The use of standard accounting tools to identify the places where utility cost is incurred in a plant was discussed in the Strategic Maintenance column on opportunities in energy costs. Then the utility usage data will show how to manage utility cost. As a rule, these practical projects will drive measurable mechanical, electrical, or operational results before they create significant changes in the organization’s financial results. Identifying and recording physical results as improvements are made will allow the organization to see that the planned operational changes are in place and will allow management to predict the financial impact in a timely fashion. Done accurately, it will improve the energy management project’s chances of getting the credit that will be due for reducing energy cost.
Derivation and significance: The exact nature of the measurements to be made will depend upon what operational changes have been ordered. Here are some typical KPIs, drawn from the change examples in the Strategic Management article:
Power factor improvement — Most power companies compute power factor and use it to drive penalties that can be read in the power bill. The power factor numbers by area and the resulting financial impact can be read and reported as they are delivered by the power company. Any unexpected changes can be reviewed and diagnosed immediately. This uses backward-looking values as forward-looking KPIs, that equip the organization to improve future results.
Electrical load planning — If electrical load has been moved to more economical times of day, results should be available on a monthly basis. A KPI can be developed showing the percentage of off-peak load that is being created. When compared to the baseline from the start of the utility management project, this should provide a numerical scorecard to explain financial impact of the improvement. As with power factor, the results should be read and made available to the project team.
Waste heat capture and condensate reuse — Once heat exchangers or other scavenging devices have been installed on equipment and proper heat exhausting gear has been added for times when the heat isn’t needed in the plant, use of the new equipment should be recorded, at least for a while. It is usually practical to capture days or hours of system use, whether changeover is automatic or manual. If it is manual, then it is particularly important to document the activity during the training period. In some cases it will be practical to capture the degree days of heat differential that are being offset by the new equipment. If possible, it is worth documenting that the change is in place and working. Then, when the effect upon HVAC cost becomes measurable, it will be possible to assign credit for the improvements. In the case of condensate reuse, it should be possible to capture the amount of new coolant — usually water — purchase avoided. Later, when financial results are reported, this is easily dollarized and added to the total.
|J. Stanton McGroarty, CMfgE, CMRP, is senior technical editor of Plant Services. He was formerly consulting manager for Strategic Asset Management International (SAMI), where he focused on project management and training for manufacturing, maintenance and reliability engineering. He has more than 30 years of manufacturing and maintenance experience in the automotive, defense, consumer products and process manufacturing industries. He holds a bachelor of science degree in mechanical engineering from the Detroit Institute of Technology and a master’s degree in management from Central Michigan University. He can be reached at firstname.lastname@example.org or check out his Google+ profile.|
Belt slippage reduction — When a belt-slippage reduction program is put into place, baseline slippage readings and improved readings should be taken as improvements are made. Then slippage should be rechecked at appropriate intervals and compared to the original numbers. After a year or so, a plan can be developed to maintain the improvements by rechecking and adjusting slippage on a fixed schedule. Using the baseline of the original project, it should be possible to generate an ongoing savings estimate. This should be compared, if possible, with power consumption information over the year to confirm the financial impact of the improvements. Tracking the slippage at the equipment will provide a good estimate of financial impact, whether or not it can be confirmed in the plant’s utility bills. It should also help to underscore the value of condition-based maintenance.
Reduction of compressed air and steam trap leakage — Compressed air leakage is usually captured with ultrasound equipment when the plant is down. It is often possible to capture the estimated orifice diameters of the leaks as they are stopped. Or, if compressor use during plant downtime can be measured before and after the leak plugging effort, this may provide an estimate of project impact. Either way, the ultrasonic checks should proceed at least quarterly for a year to determine the effectiveness of the fixes. Of course good documentation of leaks found and fixed is essential. The measurement of leakage and compressor activity will provide forward-looking KPIs that can be reconciled with utility bills to assign credit for the changes that have been installed.
Once the physical improvements to plant operations have been identified and correlated to financial results, they should become part of the plant’s annual budget. This will consolidate the gains and help remind managers of their obligation to keep the improvements in place. For an explanation of how to connect improvements to the operation’s budget, please read Establishing budget-based KPIs.
Capturing and perpetuating these benefits will help to establish maintenance and reliability’s strategic position in plant management. It will also demonstrate that simple, real-world fixes you can apply today will pay for themselves and make the plant more sustainable.