computerised Maintenance Management Systems (CMMS), the Gantt chart, the Critical path method and the Pareto diagram. The Gantt chart is a useful tool for planning and scheduling. It lists steps and activities along the vertical line and the time needed to accomplish them along the horizontal line. It gives the sequence, duration, start and finish times of events and the overall project start and finishing times. It is useful for planning and managing projects. The Critical path method gives a relationship between different events; it is most useful when used in an activity network diagram. It determines the minimum time either required to complete a project, independently, sequentially or interrelated sequence. Once plotted, the path with the longest duration is the critical path.

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The Pareto diagram is a bar chart used to prioritise and help separate the vital few from the trivial problems. It uses the 80-20 rule, which is 80 percent of the problems are associated with 20 percent of the equipment. 3.7.5 Materials management

Most systems with capabilities for materials management enable the process of managing materials effectively. Spare parts, components, lubricants, fasteners, and all other maintenance materials account for fully one-half of most companies‟ maintenance budget. To manage maintenance materials effectively and save on potentially wasted money due to neglect of materials, the process begins with purchasing, storing and inventory control.

1. Specify

5. Use

2. Source Materials process

4. Control

3. Order

Fig. 3.6 Materials management process 

Specify- the equipment register simplifies what is needed in an accurate manner and provides updated configuration of the status. The major equipment assembly is delimited into smaller components or parts that could be built into a unit. Other equipment might have integrated components that can be dissembled and re-assembled for repairs if needed.



Source- partnerships between suppliers and buyers are an integral part which drives the success of the materials management process. The overall value of the transaction and relationship is governed by trust. The buying process is no longer driven by cost but the ability of the supplier to meet the customer expectation and demand.

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

Order- the order is placed once the supplier and the specification of the equipment is known. Items kept in an inventory holding account are normally ordered once the minimum order point has been reached. The final user is not involved in the ordering of equipment. The final user is only involved at the determination of the minimum order point. The user will receive the items from the warehouse or the control store.



Store- the main objectives of having a maintenance store is receiving, stocking and issuing material that has been assigned to the job cards. The efficiency of the maintenance store is enhanced or limited by the location, layout and the technology. The quality of service will improve by employing good quality inspectors.



Control- the movement of items at the maintenance stores depend on the availability of tradesmen. The stores can be well resourced but if the inventory movement is not controlled adequately the advantages of maintenance stores will not be realised. The inventory of spares and materials should be managed and measured rigorously in the same way those raw materials, work- in-progress and finished goods are measured.



Use- The productivity of the maintenance teams is affected when the waiting times for the materials and parts increases. Time that it takes to arrange material is recorded on the requisition slip. When the material is found it is issued and brought to the workshop. The „just-in-time‟ process assists in reducing the waiting time, although all the bottlenecks must be sorted out before the process can be employed.

3.8 Maintenance tactics The development, implementation and success of the PAM strategy depend on the choice of maintenance tactics. Different equipment requires different tactics, as there is no standard system that can be suitable for all types of equipment. The tactic used will depend on the type, condition and usage of the equipment. The maintenance tactics is a „battle plan‟ against equipment breakdown; it outlines the systems of dealing with problematic situations and preventing breakdowns. The maintenance tactics provide an action plan, interventions and the timing of the action that is required. The different options available are: 

Run to failure- maintenance performed only after the equipment has failed; this is normally done on electronic equipment and electronic circuit boards

36



Redundancy- building redundancy into the systems ensures that when the primary equipment fails the secondary equipment is available.



Schedule component replacement- this is a scheduled maintenance programme at predetermined intervals based on the running times or usage regardless of the condition before or after that period.



Schedule overhaul- the equipment is stripped and overhauled at a predetermined planned period; this is normally done during a planned shutdown on a bi-annual basis or annually during low season or low peak period when the equipment is in low production.



Ad hoc maintenance- this maintenance is done as and when required; this could be done in preparation for the high production period or when the equipment is problematic and is not running consistently.



Preventative maintenance- preventative maintenance is done periodically and includes inspections, lubrications, minor adjustments and any other failure prevention maintenance.



Condition based maintenance - this type of maintenance is based on the measured condition of the equipment. The monitored conditions include vibration, temperature, flow, stresses and several other conditions. On this basis maintenance interventions are planned.



Redesign - the maintenance is designed to ensure reliability of the equipment. This is mainly done when the condition of the equipment cannot be correctly measured and when there are no reliable systems that will provide an analysis of the equipment. Most of the old equipment that has been discontinued by the suppliers falls within this category.

The selection of the correct tactics will depend on the understanding of the type of failure, type of equipment and cost of maintenance. The difficulty in maintenance selection can be analysed by an age curve which would reveal the approximate time that the equipment fails. This would indicate whether there are more failures in the earlier or later stages of the equipment life.

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Figure 3.7 indicates the higher probability of failures during earlier and later stages based on the age of the equipment failures from the technical reports of the City of Cape Town.

Probalility of Failures 10 9 8 7 6 5 4 3 2 1 0 commisioning

Middle period

Old life

1--5 years

5--15 years

15--20 years

Fig. 3.7 Probability of failure Although Fig 3.7 provides an indication of the probability of failure of equipment it does suggest that failures are directly related to age. Other related factors may include: use, compatibility, equipment, and the installation conditions.Two tactics are commonly used and most applicable to water services industries: 

Condition based-maintenance.



Preventative maintenance.

3.8.1 Condition based maitenance Condition based maintenance is effective because it detects and warns of a failure before it actually occurs. The warning gives enough time to react and intervene without affecting the equipment productivity. This type of maintenance is most applicable in the heavy industries, rotating machinery and all other equipment that fails in a cause and effect manner. The selection of an appropriate method to be used depends on the type of equipment and the measurements required. Some of the factors to be considered are:

38



The failure mechanism.



The reliability of the method to be used.



The warning or response time of the device.



The cost of the method to be used.



The skill level required to monitor, operate and interpret results.

The costs are sometimes driven by the skill required, but combining some of the methods to monitor more than one operation at a time would simplify cost management thereby providing great benefits. 3.8.1.1 Vibration Vibration analysis monitors the mechanical movement of the machine. This method monitors the vibration levels and movements outside the predetermined range. The baseline is set by monitoring the regular or required operation of the equipment. The common sources of vibration on moving equipment are misalignment and imbalances. Detecting the problems earlier will enable quick diagnostics and the location of the problem. 3.8.1.2 Lubricants Lubricant analysis involves monitoring the lubricating oil condition and wear particles. This includes physical and chemical analysis of the oil, viscosity and acidity. The oil samples are checked periodically and compared to the baseline to check the deterioration. The chemical analysis of the wear particles can indicate the suitability, condition and stage of deterioration of the oil. 3.8.1.3 Temperature Temperature monitoring looks at loose connections, deteriorating splice connections, and damaged insulation. It detects the temperature changes in the equipment or at the connection sites such as corona discharge, hot electrical connections, refractory lining defects, roofing and its insulation.

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3.8.2 Preventative maintenance Preventative maintenance reduces equipment failure and emergency repairs by promoting maintenance proactively through inspections and basic scheduled maintenance. The probability of failure is reduced by a logical overhaul or replacement schedule which minimises disruptions. The preventative maintenance requires that equipment be classified and failure patterns be recorded so that proper maintenance for each equipment can be developed. The preventative maintenance is done through a work order system where a plant maintenance system is used. The work order for preventative maintenance is either condition-based or normal routine maintenance. The work order will have a task list outlining specific tasks to be performed during maintenance. 3.8.3 Expected cost of maintenance When maintenace on asset is aligned with business strategy and performed correctly, it will have an impact on the overall maintenance budget. Figure 3.7 displays the relationship between various costs related to maintenance, including preventative and emergency cost. The figure shows the expected results that occur when preventative maintenance is done properly. The cost of preventative maintenance will grow linearly while the cost of breakdowns will be expected to decline exponentially. The total cost of maintenance will decrease to a point and then increase.

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Fig. 3.8 Relationship between different maintenance related cost (Source: IIMM 2006:3.106)

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CHAPTER 4 MEASURING MAINTENANCE PERFORMANCE 4.1 Introduction The optimization of maintenance systems and management can be realised through proper measurement. The overall capacity and cost associated with maintenance is linked to the types of resources available and management strategy. Measuring maintenance productivity ensures constant improvement. The strategy can be reviewed on a regular basis using strategic objectives and a master plan as a guide. Productivity, equipment performance and processes can be measured. 4.2 Measuring maintenance productivity The defined service levels and performance standards provides the basic requirements for measurements. The service levels must support the strategic goals, based on the asset requirements and customer expectations. Some of the equipment has legislative and regulatory requirements, which must be included in the performance measurements. Productivity measures the performance of the team against set levels and standards. Using the computerised maintenance system makes it easier to measure the productivity of the teams and the utilisation of resources. This can be done by measuring the number of job cards that are finished in a month versus the number of job cards that were issued to individuals at the beginning of the month. The utilisation is the measure of the time spent on the overall job cards in a month versus the time available for individuals in a month. 4.3 Equipment performance measurement

The key to equipment performance is the correct design and expected performance levels since the equipment will be measured against the set performance. The measurable service level for performance standards for equipments includes the following: 

Reliability and availability- measure of the availability as well as the equipment downtime and the frequency of downtime.

42



Safety- measure of the compliance rate with the safety requirements.



Economic efficiency- the measure of the quality of service or production rate.



Environmental objectives- measure of the rate of compliance with environmental requirements and legislation.



Quantity rate-measure of the capability of equipment to render the required and expected service.



Equipment effectiveness- overall measure of availability and precision of the equipment.



Maintainability- measure of the ability to make equipment available after it has failed.

4.4. Process performance measurement The inputs into the business process are cost, human resources, materials and any other resources required to complete the work order. A maintenance management system is a business process used to make it easier to manage the system. There are different categories and classifications that are required to ensure common understanding and to approach maintenance management. These procedures and processes make it possible and easier for maintenance personnel to differentiate between various maintenance processes. 

Planned and unplanned- the aim is to minimise the unplanned maintenance and have more planned maintenance since unplanned maintenance disrupts the service delivery and can be costly in case of equipment malfunction.



Schedule compliance- this high rate of compliance with schedule PM (define) indicates that there is less disruption in the business process while the opposite indicates that the company is in „fire-fighting mode‟.



Work order management- this is a procedure of handling the maintenance process. When in place, the backlog will be minimal and a process of handling the flow of work will prevent work from accumulating.

43



Urgent and normal purchases- the aim is to deal with the procedure for emergency work and requisitions. The planned maintenance will consider lead-time during planning while emergency orders and requisitions will be handled in terms of the company emergency procedures. There should be no lead times for emergency orders.

4.5. Information management system The company would have many different types of equipment, which will differ in complexity and type of parts. The inventory management and asset register for all different assets will be difficult to manage using conventional methods. The computerised maintenance management system is an idea tool to manage maintenance activities and manage the history of information as well as the asset register. The CMMS will help track the type, date, materials and costs involved in maintenance done on equipment. This information is required for decision making and useful in comparing cost of repairs with cost of replacing equipment. The CMMS uses two different modules, which are plant maintenance (PM) and material management (MM). One helps to manage maintenance activities and planning while the other deals with managing equipment or material process. The two modules are divided into many sub-modules that are designed for various related functions such as operating various data management and analysis activities. 

Work order management- process of managing work orders and estimates cost and tracking the work order status and priority.



Planning and scheduling- uses tasks and adds resources required to complete the tasks and schedule maintenance work while identifying between preventative and unforeseen breakdowns



Preventative maintenance- establishes the maintenance schedule, describes the required work, list the activities and materials required and allocates a cost.



Inventory control- manages the stores inventory; it also tracks the movement of inventory between used and on-hand materials and costs. It can further allocate inventory items for maintenance purposes.



Labour- tracks the human resources availability and usage, skills required, and training history. It also manages the movement of resources between work orders.

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

Equipment history- records the history of repairs and costs, labour used, manage equipment down-time and tracks equipment failures.



Equipment identification- manages the equipment functional location, numbers and make of equipment.

4.6 The balanced score card The balanced score card translates an organization‟s mission and strategy into a set of performance measures that provides a framework for a strategic measurement system. It emphasizes financial objectives, but also includes the performance drivers of these objectives. The scorecard measures organizational performance from four perspectives: financial, customer perspective, internal business process, and learning and growth. 4.6.1 Financial perspective Maintenance impacts and influences the profitability and financial performance of an organization. The survey done in other countries showed that magnitudes of maintenance costs in the USA is about 25% of the total indirect costs and are increasing at alarming rates. Data from the United States Department of Commerce indicated that the total expenditure on maintenance has been increasing at a rate of approximately 15% per annum from 1970 to 1980. The expenditure on maintenance is also significant when expressed in monetary terms and resource commitments (van Niekerk, 1984:14). The strategic objective for the financial focus of an organization is to ensure long term funding and investment for a business and financial stability for operational and business activities. PAM focuses on ensuring the asset availability and reliability by providing access to funding for asset maintenance. Assets need to be valued and the key is understanding how assets depreciate over their useful life and correctly allocate costs and calculate income streams. Valuation and infrastructure financial planning require the understanding of asset life cycle and replacement process. The financial reporting standards require that assets be valued at fair value or market type valuation and where the fair value can not be established, the discounted cash flow (DCF) analysis on future earnings is used as a basis for valuation. In some cases, both market value type

45

valuation and future earnings may be difficult to establish. Hence the depreciated replacement cost is the most appropriate method to be used for valuation. Costs occur in all phases of asset life. Major errors occur when the emphasis or focus on decision making is only placed on the initial capital costs when evaluating assets and acquisition options while ignoring long-term decision making. Life cycle cost includes the following: 

Initial capital/ investment cost.



Operation and maintenance costs.



Refurbishment and renewal costs.



Administration, overheads and taxes.



Depreciation.



Capital use charges/rate of return.

A sustainable, long-term approach to asset planning requires preparation of long-term financial forecasting. This enables maintenance planning of renewals or upgrades. 4.6.1.1 Direct Financial Benefits Direct financial benefits and costs that can be quantified and linked with decision making of the financial investments. These include the following: 

Revenue generation.



Asset life extension.



Reduction in operating, maintenance and disposal cost.

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

Risk cost reduction.

Revenue generation is the difference in income generated before and after completion of a project. Revenue generation should be based on the net income gain to the organisation and not just the specific projects being considered. PAM‟s objective is to extend the asset life and the direct benefits are calculated by determining the NPV, which is the value of the asset to the organization derived from the continued use and subsequent disposal in present monetary values. The net benefit is the NPV of the operating and maintenance benefit each year over the project life. Operating costs are all maintenance related costs associated with active utilisation of the asset. These costs include the costs required to keep an asset as close as possible to its original state or condition. Operating and maintenance costs are estimated over the life of the project and can be estimated by extrapolating historical expenditure or alternatively they can be calculated by identifying maintenance activities, which could include asset failure analysis.

Broad cost leadership

Broad differentiation

BEST COST PROVIDER

Focused cost leadership

Focused differentiation

Fig. 4.1: Different Cost strategies available for an organization

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Figure 4.1 indicates the different cost strategies available for an organisation depending on the type of its business. Good financial planning and focus will enable the organisation to choose the correct strategy. 4.6.2 Customer Perspectives Organisations that manage networks of assets have varying knowledge about the physical attributes of those assets and financial forecasts based on that knowledge introduces variability. Confidence levels tend to be lower for water utilities, with extensive underground asset networks. The organization will typically have disparate information about such assets and therefore decisions based on such information will tend to have significant degree of subjectivity. Statistical methods of expenditure prediction and sensitivity analysis are used by various utilities where basic asset data is uncertain or unknown. The objective of the physical asset management is to prepare the long-term financial forecasts that outline the organisation‟s future financial requirements based on all information relating to asset creation, maintenance, renewal or rehabilitation and disposals. While financial forecast assists maintenance engineers and maintenance personnel to plan ahead for future maintenance requirements for different assets, it also assists the asset owners to prepare correct budget and long-term forecasts for asset maintenance and use. The key issues that need to be addressed from the customer perspectives are: 

The required funds to acquire, operate, maintain and renew the asset



The time when the funds will be required

The true costs of providing infrastructure services depend on the standard or level of service required. Every user expects a high standard of service, the transparent cost of providing the service and the realistic expectations. 4.6.3 Internal Business Process Asset management information systems should contain both technical and financial information designed and maintained to enable the organisation to manage their efficiency and effectiveness, policy and strategy, risk management, planning and implementation and operation.

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The important step of the process is to get the information architecture correct. This translates the business requirement into a process that identifies all business information requirements, the relationship between information requirement and business functions and the key steps that outlines how the information is best delivered and structured for the end user. Information systems should clearly support business processes and facilitate continuous improvement. Competent personnel are required to ensure that asset information is accurate, timely and of high quality. The asset information system must be capable of delivering the information necessary to support business process and asset management. The competent person will be tasked with responsibility for: 

Maintaining asset information management and ensure it conforms to the required standards.



Bulk asset data entry and maintenance of the quality and integrity of asset data base.



Governance of the overall corporate information resource.



Providing guidance in the developing of strategy for the expansion and application of all asset information.



Policy development and guidelines for the use of the information systems.

The objective of investment in asset management systems and data collection is to support documentation, which in turn supports the business process. There must be documented policy guidelines, which will ensure compliance with quality assurance and standards. The benefits to be derived from an integrated approach to the management of assets and standardised process are: 

Organisational flexibility.



Business operational flexibility.



Improved quality and asset information.



Proper dissemination of asset information internally and externally.

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

Resource utilization efficiency



An integrated approach to the management of all asset classes

Maintenance Equipment Effectiveness Availability Reliability Response time PM Schedule compliance

Typical Measurement 65% 95% No of days 1 hour 93%

Planned/Unplanned hours Cost per total operating cost Stores Value Turnover Service level Coverage Staffing

65:35 20% Typical Measurement Rand value 92% 8hr/5day No of personnel

Stores issue/Total maintenance material

45%

Fig. 4.2 Measures to Benchmark Performance 4.6.4 Learning and Growth The majority of introduced processes have brought increased attention on the importance of evaluation which has resulted in measurements and analysis experiments conducted to evaluate the contribution of specific programmes. This has created a shift in mindset of many organizations where in most cases, the emphasis has been on the bottom line and now the shift is more aligned with the business approach, which focuses on training and development. New strategies put emphasis on return on investment (ROI), which measures and evaluates the performance and training improvements. For an ROI process to be useful, it must balance many issues such as feasibility, simplicity, credibility and soundness. To satisfy the needs of the critical groups and process requirement, the following criteria are essential:

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

The ROI process must be simple, void of complex formulas, lengthy equations and complicated methodologies.



The ROI process must be economical and must be implemented easily; the process must become a routine part of training and development without requiring significant additional resources.



The assumptions, methodology and techniques must be credible and logical. Systematic steps are needed to earn the respects of the end user; this requires a very practical approach for the process.



The process must account for other factors that have influenced output variables; this emphasizes the importance of incorporating credibility and accuracy within the process.



The process must have the flexibility to be applied on a program basis. In some cases an estimation of an ROI is required before the actual programme is developed.



The ROI process must be applicable with all types of data, including hard data which is typically represented as output, quality, costs and time.



The process must have a successful record of accomplishment in a variety of applications; in many case models are created but never applied successfully. An effective ROI process should withstand the wear and tear of implementation and should get the expected result.

To ensure that the job performance needs are met, a review of the detailed objectives of the programme are done to select the measures that could be improved by a team effort and to review the skills required for the program. The output of ROI analysis designed to add value at the operational level can be measured through evaluation of the process at a determined time. The criticality of skills, the direct effects of applying these skills, the high level of management interest, the size of the target audience and the higher than average cost are factors contributing to the success of the training and development initiatives.

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CHAPTER 5 ASSESSMENT OF MAINTENANCE MANAGEMENT STRATEGY FOR WATER AND SANITATION SERVICES 5.1 Introduction A vast infrastructure network of roads, water supply, sewage networks, power supply, flood protection, recreational and other assets define the world‟s urban cities. These assets are managed predominantly by local and central governments and constitute a major investment over many generations, created in the hope that benefits will accrue through increased productivity, improved living conditions and greater prosperity. Municipalities manage the world‟s largest portfolio of infrastructure assets on behalf of their communities. It is therefore appropriate for municipalities to be vitally interested in asset management and in particular the techniques that aid responsible asset management. The key elements of effective asset management are: 

Defined service level and performance standards linked to infrastructure objectives.



Optimal investment.



A long term (life cycle) approach.

In 2000, after restructuring of the various municipalities into six entities which eventually formed the Cape Metropolitan council, the management of water and sanitation took a decision to implement the PAM principles, aimed at ensuring good governance and asset usage optimisation. Standard asset management practices are currently being implemented in many countries across the world. The local governments in Australia, New Zealand and United Kingdom are the leaders in implementing and standardising asset management programs (IIMM 2006 Version 3). The legislation requirements in the South African water industry calls for the provision of Water Services Development Plans (WSDP) by the water services authorities and water service providers. These plans are equivalent to asset management plans and are designed to meet minimum requirements for services and financial planning though a proactive approach that would

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develop and implement advanced asset management planning as required by the government and legislation. Maintenance management assessments were intended to check and assess the implementation of the integrated asset management strategy in line with the municipality requirements to have a clear defined infrastructure asset management strategy. In addition to the provision of water services to all households, businesses and industries in the metro, the municipality is also responsible for the on-going operation and maintenance of the infrastructure installed including the asset management function of the municipality. The key focus for the assessment is the maintenance practices that should be instituted for good maintenance management assessed against world class benchmarks in the maintenance management of environments. The assessment covered the following maintenance areas in detail: 

Maintenance management systems and procedures.



Computerized maintenance management systems (CMMS).



Organizational climate and culture.



Maintenance control, planning and scheduling.



Reliability maintenance management.



Fixed asset register.



Fleet maintenance and operations management.



Contracts and procurements.

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5.2 Organizational climate and culture The organization or department must display the following attributes to ensure proper organizational structure and create a positive environment for employees: 

Teamwork.



Positive attitude.



Productivity conscious.



Responsiveness to technology.



Motivation.



Healthy relationship with other departments.



Balanced supervision in managing people and work output.



Client focus.



Satisfactory completion of work.

These attributes are essential for the department to function effectively and efficiently in order to fulfill its obligations and objectives. The water services technical department has been restructured a few years ago but there are organizational issues related to culture, climate, processes and administration that require special attention from the management. The following are the key findings in this regard; this is noted in the appendix B. 

Vision and Mission Technical services and its subsections have no clear defined vision and mission. Organizations or departments without their own defined role in terms of vision and mission find it difficult to achieve direction and map the direction for the department to ensure that everybody within focuses on department‟s objectives.

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The vision and mission must define the purpose of existence and all employees must feel part of it meaning that inclusivity is the key. 

Teamwork within the Department

The department has experienced high turn-over in leadership at management level and this has created a void causing misalignment due to instability and a lack of team cohesion. At lower levels there is no sign of strong team work which could have been supported by positivity and group cohesion. There is concern with regards to the work methodology as most of the work is done through trial and error; there is no proper planning and scheduling of work. An encouraging point though is that through the challenges identified, work orders and outstanding jobs have decreased on average which shows that employees are working even though it is not through a proper maintenance system. 

Team Productivity Outputs of the maintenance department and its sections must be measured as a basis for continuous improvement and this will give an indication of the departmental productivity. The assessment found no proof of any measurement to check and measure productivity and performance. In addition there were no defined performance measurement systems to drive productivity in the department. Maintenance key performance indicators (KPI), activities and performance measurement are not clearly defined for the whole department and they are not dispersed to lower hierarchical staff ranks but only among senior management. The shortcomings can be overcome by the implementation of the following: o

Development of the maintenance KPI‟s for the whole department that will disperse down per section to all maintenance teams.

o

Develop a balanced reporting matrix or tool that can be used to measure all sections at the same level.

o

All KPI‟s to be drawn from the same maintenance data in CMMS.

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o 

Measurement intervals to be standardized and have fixed period or time frames.

Change and New Technology The personnel of various sections within the technical department have different views with regards to the utilization, productivity measurement and usage of maintenance systems. A proportion of the staff viewed the maintenance system negatively and it became clear that there are misunderstandings with different views of the objectives and expectations of the management concerning the maintenance management system. A good understanding of new methods and technology in theory should start with the senior management and once they have fully appreciated the technology, it can then be dispersed down to all levels of the organization successfully.

5.3 Expertise and competence Implementing successful maintenance asset management requires high quality capability and capacity in engineering knowledge and skills; this will be complemented by the continuous development and experience in the maintenance environment. 

Training and development of personnel The Technical services within water and sanitation in the City of Cape town does not have training and development plans for individuals and no training requirements have been identified to address the required skills and competencies. The only form of training was the Work Place Skills Plans (WSP) which was not available for employees. This training was indicated as being completed but no proof within various sections of the department was apparent. Graduate training programmes for engineers and technicians are not formalized and there are no guidelines and time frames to develop graduates for the industry. No process is available to track the training progress and assess the performance of the trainees. These training programmes must conform to the requirement of institutions like the Engineering Council of South Africa (ECSA) and other institutionalized authoritative bodies. Currently there is no formalized coaching and mentorship systems. The department must consider

56

mentorship and coaching to assist in the effective building of expertise and skills especially for new recruits. A skills transfer programme will enhance an organizations tradition and train new recruits with the norms of the organization. No evidence exists that managerial, supervisory development, negotiation skills and time management training are taking place. There is a norm and understanding that such training is managed and organized at corporate level but it is important that such developmental training does take place and is driven throughout all department levels. Recent techniques combined with the latest advanced technologies within the technical environment include problem solving skills and decision analysis. This requires section heads, maintenance managers and superintendents to have the necessary skills and competencies in those areas. Evidence of such training or workshops are lacking in the department. The relationship between different personnel related competencies and growth of the organization is translated to organizational performance and productivity. 5.4 Maintenance management system procedures The technical services department does not have a maintenance policy document which is supposed to be the driving mechanism behind maintenance activities. A maintenance policy should outline the objectives; underline the procedures to be followed under various conditions including emergency procedures, the departments approach on backlog and the outsourcing of certain tasks and activities within the department. The appendix B outline the process to be followed in the creation of a good maintenance system and the proper implementation of the maintenance system that can benefit the organization. 

Maintenance Policy and Procedures

The maintenance policy forms the solid foundation where all maintenance practices are derived from. It is vital that this document exists and it should give the general approach, guidelines and principles of effective maintenance management. The technical services do not have a documented policy and guidelines for technical activities. Employees just depended on the course of action and experience of certain individuals. The policy can be developed over a period of time and a project or task team can be mandated to develop such a policy. The task team should comprise of people from different sections to ensure uniformity and standardization.

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The objectives for developing a maintenance policy is to ensure that work methods, maintenance procedures, safe operating and working procedures are documented. This ensures synergy and standard methods throughout the organization and can also assist the development and training of new personnel in the organization to disseminate knowledge of the operating methods of certain equipments. These documents are reviewed on a continuous basis to ensure that they are relevant and regularly updated. Tasks must be completed within the minimum time in an economical fashion without compromising quality and safety. Different sections within the technical services department use different methods. This produces maintenance confusion within operations department especially when job activities involve different sections and personnel and there are no documented processes and guidelines. The maintenance guidelines and procedures should include the following processes: 

Defect reporting and handling procedures.



Work order management procedure.



Planning and scheduling.



Procurement procedures.



Maintenance work execution.



Breakdown or emergency management.



Repairs, replacement and scrapping procedures.



Medium term planning.



Maintenance KPI.



Preventative maintenance process.



Maintenance schedule developer.

58



Prediction and condition monitoring procedures.



Incident investigation.



Continuous and performance measurement.



Root course analysis.

A proper implementation of the maintenance systems will depend on the successful development of the maintenance KPI which will assist in the development of policy and strategy formulation. The KPI will assist in measuring the performance of the department against the service levels and agreed standards. The findings reveal that there is no KPI to measure the maintenance team against the client expectation and service level agreement. The service level agreements were found to be outdated and no personnel were assigned to monitor conformity and performance. The major concern of the maintenance system is a lack of effective use of the system and as a result, no benefits and value can be drawn from it while the city has paid enormous amounts money towards the implementation of the SAP. SAP is an enterprise resource planning (ERP) system which incorporates the maintenance module. The reports drawn from SAP did not indicate the objectives and the plan of action in problem areas and whether any steps were taken to address critical issues since no processes and protocols were identified. Some of the reports that were generated included: 

Preventative maintenance.



Corrective maintenance.



Man-Power utilisation.



Plant availability.



Material and labour cost.

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

Maintenance cost by location.



Number of breakdowns and down time.

These reports can be used effectively to manage resource utilization and to manage maintenance activities; they will also provide superior inputs towards budgeting and can be used to track progress to provide the required interventions timeously. Other reports for utilization are used to ensure that the available resources are used effectively and to check when additional resources are required to avoid unnecessary costs. Figure 5.1, 5.2 and 5.3 below shows the reports drawn directly from SAP used by the City of Cape Town water and sanitation departments.

450 400 350 300 250 200 150 100 50 0

ELEC PCS

02 march 09 march 16 march 23 march 30 march 13 april

Fig. 5.1 Maintenance backlog per section

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Issued job cards Backlog

Work Centre

Amount

WAM270

4

WAM220

8

WAM260

10

WAM240

24

WAM250

24

WAM230

31

WAM300

37

WAM290

38

WAM210

56

WAM310

62

WAM320

106

WAM280

149

Fig. 5.2 Backlog of job cards issued per month

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REACTIVE VS PROACTIVE 80% 70% 60% 50% 40% 30% 20% 10% 0% Reactive

Proactive

Fig.5.3 Average reactive versus proactive work percentage for 2008 5.5 Fixed asset register The maintenance system is based on the asset register, which contains the data of all equipment available for the organisation. The fixed asset register contains the equipment identity including the numbering, physical location and equipment or asset number. It is easier to organize the asset register if the company is using the maintenance system as its data base. Most systems have the capability to classify equipment by their class or type that can be used to organise the asset register. It was observed that the asset register for technical services was incomplete. Most of the assets were not correctly accounted for and not registered on the asset register because no single person was assigned responsibility for updating the asset register. Most companies appoint one or more individuals to register and deregister an asset when it is procured or condemned, respectively. Although the city uses the SAP R3 system, which has the capability for creation and updating the asset register, the fixed asset register was poorly managed making it difficult to implement asset management and to plan for asset maintenance. The maintenance system uses the work order system to ensure that an asset in the maintenance plan is linked to that particular asset. This information is available for future references and can be used to plan for future upgrades, renewals or replacements. If equipment is not registered on the asset register maintenance planning and

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scheduling becomes difficult and results in poor maintenance reporting and wrong cost allocation while maintenance budget will not reflect the correct costs because of the missing assets. The average productivity measured on the job cards was less than 30%. Assuming that one work day of 7.5 hours equals 7.5 man-hours; a productivity of 30% means a person works for 2.25 hours of actual period. If productivity increases to 60% then a person does productive for 4.5 hours. The quality and accuracy of the results depends on whether the correct information is entered on the job cards. If some of the assets are not on the register or work is not properly entered on the maintenance system a wrong impression is created. 5.6 Computerized Maintenance Management System

The CMMS is a system that is used by the technical department based on a SAP called SAP PM Module or plant maintenance. The system is poorly utilised and is a cause of huge frustration to the employees. There is confusion because the old management systems are being used in parallel with the current system. The master data has not been updated causing confusion as to whether some assets are missing or not on the master data. The normal CMMS links the two processes of maintenance and materials processes. This programme lays out the entire cycle beginning with the requirements and ending with an analysis of purchasing and inventory control. The complete maintenance plan is addressed from identifying needs to be accomplished and an analysis of the finished work. The Maintenance and materials processes converge in the plant together with equipment configuration and bill of materials. An understanding of the system lies in the availability of the blue print of how the interactions take place within the institution/department. The capturing of the correct information into the system will ensure an improvement in the decision-making process and will enable the business to progress towards the maturity graph. The CMMS is usually divided into modules of related functions which operate the various data management and analysis activities. The eight common modules/ capabilities that were evaluated are the following: 

Equipment identification and bill of materials: all equipment covered by the CMMS is logged with name plate data and the set of equipment is linked or identified according to hierarchy

63

or relationship. This was found to have been correctly done at the beginning but at the later stage was ignored and hence never updated. 

Work order management: this manages the process of opening a new order; estimates the costs associated with the order, tracks the status of various orders on the system and ranks them according to the priorities given. While SAP module has this capability, it is not being utilised.



Preventative maintenance: it helps establish the PM schedule, describes the required tasks and materials, allocates costs and set schedules. This is commonly used but not at full capacity.



Inventory control: it manages the stores inventory. Its function is to track inventory on hand and use as well as costs and allocation of inventory items for maintenance. This module has never been used; the department depends on the procurement section to notify it of the materials movement and availability.



Equipment history: records the history of equipment, which includes refurbishments, repair costs, labour, down time, and utilisation in order to track failures and special events in the equipment life cycle.



Labour: keeps an inventory of individuals, their skills, availability schedules, training history and utilization to enable accurate work order and project scheduling and backlog control.



Budgets and costs: Projects, estimates and gives actual costs in multiple cost centres for labour, material, services and allocated overheads.

CMMS utilisation by the department was at a very low scale. All of the above-mentioned modules were found to have been utilised at a very minimum level and most of the modules were not utilised at al. Yet a large amount of the money was invested in the system.

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REAL BENEFITS

EFFICIENCY IMPROVEMENT

Maintenance

DEVELOP BUSINESS PROCESS

Initiatives

Asset Management Strategy

Fig. 5.4 Maturity Graph Figure 5.1 shows that the technical department is currently on the first column in their utilization of the system. There is a business process being followed and the database does not have historical information that can be used to make decisions. The need for a document management system is in demand and this will help compliment the information management capacity that is available on SAP. In this case, the hardcopy of the documents is in the possession of individuals. This is risky to the organisation since most staff resign from the organisation and are reinstated as consultants. These consultants use the same documentation that actually belongs to the organization. The department did not have a technical library that catalogues all the manuals, drawings, projects and contracts documentations for future references. The review and assessment of transactions and reports from SAP reveal the following findings. 

Flog structure was not properly set up, most of the new equipment not are not loaded into the system and no standard process set up to be followed.



Master data is not complete.



Material master not being used and service master not existing at all.

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

Planning and scheduling tools not properly used.



Existing task list is outdated while it has been standardised to all similar equipment and sometimes not applicable to other equipment.



There is a lot of legacy systems being used in parallel with SAP, like spreadsheets with constitute duplications as SAP provide that capability.



The process of reporting defects through creation of notification on SAP not formalized and sometimes not used.

The most important aspect of the CMMS (SAP) is to enable and manage integration points within the business. The SAP modules that integrate closely with Plant Maintenance module (PM) are Material Management (MM) and Finance (FI). The key foundation of the integration is the master data, without which the accuracy of the integration is doomed to failure. The development and maintenance of the master data for the water and sanitation department will be crucial and it is important that during the development process correct and proper standards are used. 5.7 Maintenance, planning, scheduling and control Maintenance planning entails work order definition, scoping, resource planning, labour planning, equipment planning, logistical arrangements and all other resources that may be required during an execution of a task. This definition describes how preventative and corrective maintenance will be executed and it sometimes includes costing of all resources on the work order. Maintenance scheduling involves the process of allocating planned maintenance work to specific time periods for execution of the work order. Specific resources including labour, materials, equipment and tools are included in the work order. This ensures that all allocated resources are utilized to their maximum to avoid a waste of resources. The maintenance planning and scheduling impacts on the following maintenance issues: 

Helps increase the amount of time resources spent on the actual work without delays.



Drives the rigorous execution of preventive maintenance, which is the key element of asset management strategy.

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

Instrumental in driving the initiatives and eliminates wastage.



Assists with accurate estimation of requirements for budgeting and resource allocation.



Eliminates the conventional way of planning and execution of work, which is based on unwritten rules.

The technical department is currently working furiously at the breakdown maintenance strategy. This is evident from the high levels of equipment failures and lack of formal planning and scheduling processes. The problem is aggravated because incumbents assigned to these tasks do not have the technical expertise and training for planning and scheduling techniques. There is an overlap between maintenance planning and maintenance execution because of the lack of proper maintenance plans from the planners. This results in maintenance supervisors doing part of the planner‟s duties. There is no formal planning and scheduling meetings between the planning office and maintenance teams. The recommended steps for the department are to first start with planning, scheduling and agreeing on the execution of work to provide guidelines to the maintenance team. The second step is to develop a customised training module on planning and scheduling for planners to improve their knowledge level on planning and scheduling. Appendix A and B, gives a clear guide on the process to be followed. Appendix A can be used for maintenance and equipment audits to determine the levels and condition of the equipment and maintenance progress. Appendix B gives different maintenance processes that can be adopted for various sections.

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Figure 5.5 outlines the process that can be followed during the strategic implementation and a regular review of the strategic plans.

•Awareness •prepare and finalise plans •prepare information packs •identify key stakeholders

•Strategic Review anually

Strategic Review

Planning

Controlling / progress

Implementation

•Problem reas identified •Problem analysis •intervention by Exco if required

Fig. 5.5 Planning and review process

•Ensure participation •Set up project team •Monthly review meetings

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Figure 5.6 below shows the staff utilization report from the technical department of the City of Cape Town,

2007

2008

ELEC

129%

82%

Mech

108%

121%

Fig. 5.6. Staff utilization due to lack of planning 5.8 Reliability maintenance management Reliability-centred philosophy provides organizations with a competitive advantage by continually improving plant and equipment reliability, availability and performance. Upon establishment of good maintenance systems and practices, an organisation would consider a reliability effort to further develop production capacity and reduce variation in equipment performance. A successful reliability effort will succeed if embraced by all relevant stakeholders (i.e. maintenance, operations, stores and all other support groups. See Appendix B for the whole maintenance strategy overview and implementation). Different companies use different tools and processes. However, a good reliable philosophy can deliver significant benefits without spending considerable amounts of money. A very simple process can be employed to ensure that all tasks completed for the purpose of maintaining an operation are done to appropriate levels or standards. It is a level of discipline implemented across the whole continuum in which stores, planning, operations and maintenance uses certain techniques and tools to pro-actively influence the reliability of equipment, reduce equipment related

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losses and eliminate repetitive failures. The main objective of this philosophy is to move the organisation from a repair focused culture to a reliability-focused culture. Reliability management is an advanced level of asset management. The foundation of asset management is to develop the basic procedures, develop maintenance standards as well as all other CMMS related procedures to ensure that the entire hierarchical chain in an organization accepts the idea and they implement the maintenance systems. Other processes, which include the planning, scheduling and material management or procurement processes, must be instituted before and the implementation of performance measurement in both the maintenance resources and equipment is the key to reliable management. Reliability management utilises the equipment history, performance measurement tools such as condition monitoring and other systems to obtain information regarding the performance of the equipment to ensure that correct preventative maintenance is done timeously. This process also assists in planning for future upgrades or renewal of the asset. Available maintenance related costs will assist the manager to make an informed decision whether the equipment should be maintained or replaced because of high maintenance costs. The reliability management section within technical services is still new. It has not been properly developed and hence lacks the capacity to operate. Policies, procedures, and strategies are nonexistent. The objective of this section is either not clear to its management or it does not exist. This is a critical component of the Technical department but it does not appear to receive priority in terms of capacity, funding or level of importance. The section does not involve itself in technical issues and its only capacity and core function is data capturing. The section had two technical personnel as drivers of the maintenance processes and policies. It is crucial that the decision makers look at correcting the situation by creating and capacitating the Reliability management section. This will ensure that proper procedures and policies for the department are formally developed. The main objectives will be to: 

Review and improve the equipment maintenance programmes.



Evaluate preventative maintenance effectiveness.



Develop predictive maintenance techniques and procedures.

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

Implement condition monitoring programmes.



Investigation of failures using structured techniques and also perform root cause analysis.



Develop training and development interventions for technical personnel on reliability technologies.



Review and analyse the activity task, work methods and material usage practices.



Develop Safe Working Procedures (SWP) and Standard Operating Procedures (SOP).



Review equipment maintenance history and trends to ensure that correct interventions are implemented.



Identify and implement improvement requirement to maintenance and operating practice.



Ensure that the existing strategy and procedures are appropriate.



Identify and recommend the detailed improvement to activities such as lubrication and service task list.



Research solutions to eliminate defects.



Improve maintenance task scheduling.



Ensure data integrity.

5.9 Material management The success of maintenance planning and scheduling depends on the efficiency of the material management process. The availability of material, spares and other procurement items ensures that maintenance plans are executed on time and minimises the backlog on maintenance. Sometimes other departments enter into service level agreements with supply chain management to ensure that there is a smooth process between planning, execution of work and resourcing of planned work with material and spares.

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The quality of planning is the key and maintenance personnel need to get involved in all aspects of the equipment life cycle, from design, installation and disposal of the asset. High redundancy/ obsolescence risks and non-availability of critical spares can often be reduced and can even be avoided with involvement of material management in the spares determination and structuring. This may sometimes involve the equipment classification into different categories to ensure that high priority equipment that have significant impact in the functioning of the water or waste water treatment are available when required. Supplier involvement at the commissioning stages of the equipment is also important. Cost saving can be realised through correct alignment with the right supplier. The influence of the suppliers is useful in risks assessments and technological innovations within their specific markets. Involving suppliers will also assist in early identification of obsolete equipment before catastrophic situations. Materials management should ensure and encourage supplier partnerships and involvement in the root cause analysis during equipment failures. This will ensure the uninterrupted supply of goods and services while maintaining the equipment ownership and good relationship with the supplier prompting quick response during equipment failures or diagnostic failures. The absence of supply chain management policies or strategies for dealing with material handling or sourcing often limits the potential of the department. There are other practices available on the market that help in optimizing inventory management and implementing the best practices in supply chain management to assure the reliability of service provided by the supply chain. Maintenance loops consist of procurement, stores and maintenance management to ensure the correct flow of materials and the management of inventory. The inventory needs to be kept at a manageable level, not too high and not too low. This study revealed misunderstandings and different interpretations within the technical department and the supply management. This involved classification of emergency work, priority assets and the process that is followed in resolving them. As a result many work orders were kept open because of the lead time for materials. High priority equipment were open for abuse since the supply chain management refused to release material orders that were classified as high priority. The lack of skilled planners and maintenance planning resulted in confusions over emergency procedures. For example, maintenance staff classified all maintenance work as urgent because there is no formal planning. Some of the gaps identified during assessments were:

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

Lack of maintenance involvement in capital projects and equipment acquisitions.



Non existent relationship between supply chain and maintenance personnel.



Lack of understanding and cohesion of the supply management policies and strategy.



No meetings or interactions between maintenance and supply chain.

The lack of involvement of the supply chain in maintenance issues delays the procurement and acquisitions of large equipment, especially those that are ordered from overseas. The creation of a standardized acquisition policy will ensure standardization of equipment, which is lacking at the moment. The variety of different types of equipment within the same plant creates difficulties for the supply chain to obtain and correctly inventory the items. The value of having regular meetings and stakeholder interaction between the maintenance personnel and material management will achieve the development of common standards which will be documented to outline the following: 

Specification standards.



Quality standard establishment.



Stock levels.



Redundancy management.



Forecasting and planning of upgrades.



Vendor management and preferred suppliers.

Operational requirement should take precedence in the determination of preferred suppliers and acquisition policies. This is why there is a need to involve other departments within the City of Cape Town. This will ensure that the City of Cape Town benefits from the economies of scale when purchasing equipment from major suppliers, especially when ordering items in bulk. The integration and incorporation of other departments will eliminate the unnecessary duplication of functions and decrease spending while increasing the quality of service and reduce the lead-time for material delivery.

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Technical services do not have a standardisation policy and this has resulted in maintenance personnel purchasing from different equipment manufacturers or suppliers. It is common to find three or four different brands of bearings in the maintenance store, purchased from different sources. The absence of a standardization policy and preferred supplier limits the purchasing power of the organisation, limits the potential economies of scale and has negative impacts on inventory and cost management. The organisation does not have a strategy of monitoring and measuring performance value gain or loss due to repetitive repairs of equipment such as motors and gearboxes. No commercial history is recorded to monitor systems for repairs and replacement. The layout and location of stores creates delays in maintenance execution due to the time taken during material collection. The decision to close some of the stores located close to maintenance was taken by the supply chain without the involvement or consent of maintenance personnel. The decision was purely unilateral. This highlights and underscores the importance of a good relationship between supply chain and technical personnel. Some of the gaps identified are as follows: 

Satellite stores not managed through the maintenance system (SAP).



Procurement systems not user–friendly.



Material master not being used.



Sole supplier practice being abused.



Communications between maintenance, procurement and reliability management not conducive to good working relationship.



Management of repair systems does not exist.



Critical spares not held at the stores but held by suppliers which is risky.



Stores requisitions uses manual system.



Materials preservation programme not in place.

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5.10 Fleet management The success of maintenance activities and responsiveness depends highly on the availability and condition of the maintenance fleet. All the fleet must comply with the relevant Road Traffic Act and related legislation in terms of vehicle roadworthiness. Management has the responsibility to ensure that the cost of transport operations and its related functions complies with the company‟s financial planning and its objectives while they meet customer expectations in terms of level of service. The financial and operational objectives will form the foundation of the fleet management policy, which should give guidelines based on the corporate objectives, financial plan and operational criteria as well as standards. The fleet policy must give clarity and guidance on: 

The type, sustainability and age of vehicles used.



The „mileage‟ and operating conditions.



The quality and frequency of maintenance.



The responsibility of the driver and company.



Clarify the liabilities in term of roadworthiness and fines.

An assessment of the fleet management of the Technical services was based on the following key elements of fleet management policy and in terms of best practices: o

Vehicle selection criteria and specification.

o

Vehicle replacement.

o

Vehicle maintenance.

o

Tyre management.

o

Fuel management.

o

Vehicle policy.

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o

Risk management and loss control.

o

Management information System (MIS).

o

Legal compliance.

o

Service providers.

 Fleet management policy

A fleet management policy does not exist for technical services but it available at corporate level that are enforcing compliance. The technical policy is being developed but in a fragmented format although fleet operation has been in existence for quite a long period. It is expected that such a policy should be in place. 

Vehicle selection and specification There are no guidelines on vehicle selection and specification to ensure that these aspects are based on criteria such as fuel economy, environmental consideration and supplier support services. This is also influenced by procurement policies.



Vehicle maintenance strategy Regular maintenance of vehicles guarantees availability and better management of operating costs. The policy ensures that vehicles are safe and roadworthy and complies with legal standards. This enforces sustainability of vehicles and protects the company against any legal action which may arise due to non-compliance. There was no evidence that a vehicle maintenance strategy exists and was being used even though there was information on the existence of a policy. Furthermore, there were no lists of preventative maintenance tasks or schedules with detailed maintenance instructions and frequencies of the inspections. The department relied on the pre-trip inspections from the vehicle drivers. These reports were not being audited to ensure that the managers attended to identified defaults. The vehicle maintenance tasks lists and schedules must be available and captured in the maintenance system for all vehicles.

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

Tyre and fuel management The fuel management system that was adopted and used by the department is one of the best and is widely used in by fleet management companies. Due to the effectiveness of the policy, the fuel costs were already reduced. One of the recommendations was the removal of fuel dispensers, which were managed by the city, as there was no capacity to manage the high risks. Tyre management was not consigned and the current system that is partially used is not effective due to the lack of control measures. Due to the risk of theft and system abuse and the size of the fleet it is necessary to have a tyre management programme with other reputable companies who provide such service. The department must consider implementing the tyre management system. 

Fleet audits

Audits are done to assess and compare the state of fleets in organisations with a set of preapproved and defined standards to establish whether improvement or interventions are necessary and to ensure compliance with fleet management policy. These audits must be carried out on a regular basis on an agreed time frame. The assessments found that there is no regular or formal audit system in place and there is no documented audit tool to cover all elements of an audit. An independent and impartial person or non-partisan party with no interest in the department may lead the auditing to ensure objectivity and neutrality. Vehicle replacement planning is a vital component in fleet management. The following are suggested measures to develop the procedures: o

Pre-determined expected useful life for each category of vehicle and type.

o

Estimate the residual value at the end of the vehicle useful life.

o

Estimate the productivity of vehicle types at the end of its useful life.

o

Owning and operating expense over the useful life.

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o

Vehicle disposal procedure and estimates of value beyond the useful life taking into consideration the cumulative cost, condition and mileage.

o

Objective assessments before vehicles are written off due to accidents or replacement.

o

Replacement procedures and the criteria.

5.11 Contracts

Equipment designs and blueprints influence their performance while poor designs may adversely affect them. For example: 

Inaccessibility of parts and components causing delays, errors and damages in maintenance equipments.



Inventory levels.



Modifications and engineering changes.



Demand for more direct support during operations.



General increase in support costs.



Demand for maintenance resources.



Safety requirements.

The full capabilities of machines are realised by ensuring that during normal operations in their life cycle, necessary support is in place for maintenance, training of operators, documentation, spares and information. It was evident that earlier mentioned equipment management philosophies were not in place within the technical department resulting in many maintenance breakdowns, a variety of spares and non-standardization of equipment. The availability of such a policy is crucial especially when looking at the asset base and the value of the asset being maintained. The early

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equipment life must form part of the procurement policy and needs to be used inline with the current procurement documents. These documents must cover in details the following requirement as specifications: 

Equipment specification.



Task list requirements for failure analysis.



Spares requirements.



Bills of materials.



Training requirements.



Drawings and as-built drawings.

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1st Generation:

2nd Generation:

3rd Generation;

4TH Generation:

Strategy

Breakdown

Prevention

Prediction

Reliance

Structure

Central craft

Multi craft groups

Multi-skilled

Poly-skilled

trades

Technician

Self analysis

Maintenance tactics:

groups

Failure

Operate to

Scheduled

Failure mode,

management

failure

overhaul

Critical analysis

Data

Card files

Mainframe

Fully functional

Fully networked

function

CMMS

Stations

Availability

Equipment

Probabilities

management

Measures

Throughput

Effectiveness Fig. 5.7 Maintenance management tactics (Source: Campbell 1995:151)

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5.12 Conclusion The Technical Services Department within the City of Cape Town is a strategic maintenance department focusing on managing intensive assets that are critical for the water and sanitation department. The key objective for the water and sanitation department is to provide water and sanitation to millions of people in Cape Town and the surrounding areas. The success of the technical services department in providing a reliable service as expected by various stakeholders depends on having a solid foundation built on the ideals stemming from an excellent maintenance management system. The assessment of this study has revealed that the department lacks key maintenance fundamentals limiting its potential to provide maintenance services to their clients. The department is currently functioning on a reactive mode of maintenance and spending more time on breakdown maintenance and little or no time on preventative maintenance. This was evident in the high number of equipment breakdowns and chronic failures. This culture of ineptitude is evident across all sections in the technical services department. The implications of maintaining the status quo leads to high maintenance costs, lack of equipment reliability and availability, lack of stability within the department and a strained relationship with the various interlinking operations departments. The department does not have a maintenance management policy, which spells out the maintenance strategy for the department. In addition, no maintenance procedures are documented describing how maintenance must be carried out within the department. The department needs to provide guidance on the acceptable standards of maintenance. The lack of maintenance policies and procedures creates confusion within the department as different individuals develop different interpretations of procedures and the processes when rendering maintenance services. Although the department utilises SAP R3 as their maintenance module of CMMS, the evidence shows that the systems are not properly used. It was found that some of the configurations in the maintenance system are not user friendly creating confusion and high levels of frustration amongst maintenance staff and others who are supposed to use the system. The master data was found to be incomplete and the maintenance task list was not properly developed for equipment on SAP. The maintenance task list and master data should receive priority if the department wants to develop the correct foundation for maintenance management system. The equipment numbers and the fixed asset register are not

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complete in SAP and some of the newly commissioned equipments are not correctly entered in the system. The integration and relationship between the supply chain and maintenance personnel is very poor resulting in poor service delivery and an on-going confrontation between the two crucial departments. The procurement system has an important role in the execution of preventative maintenance and availability of spares and equipment. However, the poor relationship between personnel of two departments has a negative impact in their functioning. Maintenance planning and scheduling are the key drivers for maintenance organizations and their functions and activities. Good planning and scheduling ensures that preventative maintenance is carried out in a planned and cost effective manner. Thus the lack of these two key functions renders the department functionless and without short or long term direction. The need for properly trained maintenance planners with the correct background and expertise in the technical field is not be underestimated. The current scenario where maintenance planners do not possess the necessary background limits the potential for the reliability management section to ensure proper support to maintenance sections. The role and function as well as the objectives for the design and contracts section is currently not clear. This section can play a crucial role in management of contracts and projects as well as ensuring the standardization of equipment to assist the department with inventory management. The current situation where each subdepartment within the water and sanitation department have their own design and contract section appears to be fragmented and results in silo effects between different departments. Good maintenance policies and the balanced score cards approach does not exist within the technical services. These systems will ensure measurement of activities and suggest interventions for corrective measures to provide proper service to the clients. The fleet management section has a number of gaps in policy, procedures and maintenance related items including tyre management and vehicle replacement policies. While the department utilises SAP as their key CMMS it was found that there is a lack of knowledge on the utilization and the capabilities of the system. This has resulted in some personnel running their legacy systems in parallel with the CMMS. Each deficiency on average requires other inter-related corrective actions while some offer the opportunity for collateral improvements. Some deficiencies can be corrected using maintenance and operations (M&O) work orders, while others could be corrected with the required capital funding. The cost for correcting the total system usually exceeds available annual M&O funding. If

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one would calculate renewal of the system over an anticipated facility life of 50 to 100 years, the annual capital required will be about 2.74 percent of the current facility replacement cost. This is an additional amount over the normal operations and maintenance spending of the facility (Qualine and Rabenaldt, 2002: 174). Phased facility assessments, matching available time and effort to desired deliverables offer real benefits and should include: 

Prioritising corrective actions or maintenance and matching corrective actions with available funding streams.



Keeping assessment data current.



Stretching the resources to be able to do more with less.



Promoting innovative approaches that can shrink problems into manageable solutions.



Audit results which promotes to equipment life cycle model and replacement cycles.



Developing portfolio data base.

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CHAPTER 6 PROPOSED STRATEGY FOR THE CITY OF CAPE TOWN TECHNICAL SERVICES 6.1 Introduction The water and sanitation department is responsible for both bulk water supply and bulk sewage treatment. The fresh water supply treatment plants do not require a rigorous maintenance compared to the sewage treatment plants. Sewage treatment plants require more maintenance because of the corrosive nature of the sewer. The presence of sewage and other wastes in rivers or streams can produce harmful effects, such as diseases due to contamination of water. Sewage contains large numbers of bacteria and other pathogenic organisms, which can be harmful to man. High concentrations of these substances are more likely to give rise to diseases. In the early days of public sanitation before sewage treatment plants were common, it was normal practice to run sewage or other waste into the nearest stream, river or lake if there was a problem at the plant. At the seaside towns, the sewage was run into river estuaries or directly into the sea itself but as cities grew and the volume of wastewater increased, the effects grew increasingly harmful to local sea life and caused contamination of nearby beaches. Awareness

of the

phenomena led to the consideration of various means to improve the situation; amongst these were the provision of sewage treatment facilities and the emphasis on the asset maintenance. Good treatment of sewage or effluent is necessary to ensure the reduction of the identified risks; hence, it is very important that the technical services department is geared to provide the appropriate service to ensure that treatment plants are reliable. The sewage organisms use up most of the available oxygen in the water which results in water not supporting normal life. To minimise equipment failure, it is necessary to carry out preventative rather than corrective maintenance, which involves repairing and replacing damaged parts. Preventative maintenance includes detailed inspections, reliability checking, cleaning, lubrication, replacement of defective parts and calibration where required. Task schedules must be planned for maintenance to be done by a process controller, maintenance personnel or their assistants. Certain equipment must be checked daily or monthly at set time intervals or during the actual running hours of the equipment.

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6.2 Implementation approach The Asset Management (AM) plan should be consistent with the organizations strategic plan, risk management framework, nature and scale of the organizations assets, operations and the availability of resources. In developing an improvement programme, the organization must assess and decide on the realistic rate of implementation and on the deliverable plan of action. Different equipment requires different maintenance tactics or approaches (Appendix C). Maintenance approach could be preventative or corrective, though the important factor is the type of equipment used. The approach or process would identify and include the following: 

Corporate business needs for AM process.



Current practices and status of AM practices.



The gaps between the current practice and business needs.



Develop and implement the AM improvements, considering the risks and costs of options to close the gaps and the resources required.



Improvement task outcomes, project responsibilities and resources.

Proper maintenance of equipment contributes to its efficiency and life span. The identified gaps between the technical services and the benchmarked processes available in the market and widely used systems can be properly implemented in a phased approach to ensure that there is a smooth transition between the current practices and the targeted levels. Most AM programmes failed because improvement activities are seen as a sideline to the person‟s „main job‟ of operating the assets. 6.2.1 Phase 1: Assessing the current asset management status and framework The focus on this phase is to get the basics and fundamentals in place and start with the process of developing a maintenance policy and strategy. The basic maintenance process will be

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developed to „kick start‟ a proper planning and scheduling environment. The areas of focus in phase 1 will include the following: 

Daily and Weekly meetings to sensitise people of the process



Develop maintenance policy and strategy



Basic maintenance management



Fundamentals in preventative maintenance  Basic inspection  Basic lubrication  Basic equipment numbering and condition  Work order control

This should focus on equipment condition and monitoring which is based on the manufacturer‟s operation manual or instruction, which covers the following areas: 

Type and grade of oils and grease to be used



Frequency of greasing and oil changes



How much oil or grease must be used



Troubleshooting in case of problems e.g. overheating, excessive vibrations



Business process implementation  Planning development and training  Maintenance improvement programme implementation

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

Procurement improvement  Identification of all critical spares for equipment for prioritisation  Utilization of material master and basic contracts  Implementation of satellite stores  Develop good working relationship with Procurement department to enhance the maintenance improvements.

The scope of phase 1 for assessing the current AM status could relate to the four broad AM plan inputs/outputs and the AM process plan: 

Processes: the processes, analysis and evaluation techniques needed to support effective AM plan.



Information Systems: The information systems to support AM process and manipulate the data.



Data: Appropriate accessible and reliable data for manipulation by information systems to produce the outputs required for effective decision making.



AM plans: Identifying the optimum lifecycle management tactics and resources.



Implementation tactics: Strategic tactics required for dealing with organizations, contractual and people issues.

6.2.2 Phase 2: Condition assessment and performance monitoring Condition data is used to determine the need and timing of some preventative or remedial action to prevent loss of service or economic loss. Performance monitoring is done to compare actual performance with service standards and systems design. Once the base level maintenance management procedures and systems are in place and working well, including processes such as planning and scheduling, materials management and the collection and use of performance data,

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the next phase, phase 2 may commence. The focus of phase 2 is prevention and breakdown reduction through the implementation of the reliability centered processes and culture within the maintenance department. The best practice outcome of implementing AM processes for decision making and supporting data collection and information systems is to gain a: 

Knowledge of assets owned.



Knowledge of physical condition of assets.



Knowledge of levels of service agreed with customers.



Knowledge of performance and reliability.



Asset utilization and capacity.



Asset value and predicted future demand for service.



Predict the failure modes and estimated time of failure for assets



Ability to analyse alternative treatment options and determine the likelihood and consequences associated with different failure modes. The above processes are outlined in Fig. 6.1.

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Fig. 6.1 Condition Monitoring process (Source: IIMM, 2006:3.3) The focus areas of phase 2 will include the following: 

Reliability based maintenance programme development  RCM process  RCM decision logic  Preventative and predictive maintenance schedules  Equipment criticality and risk assessment  Decision matrix 

Maintenance schedules

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

Spares requirements



Local content potential



Skills requirements



Special tools



Time requirements

Fig. 6.2 Decision matrix (Source Campbell, 1995: 115) 

Problem solving entrenchment



Procurement Effectiveness

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 Develop cataloguing principles and source software  Set up the Material Requirement Planning (MRP) requirements  Create information records and source list  Enforce the use of material master and make it a compulsory requirement for new equipment purchases  implement equipment standardisation policy 6.2.3 Phase 3: Reliability and monitoring This phase looks at the reliability and accuracy of the information to ensure that decisions are made from correct and accurate information. It also looks at ensuring that correct master data, materials register equipment register and fixed asset register are in agreement. The updating of the maintenance tasks list and materials register forms the core of maintenance management and will be the focus of this phase. 

CMMS should have the following basic capability  CMMS reports development  Equipment register update  Master data cataloguing  Material master creations  Service master creation  Bills of materials

Maintenance and materials processes converge in the plant. The equipment configuration and the materials required must be reported in the analysis conducted. The maintenance management

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systems can be better understood and utilised if there is a blue print of how they should interact. At the same time, the CMMS simplifies the job management information. The CMMS may run on the main frame, minicomputer, workstation, microcomputer or network and because of their increasing capabilities and ease in networking for multiple users, micros are the most popular platform for CMMS software.

Category

Goal

Business Objectives

Reduce failures Improve Reduce stoppages availability, Increase speed reliability and Reduce rework maintainability Performance monitoring

Increase Capacity

Reduce Cost

Reduce overall maintenance costs

Reduce labor Reduce storage inventory Reduce emergencies Reduce paperwork Performance Monitoring

Systems Objectives Analyze equipment histories manage equipment data keep skills profile Keep bills of materials Build PM routines Monitor machine variance Costs and performance data on equipment Control jobs Plan labor/materials Analyze usage Analyze investment Schedule PM Analyze breakdown Automate work orders Automate PO's Cost by area, labor, job

Fig. 6.3 CMMS Objectives 

Reliability based maintenance  Condition Monitoring  Maintenance task review  Operator checks

This approach complements other improvement initiatives, such as just in time (JIT) and total quality management (TQM). It provides: An improved support from people in operations, materials and technical departments for RCM and ensures the acceptance of change. It also provides flexibility and cost effectiveness, minimizing the need for full time staff. The foundation of this process is the cross-functional RCM review team

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of employees and this ensures that all critical areas of physical asset management are covered for not only maintenance but also the operations, procurement and financial needs. 

Fixed asset register update



Early equipment management



Fleet management systems



Maintenance audits tools

Fig. 6.4 RCM implementation process

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6.3 The maintenance planning Optimising maintenance management is a major challenge for the asset managers. They need to strike a balance between planned and unplanned maintenance arising from unexpected failures. A risk based approach is used which looks at the required performance from the client‟s perspective and organisational outcomes for the service at lowest cost. The risk based maintenance approach looks at various processes, which includes: 

Identifying assets and their expected outputs.



Performing failure analysis to predict potential failures.



Analysis of different maintenance options and changing maintenance intervals.



Assessment of the lifecycle costing option to ensure reliable performance.

The required maintenance outcomes are usually expressed as service levels and performance measures in maintenance contracts. The detailed work maintenance practices required to achieve the outlined outcomes are developed and assessed through formal maintenance analysis. 6.3.1 Important elements of maintenance planning

The best practices in maintenance management planning involve the activities that involve inputs and outputs from both maintenance and operational staff and other staff who would execute the maintenance tactics. The maintenance activities should include: 

Development of business objectives and performance criteria and measurement of performance against these objectives.



Analysis of failures and root cause analysis to prevent recurrence.



Costs benefit analysis to determine optimum benefit between planned and corrective maintenance.



Operations and maintenance manuals outlining the procedures as appropriate.

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

Contract management auditing procedures and work quality, quality of workmanship and reporting procedures.



Contractor‟s performance audits and feedback.



Operations and maintenance data capturing/recording and processes for tracking maintenance performance.



Process of continuous improvement and monitoring of all activities and updating of documents.

6.3.2 Maintenance categories There are two maintenance categories for asset management. These ensure the reliability and performance of equipment and are undertaken to reduce the probability of asset failure to an acceptable standard or level. These activities include: 

Preventative maintenance actions done before asset failure, this is a regular programme for ensuring asset functionality and availability.



Servicing tasks which require consumable materials and the process of replenishment of consumable materials.



Condition monitoring systems determine the conditions and functioning of equipment. The aim of this process is to determine the level of operation, predict the failures before they occur and introduce the corrective measures to prevent catastrophic failures.

The process of categorizing maintenance is done to differentiate between various maintenance tactics so that the correct tactic can be used to restore the asset to its original condition. Choosing the wrong tactic could result in high cost of maintenance and the poor utilisation of resources. Unlike the planned corrective maintenance, unplanned corrective maintenance is work carried out in response to problems or defects reported by the user or operations, to restore the asset to its original operational condition. Technical staff may carry out the corrective maintenance. Some of the unplanned activities include:

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

Equipment repairs, this is limited to fault isolation and dismantling of the equipment to restore or replace the faulty item or component.



Modification and design, this is the process to enhance the performance of the equipment to enable it to meet its operational objective.



Condemnation and replacement, where it is uneconomical to repair the asset, it is replaced to avoid costly maintenance activities.

6.3.3 Process of maintenance analysis Reliability centred maintenance is based on the philosophy that maintenance is the key function of the company. It is crucial for the expected function performance and productivity goals to be achieved. RCM approach can be applied to provide a

reachable balance between planned and

unplanned maintenance, especially for critical assets to ensure that required, and expected performance levels are achieved. The RCM is a progressive based process and it examines and analyzes the following issues related to assets. 

The assets owned and operated by the organisation.



Functions of an asset and how it contributes to the achievement of the performance standard.



The asset objective and performance standard.



How the asset can fail to perform its objectives and the causes of failure.



Consequences of each failure and what should be done to prevent each failure.



The ways of predicting and preventing each failure and the cost effective options.

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The formulation of the RCM process depends on the maintenance principles that the organisation wants to implement. The reliability maintenance systems with the assistance from CMMS will create and grow the profit centre instead of a cost centre.

10% Profit Center

90% Cost center 100% Profit center

Fig. 6.5 Turning Cost Centre into Profit Centre (Source Plant Engineering, 2008:25) “In an effort to view maintenance as a positive activity, it is important to see it as a profit centre instead of a cost centre. A cost centre approach is strictly concerned with adhering to the budget and decreasing expenses as much as possible. In contrast, the profit centre model realizes that investment and operating costs can be allocated to improve efficiency, this efficiency naturally results in higher profits” (Bagadia, K. 2008: 2). Maintenance is the backbone of any organisations where equipment needs to be maintained, whether at a manufacturing plant or Utility Company. With CMMS in place, maintenance can save time and money for a number of industries. Another way that companies can turn maintenance into a profit centre is through Overall Equipment Effectiveness (OEE), OEE consist of three factors: 

Availability: the percentage of time that the equipment is available for production.



Utilisation: The rating of the equipment, from the design specification.



Quality rate: this gives indication of how good the final product is out of all products produced.

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Overall equipment effectiveness is a good path to follow to turn maintenance into a profit centre, as the following equation supplied by Bagadia: (Bagadia 2008:2) OEE = Availability X Utilization X Quality rate 6.3.4 Creation of the maintenance plan Once the set of tasks are determined, the required activities, interventions and the condition of equipment are known it is necessary to develop the maintenance plan. The maintenance plan consists of maintenance tasks for individual equipment, which are organised into a detailed plan of action. The maintenance plan will normally consist of the following: 

Maintenance and operations objectives, performance criteria and expected outputs.



Maintenance policies covering planned and unplanned maintenance activities and outline the overall maintenance strategies.



Maintenance and operations standards.



The required basic inspections performed by operators and preventative maintenance plans.



Procedures for dealing with critical events, classifications of critical items or equipment.



The emergency repairs processes and responses during certain failures.

The detailed maintenance plan will enable the organization to establish the improvement potential within the system. Two types of improvement will results from a well-designed and integrated plan: 

Functional improvements: improvements in the process for handling maintenance work and cost improvement. The functional improvements are essential for employee support.



The cost improvements: these are long term management support.

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The majority of organisations will write their improvement potential in a mission statement so that it can provide focus on tangible goals for everyone involved. Measurement of results versus the goals will keep management and employees informed of progress and keep them motivated during various phases of development. The improvement cost will depend on the needs uncovered during the assessment of the current situation and determination of the improvement potential. 6.3.5 Maintenance system Understanding of maintenance work process and flow will enable managers to identify and eliminate inefficiencies as well as to develop an effective, productive and improved work process flow. Usually maintenance personnel work under pressure due to emergencies and other unplanned activities while technicians do not have time to correctly analyse the root cause of the problem and instead tend to fix it and move on to the next problem. This can lead to recurring breakdowns and long-term loss of productivity. With the utilization of workflow management and scheduling, technicians can spend more time determining the root causes of problems. When repairs are thorough and complete the risks of recurring defects and further damages are minimised, saving invaluable amount of capital in the process. It is crucial that inefficiencies in planning and scheduling as well as in work process flow are minimised or else latest technologies will be rendered obsolete to the cause. Some technologies have the potential to turn an efficient maintenance department into a real time, problem solving maintenance centre. Adding CMMS technology to the maintenance system can enhance efficiency and lead to cost saving measures. A CMMS can improve the workflow and add flexibility to further improve scheduling while allowing employees to initiate and approve work orders. Work order management will ensure that the maintenance manager knows how many work orders are generated each week. This will assist in tracking the productivity of personnel, which includes the time spent on the job, materials used, labour and all other resources used for the job including costs related to the work order.

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6.4 Conclusion It is clear that the utilisation of the maintenance system is not the initial but last step in the physical asset management. The foundation starts with assessment and understanding of the condition of the asset. Regardless of the systems that get selected, the first step is to start from the current situation and develop an orderly series of steps to get to where the target or objective by assessing the current situation. The assessment will reveal the maintenance interventions and maintenance tasks required. Then the maintenance tactics are chosen based on the condition of the asset, which is assessed using the condition assessment methodology. The maintenance plan will be derived from the two initial tasks, the assessment and condition monitoring. The maintenance plan will then include the required tasks, resources, materials, labour and costs. All this information will be entered into the work order system using the maintenance system or CMMS. The CMMS makes planning and scheduling easier for maintenance personnel and it ensures that there is a history for the asset for future references including budgeting for maintenance. The process of developing a maintenance plan involves several interrelated steps for decision making and these include: 

Grouping tasks into work related packages



The intervals at which each work package is to be performed

The decision matrix depends on the plans for individual maintenance tasks, taking into consideration the operational and maintenance management requirement. Once the decision is made, it will need to incorporate the maintenance workload and labour requirement within the maintenance cycle.

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CHAPTER 7 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 7.1 INTRODUCTION

The research showed that maintenance of an asset cannot eliminate the inherent failure completely but the risks are reduced significantly by having more structured maintenance management programmes. The literature research revealed that the common elements in most philosophies and models that have been developed for management of assets are: 

A well defined service level and performance standards linked to the organizations strategic goals and objectives



Equipment conditions and life cycle approach



Financial implications of asset management

These provide the building blocks for developing the design and techniques to manage maintenance

and

replacement

programmes

associated

with

financial

projections.

The

requirements to fund depreciation and corroding wastewater infrastructure at the City of Cape Town have resulted in an intensive drive to focus on both valuations of infrastructure and improvement of physical asset interventions and skills. 7.2 SUMMARY OF RESEARCH RESULTS

The objective of Physical Asset Management (PAM) is to develop and maintain the infrastructure to ensure that defined service levels and performance standards drive asset requirements and asset management strategies. The research looked at establishing the relationship between physical asset and business objectives by using the City of Cape Town Water and Sanitation as a case to answer the following questions: 

How can the PAM models internationally established and recognised, be implemented and utilised in the Water and Sanitation organizations?



What are the fundamental requirements for the implementations of sustainable asset management practices?

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

How can the application of PAM be beneficial to organizations?

The literature highlighted how most asset intensive industries are realising the importance of having an enterprise asset management (EAM) system or other CMMS to track and monitor business processes. The EAM system has never been more important especially today with uncertainty in the economic conditions, an ageing workforce and changing regulations. It has become important that organizations cut or reduce their operations cost while trying to maximise their revenues. The internationally established PAM models discussed in this report including the (i) Uptime maintenance strategies by Campbell, (ii) Pragma AIMIP strategy and (iii) International Infrastructure Management Manual all gave the similar approaches to physical asset management. All the strategies outlined the requirement of successfully implementing the asset management systems and all have shown similarities. Evidence of the success that PAM has achieved through the team effort amongst all the role players, affected sections and departments in the organization. Effective implementation of PAM in the organization requires the correct integration of the objectives with all business functions in a coordinated way and should form part of the business strategy. People managing capital-intensive organizations will do well to implement PAM strategies, as it forces organizations to control their planning, scheduling, maintenance and replacement programmes. PAM is one business functional area where the reduction in operational cost and increasing the bottom line can be realised if efficiently utilized. It forces the asset managers to plan and manage the asset beyond the commissioning date and ensure decision-making becomes easier throughout the asset life cycle. The researcher used the current practices for the City of Cape Town to evaluate how most organizations in the similar industries can benefit from the lessons learned from the City. While the Technical services within the Water and Sanitation is regarded as the best utilization of maintenance Technology in managing their asset, the research revealed some short comings in the department asset management. The recommended proper implementation and utilization of a maintenance management system and the required resources and interventions are given in Appendix B. The City has adopted the best practices available in asset management but failed to implement the basics to ensure sustainability of the system and that has resulted in confusion and

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a lot of people implementing SAP PM module in parallel with their legacy systems while the organization has invested more than five hundreds millions rand into SAP. 7.3 CONCLUSIONS

It is evident from the research that Asset Management, Physical Asset Management and Strategic Asset Management Strategies are similar terms used to refer to the process whereby an organization aims to obtain optimum economical benefit from the process of acquiring, utilizing and / or divesting a physical asset. The case study for the City of Cape Town highlighted the fact that implementation and utilization of the best practices does not have short cuts, and any attempt to short circuit the process always results in more costs and the loss of economical benefits that could have been derived from such systems. During the assessment of the Technical services division of Water and Sanitation, the following issues were identified: 

The methodology of Physical asset management assessment, strategic planning and replacement were not fully understood and deficiencies within the current process were not identified and corrected.



The change from previously used fragmented systems and integration to SAP PM Module was not well managed and this created parallel systems that were still being utilized.



The balanced score card was only applicable to senior level managers and cascaded down to the operational level and that created a situation where no leadership was driving the process.



Some of the departments within Water and Sanitation use different systems and this shows a lack of Direction and leadership for the department.



There is a lack of work order management and the system is conveniently being utilized not for production purposes and therefore no benefits are produced from using the system.



Reliability Management section, who are the custodians of the system, lack capacity and appropriate skills to manage and advice other sections about the system.

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

The department seems to lack the understanding of the concept of Asset Management and operate on reactive and the „fire fighting mode‟ of maintenance. Worryingly they seem to be comfortable in doing so and this in turn limits the potential for growth and benefit. The leadership of the department needs to be trained on the concepts so that they can drive the process of asset maintenance.



The Asset Management is currently being carried out in pockets on an ad hoc basis throughout the City and follows no formal approach; a review of strategic maintenance management has been suggested in the Appendix B.



The set up of an Asset data base, Asset register and Asset Clusters makes it difficult to utilize the data on SAP, the correct set up is required before the attempt to utilize the systems is undertaken.



The change management process is required to pilot and manage the change throughout the organization; this will enable „buy in‟ from all stakeholders and ensure compliance.



The development of maintenance policy, which was mentioned as not existing within the City, was identified as a crucial step to the correct direction in implementing asset management. This will give direction and guidance to the maintenance personnel on the process going forward.

The maintenance Management diagnostic gave key areas and elements that are important towards successful implementation of an Asset management. The systematic implementation approach provided in Chapter 6 provides a guide into water and other related industries, which needs sustainable management of their assets. This approach is classified into different categories starting from business objectives. These are the following: 

Business objectives: Business plan and competitive dimensions, nature of business, operating plans, policies, special regulatory framework, environmental and safety considerations.



Maintenance strategy: Documented mandate of the organization; Maintenance principles and improvement plan. This gives the overview of the facilities being managed, capital expenditure plan and upgrading process and overall operating budget.

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

Organizational structure: This should give the structure and the preferred communication channels, personnel structure and authority for different delegated authority for approval. Key accountabilities within the organization and hierarchy of maintenance management system.



Maintenance administration: The custodian of maintenance management and process flow, cost reporting, cost control and information flow through reports that needs to be generated from the maintenance system.



Planning and Scheduling: Priority setting, collaboration, work scoping and activity planning which includes the planning of activities and resources. This process involves coordination with other relevant department and external parties.



Work order management: This requires the appropriate understanding and competencies to apply the policies to manage the backlog and the process of maintenance, relevant authority is required to make appropriate decision to change and prioritise work.



Maintenance tactics: Maintenance requires the selection of appropriate tactics to use for different equipment. No single tactic will suffice for all equipment in maintenance and the condition monitoring will assist in deciding the correct tactics.



Maintenance history and Decision making: The CMMS assists in data management and work processing. The history of an assist allows one make the correct decisions with regards to the type of maintenance required for the particular equipment and it also assist in maintenance budgeting.

The Physical Asset Management will be more beneficial to organizations like Water and Sanitation services and all other Water related organizations especially those dealing with maintenance of Sanitation as their asset life is shortened by the corrosive nature of the operating conditions. Accurate and real time fault recording and conditional monitoring are the crucial elements for organizations dealing with wastewater treatment and water services and this will ensure an agreed service level. Response times to faults and turnarounds are managed through work order management and work planning as this will minimise the environmental impacts during wastewater spillages and

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blockages. When both planned and unplanned work are recorded through CMMS, equipment history and work quality is managed through available data source which manages daily, monthly and financial year work activities including expenditures. When a large number of jobs and equipment malfunction has to be carried over to the following financial year, the database will enable financial managers to make appropriate provisions before the financial year-end to avoid utilizing funds from the new budget for the old work. 7.4 RECOMMENDATIONS

While the paper looked at different maintenance strategies and principles for Physical Asset Management and the benefits of their utilization, water related industries could benefit more as the competencies and skills required to perform well in the industries is very scarce. PAM ensures that knowledge transfers are available from the database for new recruits and the maintenance policies will enable everybody to operate from the same base. Currently where most people use their „gut feel‟ and experience to maintain assets and standardize maintenance activities. Performance measurement ensures that there is a common measurement tool when measuring maintenance performance and that it is applicable to all maintenance personnel and not only to senior management as that creates confusion and lack of leadership. Maintenance is a concomitant part of reliability and an integral arm of equipment asset management as it affects the useful period of an asset. Equipment mean time to repair (MTTR) becomes important to the asset user as it gives an indication of when the asset will be available for operation and in turn the information becomes crucial to the maintenance manager for the team productivity and planning. Water services industries will do well to implement and apply the PAM philosophy in their organizations, as it assists in achieving high reliability and availability of water treatment equipment but depends on the following factors of the organizations: 

Operating and maintenance philosophy of the organization



Maintenance policy and strategy which drives the maintenance tactics to be used for proactive maintenance and corrective maintenance



The types of equipment used to monitor the asset conditions to predict and minimise failures

Depending on the maintenance strategy the organization chooses, a co- ordinate material strategy will help reduce the equipment down time and the waiting time for spares. Shortening MTTR

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requires a critical assessment of all steps in machine assembly and disassembly. The asset management equips maintenance personnel to improve customer service and control cost while also addressing the quality of service. Equipment maintenance history is crucial for quantitative reliability work. Details of the past planned overhauls and „as-found‟ component conditions, component failure models, corrective maintenance events, component degradation and its causes as well as predictive and preventative maintenance provides valuable inputs that describes equipment behaviour in operation. The primary use of the data will be to develop statistical failure distributions that represent the failure mechanism of equipment and its subcomponents. The evidence suggests that different asset management strategies could result in various problems if not properly applied. The success depends on developing good policy foundations and understanding of the maintenance requirement. The maintenance function is extremely complex and requires proper understanding of the underlying maintenance objectives. It is suggested that the City adopt the maintenance objectives that will become the fundamental principle for all maintenance activity. An example is the following: “The objective of the maintenance function is to support the production process with adequate levels of availability, reliability, operability and quality at acceptable levels of safety, environmental risk and cost” The above objective consists of seven sub-objectives which are: availability, reliability, operability and quality, safety of equipment, environmental risk and cost.

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LIST OF SOURCES Bagadia, K. 2008. Turning maintenance into a profit centre with CMMS. Plant engineering, Maintenance connection. July, 25:2. Bleazard, D.G. & Khu, P.T. 2001. Physical Asset Management Philosophies. Engineering and Mining Journal, March, Vol. 202, 36. Botes, H. 2006. The evolution from plant maintenance to physical asset management: an analysis of Sasol Synfuels roadmap for change. Unpublished research report. University of Stellenbosch, Cape Town August. Campbell, J.D. 1995. Strategies for excellence in maintenance. Uptime. Oregon, Portland Campbell, J.D. & Reyes-Picknell, J.V,2006. 2nd Edition. Strategies for excellence in maintenance management. Uptime. Production Press, New York City of Cape Town Website. The cooperate strategy and Water services development plan (WSDP) [Online] Available: http://www.capetown.gov.za/en/ water/Documents_situation.13_Oct_08.pdf Accessed 23 June 2009. The City of Cape Town Water and Sanitation strategy document. [Online] Available: http//www.capetown.gov.za/en/water/documents/vision_strat_goals.pdf Accessed: 09 October 2009 Dunks, B. 2007. Effective EAM Strategy drives plant and enterprise success. Plant engineering, December, 18. Fitzgerald, K.F. 2005. Recognize the true value of asset management. Plant engineering, Sept, 34. Garibay, P.& Ronsivalli, L. 2008. Blowing hot and cold. American school Board Journal, July, 3637. Geraghty, T. 2001. Utilities re-think failing maintenance strategies. Water engineering and management. November, 37.

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Koegelenberg, J. 2005.Integrating PAM with business strategy. Unpublished research report. University of Stellenbosch, April. International Infrastructure Management Manual. 2006. 3rd edition. New Zealand: Ingenium Moore, R. 2006 Many facts to an effective asset management strategy. Plant engineering. April, 35-36. Publicly Available Specification 55-Part 1. Asset management: specification for the optimised management of physical infrastructure assets. 2004. 1st edition. London: British Standards Institute. Publicly available specification 55-Part 2. 2004. Asset management: guidelines for the application of PASS55. 2004. 1st edition. London: British Standards Institute. Pradhan, S.A. 2005. Reliability driven asset management strategy for reciprocating compressors. Aug, 51. PRAGMA 2001.Asset management improvement program (AMiP). Pragma Brochure. 2008 May 23. Worley International. 2000. Strategic municipal asset management. Urban and local government. Background series 5. April, 1-3

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APPENDIX A:

MAINTENANCE AND EQUIPMENT AUDITS Quick Plant Audit Name of the plant…………………………………….. Date:…………………………….. Name of the Auditor:……………………………………. 1. Inlet works Equipment

Condition

Expected

rating

Rating

Section 1 overall score:……………..

Comments

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2. Process Equipment Equipment

Condition rating

Section 2 overall score:………….

Expected condition

Comments/Reasons

111

3. Dewatering Equipment Equipment Condition rating

Expected condition

Section 3 overall score:……………. 4. General condition of the plant and the quality of effluent:

Comments/Reasons

112

Section 4 score:……………………

5. Maintenance System. 5.1 Maintenance plans available………. 5.2 Maintenance plan being used…………. 5.3 Completed jobs/month versus planned jobs…….. 5.4 Work classification/categorization………… 5.5 Understanding of maintenance KPI from technical staff…………….. 5.6 Work order management in place………….. 5.7 Quality of information on work order………… 5.8 Quality of feedback on work order…………. 5.9 Availability of spares in stores or to Technical staff…………. 5.10 Work prioritisation: Corrective versus Prevention………… Section 5 score:…………….. Overall Impression of the Plant.

Overall score:……………………. Scoring System used: 1: -Worse condition, serious intervention required 2.: -Moderate condition, potential hazard, improvement needed and could be achieved soon 3.: -Good condition, room for improvement

113

4.:-Very good 5.: -Excellent condition, everything well managed * Average all scores in each section to get the overall score for each section **Average all scores to get the overall condition of the plant

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APPENDIX B:

MAINTENANCE STRATEGY OVERVIEW BUSINESS STRATEGY

MAINTENANCE MANAGEMENT VISION AND OBJECTIVES

MAINTENANACE MANAGEMENT POLICY

PLANT AND EQUIPMENT RELIABILITY PROGRAMS

•Schedule Development •Preventative Maintenance •Reliability Programmes •Predictive & Condition based Maintenance •Continuous Improvement •Shutdown Optimization

SAP R/3 PLANT MAINTENANCE

•Plant & Equipment structuring •Notifications and Work Order structuring •Maintenance Reporting •Documentation control •Control & Integrity •Master Data •Equipment Master Record

PLANT AND EQUIPMENT FACILITIES

•Criticality •Housekeepin g •Internal Review •Workshop Tools •Plant Modification •5-S in Workshops •Plant Maintenance Audits

MAINTENANCE CONTROL, PLANNING AND SCHEDULING

•Work Order Management •Weekly Maintenance Planning •Maintenance scheduling •Shutdown Management •Equipment Repair •Replacement & Scrapping

MATERIALS & ENGINEERING SPARES MANAGEMENT

•Quality Control •Supplier Alliance •Material Maintenance •Material Storage •Capital Spares •Internal & External Equipment Repair •5-S in Stores •Standards

CHANGE CONTROL, DOCUMENTATION & INFO SYSTEM

•Change Control Management •Maintenance Documentation •Maintenance Manuals •Equipment Manuals •Master Data Changes

ORGANIZATION AND STAFF

•Maintenance Organization Structure •Four Tiers Of Management •Roles and Responsibilities •Job Models/Profiles •Business Process •Call Out Control

PEOPLE

•Principles •Development •Culture •Innovation •Synergies •Methodology •Technical Training •Equipment Training •Skills Development •Action & Workplace Learning

OCCUPATIONAL HEALTH & SAFETY

•Premises& Housekeeping •Mechanical, Electrical * Personal Safeguarding •Fire Protection & prevention •Incident Recording & Investigation •Health & Safety Organization

OUTSOURCED SERVICES ,PROJECT INTERFACE & TCO

•Early Equipment Management •Service Level Agreements •Phase Project Review •Outsourced Maintenance & projects Interface •Total Cost Of Ownership

`

115 APPENDIX C:

MAINTENANCE STRATEGY TREE

Maintenance Strategies

Corrective Maintenance

Preventative Maintenance

Design out Maintenance

Predictive Maintenance

Condition Monitoring

Inspections

Use based Maintenance

Scheduled Overhaul

Scheduled replacement

Component replacement

Opportunistic Maintenance

Block replacement

Routine services