Chapter 2 - Maintenance Policies

Maintenance
Management
Chapter II
MAINTENANCE POLICIES
Maintenance Policies
This chapter covers basic policies for the operation of a
maintenance-engineering department.
While many of these policies overlap and are
interdependent, they may be grouped in four general
categories:
Policies with respect to work allocation
Policies with respect to workforce
Policies with respect to interplant relations
Policies with respect to control
3
Work Allocation
To Schedule or Not to Schedule?
It is generally accepted that, in any maintenance
department where there are more than 10 men and more
than two or three crafts, some planning, other than dayto-day allocation of work by foremen, can result in
improved efficiency.
Work Allocation
To Schedule or Not to Schedule?
As the size of the maintenance organization increases,
the extent to which work planning can be formalized and
the amount of time that should be spent on this activity
are increased. There should be only as much planning as
necessary for maximum overall efficiency so long as the
system costs less than the cost of operating without it.
Work Allocation
How Much Scheduling ?
There are practical limitations to any scheduling system.
A very detailed schedule that becomes obsolete after the
first hour or two of use because of emergencies is of little
value.
If, however, actual performance indicates from 60 to 80
percent adherence during normal operation, the value of
the schedule is real.
Work Allocation
Justification of any scheduling system requires proof of
its effectiveness in cost saved. Where some form of
incentive system or work measurement exists, such proof
is readily available. But in most maintenance
departments no such definitive method is available and
the only criteria of measurement are overall trends in
maintenance costs and quality of service.
Work Allocation
Some aspects to be considered in arriving at a
sound work-scheduling procedure are:
Work Unit. Most detailed schedules are laid out in
terms of man-hours or, if standard times are used,
fractions of hours. Other scheduling systems use a
half man-day as a minimum work unit. Others may use
a man-day or even a man-week as a basis.
Size of Jobs Scheduled. Some work-scheduling
systems handle small jobs as well as large ones.
Others schedule only major work where the number of
men and the length of time involved are appreciable. 8
Work Allocation
Percent of Total Work Load Scheduled. Although in
some cases all work may be scheduled, the most
effective systems recognize the inability of any
maintenance-engineering department to anticipate all
jobs, especially those of an emergency nature, and do
not attempt scheduling for the entire work force. A
portion of the available work force is left free for quick
assignment to emergency jobs or other priority work
9
not anticipated at the time of scheduling.
Work Allocation
Lead Time for Scheduling. Some scheduling systems
do not attempt to cover breakdown repairs and are
limited to the routine preventive maintenance and to
major work that can be anticipated and scheduled well
in advance. In these cases a monthly or biweekly
allocation of manpower suffices. In most instances,
however, a weekly schedule with 2 or 3 day lead-time
results in good performance, yet is sufficiently flexible
10
to handle most unexpected work.
Work Allocation
Selection and Implementation of a Scheduling System
Flow-of-Work Requests
Before any formalized scheduling program can be
initiated, the method of requesting work from the
maintenance department should be formalized.
This request may take the form of a work description
or job ticket, listing manpower or equipment
requirement, or it can be in the form of a work sheet
on which the same type of information is accumulated
by either verbal or written communication.
11
Work Allocation
Flow-of-Work Requests
It must be routed to one central point if a scheduling
system is to be used. In a small plant this can be the
shop foreman, the maintenance superintendent, or the
plant engineer. In a larger maintenance department it
should be through a staff individual or group.
12
Work Allocation
Determination of Priority
In any maintenance organization, which is efficiently
manned, the work load in terms of quantity or timing,
exceeds the availability of men and/or equipment.
For this reason the problem of defining the order in
which the work is to be carried out. or establishing
priority, exists and is an important factor in scheduling.
13
Work Allocation
In a small plant with one operating department and a
small maintenance organization, establishment of
priorities may amount to casual discussion between
maintenance and production.
14
Work Allocation
However, as the plant grows and the maintenance
department is called upon to provide service to more
than one production department, the problem of
equitable and efficient priority assignment becomes
more involved. One of the most serious problems in
maintaining good relations between maintenance and
production departments is in this sphere.
15
Work Allocation
16
Priorities
Equipment Criticality
Description
Critical safety protective devices
Critical to entire plant operation
Critical to continued production of Main Product
Ancillary System to main production process
Critical to continued Production of Secondary Products
Ancillary System to secondary production process
Stand by unit in a critical system
Stand by unit in a non critical system
Ancillary Equipment
17
Priorities
Task Effect
Description
Immediate threat to safety of people
Immediate threat to the safety of the plant
Limiting Operations ability to meet primary targets
Limiting Operations ability to meet secondary targets
Hazardous situation, people or machinery, not immediate
Will effect operations after time
Improve the efficiency of the production process
Restoration of the plant technical integrity
General improvement to further operability, safety or maintainability goals

18
Priorities
Effect of task
Criticality
A
1A
1B
1C
1D
1E
1F
1G
1H
1I
2A
2B
2C
2D
2E
2F
2G
2H
2I
3A
3B
3C
3D
3E
3F
3G
3H
3I
4A
4B
4C
4D
4E
4F
4G
4H
4I
5A
5B
5C
5D
5E
5F
5G
5H
5I
6A
6B
6C
6D
6E
6F
6G
6H
6I
7A
7B
7C
7D
7E
7F
7G
7H
7I
8A
8B
8C
8D
8E
8F
8G
8H
8I
9A
9B
9C
9D
9E
9F
9G
9H
9I
19
Priorities
Color Key:
Time Frame
Color
Priority
24 hours
48 hours
72 hours
1 week
3 weeks
The combination of the criticality and effect of the work

can be cross-referenced to give a relative weight of each
task in comparison to all other types of works. The
colors represent the time frames with which these
priority tasks can be allowed to occur
20
Work Allocation
Preventive vs. Breakdown Maintenance
Preventive maintenance has long been recognized as
extremely important in the reduction of maintenance
costs and improvement of equipment reliability. In
practice it takes many forms.
Two major factors that should control the extent of a
preventive program are first, the cost of the program
compared with the carefully measured reduction in total
repair costs and improved equipment performance;
second, the percent utilization of the equipment
21
Work Allocation
If the cost of preparation for a preventive-maintenance
inspection is essentially the same as the cost of repair
after a failure accompanied by preventive inspections,
the justification is small. If, on the other hand, breakdown
could result in severe damage to the equipment and a far
more costly, repair, the scheduled inspection time should
be considered.
22
Work Allocation
plant preventive maintenance should be tailored to fit the
function of different items of equipment rather than
applied in the same manner to all equipment.
Indeed, a program of unit replacements can result in
considerably lower maintenance costs where complete
preventive maintenance is impractical.
In a plant using many pumps, for instance, a program of
standardization, coupled with an inventory of complete
units of pumps most widely used, may provide a
satisfactory program for this equipment.
23
Work Allocation
One of the most effective methods of tempering ideal
preventive maintenance with practical considerations of a
continuous operation is that of taking advantage of a
breakdown in some component of the line to perform vital
inspections
and
replacements
which
can
be
accomplished in the same time as the primary repair.
Production supervision usually can be sold the need for a
few more hours' time for additional work with repair of a
breakdown much more easily than they can be convinced
of its necessity when things are apparently running
24
smoothly.
Work Allocation
Preventive Engineering
One of the most important tools in minimizing downtime,
whether or not a conventional preventive-maintenance
program is possible, is called "preventive engineering."
Too often maintenance engineers are so busy handling
emergency repairs or in other day-to-day activities that
they find no opportunity to analyze the causes for
breakdowns, which keep them so fully occupied.
25
Work Allocation
While most engineers keep their eyes open to details
such as better packing, longer-wearing bearings, and
improved
lubrication
systems,
true
preventive
engineering goes further than this and consists of
actually setting aside a specific amount of technical
manpower to analyze incidents of breakdown and
determine where the real effort is needed; then through
redesign, substitution, changes, and specifications, or
other similar means, reducing the frequency of failure
and the cost of repair.
26
Work Allocation
Effective preventive engineering can result only when it is
recognized as an independent activity of a research
nature that cannot be effectively sandwiched into the
schedule of a man who is occupied with putting out fires.
27
Workforce
Own Work Force or Outside Contractors?
The primary factor in deciding whether to use an outside

contractor is cost. Is it cheaper to staff internally for the
performance of:
1. type of work involved,
2. amount of work involved, and
3. expediency with which this work must be accomplished?
In studying these relative costs it is not sufficient to

consider the maintenance cost alone. The cost to the
company, including downtime and quality of
performance, must also be considered.
28
Workforce
There are a number of issues facing organizations that are considering
maintenance outsourcing as an improvement initiative :
To outsource or not outsource - strategic decision making
Does a competitive outsourcing market exist?
How much maintenance to outsource
Establishing an appropriate tendering process
Establishing an appropriate specification of requirements
Establishing an appropriate contract payment structure
Establishing an appropriate contract administration process and structure
Establishing an appropriate structure for the contract document
Managing the transition to the outsourced arrangement
Contract termination arrangements
29
Workforce
To Outsource or Not Outsource Strategic Decision Making:
Conventional wisdom regarding the outsourcing decision

states that you should outsource your "non-core"
business activities.
30
Workforce
In the diagram, we consider
the outsourcing decision
along two dimensions. The
first, Strategic-Non
Strategic, considers how
important the activity
proposed for outsourcing is
to the organization in
achieving long term
strategic competitive
advantage in its chosen
marketplace.
31
Workforce
The second dimension,
Competitive-Non
Competitive, relates to how
competitively the function
being considered for
outsourcing is currently
being performed compared
to the external competitive
marketplace.
32
Workforce
Putting the two elements together gives four possible outcomes.
1. Those functions that are of Strategic importance to the firm,
and which are currently being performed competitively require
no further action - the status quo should be retained.
2. Those functions that are of Strategic importance to the firm,
but which are not currently being performed competitively
with the external marketplace should not (in the long run) be
outsourced. Instead, a better long-term option is to reengineer them to ensure that they are performed at a
competitive cost.
33
Workforce
3. Those functions that are not of Strategic importance to the
firm, and which are not currently being performed
competitively with the external marketplace should be
outsourced. There is little value in investing in improving this
function.
34
Workforce
4. The final combination, those functions that are not of
Strategic importance to the firm, but which are being
performed competitively with the external marketplace is
more interesting. A number of options exist:
selling the function as a going concern,
extending the function to provide services to external

customers,
outsourcing the function, or
raise the profile of the function to turn it into a source of

strategic competitive advantage.
35
Workforce
Does a competitive outsourcing market exist?
A second consideration for outsourcing, is to decide whether

a competitive market for the outsourced services actually
exists.
By adopting an appropriate outsourcing strategy (such as

letting work to two or more contractors, rather than to one
exclusively), awareness of this possible outcome prior to
establishing the outsourcing strategy is vital if the outsourcing
organization is not to find itself "locked in" to a sole provider.
36
Workforce
How much maintenance to outsource?
An important consideration in making the maintenance

outsourcing decision is what aspects of maintenance to
outsource. If we consider the maintenance management
process as consisting of six major steps, as shown below,
then a number of options exist.
37
Workforce
In the first instance, organizations may choose simply to

outsource the work execution step, while retaining the
remaining steps in-house. This is often done on a limited
basis, for example, when employing contractors to
supplement an in-house work force during times of high
workload, during major shutdowns, for example. This is the
minimalist approach to outsourcing.
38
Workforce
An alternative approach is to outsource all of the above

activities with the exception of the analysis and work
identification steps. In this approach, the contractor is
permitted to plan and schedule his own work, and decide how
and when work is to be done, but the outsourcing
organization retains control over what is to be done.
39
Workforce
A third approach is to outsource all of the above steps, thus

giving control over the development of equipment
maintenance strategies (ie Preventive and Predictive
Maintenance programs) to the contractor. In this instance, the
contract must be structured around the achievement of
desired outcomes in terms of equipment performance, with
the contractor being given latitude to achieve this to the best
of his ability.
40
Workforce
The most appropriate approach will depend on the clients

particular situation.
Many organizations today are adopting Total Productive

Maintenance principles, which encourage Production
operators to take a higher level of responsibility for equipment
performance, and also to perform minor maintenance tasks.
There is also a growing realization that the manner in which
equipment is operated can have a huge bearing on
maintenance costs and the maintenance activities required to
be performed if equipment performance targets are to be met.41
Workforce
A high level of teamwork between the Maintenance

contractors and the Production operators is, therefore, vital to
the successful completion of the contract. This leads to the
view that an alternative, and possibly better, approach to the
outsourcing of maintenance is to include plant operation in
the scope of the contract.
42
Workforce
Finally, taking things one step further again, there is also a

growing realization that maintenance is limited in achieving
higher equipment performance by the fundamental design of
the equipment being maintained.
43
Workforce
There is, therefore, a school of thought that says that the best
way to overcome this limitation, in an outsourcing
environment, is to also give the contractor responsibility for
the design of the equipment. This can be done either by
giving him responsibility for ongoing equipment modifications,
or by giving him responsibility for the initial design of the
equipment, as in a BOOM (Build, Own, Operate and
Maintain) contract, which is gaining favour in many
infrastructure projects.
44
Workforce
45
Workforce
The tendering process for a major outsourcing contract is likely to be
different to the contracting process for major capital works in a few key
aspects.
Of particular importance will be the explicit consideration of risk at various
key points in the contracting process, and the identification of appropriate
strategies for managing those risks. These could take the form of either
shaping or hedging actions. Shaping actions are those action undertaken to
minimize the likelihood of the risk factor occurring. Hedging actions are
those actions undertaken to minimize the impact of the risk factor, should it
occur.
46
Workforce
In addition, the evaluation criteria for the selection of an appropriate
maintenance contractor are likely to be quite different from those for a major
capital project. It is likely that significant work will be required to develop
appropriate criteria, and to ensure that sufficient information is obtained
from tenderers to be able to make an informed decision.
47
Workforce
Establishing an appropriate specification of requirements:
The specification of requirement during the tendering process will need to be
carefully considered.
Ensure that the requirements specification is outcome-based, rather than

input-based. In other words, the specification will need to detail what is to
be achieved from the contract, not how it is to be achieved, or what inputs
will be required for its achievement.
Ensuring that all the required outcomes are specified is a major undertaking.
Agreeing how the achievement of all of these outcomes will be measured is
also, potentially, a huge undertaking. Deciding how to measure that was a
difficult process.
48
Workforce
There are a number of alternative contract payment
structures. These include but not limited to:
Fixed or Firm price
Variable Price
Price ceiling incentive

Cost plus incentive fee
Each of these price structures represents a different level of

risk sharing between the contractor and the outsourcing
49
organization.
Workforce
A number of considerations will need to be made in

determining the most appropriate payment structure. These
include:
The extent to which objective assessment of contract performance is
possible
The ease with which realistic targets can be set for contractor
performance
The administrative effort involved with each payment option
The degree of certainty with which the desired contract outcomes can 50
be specified.
Workforce
Transition arrangement may be put in place to gradually transfer
the payment structure from one method to another over time, as
a greater degree of certainty over the requirements of the
contract, and more accurate knowledge of target levels of
performance is established.
51
Workforce
Establishing an appropriate contract administration process
and structure
Before the contract is let, the client will need to have decided on
the appropriate contract administration process, and the roles
and responsibilities of his own staff in managing the contract.
He will also need to establish the structures, processes and
equip his people with the skills to perform the required duties.
We have seen many potentially successful outsourcing contracts

fail, simply because the client did not manage those contracts
52
effectively.
Workforce
Establishing an appropriate structure for the contract
document
Most standard contracts in place at most organizations, are not
appropriate for large outsourcing contracts. Many Standard
Terms and Conditions are inappropriate for large, long-term
service-related contracts .
It is best to combine Special Conditions of Contract with

revised Standard Conditions of Contract to develop a new
contract structure that is appropriate for the particular contract
being let.
53
Workforce
There are many issues to be addressed by the outsourcing organization in the
transition to the new arrangements. Among these are matters such as:
Staff - which will be retained by the organization, which will be employed

by the contractor, which will be let go?
Drawings - who has responsibility for ensuring that drawings are kept up to
date, who will be the custodian of site drawings?
Computer systems - will the contractor have access to the clients

Computerized Maintenance Management system? Will they maintain their
own computerized Maintenance records? Who is responsible for ensuring
that all data in the Computerized Maintenance Management systems are
accurate?
54
Workforce
There are many issues to be addressed by the outsourcing organization in the
transition to the new arrangements. Among these are matters such as:
Materials Management - will the contractor provide his own
materials, or will the client provide these?
Workshop facilities and tools - who owns and maintains these?
55
Workforce
Contract termination arrangements
Another critical issue that needs to be addressed before the

contract is let, is how the situation will be managed if the
decision is made to terminate the existing contract.
In particular, agreement needs to be reached regarding the
duties and obligations of the outgoing contractor in handing
over to the incoming contractor (or the client organization,
should they decide to bring maintenance back in-house).
56
Workforce
Conclusion
While these are some of the major considerations for

organizations considering outsourcing maintenance, there are
many others.
Needless to say, the decision to outsource any major function,
such as maintenance, is not one that should be taken lightly, and
careful consideration of all major issues is vital, if the transition
to contracted maintenance is to be smooth and satisfactory to
both parties.
57
Workforce
Shift Coverage
The two extremes in providing maintenance for continuous
operation are to provide full coverage during all hours that
the plant is in operation or to maintain day coverage only,
letting the plant shift for itself during other periods or to
accept minimum essential service on call-in, overtime basis.
The optimum arrangement is something in between,
depending a great deal upon circumstances in an individual
plant.
58
Workforce
Shift Coverage
In considering the staffing of a maintenance department to
cover more than one-shift operation, many factors are
involved:
Efficiency of the Worker.

Location of the plant.
59
Workforce
Centralization vs. Decentralization
Advantages of a centralized maintenance shop are:
1. Easier dispatching from a more diversified craft group

2. The justification of more and higher-quality equipment
3. Better interlocking of craft effort
4. More specialized supervision
5. Improved training facilities
60
Workforce
The advantages of decentralized maintenance are:
1. Reduced travel time to and from job

2. More intimate equipment knowledge through repeated
experience
3. Improved application to job due to closer alliance with the
objectives of a smaller unit "production-mindedness".
4. Better preventive maintenance due to greater interest
5. Improved maintenance production relationship
61
Workforce
In practice, however, it has been found that neither one
alone is the panacea for difficulties in work distribution.
Often a compromise system in which both centralized
and decentralized maintenance coexist has proved most
effective.
62

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Maintenance

Critical safety protective devices

Critical to entire plant operation

Critical to continued production of Main Product

Ancillary System to main production process

Critical to continued Production of Secondary Products

Ancillary System to secondary production process

Stand by unit in a critical system

Stand by unit in a non critical system

Immediate threat to safety of people

Immediate threat to the safety of the plant

Limiting Operations ability to meet primary targets

Limiting Operations ability to meet secondary targets

Hazardous situation, people or machinery, not immediate

Will effect operations after time

Improve the efficiency of the production process

Restoration of the plant technical integrity

General improvement to further operability, safety or maintainability goals

The combination of the criticality and effect of the work

The primary factor in deciding whether to use an outside

In studying these relative costs it is not sufficient to

To outsource or not outsource - strategic decision making

Does a competitive outsourcing market exist?

How much maintenance to outsource

Establishing an appropriate tendering process

Establishing an appropriate specification of requirements

Establishing an appropriate contract payment structure

Establishing an appropriate contract administration process and structure

Establishing an appropriate structure for the contract document

Managing the transition to the outsourced arrangement

Contract termination arrangements

Conventional wisdom regarding the outsourcing decision

selling the function as a going concern,

extending the function to provide services to external

outsourcing the function, or

raise the profile of the function to turn it into a source of

A second consideration for outsourcing, is to decide whether

By adopting an appropriate outsourcing strategy (such as

An important consideration in making the maintenance

In the first instance, organizations may choose simply to

An alternative approach is to outsource all of the above

A third approach is to outsource all of the above steps, thus

The most appropriate approach will depend on the clients

Many organizations today are adopting Total Productive

A high level of teamwork between the Maintenance

Finally, taking things one step further again, there is also a

Ensure that the requirements specification is outcome-based, rather than

Price ceiling incentive

Each of these price structures represents a different level of

A number of considerations will need to be made in

We have seen many potentially successful outsourcing contracts

It is best to combine Special Conditions of Contract with

Staff - which will be retained by the organization, which will be employed

Computer systems - will the contractor have access to the clients

Another critical issue that needs to be addressed before the

While these are some of the major considerations for

Efficiency of the Worker.

1. Easier dispatching from a more diversified craft group