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

ii

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

iii

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.. ii Acknowledgements... iii Abstract... iv Table of contents....... v List of figures...... x List of tables................................................................................................................. xi List of appendices........................................................................................................... xi List of acronyms.............................................................................................................. xii CHAPTER 1- Introduction and background................ 1 1.1 Introduction... 1 1.2 Statement of the problem........... 2 1.3 The research objectives...... 2 1.4 Assumptions and delimitations.. 4 1.5 Plan of study......... 4 1.6 Research design and methodology...... 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... 18 3.1 Introduction.. 18 3.2 Maintenance management framework ..... 18 3.3 Developing an asset management plan 20 3.4 Strategy development 21 3.4.3 Status analysis........... 21 3.4.4 Asset management objectives................ 21 3.4.5 Asset data classification. 22 3.4.6 Data prioritization. 23 3.5 Asset register.. 23 3.5.1 Asset register set up. 23 3.5.2 Managing asset register 24 3.5.3 Data capturing. 24 3.5.4 Replacement program and costing. 24 3.5.5 Provisional asset management plans. 24 3.6 Physical asset management development..... 25 3.6.1 Attributes 25 3.6.2 Basic condition assessments... 26 3.6.3 Prioritization based on condition. 26

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3.6.4 Critical asset identification.. 26 3.6.5 Maintenance history data collection....... 26 3.6.6 The next generation maintenance plans 27 3.6.7 Documentation for decision making. 27 3.6.8 Determining the target level of service.. 27 3.7 Physical asset management implementation and monitoring.. 27 3.7.1 Maintenance Procedures.... 27 3.7.2 Work order system.. 30 3.7.3 Creating a job card. 31 3.7.4 Planning and scheduling tools.. 33 3.7.5 Materials management 34 3.8 Maintenance tactics.. 35 3.8.1 Condition based maintenance 37 3.8.1.1 Vibration.. 38 3.8.1.2 Lubricants 38 3.8.1.3 Temperature.. 38 3.8.2 Preventative maintenance.. 39 3.8.3 Expected cost of maintenance. 39 CHAPTER 4 Measuring maintenance performance.. 41 4.1 Introduction 41 4.2 Measuring maintenance productivity...... 41 4.3 Equipment performance measurement.... 41 4.4. Process performance measurement.. 42 4.5. Information management system... 43 4.6 The balanced score card... 44 4.6.1 Financial perspective.. 44 4.6.1.1 Direct financial benefits.. 45 4.6.2 Customer perspective. 47 4.6.3 Internal business process.. 47 4.6.4 Learning and growth 49 CHAPTER 5 Assessment of the maintenance strategy for water and sanitation services .. 51 5.1 Introduction.. 51 5.2 Organizational climate and culture.. 53 5.3 Expertise and competence... 55 5.4 Maintenance management systems and procedures... 56 5.5 Fixed asset register.................. 61 5.6 Computerized maintenance management system 62 5.7 Maintenance planning, scheduling and control............................... 65 5.8 Reliability maintenance management................... 68 5.9 Material management............. 70 5.10 Fleet management........ 74 5.11 Contracts........ 77 5.12 Conclusion...... 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................... 100 7.1 Chapter introduction... 100 7.2 Summary of research results... 100 7.3 Conclusions.. 102 7.4 Recommendations. 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 process14

Figure 3.1: Asset life cycle18

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 entered33

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 month60

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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1

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

2

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?

What are the fundamental requirements for the implementation of sustainable asset

management practices?

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

studys 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.

3

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 organizations 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)

4

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.

5

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.

6

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.

7

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 systems 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 breakfix

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

8

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).

9

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.

10

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.

12

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

Incorrectly devised maintenance tactics (preventive maintenance plans)

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)

13

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).

14

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

15

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

16

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 Africas 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.

17

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.

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

management 2000: 4).

Asset Strategy

Plan

Evaluate

Design

Procure

Operate

Maitain

Upgrade

Dispose

19

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: Target: Requirements:

Stage 1

Strategy development

Current status analysis

Setting the asset management objectives

Asset data classification

Prioritization of data collected

Stage 2

Asset register

Set up the asset register

Set up how the register will be managed

Capturing of data

Replacement program and costing

Provisional asset maintenance plans

Stage 3

Asset management

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.

21

Table 3.2 Implementation and monitoring phase of asset management

Stage: Target: Requirements:

Stage 4 Asset improvement/upgrade plan Maintenance procedures

Decision and process flow

Failure analysis

Stage 5 Techniques required Risk analysis

Identify where equipment is in its life cycle

Develop plan for replacement

Decision making based on life stage and budgets

Stage 6 Management system 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.

22

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:

23

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

Number Class Class Code Sub Class Sub - Class

Code

1 BLOWERS BLR Blower-centrifugal fan type. BLR01

Blower-roots type, belt-driven. BLR02

2 BELT PRESSES

3 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

24

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 assets 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.

25

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.

26

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.

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.

Management

Maintenance

Operation

29

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)

30

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.

32

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 members 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 items date required must be within the work orders 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.

33

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.

34

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.

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.

5. Use

4. Control 3. Order

2. Source

1. Specify

Materials

process

35

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.

37

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.

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:

0

1

2

3

4

5

6

7

8

9

10

commisioning Middle period Old life

1--5 years 5--15 years 15--20 years

Probalility of Failures

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.

39

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.

40

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

41

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.

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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