Fight maintenance waste with labor analysis

Understanding the importance of labor-hour analysis and the usage of associated metrics.

By Fortunatus Udegbue, FOGAEC Electrophysics Technologies

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In brief:

  • About one-third of every dollar of maintenance costs is wasted as a result of unnecessary or improperly carried-out maintenance.
  • Most managers would agree that they can’t control and improve things they can’t measure, and most industrial managers have not invested in the tools to measure and manage maintenance labor.
  • Documented guidance for reporting maintenance labor, if it’s properly rolled out and entrenched in the maintenance organization, will solve the problem and standardize maintenance labor data that’s reported, making it easier to analyze.

About one-third of every dollar of maintenance costs is wasted as a result of unnecessary or improperly carried-out maintenance, according to R. Keith Mobley, principal, subject matter expert, Life Cycle Engineering (www.lce.com). Since more than $200 billion is spent annually on plant and facility maintenance, says Mobley, poor maintenance management is something like a $66 billion problem.

Conservatively, 42% of total maintenance cost is maintenance labor cost, according to Dr. Alan Wilson, author of “Asset Maintenance Management.” Moreover, direction of maintenance labor has a huge impact on the cost of maintenance material. This means that optimization of maintenance labor has the potential to significantly reduce the waste in total maintenance cost. It is certainly a valid place to attack maintenance waste.

A brief look at the maintenance labor management situation in most industries helps us understand this opportunity better. Most managers would agree that they can’t control and improve things they can’t measure, and most industrial managers have not invested in the tools to measure and manage maintenance labor. This is partly because the data processing to do the job hasn’t been available very long and because maintenance cost is typically about 10% of a company’s operating cost. Most managers probably felt they had bigger fish to fry. For maintenance and reliability professionals, though, the realization that we have the opportunity to conquer a $66 billion opportunity is exciting. Below are some observations on where we can begin attacking this issue.

Maintenance labor analysis often fails to yield desired results because of several key factors, two of which are:

  • lack of management focus on labor utilization analysis and effective stewardship
  • lack of documentation of maintenance labor reporting guidance.

Employees give attention to whatever management has clearly defined as very important.

SMRP Conference

Fortunatus Udegbue, CMRP, PMP, CEO of FOGAEC Electrophysics Technologies, and Ricky Smith, CMRT, CMRP, principal reliability advisor at Allied Reliability Group, will present “7 Deadly Sins of Data Centric Maintenance Management” at the Society for Maintenance & Reliability Professionals Annual Conference in Indianapolis on Oct. 15 at 2:45 PM. The presentation will focus on seven major issues that can drive the wrong organizational behavior for managing the maintenance function in any organization. The presentation will show the cost/benefit analysis of maintenance data management, the data that is required for effective maintenance management of any assets, and what data is optional and why. In addition, remediation concepts will be introduced that would put an organization on the right path toward achieving effective and efficient maintenance management using a data-centric maintenance management approach. Learn more about the SMRP Conference.

In most computer maintenance management system (CMMS) software, where the work order system is used to record maintenance history, recording of the man hours used to complete the work is weakly emphasized, if it is emphasized at all. The alternative way to determine maintenance labor hours is the use of work studies, which is very expensive compared to continuously reporting, auditing, and analyzing labor hours through the CMMS. Also, organizations rarely carry out work studies, so maintenance labor forecasting is mostly based on guesswork without any effectively validated data.

In cases where utilized maintenance labor is reported, the reporting is usually not uniform because there is no company-wide guidance on what is the organization’s acceptable standard. Some report wrench time, while others report the entire labor time.

For example, a technician who starts off his day by 7 AM spends one hour to obtain a work permit, takes two hours to gather tools and materials, waits one hour for isolation and access of equipment to be worked on, travels one hour to and from equipment location, performs actual maintenance work on equipment for three hours, uses one hour for housekeeping, and then spends 30 minutes on the maintenance history update in the CMMS.

With respect to the example above, one technician in a plant could report the labor time as “three hours” — the actual time spent on maintenance work; another technician in the same plant could report “six hours” — the sum of time to gather tools and materials, time to isolate and access equipment, and the actual time spent on maintenance work; and another technician could even decide to report the entire nine hours and 30 minutes — from 7 AM to when the work was reported in the CMMS.

The challenge from this example is that analysis of the labor reported in the CMMS becomes impossible because the maintenance analyst doesn’t know exactly what time is being reported. Benchmarking of maintenance labor effectiveness and efficiency will be impossible as the analyst can’t make an apples-to-apples comparison to leverage good practices or eliminate bad actors. Documented guidance for reporting maintenance labor, if it’s properly rolled out and entrenched in the maintenance organization, will solve the problem and standardize maintenance labor data that’s reported, making it easier to analyze.

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