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Managing Maintenance As A Business

C. Paul Oberg, EPAC Software Technologies

In most businesses, success is easily measured by lookingat the bottom line; but what's the bottom line in themaintenance business? To better understand how toevaluate maintenance business performance, it's helpfulto examine how businesses generate profits. Quite simply,businesses generate profits by providing goods and/or

services at minimum cost and sold at a fair market price.Obviously, revenues generated from sales must exceedthe costs. It is important to note that the customerdetermines the fair market price. In the maintenancebusiness, the customer pays for value; price is part of thevalue equation along with quality and timeliness. So, aswe look at the maintenance business, price is somethingthat cannot be ignored. For example, if internalelectricians are charged to the department at $45.00 perhour and the comparable skill for an external resource is$30.00 per hour, it will not take long before outsideelectricians are being used.

It has been presented that customers demand value.

Timeliness, quality, price and return on investment (ROI)are the components of value. Therefore, our performancemeasures should reflect how the maintenance business isproviding value to its customers. Also, the maintenancebusiness must develop internal performancemeasurements to assess its health.

Timeliness can be measured by average time to respondfor a certain class of maintenance activities. Manymaintenance operations have set goals for responsivenessgiven the nature of the work. For example, for emergencywork, a goal might be one week. Again, these goals areestablished in concert with the customers. It has alsobeen discovered that the type of work may not be theonly determining factor; in many cases, the equipmentmay determine a response time frame. For example, abreakdown in an operating room air filtration system issignificantly more important than a breakdown of ahospital bed. Thus, our response goals are dependentupon not only the nature of the work, but the equipmentas well. The average time to respond can be calculated bycapturing the elapsed time between request receipt andthe commencement of work. Once calculated, thismeasurement is indicative of how well maintenance issatisfying customers' expectations of timeliness.

Schedule compliance is another means of monitoringcustomer timeliness expectations. In this metric, thescheduled start date or promise date of the work order is

compared to the actual start date. Again, a simplecalculation of actual versus promised; either it was startedon time or it wasn't. Customer communications andmanaging expectations are paramount.

Quality of work is not as easily measured as timeliness,however, quality can be measured through customercomplaints, work review and repeat work. If the customeris not satisfied, it is hoped that the dissatisfaction will beacknowledged in some form. In many cases, the customeris required to sign a completed work slip accepting thequality of the work performed. Although this is asatisfactory form of acceptance, has satisfaction trulybeen measured? Perhaps the best way to ensure quality is

through a work review program where supervisorypersonnel review the quality of the work performed. Theseare formal programs that when properly conducted canprovide valuable feedback regarding customer satisfactionand employee skills. A rating system is typically employedwhich recognizes the quality of the work and level ofcustomer satisfaction. Finally, if a particular work activityis frequently being requested, it may be indicative of amultitude of problems. Remember, in the eyes of thecustomer, if it keeps breaking, it's because it was notfixed and therefore, is a maintenance responsibility.

Price is always a topic for debate. How many times haveyou heard, "If I had known it was going to cost that much,I wouldn't have done it!" or "What do you mean it cost$490 to replace that bulb!" Customers do not likesurprises and they demand fair pricing. Admittedly, inmost internal maintenance operations, the customers findout what it costs after the fact and not before. It isamusing that as private citizens, we would not havesomeone perform any work without having some idea asto what it might cost, and then, we may even attempt tomitigate or negotiate. In the internal maintenancebusiness, how often are estimates provided? Are thereestablished hourly rates for providing service for both

labor and materials? How do these rates compare withexternal rates? Determining price performance isaddressed largely by comparing the book rate versus theactual rate. The book rate is a blended average of hourlylabor rates inclusive of benefits, whereas the actual rate iscalculated by taking total labor dollars of direct activities(actual work time). The book rate is a quick comparison tothe outside rate whereas the actual rate reflects utilizationand rate.

As we examine our maintenance business, we must alsoidentify our ROI. Identifying, quantifying and realizingbenefits, is the goal of any business. Within themaintenance business, we can usually categorize benefitsmaterializing in the areas of labor utilization/productivitymaterials management and equipment productivityStrategies for achieving savings in each area can rangefrom simple to complex. However, experience has shownus that the simplest strategies yield the highest results.

As we continue to look for the elusive ROI for themaintenance business, companies have discovered thathe greatest opportunity lies with improved equipmentproductivity. These savings manifest themselves in theareas of increased equipment uptime/availabilityimproved product/service quality and finally, improvedequipment/service reliability. Again, upon closeexamination of each of these categories, additionadistinctions can be made. For example, in the area of

increased uptime, savings can be realized through theimplementation of programs resulting from:

Breakdown analysis

Failure analysis

Rationalizing PM frequencies

Predictive maintenance

Planning and scheduling of work

Likewise, in the area of improved quality, opportunities foimprovement exist when specific actions are taken in:

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Failure analysis

Preventive Maintenance programs

Predictive Maintenance Programs

Breakdown Analysis

And finally, looking at possible strategies for improvementin the area of improved equipment/service reliability,possible opportunities exist in:

Improving the PM program

Improving the PDM program

Failure analysis supporting a corrective

maintenance program

Breakdown analysis supporting a corrective action

program

Achieving an acceptable return on investment for themaintenance business is as critical as helping themaintenance customer achieve their return on theirmaintenance investment. The maintenance business iscustomer oriented and must provide value to thecustomers. The symbiotic relationship which exists

between the maintenance business and its' customers is awin-win situation. When the maintenance business isoperating at peak performance and efficiency, then themaintenance customers will realize the value of theirservices as well as reap the rewards.

Managing maintenance as business involves managingexpectations and balancing costs and service. Identifyingmaintenance cost drivers is an important factor is the costand service-balancing act. Maintenance costs are largelyattributable to labor, materials and contract services.Material costs can effectively be managed and controlledthrough inventory management practices, procedures andpolicies. Thus, we can reduce the volatility of thebalancing act by concentrating on labor and contract

services. What drives labor cost is simply a matter ofsupply and demand. The demand portion is determined bythe amount of work needing to be performed and when itneeds to be performed. Understanding this will determinethe supply side of the equation. Time to revisit ourmission statement! Is the maintenance business missionto provide resources when needed or is it to accomplishthe work when resources are available? Each responseyields a different set of requirements. Therefore, "howmuch" and "when" are critical drivers. Is there aseasonality to demand? Are there periodic shutdowns? Arethere slow periods or accessible periods for maintenance?Can the existing work force be supplemented withcontract labor? The real cost drivers can easily bedetermined once everyone agrees on the mission.

All too often, the concept of maintenance management isthought of as synonymous with computerizedmaintenance management systems; that by implementinga computerized maintenance management system, resultswill magically appear. Long before computer systems,there were successful businesses because attention waspaid to customers and the implementation of effectivebusiness processes to provide goods and/or services tothose customers. To achieve success in managing themaintenance business, identification, development andimplementation of core business processes is essential.CMMS is only a tool to support the processes. No matter

how big or small the maintenance function, there is nosubstitute for basic process implementation. Ask yourselfif you cannot define the basic processes, how canappropriate application software be selected? After allone of the basic covenants of effective maintenanceplanning is determining the right tools for the job basedupon the work and tasks to be performed. For those whohave implemented a CMMS, which came first: the systemor the process?

Managing the maintenance business presents thechallenge of operating most service type businessesStriking the fine balance between service and cosdemands the best practices supported by the best toolsThe effort required to implement a computerized systemdoes not translate to results; effort put forth in theimplementation of the right processes will yield results. Inthe final analysis, it's results that count.