1660320651573 Article Predictivemaintenancevalue1

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

March 31, 2011
Proof of predictive maintenance benefits can have an astronomical effect.

The constellations of the zodiac appear along the path of the sun, in what’s called the ecliptic. More than 2,000 years ago, skywatchers studied these star patterns and predicted how the movement of the planets “through” them affected civilization on Earth.

Many individuals still cling to the promise of these predictions, or horoscopes, based on astrologers’ interpretations of star patterns in the ecliptic, even though most astronomers dismiss it as a bunch of silly cosmic mumbo jumbo.

Plant and maintenance managers might sometimes feel similarly pressed to defend the merits of predictive maintenance (PdM) techniques. A PdM program requires the use of technologies that help industrial personnel to make better decisions on when to performance maintenance. And these technologies cost money.

Predictive maintenance technologies are numerous, but how much of each is best? In other words, what’s the most cost-effective combination? “Applying the RCM concept for determining what maintenance strategy should be appropriate for each failure mode is best,” says Reid Neubauer, reliability engineer at Therma-Tru’s (www.thermatru.com) manufacturing plant in Butler, Indiana. “I say that because failure-mode maintenance strategies consider, as the first and best option, condition-based maintenance, but only if the means to determine the condition of an asset is technically feasible and worth doing. That might include the use of a specific PdM technology.”

Another take comes from Doug Smithman, P.E., president of EMP Engineering Services (www.empes.com), in Dresher, Pennsylvania. “Anybody involved knows the percentage of failures related to bearings, misalignment, poor installation, insulation and the like,” he says. “They also know that some tests are better at early identification of certain problems than others. The trick is to mix those technologies properly. This is where most programs start off on the wrong foot. Is a program initiated by developing a wish list and then attempting to appropriate the needed funds or by optimizing a budget that has been granted? In most cases, it’s the latter because the program isn’t funded as desired anyway.” In that case, linear programming is the best technique to use to optimize the application of technologies for a host of equipment, he explains.

“Selecting the least expensive combination of PdM technologies usually isn’t your best approach to the highest possible return on investment,” says John Trulli, director of mechanical services at Allied Reliability (www.alliedreliability.com). “Regardless of their cost, the application of technologies is what affects the bottom line. 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. This strategy for selecting technologies results in the most cost-effective corrective action and therefore proving the best return on your technology investment.”

It’s the focus on the bottom line that can make the difference. This means including the labor content in the equation. “First it must cost less to do the technology than to not do it,” says Jim Taylor, CPE, CPMM, director of operations at Machinery Management Solutions (www.machineryhealthcare.com) in Clarks Hill, Indiana. “Then optimize the cost of the full program over the entire plant. An individual technology might be cost-effective for a few machines, but when we look at the entire operation, it might be too expensive. Of course, consider the various ways to apply the technology — contract out, partial in-house, partial contract or fully in-house. Some are more effective if contracted out, especially if they require extensive training or ongoing experience to maintain skills.”

Appropriate application

Figure 1. The oft-cited traditional version of the P-F curve is a theoretical construct that helps visualize the path of degradation in equipment functionality. (Green Energy Engineering Services, Inc.)

Once you have a handle on which technologies are optimum for your plant, the next question most people confront is how rigorously and intensely they should be applied to plant assets.

“The process of RCM-based maintenance strategies determine the intensity and frequency of the PdM technology used,” says Therma-Tru’s Neubauer. “The objective would be to mitigate a functional failure before the asset reaches that stage, which means the P-F interval is long enough to allow the management of the potential failure by scheduled corrective action.”

The P-F curve (Figure 1, Figure 2) often is cited as a way to determine periodicity, says Machinery Management’s Taylor. “But it’s rare that we can plot one for actual machines,” he says. “We can, however, form an initial estimate based on experience. Use industry norms as a starting point. Then take into account the machine type, speed, load, operating environment and consequences of the failure mode. After you gain some experience with that periodicity, use a technique like age exploration to see if you can safely extend the interval.”

Allied’s Trulli argues not to rely exclusively on predictive technologies. “Studies have proven that the most cost-effective maintenance programs include a combination of precision maintenance practices, predictive maintenance, preventive maintenance and run-to-failure maintenance strategies,” he explains. “That said, where failure mode-based maintenance strategies overlap, PdM or condition monitoring should be preferred over the other applications. PdM technologies should be developed and applied based on asset criticality with ever-increasing coverage levels applied as the organization’s work management systems and maturity levels evolve. The key is to feed the work execution process with work identified by condition monitoring and preventive action activities. As the organization realizes the benefits from these activities with a less reactive culture and reduced unplanned down time, resources can be redirected to supporting additional maintenance and reliability initiatives.”

Figure 2. This version of the P-F curve assigns maintenance priorities and suggested maintenance strategies for the various stages of degradation. (Green Energy Engineering Services, Inc.)

Another key to establishing the intensity of an application lies in historical records. “The source information is typically in the form of CMMS work orders, reflecting equipment maintenance history,” says Paul Lachance, chief technology officer at Smartware Group (smartwaregroup.com). “Work orders show the real-life needs during equipment failures. It’s helpful to compare corrective maintenance with preventive maintenance, as well. Meter readings also can be used for PdM analysis. If you can retrieve this data in an automated way, you’ll get more data points on the asset while eliminating human error doing data entry, thus giving better, more accurate and timely analysis.”

Dean Wallace, president of Applied Facility Solutions, Inc., in Jeffersonville, Pa, agrees that equipment history is another factor and suggests results from the PdM program be reviewed to determine if the frequency needs to be adjusted.

“If by intensity you mean frequency, then equipment criticality, shaft speed, typical repair costs and lost production factor into monitoring intensity,” says EMP’s Smithman. “However, intensity often can mean more than frequency. It also can mean the types of monitoring performed. Is oil sampling appropriate? How about a megger test versus a full electrical analysis? Do we monitor vibration on each bearing or simply on the entire component?”

Truthful numbers

To gain any traction for a PdM program at the management level, the cash saved because a breakdown didn’t occur need to be quantified. “We use cost avoidance,” says Therma-Tru’s Neubauer, “which is a total of parts, labor and the cost of the asset being unavailable.” Downtime should be looked at as parts and resources are available, or if they aren’t, he adds.

“This is an area where condition monitoring aficionados tend to oversell themselves,” says EMP’s Smithman. “If the lost opportunity cost is $35,000/hr, a lost week is 7 times 24 times $35,000, or almost $6 million, right? Of course not. Any effective plant finds ways to reduce the hemorrhaging once the corrective measures begin. The hourly cost will drop off, usually by quite a bit. Likewise, citing the full savings over every bearing identified is dishonest. People identified worn bearings by sound and temperature and overloads long before anybody thought of using spectral analysis. Lose sight of that fact or your numbers, and you can lose credibility.”

Each time you find a problem, make sure you publicize the catch and what would have happened if it hadn’t been caught, explains Machinery Management’s Taylor. “You want to build a subconscious belief in PdM’s effectiveness,” he says. “Then, for at least the major finds, do a repair work order estimate as if the failure had occurred, but don’t overdo it with cascading and secondary failures. Be conservative. Then compare that to the cost of the PdM program. I’d strongly advise having someone from the treasurer’s or comptroller’s staff on the team putting together the cost avoidance. When that cost/benefit study gets to the plant manager or higher, you want the comptroller to be able to say, ‘Those are good numbers; my staff helped put them together.’ One other thing, I’d advise reaching agreement a priori on the cost of lost availability. Direct costs are not too controversial, but lost production or sales cost can be.”

How to quantify the benefit of PdM is often asked and frequently left unanswered, says Allied’s Trulli. “The obvious answer is a cost-avoidance figure, an arbitrary or subjective number assigned to an event illustrating a what-if scenario based on an identified defect, the maintenance costs and production loss,” he says. “The trouble with this approach is that when you present the cost-avoidance figure to justify programs or request additional funding, even though the estimations might be accurate, the typical response is that cost avoidance is a fictional calculation. The best way to quantify your program’s effectiveness is to capture metrics specific to the application and effectiveness of the maintenance and reliability initiatives. For example, you can track emergency downtime, maintenance costs as a percent of replacement asset value, overtime costs, parts, PdM and PM compliance, and mean time to implement condition entries.”

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.”


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.

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