Calculating Benefits of RCM

When training RCM facilitators, (or any leaders of reliability change for that matter), I am always sure to make sure I show them how to build a business case, and how to "tell the story". This isn't your run of the mill "How RCM saves you money" article. But hopefully it will give RCM Facilitators and Analysts some capability to determine the value from their studies, and to use that to build momentum for change in their companies. The ability to implement is a rare skill, and in times of rapid change it becomes extremely valuable. Showing value from work is something that is of vital importance, yet seems to be lacking in many reliability projects. As a career consultant my view of this is obviously skewed, but it seems like a lot of reliability professionals tend to outsource this to consultants. (And there are some pretty good reasons for that. Both in terms of the internal dynamics of the company, and in terms of "deny-ability" later sadly) It is true that many RCM analyses end their life as dust gatherers or trapped inside some software program, and there are lost of reasons why. But one of the biggest causes of inaction is a failure, on behalf of the facilitator, to sell the value from the analysis effort. Implementing RCM crosses many corporate boundaries and many managerial disciplines. Not all of whom understand what you are doing, and often they could care less what maintenance are up to. Thats not their fault, they are busy people too, and such is life. So if you are going to get them engaged in your analysis project, then you need to have a compelling story about what you are doing, why you want to do it, and how it will "rock" their world if they help you to do it. And for that you need benefits!! These come in two varieties, the cashable variety and the non-cashable type. Both are good, but some get more attention than others. Get used to that, you aren't going to change it - so you might as well use it to your favor. Cashable Benefits The stuff that changes the bottom line. Period

Potential Revenue Increases

Activities and changes that will cause a net increase in uptime, utilization or yield rates. This benefit is most credible when you can prove downtime from this issue over a reasonable period, say 2 - 3 years, and then forecast the savings over a similar time period. At times this change may be the result of several strategies, not just one. So look carefully for them. Direct reductions in maintenance costs Moubray was fond of saying that RCM will achieve “a reduction of between 20% and 70% in routine maintenance where there is an existing scheduled maintenance program.” My experience is that John, as always, was right on the money with this one. But how does this happen? Here are some areas to look for: When you apply RCM that is compliant with the SAE JA1011 it specifically asks you to determine whether each strategy is "Technically Feasible" (Applicable) and "Effective", therefore some obvious benefits come from:
  1. Inapplicable Maintenance:Elimination of maintenance routines that are accomplishing nothing because they do not fit the criteria to be applied.
  2. Ineffective Maintenance: Elimination of routines that increase rather than reduce the costs of maintenance, or they do not reduce the risk of failure to the appropriate levels, or they actually increase the likelihood of failure.
  3. Maintenance Out of Context: A big one in my view. Changing operating procedures, plans and strategies to suit the operating context of the assets.
Non-Cashable Benefits All the other stuff that RCM can give you. This is a huge list and I am only going to list some of them here. Avoided Cost Careful definition required here, this is one that many risk consultants play up. But if you are going to be honest about it there is a right way and a wrong way to define these. The definition I have been using for the last 5 years or so is: The consequences that are mitigate via any maintenance strategy applied to a reasonably likely failure mode; where there was an inadequate existing maintenance policy. Note the emphasis on the existing maintenance policy! Often this is calculated from the estimated costs of downtime only, but you need to make sure that there was nothing in place previously. Although this will give a quantifiable answer as a dollar value, this figure will never show up on anybodies bottom line. It hasn't happened to date, and because of your strategy it will not happen in the future. So it remains a valid benefit claim for the RCM team to make, but careful consideration is needed to explain it.

Knowledge increases

  • Changes to procedures, work processes and related policies (such as stores policies)
  • Increases in the knowledge of each participant ion the RCM process
  • Changes to P&IDs
  • Better understanding of the limitations and requirements of the asset base by all those who are charged with managing them

When to start calculating benefits

Don't wait until the analysis finishes. Start to calculate these the moment that the process starts. Be conscious of the impact of every failure mode that is analyzed and of every strategy that is recommended. Part of the reason why I truly enjoy training people in RCM is because the method lends itself to accepting responsibility for changing whats going on around the business.
  • If management doesn't get it, you didn't explain it well enough,
  • If you have no support, you haven't lobbied correctly or hard enough
  • If your analyses don't get implemented, then you haven't done enough to influence the implementers
And so on... great fun. Good luck! If you enjoyed this post please consider subscribing in a reader, or you can also receive The Art of Change by Email.