SMRP Metric 1.1 Ratio of Replacement Asset Value (RAV) to Craft-Wage Headcount

7/24/2019 SMRP Metric 1.1 Ratio of Replacement Asset Value (RAV) to Craft-Wage Headcount

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BUSINESS MANAGEMENT

1.1 Ratio of Replacement Asset Value(RAV) to Craft-Wage Headcount


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Copyright 2009 SMRP. All rights reserved.

PAGE 1 of 4 Published: April 16, 2009

Revised: July 10, 2013

BUSINESS AND MANAGEMENT METRIC

1.1 Ratio of Replacement Asset Value(RAV) to Craft-Wage Headcoun t

A. DEFINITION

The metric is Replacement Asset Value (RAV) of the assets being maintained at the

plant divided by the craft-wage employee headcount. The result is expressed as a ratio

in dollars per craft-wage employee.

B. OBJECTIVES

This metric allows for comparisons of the ratio of craft-wage personnel on a site with

other sites, as well as the benchmarking of data. The RAV is used in the numerator to

normalize the measurement given that different plants vary in size and replacement

value. The metric can be used to determine the standing of a plant relative to best in

class plants which have high asset utilization and equipment reliability, and generally

have lower maintenance craft-wage cost.

C. FORMULA

Ratio of Replacement Asset Value ($) to Craft-Wage Head Count =

RAV ($)Craft-Wage Headcount

D. COMPONENT DEFINITIONS

Craft-Wage HeadcountNumber of maintenance personnel responsible for executing work assignments

pertaining to maintenance activities. Include the number of contractors personnel who

are used to supplement routine maintenance. The headcount is measured in full-time

equivalents (FTE).


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Replacement Asset Value (RAV)

Also referred to as Estimated Replacement Value (ERV). This is the dollar value that

would be required to replace the production capability of the present assets in the plant.

Include production/process equipment, as well as utilities, facilities and related assets.

Do not use the insured value or depreciated value of the assets. Include replacement

value of buildings and grounds if these assets are maintained by the maintenance

expenditures. Do not include the value of real estate, only improvements.

E. QUALIFICATIONS

1. Time basis: Annually

2. To be used by maintenance managers to measure the effectiveness of their craft-

wage workforce.

3. This metric can be calculated and used to compare a process, a department or an

entire facility.

4. Contractors that are employed as part of capital projects or upgrade work shouldnot be included.

5. Contract employees who support the regular maintenance work force and perform

maintenance on a site should be included.

6. If contract costs for painting, plumbing, carpentry and similar activities are included

as part of the RAV, this contract headcount should be included in the denominator.

7. A full-time equivalent should be normalized at 40 hours per week.

8. For facilities using total productive maintenance (TPM), maintenance performed by

operators should be included.


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F. SAMPLE CALCULATION

For a given facility, the Replacement Asset Value ($) is $624,500,000 and the Craft-

Wage Headcount for maintenance employees is 150.

The Ratio of Replacement Asset Value ($) to Craft-Wage Headcount =

RAV ($) Craft-wage Headcount


$624,500,000 150 maintenance employees


$4,160,000 per maintenance employee

G. BEST IN CLASS TARGET VALUE

$8,000,000 to $9,000,000 per Craft Worker

H. CAUTIONS (Potenti al Ramifi cation s if t he Target is Mi sappli ed)

Care should be taken when using this best in class target; it may be somewhat

sensitive to industry vertical, and the value is a result of a mature maintenance andreliability process. If an organization applies this metric in an immature process that is

heavily reactive, it is highly likely that there will be insufficient craft resources to provide

adequate maintenance and repair support and equipment reliability will suffer.

I. HARMONIZATION

This metric has not been harmonized with European standard EN 15341:

Maintenance Indicators.


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J. REFERENCES

Baldwin, R. (2006). Secrets of effective maintenance. Paper presented at Society for

Maintenance and Reliability Professionals Annual Conference, Birmingham, AL.

Retrieved fromhttp://library.smrp.org/1k8egi/4?highlightText=Baldwin

Dunn, R. L. (1999). Basic guide to maintenance enchmarking. Plant Engineering,

reference file 9030/5501, 65.

Humphries, J. B. (1998). Best-in-class maintenance benchmarks. Iron and Steel

Engineer, 1.

Jones, E. K. (n.d.). Basic guide to maintenance benchmarking, Sooryasoftware.

Retrieved fromhttp://sooryasoft.com/papers/papers.asp

Moore, R. (2004). Making common sense common practice Models for manufacturing

excellence (3rd ed.). Burlington, NY: Elsevier Butterworth Heinemann.

Thompson, D. (2011, April). Presented at SMRP Executive Member Meeting, Alcoa M.

Holly plant site, Goose Creek, SC.
http://library.smrp.org/1k8egi/4?highlightText=Baldwinhttp://library.smrp.org/1k8egi/4?highlightText=Baldwinhttp://library.smrp.org/1k8egi/4?highlightText=Baldwinhttp://sooryasoft.com/papers/papers.asphttp://sooryasoft.com/papers/papers.asphttp://sooryasoft.com/papers/papers.asphttp://sooryasoft.com/papers/papers.asphttp://library.smrp.org/1k8egi/4?highlightText=Baldwin

SMRP Metric 1.1 Ratio of Replacement Asset Value (RAV) to Craft-Wage Headcount

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