Prove the value of predictive maintenance (PdM) to senior management

Getting what you need

So, you’ve done the research, you’ve benchmarked, you’ve scoured the CMMS database, and you think your argument for purchasing enhanced predictive maintenance technology is rock solid. That might be so, but your funding requisition needs to be persuasive on an objective level. How do you prove something didn’t happen because of maintenance practices and then quantify its benefits?

“Use cost avoidance and MTBF,” says Therma-Tru’s Neubauer. “If the PdM is effective, corrective action can mitigate a functional failure. MTBF is an excellent indicator that shows the value of PdM condition based maintenance.”

“The goal is to detect specific failure modes as early as possible so that repairs can be planned, scheduled, and corrected early on the failure curve.”

- John Trulli, director of mechanical services at Allied Reliability

Approach the requisition from the viewpoint of general management, suggests Bill Kilbey, remote diagnostics manager at Allied Reliability. “Evaluate your company’s mission statement and financial statements for key elements that excite stakeholders,” he says. “Then align your PdM mission and goals to those. If your industry is in survival mode, cost reductions would get attention. If your business is in growth mode, emphasize helping production meet goals and increased uptime.” If you don’t make a clear case as to how PdM directly affects the mission and the bottom line, you’re setting yourself up for rejection, he predicts.

“Be prepared with specific examples of where PdM will reduce costs and improve uptime for the facility,” adds Applied Facility Solutions’ Wallace. “Include the cost of purchasing diagnostic equipment, CMMS changes and training the plant personnel.” Also, provide estimates of labor and material for ongoing implementation of the PdM program, suggests Wallace.

“Bean counters are what they are,” adds EMP’s Smithman. “You won’t impress them with technology. You’ll impress them with ROI. Don’t forget that. Factor in the important elements, not just lost production. Did you damage in-process product? Could somebody get hurt? Might it make the newspaper or stock report? Might downstream processes be affected? Does it affect energy efficiency?”

Machinery Management’s Taylor suggests a cost/benefit study. “But you need to put it in a format that the deciding manager is used to and comfortable with,” he adds. “Is it payback, NPV, IRR or some other measure? If you have the comptroller’s staff member on your team, they’ll know how to do that. They’ll also validate your assumptions of dollar estimates. Make sure you consider all possible savings. Make up some worksheets to document how you come up with your estimates. Be conservative in payback. The Association for Facilities Engineering Certified Plant Maintenance Manager (CPMM) Program offers a CPMM Review Pak that has some good examples.”

Smartware’s Lachance agrees. “Show ROI capabilities from implementing a good PdM application,” he says. “Any good CMMS vendor can prove the ROI from PdM analysis as a result of proper implementation of a quality CMMS system. Once designated equipment information is entered into a CMMS system, PM schedules can be set up and work orders issued. If maintenance and repair patterns can be captured automatically, operational benefits and ROI can be achieved quickly.”

CMMS then reduces equipment/facility downtime by identifying equipment in advance that needs additional care and then putting additional PMs in place. This reduces maintenance costs — PM is always cheaper than corrective work — and decrease lost production time.” Lost production is expensive for manufacturers, resulting in overtime, potentially late deliveries and increased parts costs, explains Lachance.

“It’s crucial to have a clear understanding and speak to the advantages of a PdM or maintenance and reliability program that will offset the implementation or upgrade costs,” says Allied’s Trulli. “The application of PdM technologies generates positive opportunities for numerous resources and realized revenue streams. For example, with the addition of condition-based monitoring, overlapping failure modes being evaluated by PM activities can be eliminated. This results in the potential for less production loss as downtime associated with intrusive equipment inspections is reduced. This also frees up and identifies potential resources that you can use to staff your PdM or maintenance and reliability initiative. With the application of PdM technologies, defects are identified earlier on the failure curve which reduces maintenance costs. PdM also allows for the opportunity to only perform those tasks when they are actually needed therefore saving in labor hours. When it’s all said and done, you can clearly compare the costs of a reactive maintenance program to the costs associated with PdM program implementation.”

Part 2 of "Prove the value of predictive maintenance (PdM) to senior management" discusses getting the backing from plant-floor workers, the effect of wireless communications, eliminating human error and integrating PdM with the CMMS.

A version of this article, "True believers: Proof of economic benefits can have an astronomical effect," appeared in print in the April edition of Plant Services magazine.