How To Manage Maintenance

About
This Course
As one course among many offered in the American Management Associa-

tion's curriculum, How to Manage Maintenance has been designed for the man-
ager whose time is at a premium. It provides self-paced, individualized study;
learning and self-evaluation through in-text exercises.
Edward Hartmann is a registered professional engineer (P E.) and past

president of several chapters of the Institute of Industrial Engineers (IIE). He
has served as director of the Management Division and as chairman of the IIE
Maintenance Task Force. Mr. Hartmann initiated and chaired the 1984 and
1985 International Maintenance Conference and has served on its Program
Committee ever since. He has conducted Maintenance Management and
TPM seminars for business and professional organizations in the United
States and overseas, among them the American Institute of Plant Engineers
(RIPE), the Institute of Industrial Engineers, the Institute for International
Research (IIR), the Norwegian Society of Professional Engineers, CIDES in
South America, and the APRC in Singapore and Malaysia.
Donald J. Knapp graduated in civil engineering from Georgia Tech. After
Navy service, he obtained a graduate degree in industrial engineering at the
University of Southern California. He has worked in aerospace manufacturing,
at Univac, in computer services, data communications, facilities operation and
construction, testing and inspection, plant maintenance, manufacturing sys-
tems, operations management, and information management. He has held such
titles as: engineer, technical supervisor, project manager, director of engineer-
ing, director of plant engineering, director of computer systems, vice president/
sales and marketing, vice president/general manager, and president. He cur-
rently consults in the United States, Canada, South America, Europe, and the
Pacific Rim area. He is a licensed professional engineer (PE.).
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xii How to Manage Maintenance
Joseph J. Johnstone, a management consultant specializing in manufac-

turing management and training, was corporate manager of engineering ser-
vices for Armour Foods and Armour Dial before founding Engineering
Management Systems, Inc. Mr. Johnstone has also served as an advisory editor
to Training magazine, a member of the advisory editorial board for Factory
magazine, and a fellow and former national president of the American Insti-
tute of Plant Engineers.
Kenneth G. Ward spent over 20 years in various management positions at
IBM before becoming a vice president of Engineering Management Systems,
Inc., a management consulting firm. Mr. Ward has held numerous leadership
positions in regional and national affairs for the American Institute of Plant
Engineers and has written extensively on engineering and maintenance topics.
The publisher wishes to thank Salvatore T. Cordaro, president, Cord
Associates, and Professor Lawrence J. Mann, Department of Industrial Engi-
neering, Louisiana State University, for their help in reviewing the manuscript
of this course.
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This Course
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How to
Manage Maintenance
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Second Edition
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How to
Manage Maintenance
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Second Edition
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Edward Hartmann
Donald J. Knapp
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Joseph J. Johnstone
Kenneth G. Ward
Contents
About This Course xi

How to Take This Course xiii
1 Organization Structure 1
Introduction
Organization Charts and Reporting Levels
Very Small and Small Organizations
Medium Organization
Large Organization
Managerial Objectives
Resources to Manage
Human Resources
Financial Resources
Physical Resources
Information Resources
Maintenance Costs
Maintenance Department Objectives
Maintenance Department Functions
The Maintenance Manager
The Maintenance Supervisor
Staffing the Maintenance Function
Personnel Ratios
Use of Primary Skills
Area Organization
Rules and Regulations of the Organization
Summary
Review Questions
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vi How to Manage Maintenance
2 The Maintenance Budget 23

Introduction
The Chart of Accounts
The Expense Budget
The Operating Expense Statement
The Value of the Expense Budget
The Capital Budget
Overstaffing
Deferred Maintenance
Assigning Accountability for the Budget
Preparation of the Budget
Summary
Review Questions
3 Systems for Control 37

Introduction
The Work Order
Cost Information
Source of Communication
The Service Order
Small Jobs
Emergency Service Orders
Open Work Orders
Work Order Procedure Flow
Work Order System Advantages
Priority Systems
The 1,2,3,4 System
The Alpha Numeric System
Reporting Systems
Record Keeping Systems
Computer Versus Manual Systems
Summary
Review Questions
4 Inventory: Parts and Materials 57

Introduction
The Maintenance Inventory
Ordering and Inventory Costs
The Economic Order Quantity (EOQ
Need Versus Cost
The Role of Purchasing
Maintaining the Stock
Stores Catalog
Technical Database
vii How to Manage Maintenance
Control of Inventory Level

Free Use Items
Storage Location
Pre-kiting of Parts
Inventory Accuracy
Lubrication Materials
Measuring Stores Effectiveness
Summary
Review Questions
5 Maintenance Support Programs 73

Introduction
History of Preventive Maintenance (PM)
Categories of Maintenance Support Programs (MSP)
Reliability Improvement Programs
Planned Maintenance Programs
Unplanned Maintenance Programs
The Cost of Maintenance Support Programs (MSP)
Measuring the Risk of Maintenance Support Programs
Equipment Inspection
Equipment Identification
Inspection Procedures
Inspection Frequency
PM Work Order Scheduling and Routing
Scheduling PM
Routing PM
The Manager's Role
MSP Reports
Uptime Report
Compliance Report
Ten-Most-Critical Report
Work-Generated Report
Graphical Data
Summary
Review Questions
6 Planning and Scheduling 93

Introduction
The Key Elements of Planning and Scheduling
Identification of Jobs to Be Planned
Authorizing Work Orders
Assigning Priorities
The Planning Process
Estimating Labor Hours
Providing Information: Sketches, Prints, and Special Tools
viii How to Manage Maintenance
Parts and Materials Needed

Planning Sheet for Larger Jobs
Ordering Materials
Scheduling Work
Scheduling Small Jobs
Scheduling Large Jobs
Execution of Work
Review of Work
Measuring Effectiveness
Records Upkeep
Selecting the Planner and Scheduler
The Planner
The Scheduler
Summary
Review Questions
7 Craft Training 109

Introduction
Training Needs Analysis
Documenting Training Needs
Skills Analysis
Job-related Training
Functional Training
Hands-on Training
Instructors
Upgrade Training
Training Materials
Existing Programs
Summary
Review Questions
8 Measuring Effectiveness 123

Introduction
Safety Measurements
Budget Variance
Maintenance Cost per Unit
Maintenance Cost as a Percentage of Capital Investment
Additional Measures
Percent of Uptime
Workload Backlog
Overtime Ratio
Emergency Work Ratio
Labor Versus Material Ratio
Work Measurement
ix How to Manage Maintenance
Estimated Time Versus Actual Time

Work Sampling
Summary
Review Questions
9 Computerized Maintenance 137

Management Systems (CIVIMS)
Introduction
What Should CMMS Do?
How Do CMMS Work?
Basic System Features
System Modules
Functions Included in Modules
System Operating Details
CMMS Implementation
User Training
Evaluation of the Facility
Data Entry
System Operation
Reports
Report Samples
Benefits of Using CMMS
Identifying Benefits and Savings
Summary
Review Questions
Bibliography 159
Post Test 163
Case Study 171
Case Study Solution 179
- -
Selected Readings 195
Index 233
Organization
Structure
Learning Objectives
By the end of this chapter, you should be able to:
Define the need and structure of a formal orga-

nization in managing the maintenance func-
tion.
List the three elements comprising the plant
engineering function.
List four resources that must be managed by
the maintenance organization.
Define and list your maintenance department's
goals and objectives.
List eight criteria for selecting a maintenance
supervisor.
List three methods for determining the staffing
level of a maintenance organization.
Define three concepts of area organization in
maintenance.
INTRODUCTION
Driven by competitive markets and new management methods, maintenance
managers face the challenge of adapting to new and better ways of doing
things. The central structure for providing direction to the maintenance
operation is its form of organization. An organization is the administrative
and functional structure of any endeavor, whether it is a department, a busi-
ness, or even an army. Each has it own purpose and objective for existing;
1
2 How to Manage Maintenance
that is what causes the organization to come into being. The administrative
and functional elements are necessary to sustain the prime purpose of the
endeavor. They formulate the regulations, operating procedures, and basic
guidelines for interpersonal relationships; they set controls and lines of
authority. Organizations permit managers to achieve the end result of any
endeavor, namely to get the job done through efficient and maximum utiliza-
tion of all available resources.
Commercial businesses strive to make a reasonable profit; public and
non-profit activities strive to operate in a cost-effective manner. Either way,
the businesses must deliver products or services at optimum cost and on
schedule in order to be judged effective. When one thinks about world class
businesses, however, other factors enter the picture. Factors such as product
quality, environmental obligations, energy management, and the expanding
role of government and regulatory agencies in the workplace are a few of the
newer topics that maintenance managers must deal with directly. The main-
tenance manager plays a significant and growing role in pursuing these and
other issues. Still, in the final analysis, businesses must create a market for
their products or services, and from this market, operating, manufacturing,
and marketing costs are funded. In simplest terms, what remains is the gross
profit, which is increasingly influenced by the impact of activities performed
by the modern maintenance function. Increasingly, traditional organizations
are giving way to new concepts of structure. Self-directed work teams, qual-
ity circles, multi-skilled technicians, cellular work groups, and similar terms
are used to describe some of the changes. More and more, decision making
is being pushed down to the levels where work is actually done on equip-
ment and systems. Knowledge and training are becoming crucial to the abil-
ity of maintenance personnel to keep up with modern complex equipment
and systems.
Maintenance managers, then, become essential in keeping the cost of
products and services at an optimum level through effective management of
the resources for which they are responsible. More than that, to effectively
manage support resources, maintenance managers must not only become
part of the senior management team and play an expanding role in fulfill-
ing the objectives and strategy of the business, they must also provide
ongoing leadership in implementing modern management techniques in
the maintenance function itself. This may be a novel concept to some
maintenance managers who have previously operated at some distance
from policy-making levels or have followed traditional methods of organi-
zation and authority. However, the changing impact of the maintenance
function is more evident each day. The purpose of this course, then, is to
develop insights into how best to achieve this role. In this chapter we will dis-
cuss the importance of organization as an instrument for managing resources
and achieving objectives, and the importance of maintenance management in
controlling resources. Because people are undeniably the most important
resource, the manager's role in this regard will be emphasized. We will also
look at the many functional responsibilities common to both large and small
organizations.
ORGANIZATION CHARTS AND REPORTING LEVELS

In structuring an organization, many factors must be taken into consider-
ation. No single structure applies to every situation, or even to activities that
are similar. Two of the factors are:
1. Organizational objectives should shape the way an organization is set up.

The organization should be built around the functions that best serve the
mission of the business or enterprise. But an organization is dynamic; it is
made up of people. One cannot continually change boxes on an organiza-
tion chart and expect productive results. Rather, the manager should
develop the people, make them responsible, and gain maximum utiliza-
tion. Then the manager should design the organization's functions to
realize the potential of the people making up this collective activity.
2. The size of an organization dictates the need for a certain minimum
number of management personnel. The distribution of functions can also
change in organizations of the same size. However, regardless of size, an
organization must employ the necessary management functions for con-
trol and a cost-effective operation.
Very Small and Small Organizations

Very small and small maintenance organizations have fewer people (from 2
to 30), so management systems must be streamlined to reduce work activity
and paperwork. The work order is the key to all controls; consequently, a
very small plant might keep all completed work orders in a file as equip-
ment history. Engineering design might be contracted out. Typically, the
individual responsible for maintenance is a supervisor (most often referred
to as foreman), possibly a working supervisor. Budgeting is the responsibil-
ity of the superintendent or manager of support services. Smaller mainte-
nance organizations typically report to the manufacturing manager, although
experience suggests this is an organizational error; better results ensue
when maintenance and manufacturing report to the same management
level. Exhibit 1-1 shows an organization chart for a very small manufactur-
ing plant, and Exhibit 1- 2 shows a typical small manufacturing plant. A
small or even very small plant should have a formal planning and schedul-
ing function. To justify a planner/scheduler, the organization might have
the individual perform other duties, such a managing stores, purchasing
items for maintenance, and expediting deliveries. The maintenance super-
intendent and/or supervisor could carry a share of the planning and sched-
uling function as well. (The organization charts shown in Exhibits 1-1
through 1-4 are typical but not hard blueprints for designing an organiza-
tion.)
Medium Organization
A typical medium-size manufacturing plant organization is shown in
Exhibit 1- 3. The maintenance group would typically have 2 5 to 40 people.
In this example, the maintenance work is still centralized, but there is also a
central shop. There are more personnel to manage various support func-
tions, and the maintenance organization reports to a plant engineer, not to
manufacturing. Construction and some engineering might still be con-
tracted out. This is a practical organization because the natural affinity of
engineering and maintenance is effective.
Large Organization
In much larger plants, the engineering department might be pulled out of
maintenance to stand alone, and larger support activities might be adminis-
tered by business-oriented managers instead of engineers. Maintenance could
be a department of 100 people or more. A large plant might do all of its own
maintenance work, as well as small to medium construction work and only
contract out large projects to avoid building up too much internal construction
capability. An organization chart for a large plant is shown in Exhibit 1-4.
Clearly, large plant maintenance contains many more organizational functions,
and work is typically set up along geographic or functional areas to interface
with production units.
The maintenance support functions in a large plant might include engi-
neering, purchasing, and stores. These might report to maintenance or
another department depending on which activity is the chief user of the func-
tions. In very large organizations, these services are widely used by all and are
better utilized if discharged through a central organization.
MANAGERIAL OBJECTIVES
It is not enough for a manager of a department to excel technically. Because
most maintenance managers are technical persons, management already
assumes they excel in technical areas. A maintenance manager is also
expected to increase productivity and improve the technical excellence of the
organization. It takes exceptional management skills to accomplish this.
The transition from being a technical expert to a manager of a technical
organization is shown in Exhibit 1-5. For a smooth transition, a manager
must understand the overall objectives of the organization.
The objective should not simply be to get the job done: It should be to
do :a better job by knowing why the job is being done. As in technical trouble
shooting, it is important to look past the effect and find the cause.
For example, top management might include the following in this year's
overall company objectives:
A. Establish annual growth of 15 percent.

B. Expand market area to include Europe.
C. Introduce a new product.
D. Change corporate image (community involvement).
E. Obtain a 2 percent or smaller reportable accident level, as reported to the
Occupational Safety and Health Administration (OSHA).
The transition from a purely technical responsibility to the management of that technical group,
right up to a company's top executive, is well illustrated in this exhibit. The vertical lines intersect
the division of technical responsibilities and managerial responsibilities to indicate how manage-
ment skills take precedence over the technical skills as a person becomes more involved in higher
levels of responsibility. These vertical grids, numbered one through six, might be identified as fol-
lows:
1 Technician (or hourly mechanic). In this position there is some need to manage both work and time.
2 Engineer (accountant, nurse, and so on). Each position requires some type of technical responsi-
bility that demands some management of time, work, and important decisions.
3 Engineering Manager (first-line manager, foreman, accounting supervisor, and floor charge
nurse). Each of these positions manages a highly technical activity with a direct technical respon-
sibility, and there is an increase in managerial requirements.
4 Functional Manager (maintenance manager, plant engineer, accounting department head, hospi-
tal head nurse, and production superintendent). The scope is increased over that of grid 3,
though there is often overlapping of 3 and 4. With the increased scope comes the increased need
to manage all of the resources assigned to these positions.
5 Middle Manager (plant manager, assistant controller, division manager, hospital administrator,
and division, or corporate, engineering manager). The scope of responsibilities has now
increased to include the responsibility of other functional organizations. The technical knowledge
required includes an understanding of many technical functions. It becomes even more important
to administer and make decisions affecting many areas.
6 Top Executive (has a background in one of the other disciplines). Must manage (lead) all other
functions and develop the strategies of long- and short-term business planning. Like any other
manager, the top executive must know how to manage the human resources who provide the
i nput for the major decisions to be made.
Of course, many more objectives could be shown, such as quality and pro-
ductivity improvements, increases in equipment uptime, facility improve-
ment, reorganization plans, etc. And those listed above may require even
more involvement to achieve their ends. For example, expanding markets to
Europe may necessitate certification that the plant has implemented the pro-
visions of ISO 9000, a standard published by the International Standards
Organization, concerning manufacturing operations and materials sourcing.
The maintenance function would play a major role in getting the plant certi-
fied to comply with this standard.
These sample objectives relate to key business activities and can be asso-
ciated with the eight key areas for which management author Peter Drucker
suggests an organization must set objectives. These are:
1. Marketing 5. Human resources

2. Physical resources 6. Social responsibility
3. Innovation 7. Financial resources
4. Productivity 8. Profit requirements
These eight key areas can be matched with the five company objectives
previously listed, possibly as: A=6, 7, 8; B=1, 3, 6, 7, 8; C=1, 5, 6, 7, 8; D= 2, 4;
E= 2, 3, 4. Once the manager understands and identifies with the company's
overall goals, true management takes shape. At this point, no matter what
function is undertaken, the manager begins to run a business.
Understanding and identifying with the overall goals or objectives is not
the responsibility only of the maintenance manager or other functional man-
agers. A true test of top management is found in how effectively the organi-
zational goals are developed and communicated to all levels of subordinate
management. A company that clearly defines "where it is going" sets guide-
lines that can motivate all sectors of the organization. This is important
because an organization doesn't just grow by itself it grows because of people
who bring it into being and who are the main reason it sustains itself.
RESOURCES TO MANAGE
The usual resources connected with an enterprise include:
Human (personnel, intellectual talent)

Financial (capital, budget, cost)
Physical (plant, equipment, land, materials, parts, etc.)
Information
Good management of each of these resources is vital to successfully

achieving overall goals and objectives. However, the individual who success-
fully comprehends and manages the complexities of the human resources
usually manages all of the resources well.
Human Resources
Human resources are people-complex and different from one another.
They are by-and-large capable and proud and want the same respect the
manager desires. They need to be clearly shown what is wanted, and they will
do the job. People are generally motivated; the manager's job is to create an
environment in which people can achieve and, when they do, reward them
with recognition. A good manager also shows genuine concern for people,
which leads to their trust and commitment to managerial decisions and lead-
ership. Personnel at all levels have a great desire to be part of the decision-
making process. This is especially true in newer types of organizations men-
tioned earlier in this chapter. Maintenance managers must strive to involve
maintenance workers in the decision processes affecting their daily work
lives. This involvement is primarily a matter of communications, but also it
requires re-thinking issues of trust and respect among the various levels of
the organization.
Financial Resources
A good manager is concerned with the costs of getting the job done and
instills in the workforce the same concerns. To get the maximum contribu-
tions from others, a manager plans and schedules work, develops standards of
measurement and productivity, and makes sure the true costs of activities are
known. Financial control requires exercising effective leadership as well as
developing and enforcing firm but fair discipline.
Physical Resources
The heart of the maintenance function, the reason for its existence, is the
physical resources. A maintenance manager who feels responsibilities beyond
day-to-day problems is more likely to achieve the major role of assuring the
vitality of all physical assets. This larger role is another exciting aspect of
managing an organization: it is not only more interesting than the necessary
daily routine work (which managers must do well), but it gives a manager the
satisfaction of contributing to the overall objectives of the organization.
Information Resources
Our entry into the information age has been accompanied by an explosion of
facts, figures, and large amounts of data that may or may not assist the man-
ager in getting the job done effectively. Information is generally regarded as
helpful; however, one of the skills a modern manager must achieve is to study
large amounts of information and determine which items are truly helpful in
achieving the objectives of the maintenance function.
MAINTENANCE COSTS
The costs of maintenance can vary from 5 to 40 percent of the total cost of
producing a product or service. The wide range derives from the nature of
the enterprise, the way costs are recognized and accumulated, and the effi-
ciency with which work is carried out. Yet maintenance is only one of the
costs associated with total costs. In a manufacturing process, for example,
functional areas beyond maintenance claim portions of the total costs,
including:
Production Raw materials

Marketing and sales Administration
Distribution Materials handling
Plant operations Research and development
Inventories Management
Employee benefits Regulatory compliance
Environmental issues Obsolescence
Every unit that is produced contains a share of these costs. This is why
each manager has an important responsibility to control costs. A mainte-
nance manager is primarily concerned with controlling labor, materials,
and overhead costs. In a labor-intensive industry, the overall costs of main-
tenance will generally be lower than in a capital-intensive industry where
there is more equipment to maintain and support. Yet each situation, large
or small, requires the same managerial functions within the maintenance
function to keep costs under control. Another effect of maintenance on
overall costs is that poor equipment reliability and poor equipment perfor-
mance combine to affect product quality and rate of production. Thus,
inadequate maintenance can generate production costs that are many times
greater than those attributable to maintenance labor, materials, parts, and
overhead.
MAINTENANCE DEPARTMENT OBJECTIVES

The objectives that govern the existence of the maintenance organization
should also guide the functional activities of the department. At the same time,
the maintenance department's objectives should reflect the overall goals of the
business. A sample of one departmental objective might be to effectively
develop and utilize available resources to preserve physical assets while safely
providing continuous availability of production equipment at the most eco-
nomical level.
This objective presents a challenge to any maintenance manager. It pro-
vides a guide to long-term and short-term needs, and applies to all resources-
human, financial, physical, and informational. The most important part of this
objective is to get the job done effectively. To successfully implement such an
objective, the maintenance department must develop various functions and
activities.
Additional objectives will surely include some of the more current con-
cepts, such as continuous improvement, total quality, total productive equip-
ment maintenance, energy and environmental upgrades, information and cost
improvement, and so forth.
MAINTENANCE DEPARTMENT FUNCTIONS

Earlier, we said an organization is the administrative and functional structure
of any endeavor and that it is made up of people. Within every organization
there are functions and activities that are required for its successful opera-
tion. Many functions are universal to all organizations; some relate to a role
that a specific organization performs (for example, maintenance production).
However, a review of many well-run organizations reveals there are more
universal functions than unique ones. Below is a list of typical functions for
the maintenance organization:
Repairs Employee relations

Engineering Training
Preventive maintenance Record keeping
Safety Energy management
Planning and scheduling Regulatory compliance
Estimating Data base management
Stores control Budgeting
Work management Reports and analysis
Plant operations Financial planning
Quality Assurance Construction and remodeling
Other functions could be added to the list. The point is that many of
these functions are universal to any organization. Some maintenance depart-
ments will be more involved than others in these, depending on their size and
the critical nature of their responsibilities. In this list, the activities unique to
maintenance are repairs, engineering, preventive maintenance, and work
management. In some cases construction/remodeling is also included. These
are the basic technical functions of the maintenance department. The
remaining functions on the list are generally performed in any well-managed
organization. Unfortunately, some maintenance organizations focus on the
technical areas only.
Management activities (or tools) that support management functions,
include:
Operating procedures
Work orders
Management reports
Tracking of current and future work
Data and information retrieval
Priority setting
Regulations
In recent years, we have seen these activities communicated or carried

out through computer-based management systems, allowing managers to
spend more time in actual supervision of maintenance work, as opposed to
devoting a lot of time to paperwork.
A maintenance organization, regardless of size, must to some degree

develop and support all of these functions and activities if it is to be effective
in achieving its objectives. The chapters that follow will discuss these prereq-
uisites of good management in more detail.
Finding a sufficient number of people to carry out all the maintenance
functions is an ongoing task. Management must agree to the principle of
developing these functions and activities and apply them to the overall objec-
tives. Then management must determine how to divide individual responsi-
bilities among its people. The smaller the maintenance organization, the
greater the share of functional responsibilities and accountability for each
individual.
THE MAINTENANCE MANAGER

The maintenance manager is first a professional manager with a good tech-
nical background whose mission it is to direct the maintenance function. In
small to medium-size plants, the manager might be an engineer or a techni-
cally trained person who has come up through the ranks. In most large
organizations, the manager generally is a degreed engineer.
As organizations become larger and the demands of professionalism
become higher, the maintenance manager title becomes interchangeable
with plant engineer. Plant engineering combines the functions of engineer-
ing, maintenance, plant operations, and management. People occupying
the plant engineer function are often registered professional engineers
(P E.), and some strive to become designated as certified plant engineers
(C.P.E.). Some professionals in this field join the American Society of Plant
Engineers, which is called an umbrella society because different institutions
refer to plant engineers by different titles. Hospitals use the term "hospital
engineering manager"; universities typically use "facilities manager"; large
corporate organizations often use titles that include the manager's engi-
neering discipline (electrical, mechanical, maintenance, chemical). Basi-
cally, all perform the same general functions that make up plant or facilities
engineering.
TIME MAINTENANCE SUPERVISOR

Maintenance supervisors (often referred to by the traditional title of "fore-
men") occupy one of the most important managerial functions in a mainte-
nance organization: the day-to-day responsibility of personally directing a
group of employees. The supervisor is the management's direct representa-
tive and sees that all management policies and procedures are implemented
at the working level.
The supervisor's position is also the main entry level for hourly employ-
ees who want to enter management. It is essential that a good selection pro-
cess be employed in filling this position. Too often, the main criterion is the
individual's technical skills. Selecting people with technical skills is extremely
important, but a supervisor must also possess non-technical skills, abilities, or

knowledge, including:
Leadership skills.
Demonstrated planning skills.
Understanding of such systems as work orders and priorities.
Personal communications skills (both verbal and written).
Ability to sketch or diagram work to be done.
Respect for peers, subordinates, and superiors.
Ability to grasp and analyze figures.
Innovation skills.
Understanding of human nature and motivation.
In selecting a supervisor, it is important to make objective appraisals of

the candidate. This can be done best by using the same criteria for all candi-
dates and by including other managers within the organization in evaluating
new candidates.
Some organizations occasionally appoint young or inexperienced engi-
neers to the supervisor position in an attempt to give them some exposure
and seasoning in maintenance. But before moving into the supervisor's posi-
tion, the engineer should spend time in other departments to gain experience
in the overall nature of the enterprise, its processes, and its people. Other
organizations select supervisors from technicians or mechanics who have
come up through the working ranks. Each plan offers unique opportunities
for training in maintenance theory and know-how. To gain better results
from the supervisor arrangement, a clearly defined job description should
show the position's duties, objectives, responsibilities, authority, and relation-
ships to other management functions.
STAFFING THE MAINTENANCE FUNCTION

There are no hard-and-fast rules for determining the number of skilled
and non-skilled personnel a maintenance organization requires. Over
time, most managers arrive at a mix and number of personnel who achieve
maintenance objectives at an acceptable level of cost and efficiency. His-
torical patterns and the company's type of production (or work process)
will point to which types of skills are needed. But the number of skilled
personnel needed is more difficult to determine. Several methods can be
utilized:
One method is to multiply the replacement value of equipment by the fac-

tored maintenance estimate. As a general rule, total maintenance costs
vary from as low as 1 percent (for a labor-intensive industry) to as much as
15 percent (for a capital-intensive industry). It must be decided by estimate
or experience (sometimes arbitrary) where the facility and its equipment
falls on this scale of 1 through 15 percent. Below is an example using $20
million dollars of equipment replacement value and 8 percent as the total

estimated maintenance cost:
Capital Replacement Value x Estimated Maintenance Cost (%)

= $20,000,000 x.08 = $1,600,000 Total Mtce. Cost/Yr.
Next, the historical portion of labor as a percentage of the total mainte-

nance cost is applied. If it is, say, 33.3 percent of the yearly total costs, then
$533,333 labor costs can be projected ($1,600,000 divided by 3). If a
weighted average skilled trades wage is $18.21 and benefits are another
22.3 percent, then 11 mechanics can be hired.
Labor plus fringes x hours = Weekly labor costs

($18.21 + 4.06) x 40 = $890.83
$890.83 x 52 weeks = $46,323.33/Yr.
$533,333 -F-$46,323.33 =11.51-skilled workers
Another method used to. determine staffing requirements is to compare

needs with another plant or organization that has substantially the same
operation. Care must be taken to look for hidden differences that can
affect staffing needs.
A third method is to research the cost of maintaining similar pieces (or
groups) of equipment and to infer certain cost estimates based on these
data or on personal experience of the manager, supervisors, or consultants.
What is striking about these three approaches is their arbitrary or sub-

jective nature and their imprecise basis for determining the required number
of direct personnel. Over time, the true needs for keeping the equipment and
facilities maintained in optimum condition emerge. As each work site is
unique, and its problems and equipment are also unique, the manager must
study and analyze all facets of the staffing challenge, both from a historical
and from a theoretical angle. Accumulation of costs by discrete activity is
essential, as is data on estimated maintenance costs for new equipment and
even for planned items not yet installed.
The manager's responsibilities do not end with determining the skills
and numbers of personnel required. The manager must also manage those
skilled personnel efficiently. Unfortunately, there are some managers who try
to solve all problems, both technical and managerial, by simply adding more
people in the maintenance work place.
PERSONNEL RATIOS
One of the questions frequently asked is: "What should the ratios be for
supervisors (or other supervisory personnel) to skilled or non-skilled, hourly
personnel?" Once again, the type of enterprise and equipment involved cre-
ates ratios that are unique to the case being evaluated. The ratios within a
plant can vary, too. For example, a machine shop in a central location, sup-
porting the maintenance function, may have twice the number of hourly
machinists for each supervisor as an electrical shop that is dispatching electri-
cians to various parts of the plant. The obvious reason might be that all
machine shop supervisors are supervised from one location, while the electri-
cians work in many locations. Similarly, a very specialized skill, such as elec-
tronic instrumentation, might require fewer hourly employees per supervisor
because of their greater technical expertise, even though their work might be
performed in just one shop location.
The following ratios are for typical work situations. Each example repre-
sents one supervisor.
Number of hourly people

Concentrated area supervisor 12-15
Supervisor dispatching plant-wide 8-10
Machine shop supervisor 15-20
Specialty/high-tech supervisor 6-8
Average (excluding planner/estimators) 10-15
Planner/estimators, and planner/schedulers, although not direct supervisors,

generally are responsible for 15 to 25 workers, in terms of work planned, esti-
mated, and scheduled. The number of workers they can accommodate
depends on the unique work they handle from the planning aspect. Experi-
enced workers and their supervisor might plan, estimate, and schedule certain
repetitive jobs, while more complicated jobs and projects are generally desig-
nated for separate handling by the planner/estimator/scheduler position. It
should be noted that the extremely complex facilities found in many sites
today cause the planner's workload to increase by a large measure. In these
cases the planner probably can handle no more than 12 to 15 workers,
depending on the sophistication of the technology and the resources at the
planner's disposal.
For plant-wide ratios of supervisors, the two ends of the 8 to 10 average
range shown above would indicate that 7 to 10 supervisors would be needed
for a total of 100 workers. This range could be checked against the type of
industry involved. Typically, the more complex or more capital-intensive sites
require more supervisors.
To determine the ratio of management personnel to first-line supervision,
a ratio of .2 manager to 1 supervisor is often used. This adds 2 managers to an
organization with 10 supervisors, and 3 managers to an organization with 15
supervisors. Remember there are many variables (a scale of 1 to 15 percent of
equipment replacement cost, for example) and no set rules. The staffing tables
of a maintenance organization must be critically evaluated on an ongoing
basis because technical requirements and priorities are constantly changing.
USE OF PRIMARY SKILLS

Frequently one hears the comment, "A multi-skilled technician is what we
need." This term overlooks employee relations. The individual's primary skills
should always be used to the fullest extent possible. It would be inefficient to
do otherwise. It is helpful if a worker who repairs a motor bearing can also use
simple skills to remove a guard, disconnect motor leads, remove the motor
from its mounting, and return it to the shop. In such a case the worker uses
primary skills to actually replace the bearing.
However, use of multi-skills could be a delicate situation in some work
environments, particularly in a unionized organization, because this practice
might threaten the job security of other workers. Breaking the overall job into
many smaller pieces, with each piece accomplished by a separate person or
skill, is highly inefficient. Often this arrangement is not even a part of the
established labor agreement, if there is one; many times it is merely the result
of shop practices and precedent. This is but one example of why the employee
relations function must be understood by both the maintenance manager and
the supervisor.
A more appropriate evaluation of skills usage in modern facilities might
center on the need to hire workers who possess trouble-shooting and diagnos-
tic abilities rather than traditional craft knowledge. Newer equipment
requires workers who can analyze complex problems involving a variety of
technologies (e.g., computer, hydraulic, mechanical, and electronic) and direct
responses from a team of varied support personnel. Straight craft work, once
the backbone of most maintenance organizations, is giving way to generalists
and specialists who can work together to solve problems quickly and effi-
ciently. Modem technicians require training in recognizing modes and causes
of failures; data collection and analysis; and new technologies for equipment
surveillance and condition monitoring.
AREA ORGANIZATION
Many maintenance organizations have some form of area assignment.
Line assignment. A technician is permanently assigned to maintain a specific

production line (such as a product assembly or an automated "cluster
area"). Generally this type of area assignment does not effectively utilize
the worker; moreover, in certain cases it may overtax the worker. Further-
more, this assignment mode often leads to the creation of historical prece-
dent under which the workers refuse to do work other than on the line to
which they are assigned. Overstaffing can result.
Area Responsibility. A single technician is given responsibility for an area of
the plant or facility. If a top priority arises in that area, that person must
respond immediately, whether or not engaged in other work. Area assign-
ments are usually employed in smaller plants or within a classic area orga-
nization. Area assignments are considered superior to line assignments
because they encourage dedication to a particular activity while they pro-
mote increased productivity by providing other general work assignments
beyond those of the area responsibility.
Classic Area Assignment. An organization is assigned to a physical plant or
facility area. The members are responsible for the day-to-day repetitive
work, routine repairs, preventive/predictive maintenance, and some emer-

gency work. Staffing of this type of organization should be lean, with addi-
tional support supplied as needed from central shops. Here again, there is
the danger of setting precedents of overstaffing. This type of organization
is usually seen in very large plants where one area may be as large as many
small- to medium-size plants.
The major advantages of any area assignment are familiarity, dedication,

pride in ownership, reduction in travel time from central shops, better team
effort, more thorough knowledge of equipment, faster response time, and eas-
ier coordination. The main shortcoming is the potential for overstaffing, gen-
erally expressed by uncontrolled loyalty to the area or process. Priorities may
be overlooked and more services provided than are economically justified.
Often it is more feasible to assign area cognizance to supervisors only and let
them draw on central shops for support within a solid priority system. Thus,
supervisors can provide the dedication necessary to get the work done, while
avoiding the establishment of an overly large permanent working group.
RULES AND REGULATIONS OF THE ORGANIZATION

Every organization has rules and regulations that govern its activities and the
relationships between people, as well as certain procedures on how to operate
each function. One procedure may regulate behavioral functions, another the
methods by which a job is done. Rules, regulations, and procedures must be
written concisely for clear understanding by all. It is important that members
of an organization know what is expected of them.
To be implemented successfully, all rules and regulations must be treated
as standards that apply to everyone, although some defined differences may
exist in their administration. Rules for managers might vary somewhat from
those that apply to hourly workers; however, the principles should be similar.
For example, chronic absenteeism should be treated uniformly for all employ-
ees, and penalties should be enforced regardless of the classification of
employee. On the other hand, a manager might get an afternoon off with pay
to conduct personal business, partly because the manager works additional
hours without pay. An hourly worker who is paid for all hours worked, includ-
ing overtime, may be docked for time off to handle personal business. Simi-
larly, if the manager or hourly employee abuses the personal business
procedure, there would be potential for disciplinary actions in either case.
Besides the personal on-the-job rules and regulations governing per-
sonal conduct, there are regulations or laws with implications of a larger
magnitude, and these must be rigidly enforced. Typically, these are regula-
tions or laws promulgated by various agencies such as the Equal Employment
Opportunity Commission (EEOC), Occupational Safety and Health Admin-
istration (OSHA), the Environmental Protection Administration (EPA), and
various other entities. Also, a host of federal, as well as state and local, stat-
utes govern much of what is done in maintenance. Top management and
operating managers must become familiar with these areas and implement
the provisions of the rules and regulations as effectively as possible.
Moreover, systems used to manage maintenance (such as work order, pri-
ority, data retrieval, etc.) must have written procedures if they are to be univer-
sally and effectively implemented. Many routine job tasks (such as preventive
maintenance, equipment shutdown, safety policies, planning, etc.) must also
have procedures. For example, safe replacement of a motor might require tech-
nical procedures dealing with motor shutdown, lockout, and tagging.
Many rules and regulations apply to all functions in a plant and can be
written by others; however, the day-to-day maintenance operating procedures
should originate within the maintenance organization, usually with the individ-
uals responsible for the activity or function. Some maintenance procedures
affect other organizations, as well, so their input should be included. The easi-
est way to develop maintenance procedures is to write them down simply and
attach a flow diagram, showing each step as a numbered statement. The pre-
parer should never assume that someone else knows or understands what is
being described; all essential details should be defined and described.
SUMMARY
Maintenance management is essential to facilities that wish to keep their
equipment running smoothly and their costs down. Today's maintenance
managers are expected to adapt to the challenges of increasing productivity
and improving technical excellence, while keeping up with ever-changing
markets and management methods. The key to achieving this goal, whether in
small or large organizations, is to establish the appropriate organization for
managing the maintenance function and for maintenance managers to
become part of the senior management team: maintenance managers must
understand the overall objectives of the organization.
Effective management of an organization's resources-human, financial,
physical plant, and information-is also key. It is not enough for a mainte-
nance manager to simply get the job done; he or she must motivate the work
force, assure the vitality of the plant's equipment, and wisely use the
information resources available today. And because maintenance costs can run
from 5 to 40 percent of the total cost of producing a product or service, it is
especially important for the maintenance manager to control costs. Inade-
quate maintenance can generate production costs that are many times greater
than those attributable to labor, materials, parts, and overhead.
All of this can be achieved by setting maintenance department objectives,
which should guide the functional activities of the department and reflect the
overall goals of the organization. But the most important part of the objective
is to get the job done effectively, to do so, the maintenance department must
codify the various functions and activities typical to its organization. And, of
course, it is important to select the right people, in the right numbers and
with the right skills, to carry out the maintenance function-from the mainte-
nance manager (sometimes called the plant manager) to the maintenance
supervisor to the skilled and nonskilled maintenance personnel.
1. The four resources maintenance must manage are: 1. (a)

(a) human, financial, physical, and information resources.
(b) plant, equipment, energy, and personnel.
(c) human, regulations, safety measures, and energy.
(d) contractors, personnel, plant operations, and budget.
2. A manager who is effective in managing the resource 2. (b)

is usually effective in managing all resources.
(a) financial
(b) human
(c) planning and scheduling
(d) skilled trades
3. The elements of a maintenance manager's primary concern with 3. (c)

costs are:
(a) employee benefits, administrative jobs, new equipment.
(b) company cost and departments control.
(c) labor, materials, and overhead costs.
(d) safety and regulatory compliance.
4. An overall company objective is not simply getting the job done, 4. (c)
but also:
(a) assigning the workload properly.
(b) designing an appropriate organization chart.
(c) knowing why the job is being done.
(d) none of the above.
5. To determine which skills are needed in an organization, one can 5. (b)

evaluate and analyze the:
(a) maintenance costs vs. projected sales growth.
(b) type of production process and historical patterns.
(c) lines of authority and relationship between people.
(d) facility's capital investment and estimated cost of labor.
6. creates ratios of first-line managers to hourly employ- 6. (a)

ees and all other personnel unique to every organization.
(a) The type of industry activity and equipment
(b) The number of skilled personnel already working
(c) The number of trainees thought to be needed
(d) The annual budget for maintenance work
7. Assigning people responsibility for the day-to-day maintenance 7. (b)

work of a physical plant area is called:
(a) line assignment.
(b) classic area organization.
(c) area responsibility organization.
(d) tiger team organization.
8. A(n) position is the main entry to management for 8. (a)

hourly employees.
(a) supervisor's
(b) superintendent's
(c) engineer's
(d) skilled trade person's
9. The best way to prepare organizational procedures is to: 9. (a)

(a) draw a flow diagram and write statements for each numbered
step.
(b) invite input from other departments.
(c) give the department manager authority over its preparation.
(d) study competitor approaches and duplicate them.
10. An administrative and functional structure of an endeavor is called: 10. (a)

(a) an organization.
(b) systems and procedures.
(c) an information pipeline.
(d) a management hierarchy.
The
Maintenance Budget
Learning Objectives
Define the two parts that make up the total

maintenance budget.
Identify the six items that should be considered
when preparing the maintenance budget.
Identify the format and content of the chart of
accounts related to the maintenance budget.
Distinguish between the two systems for assign-
ing accountability for preparing the mainte-
nance budget.
Explain the differences among three terms:
budgeted amount; actual expenditure; and vari-
ance.
INTRODUCTION
The maintenance budget is the instrument for controlling important finan-
cial resources that are necessary for running the maintenance department.
Budget administration employs various accounting procedures and com-
puter-based systems to help manage, control, and measure departmental
effectiveness. Budgeting can also be used as an effective planning tool for the
coming year's activities as well as for pinpointing responsibility. Every
department within an organization-production, maintenance, administra-
tion, services, marketing, sales, and others-should have a budget to deter-
mine the overall cost of doing business. Some of the more traditional budget
activities will be discussed in this chapter.
As facilities become more automated and equipment more complicated,
maintenance costs become a larger part of the cost of operations. At the same
23
time, labor costs tend to fall, in terms of unit of product produced or service
rendered. The maintenance budget, therefore, becomes increasingly impor-
tant in the financial planning of most organizations. To reflect these changes,
maintenance budgets are gradually evolving from collections of line item
accounts that show planned expense and capital spending, to more specific
types of documents oriented in a variety of ways to better display and evalu-
ate spending plans. These might include budgets for cost centers, profit cen-
ters, single or combined programs, new technology applications, selected
customer sector activities, and other specialized budgets for pinpointing cer-
tain cost or investment targets. However, the maintenance manager should
bear in mind that the maintenance budget should be tied to the overall orga-
nizational objectives of the business. This means that future plans or strate-
gies must be considered in formulating the total funding that maintenance
needs for developing and delivering proper support for the departments out-
side of the maintenance area. The aim of integrating maintenance with over-
all budget planning is to avoid maintenance shortfalls that might impact
production or service costs in other areas of the business.
THE CHART OF ACCOUNTS

The costs of goods and services are listed in the budget under a number of
categories called the chart of accounts. Each category is called a line account,
a line item, or simply an account. Each account defines an individual type of
expense, such as labor, salaries, fringe benefits, fuels, electricity, repair parts,
lubricants, and so on.
TBE EXPENSE BUDGET

One of the most important responsibilities for the maintenance manager is
the expense budget. This is a detailed financial plan that shows expected
costs for the goods and services that will be needed each month or account-
ing period. The dollar amounts represent the labor, parts, utility service,
tools, overhead, and other items required on a current basis for the mainte-
nance department to do its job. It also projects the department's share of
the cost of each unit produced or, in the case of services, the cost of individ-
ual services or programs delivered. This budget contains mostly historic,
fixed costs for operating the maintenance function year to year; however,
the budget is also influenced by such variable costs as increased or
decreased production or service demands, growth, and seasonal and regula-
tory situations.
Exhibit 2-1 shows a sample yearly expense budget for a maintenance
department in a small plant. The dollar values are only examples, but the
various line items give an idea of the maintenance manager's budget
responsibilities. In this exhibit there are nine major account groupings,
indicated by numbers at the right of the descriptions. For example, look at
number 12, to the right of Salaries. Under this heading, there are various
line items related to salaries. Further down, the last two groupings, 89 and
98, are Distributive Expenses. Eighty-nine is Distributive Expenses-Debit:

the share of the so-called motive power (that is, steam, space heat, com-
pressed air, vacuum, etc.) that maintenance uses and pays for. Ninety-eight
is Distributive Expense-Credit: a redistribution or transfer of maintenance
costs to other appropriate departments (such as production). These credit
show up as line item debits in the budgets of other departments that use
maintenance services. Labor is also broken down into several categories.
Note that the expense portion of Maintenance Labor-Projects (account
number 5260) is included in the total, but Capital Labor has been trans-
ferred out (line accounts 5269 and 5290). In this sample budget, Fringe
Benefits are shown at approximately 25 percent more than labor and salary
costs.
Under Repairs-Materials (45), the last four items are material costs
redistributed or charged out to the maintenance department itself for
materials used in the work the department performed for its own needs.
Refer to the subtotal after the first six groupings. The two columns of fig-
ures to the left of the heading represent the totals for day-to-day operational
costs in the period , reported in this sample budget scheme. One column of
numbers is the budgeted amount, the other is the variance. There is also a
Year to Date actual and variance to the right of the Subtotal heading. The
minus sign in the variance columns represents overspending; therefore, if
there is a negative sign in the variance column, it means "over budget." A neg-
ative sign in the actual column means a redistribution or transfer to another
plant account.
Next, look at the figures in the actual and variance columns under
Period. Add the actual (20,048) to the variance (2,893). (Add because there
is no minus sign.) Multiply this total by 13, the number of accounting peri-
ods. This amount will be equal to the total for the actual and variance
under Year to Date. Remember, this sample is a year-end report. The Year
to Date variance, therefore, indicates that $30,226 of the operational mon-
ies budgeted were not spent at the end of the year.
After redistributing all appropriate accounts (Distributive Expense-
Credit) to various other plant departments, the actual Year to Date cost
(Grand Total) chargeable to the maintenance department was $12,946, and
was still $23,207 under budget (Year to Date variance) for the end of the
year.
Although this is a sample budget for a small plant, it is the same type of
budget that would be applicable in a larger plant. The various ratios appear
normal (labor to fringes, labor to overhead, labor to material, etc.). The
amounts budgeted in each o the accounts are estimates, and the actual
expenses can be expected to vary as the expenses are incurred during the
periods. The size of the variances in the line accounts and the grouping
subtotals are often used as a measurement to determine trends, reflecting
how well the maintenance function is being managed. Using a specific
account to quantify the cost of labor helps to identify areas of excessively
high or low activity. For example, a high expense portion of capital work
could be jeopardizing the preventive maintenance program.
In this sample, the plant's overall energy budget is controlled outside
of the maintenance department. The more usual case is that the plant's util-
ities are part of the maintenance budget. When this is so, they must be
treated as a maintenance responsibility, but should be redistributed to the
various departments on a pro-rata share of the projected annual usage.
Thus, a more accurate picture of every department's cost in the manufac-
turing of each product, or in providing a service, is given.
When the budget has been completed, approved, and placed in opera-
tion, each maintenance expense is charged against one of the line accounts.
This accounting is extremely involved because of the relatively large num-
ber of accounts needed to properly reflect the maintenance activity. Since
the maintenance function will report work and materials used, and the
accounting function will charge the dollars to the budget, it is necessary
that both departments understand the definitions of the line accounts. The
first thing to do when preparing a budget is to check the definition of each
item in the chart of accounts and make sure estimates are based on mutual
understanding.
The Operating Expense Statement

A report called the Operating Expense Budget Statement (or a similar name)
is generally produced each month or accounting period. For each line item it
shows the annual Year to Date and Current Period budgets, and the expendi-
tures against those budgets. The amount of detail in these reports will vary
according to local needs. These reports are an invaluable aid for the mainte-
nance manager, and are useful as a tool to monitor and control costs of
selected line items, or groupings of line items. The format is similar in
appearance to that of the expense budget shown in Exhibit 2 - l, but may not
display Fixed Asset and Redistributive Costs.
The Value of the Expense Budget

The expense budget is normally of great value to the maintenance depart-
ment's daily activities. As stated earlier, it is a detailed plan of financial activities
over the budget planning period, usually a year. Preparing an expense budget is
the best way to estimate funds required each month (or period) to carry on
planned maintenance activities. Considerable planning is needed before these
dollar amounts can be determined. The planning process is one of the chief
advantages of preparing the annual budget. Plans for production (or services)
and other operating departments served by maintenance must be reviewed
before a credible operating plan for maintenance can be produced. There are
many things that will affect maintenance budgeting, such as expected levels of
production, new products or services, and the introduction of new equipment
anywhere in the facility. Special maintenance plans, such as new management
programs, major overhaul or remodeling projects, expected overtime require-
ments, new tools and equipment, additional management responsibilities, and
expected cost reduction programs, must also be considered and reviewed so
that their effect on the budget can be properly estimated and included.
Expense budgets usually include a staffing forecast, by skill or category,
that supports the proposed budget. This could be a simple headcount number
by month, or it could be much more sophisticated. The budget itself may
require several line items that specify regular salaries, hourly wages, premium
pay for shift time or overtime, and fringes. These figures might be displayed by
"fixed" (minimum) staffing and "variable" staffing related to certain programs
that may or may not be approved. Detailed planning for the funds estimated
for outside contracted services for projects (or to reduce in-house staffing
requirements) is also required.
THE CAPITAL BUDGET

The capital budget is usually compiled and administered by a senior manage-
ment office, though maintenance may be assigned to formulate major portions
of it because of the large amount of the total the department might control.
The capital budget provides funds for non-recurring projects such as major
renovations, construction, additional space, installations of major equipment,
technology implementation, and other special projects that add to the corpo-
rate financial investment (capital). This budget does not contain funds for the
day-to-day cost of doing business. The capital budget consists mainly of
defined projects, their priority and estimated cost, and expected start and com-
pletion dates. Detailed information is often attached for supporting documen-
tation. The budget is used for planning and as a tool for obtaining approval for
special funds for these projects in the future. The capital budget provides an
overview of approved requests and is included in corporate financial planning.
Local accounting personnel should be consulted for assistance in defining
which projects are considered capital and which are considered expenses.
Overstaffing
The capital budget is variable and changes from year to year. If some main-
tenance personnel are scheduled for capital work, it is important to guard
against overstaffing resulting from deferment of capital work. Conversely,
understaffing of critical maintenance activities can result from diversion of
labor to capital projects. Once new capital expenditures are completed, it is
not often possible to retain workers hired to perform capital project work
as regular maintenance employees. Exhibit 2 -2 shows the effect of this sit-
uation.
DEFERRED MAINTENANCE
Deferred maintenance includes capital projects and regular maintenance
work that is needed but has not been done for a number of reasons. It may
include repairs, preventive maintenance, and routine tasks in addition to cap-
ital work. For instance, when capital work is performed by workers who are
"budgeted" to perform regular maintenance, this is considered deferred
maintenance. Or, if the existing workforce simply does not get a job done,
either because of a staff shortage or because the group knowingly put it off,
this is also considered deferred maintenance. A good way to avoid deferred
maintenance is to plan for capital work by outside contractors, thus preserv-
ing existing staff for regular maintenance work.
ASSIGNING ACCOUNTABILITY FOR THE BUDGET

Assigning accountability for the budget is another factor that will have an
effect on budgeting funds. Two general systems are used, each with a differ-
ent department held accountable. There are many variations to each system.
In the first system, the production department (or major services in
non-production organizations) is accountable for the budget. In this system,
the maintenance budget includes funds for maintenance of the "customer"
function. When maintenance work is done for the customer, the costs are
charged there and the maintenance budget is credited. The customer
department must therefore bear more responsibility for high maintenance
costs. (Refer to Distributive Expenses-Credit, the last item in Exhibit 2-1.)
Fixed maintenance costs would be the historic efforts required for the predictable daily equip-
ment, building, and grounds maintenance. Fixed costs would include utilities and the annual rate
of inflation.
Variable maintenance costs would include activities such as a project (expense or capital)
that the maintenance department might become involved in on a periodic basis. There are
unpredictable elements, so it is difficult to accurately staff for this activity. In addition, these vari-
able elements have irregular beginning and ending periods, which result in demands for labor as
indicated in the sawtooth curve. At the apex of the sawtooth curve, the fixed maintenance must
give way to the variable demand for labor. This is when the preventive maintenance program
suffers.
Because of the irregular demands, even if variable and fixed costs are budgeted for and the
staff is on the payroll, overstaffing occurs when the project is completed (bottom of sawtooth
curve). One solution is to contract all of the major variable activities.
Utility accounts, such as fuel, water, and electricity, may be charged to all
departments or left in the maintenance budget only, depending on company
policy.
In the second system, the maintenance department prepares the budget
and is accountable for the maintenance costs of the entire facility. In this
case, the maintenance department must bear more responsibility for high
maintenance costs. Both systems require close consultation between the
maintenance department and its customer departments while the budget is
being developed.
Many variations on these two systems are possible. Most organizations
wind up with a hybrid responsibility arrangement for preparing the budgets.
The main goal should be to develop a budgeting system that works for the
organization in question and provides the right amount of accountability
along with visibility.
PREPARATION OF THE BUDGET

The actual preparation of the budget should begin when the operating plan
for the total organization (including the maintenance function) begins to take
shape. Existing and planned budget line items should be reviewed to assure
they are clearly defined and understood. Questions should be resolved
quickly. For example, a typical question might be whether a special fuel used
only in a certain manufacturing process should be charged to maintenance or
to production. If it is charged to maintenance, how should the effect of excess
production levels be handled? All line items must be carefully considered
when preparing the maintenance budget.
When line items are settled, dollar amounts should be assigned for each
accounting period (usually one month, or four weeks) in the coming budget
year. Generally, the total amount is spread evenly over each accounting
period, but is adjusted for seasonal or event-driven considerations such as
snow-removal in the cold months. Maintenance budgets usually have many
more line items than do other functions of the business, due to the many ser-
vices the maintenance department performs and the large number of equip-
ment items it maintains for other functions.
The following list of considerations should be applied when estimating
each budget account:
Variances from the year-to-date and monthly budget amounts in the cur-
rent budget should be reviewed. If they are significant, explanations for
this should be sought in order to avoid underestimating next time-
unexpected events or incorrect charges might be the causes. If funds were
underexpended, the account should be reduced next time. Remember, the
budget is the best estimate of projected actual requirements for funds and
should not be set so high that it takes care of major breakdowns or other
possible extreme occurrences. Another series of budget accounts should be
set up for gathering charges for these situations.
It is also a good idea to compare average period charges in the line account
with individual charges to determine possible trends. An account may
increase or decrease from period to period and significant differences might
indicate a mischarge or a special technical problem. For example, a sudden
period increase for parts might signal a price change or, perhaps, an impend-
ing wear-out situation. Either way, the cause for the change in charge activ-
ity should be investigated. The future budget might have to be adjusted.
The effect of variables (such as special projects mentioned earlier) on each
line item must be considered when reviewing and preparing each account.
Changes may be required in the amount budgeted for each line item
account. For example, it might be determined that an additional pick-up
truck will be needed at mid-year. Therefore, it would be wise to increase
the accounts that will be charged for gasoline, oil, and other maintenance
services for the last six months of the year.
Overall price changes caused by fluctuations in the economy can have a
significant effect on the accuracy of the maintenance budget. A mainte-
nance manager is not expected to predict the movement of the economy,

but should be aware of possible trends when preparing the budget. Corpo-
rate or top management offices often provide planning assumptions.
These may relate to wage and fringe projections or even include other
items such as energy, taxes, or equipment and parts pricing assumptions.
Timing of salary and wage increases can be important and changed values
should be plugged into the budget. The effect of assumed inflation
changes must be taken into account as well.
Capital projects sometimes contain an "expense" component that is easily
overlooked. For example, on a renovation project, demolition of the old
walls might be judged to be an expense item properly chargeable to an ongo-
ing maintenance work expense line item. If a major capital project is contem-
plated where this sort of judgment call might be involved, it should be
reviewed and budgeted with care between the expense and capital budgets.
If there is a good system in place now to record the accurate charges and
history of maintenance activities, the new budget projections for next year
will also be more accurate. This is discussed in more detail in Chapter 3. A
budget may be a good planning tool, but it is not an effective measure by
itself. Other measures and regular reports are needed, which will be dis-
cussed further in Chapter 8.
SUMMARY
Once the budget has been prepared and approved, it becomes a valuable
management tool. The process of preparing a budget leads to preparation of
detailed action plans for implementing its various parts. Even if these plans
are informal, they will present a clearer picture of forthcoming activities and
their costs, and will help the manager comply with the budget.
As the budget year unfolds, variances from the budget will be one of the
first clues to show if spending is being controlled. Moreover, examination
and correlation of actual versus budget by line item codes each month is an
excellent way to use the principle of management by exception. Unexpected
variations can be significant in more than just a financial way. For example, if
Preventive Maintenance-Labor is well below budget, either the work is not
being done, or, worse yet, it is being charged in error to the routine repairs
account. A large cost variance for parts might signal some serious mechanical
deterioration, or it might only reflect a new motor being mischarged to
expense when it should have been charged to a capital equipment account.
Any large departure from budget is cause for investigation until a reasonable
explanation for the variance is found. Maintenance costs are often substantial
and maintenance personnel are highly visible in the facility. Therefore, to
avoid a great deal of comment and criticism about the maintenance function,
it is wise to spend time preparing and using an accurate budget to demon-
strate effective management of a complex and costly operation.
1. The budget deals with the everyday cost of doing busi- 1. (a)
ness, while the budget provides funds for non-recur-
ring projects.
(a) expense ... capital
(b) expense statement.. . facility
(c) working ... contracted
(d) personnel . . . plant operations
2. Which of the following is not used to describe a single category of 2. (c)

expense in the maintenance budget?
(a) A line account
(b) A capital account
(c) A chart of accounts
(d) A line item
3. Quantifying labor accounts by account helps identify areas of 3. (c)

excessively or activity.
(a) technical ... manual
(b) critical ... routine.
(c) high ... low
(d) hands-on ... administrative
4. Predictable day-to-day routine maintenance is a cost 4. (a)

influenced by costs that reflect increased or decreased
production and capital expenditures.
(a) fixed ... variable
(b) unavoidable ... hidden
(c) fixed ... installation
(d) variable ... regulatory
5. The maintenance expense budget is usually prepared by the 5. (c)

department.
(a) accounting
(b) financial
(c) maintenance
(d) production
6. Actual charges to the line accounts in the expense budget are made 6. (b)
by the department.
(a) benefiting
(b) accounting
(c) personnel
(d) maintenance
7. If additional personnel are hired to complete a special project and 7. (b)

remain on the payroll thereafter, the results can lead to:
(a) deferred maintenance.
(b) overstaffing.
(c) fixed maintenance.
8. Preparation of a new expense budget requires careful consider- 8. (d)

ation of
(a) expected inflation and price changes.
(b) capital projects.
(c) staffing projections.
(d) all of the above.
9. Monthly examination and correlation of actual and budgeted 9. (a)

amounts for each line item is a way of practicing:
(a) management by exception.
(b) micromanagement.
(c) effective cost control.
(d) delegation of responsibility.
.0. The maintenance budget is a that shows the expected 10. (a)
cost of labor, materials, and associated charges required each
month (or period).
(a) detailed financial plan
(b) management policy statement
(c) legally required document
(d) manager's vision statement
Systems
for Control
Learning Objectives
List the seven primary steps in the flow of a

maintenance work order system.
List four primary advantages of using a work
order system.
State the chief difference between a regular
work order and a service order.
List the three major sources of information in
maintenance record keeping.
State the difference between the two major
types of maintenance priority systems.
INTRODUCTION
Use of the basic work order, priority, and record keeping systems is a pre-
requisite for effective maintenance management. All three are closely
related and using all three together in a disciplined systems approach is one
of the fundamentals of maintenance management control. Although most
maintenance organizations now use computer-based management systems,
the basis for good management control is still universal. The manager
should carefully analyze the maintenance control challenges in the particu-
lar organization and design systems that most effectively meet those chal-
lenges.
THE WORK ORDER

Like any other organization, the maintenance organization has many func-
tional responsibilities and uses a number of systems and procedures to manage
37
those functions. Each system is integral to the overall control program. When
one system is neglected, the effectiveness of the others is reduced. But the one
system that interfaces with all others, and influences the others the most, is
the work order system.
The work order may be used for planning, communicating, directing,
recording, and tracking the majority of maintenance work activities. All essen-
tial elements of good management are tied up in this single document.
Work orders, whether produced manually or by computer, are similar in
appearance. Exhibit 3-1 shows an example of a typical non-computerized
work order format. If not produced by a computer, a work order generally is
issued in several copies, each copy usually different in color. Typically, copies
go to the person (or team) doing the job, the supervisor, and the work control
office; others may go to the originator of the request or people associated with
accomplishing the work.
In the example shown, four copies are indicated: originator, open copy,
closed copy, and work copy. They are used as follows:
The originator starts the request by entering all pertinent information and
submitting it to maintenance. The originator keeps a copy for follow-up.
(In computerized systems, this copy may be eliminated in favor of a report
listing open work orders by client department.)
The open copy is reviewed and completed by the maintenance supervisor,
the coordinator, or planner. In manual systems, it is kept in a backlog file
of open orders; if computerized, it is passed to data entry to generate open
order/backlog reports.
The closed copy is retained by the supervisor, coordinator, or planner until
the work is completed. Information supplied by the person(s) doing the
job (such as cause, effect, downtime, work done, parts used, and comple-
tion details) is entered. In modern computerized systems, the worker who
does the job might enter this information directly into the computer, and
the supervisor or others could review and add other pertinent details
before closing out the order.
The work copy serves as the actual order to perform the work and provides
instructions for the worker who does the job. It generally contains suffi-
cient information to act as a plan for the job. For larger jobs, however, a
planning sheet and drawings (discussed in Chapter 6) accompany the work
order.
Work orders are used to communicate requests to perform specific jobs.

The requests come from many sources, both outside as well as within the
maintenance department. Work orders authoritize that jobs may be under
taken and that expenditures may be made. They indicate the location where
the work should be done, the equipment (or thing) that should be worked on,
and the method to follow. The specific method may simply allow mechanics
or technicians to apply their knowledge, or it may be described in specific
detail if more complex jobs are involved. Finally, the work order indicates the
priority of each job.
It is desirable to have at least 80 percent of all assigned work covered by

formal work orders, although ideally, every job request should be converted
into a written work order. To achieve this would require commitment from
every level of management within the facility. Realistically, this commitment
will come only if the advantages of using work orders can be demonstrated.
Some of the advantages written work orders provide are:
Job identification and follow-up.

Accurate cost data for departments, jobs, equipment, and the entire facil-
ity.
Means of accumulating backlog and work load for planning and schedul-
ing.
History (cause and effect) of what was done and the methods and tools
used.
Methods to measure estimating effectiveness.
More accurate assignment of jobs, by priority.
Cost estimates and technical approval of the work.
Work order numbers (or authority numbers) are used to track work
requests. For larger jobs, the work order number can be adjusted or modified
with suffixes to identify and assign different elements of a job or project (such
as utilities, piping, construction work, or electrical shop). These suffixes can
also be used to identify the points on project management diagrams, such as
those generated by CPM or PERT systems (computerized work scheduling
programs).
Cost Information
Cost information related to work order activity generally comes from two
separate documents. These are the job card (or labor ticket) for labor
expended; and the stores issue slip for materials used. (The job card and labor
ticket might be two separate documents in some organizations.) In any event,
it is the work order number that pulls the information from these sources
together. This allows costs for material and labor to be distributed to accounts
such as: type of work, cost center, crafts, equipment, department, or capital
projects.
For example, the job card or labor ticket shown in Exhibit 3-2 is filled
out by each person who has worked on the job order. (For on-line, real-time
computerized systems, workers might do the same thing by entering the
information on a computer terminal located somewhere in the facility.) The
work order number, employee number, and skill code identify what job is
being reported on and who did the work. The supervisor usually reviews and
verifies the information before it is sent forward; the planning function might
also review it to check estimated times. Overtime is segregated by type (such
as time-and-a half, double time, etc.), as it might require special authorization
or review.
In simple one- or two-person jobs, the work order itself can be used for
capturing the actual time and skill codes used. If the job is more extensive, the
job card or labor ticket method of recording information is more successful.
As with labor, material usage information might also be entered in a com-
puterized system. If not, a stores issue slip, shown in Exhibit 3-3, is prepared.
It shows the unique work order number, the material issued, and the cost allo-
cated. Some computerized systems store the price of each item, so only the
part number (or kinds/amounts of materials used) and work order number are
required. Again, review by the supervisor or the planning department might

be part of the procedure.
A final comparison of job estimates with the actual times and, materials
needed to perform the job provides a way of determining the effectiveness of
estimating.
Source of Communication
As noted earlier, active work orders communicate to all parties what jobs are to
be done, when, where, and by what method. When jobs are finished, a com-
pleted work order serves as a form of communication for updating historical
data files. It is important to capture relevant information concerning equipment
items on which work has been performed. The more complete and accurate the
information, the better the planning and scheduling is for future work.
In-process work orders (for jobs scheduled but not yet completed) serve to
communicate time allocations for the skills needed to complete upcoming jobs;
they also serve as a source of backlog information for the entire future mainte-
nance load in the facility.
Exhibit 3-4 shows a typical work order flow diagram. It shows, for every
request made, the steps taken and the personnel involved in completing and fil-
ing a work order. (The one major exception to the rule of "a work order for
every request" would be when a request for a response to an emergency is
received. An emergency is defined as an interruption of vital equipment or ser-
vices or a serious safety situation. In that case, the maintenance response should
be started without a work order, and documented later as time permits.)
Exhibit 3 -4 depicts the flow of a manual work order system; a computer-
ized system would be similar, but some of the "flow" might be accomplished
within the computer, thus saving time, effort, and cost.
Many maintenance managers complain that producing a work order for
every job performed creates a blizzard of paperwork, particularly since the
majority of jobs are small. Further, they allege it "takes more time -. to prepare
and document a work order than to do the work." Studies coonductedin dozens
of plants over a 10-year period show that the type of industry has an impact on
the difference in hours required for large or small jobs. Indeed, on the average,
60 percent of work orders represented only 10 percent of the time spent in get-
ting all work done. Exhibits 3-5 and 3-6 show the results of two such studies.
The argument to remember in favor of work orders is that they help manage-
ment guarantee plant integrity; protect investments; help ensure safety; follow
government regulations; avoid legal liability; and promote good management
principles, training, and quality guidance. These and other strong reasons sup-
port the goal of having most, if not all, work directed via a well-designed work
order system.
THE SERVICE ORDER

Some organizations use service orders to complement their work order sys-
tem. Service orders can be issued as substitutes for separate work orders;
they usually relate to small jobs. Generally, the service order is a formal
request for work to be done by authority of a standing work order for a
given department or cost center. While the request itself is important for
maintaining control and discipline, it also provides some flexibility in order-
ing the work to be done. Service orders should be scheduled like any other
work to maintain control and avoid an overabundance of emergency
requests. And they should be closed out like regular work orders to provide
visibility on labor and cost distributions and pertinent history entries to
equipment files.
Small Jobs
Each service order should be identified by a unique number that ties it to a
larger, or standing, work order. The requester need only use the assigned
service order number to initiate the job, get required approvals if necessary,
and describe what work or task is being requested. To effectively employ
service orders, each organization must decide what size job or task is to be
covered by each service request. Generally, the service order is used for jobs
that represent about 10 percent of the total hours, yet account for more
than 50 percent of the paperwork. In all probability, these are jobs requir-
ing one to four hours or less of labor. In one plant, 70 percent of the work
orders may represent 18 percent of the workload, and those jobs usually
take less than four hours each.
Emergency Service Orders

Service orders are often used as a request for emergency work although this
may or may not be an appropriate use of the service order concept. Few of
these small emergency jobs provide significant historic data for the files, but
if they do, the information should be captured through the review process
after the work is completed, and the pertinent information should be placed
in the cost and equipment history records.
OPEN WORK ORDERS

Open work orders may also be called standing work orders. Often they are
confused with the maintenance backlog (scheduled jobs that have not yet
been done). Understandably, these terms of reference are confusing. To clar-
ify, an open work order is a pre-approved work authorization that may be
accessed when needed by a requester or by the maintenance department.
These open work orders tend to become catch-alls for any and all work, lead-
ing to a loss of management control. However, control can be regained by
establishing that a fixed percent of the total hours of work in a given area or
department should be represented by open order work. Once that level is
exceeded on a weekly, monthly, or other monitored basis, the maintenance
manager is alerted to the possible loss of control and can take corrective mea-
sures. For backlog purposes, the fixed percent of open order work becomes a
constant in the forecast, although sophisticated managers might adjust the
figures as a result of production, seasonal, or other factors.
WORK ORDER PROCEDURE FLOW

Shown below is a general outline of the flow of a typical work order. The
procedure and personnel responsibilities might vary between manual (non-
computerized) and computerized maintenance systems. Use Exhibit 3-4 as a
reference.
I. Originator:
A. Prepares work order request and completes all information available
or pertinent at the time.
B. Retains copy for follow-up or reference.

C. Obtains or provides authorization or approval.
II. Maintenance Manager (or assigned personnel):

A. Screens for pertinent information.
B. Approves/reviews with originator or management (if necessary).
C. Approves for scheduling in the work order system.
III. Planner or Scheduler (or other assigned personnel):

A. Assigns work order number, if needed, and authority number.
B. Plans method, materials, drawings, external services.
C. Estimates labor and material.
D. Reviews work order for all pertinent information.
E. Prepares a work schedule for the job.
1. Thinks in terms of backlog, preventive maintenance, and service
orders.
2. Integrates into daily, weekly, monthly, etc., schedules.
3. Reviews with supervisors, craft workers, stores.
F Orders/arranges/expedites materials.
G. Places the work into the backlog file or data base.
H. Reviews completed work order for completeness and compares with
estimates.
I. Monitors progress of work in process vs. schedule.
J. Prepares management information reports. Examples include:
1. Backlog.
2. Equipment history, downtime, etc.
3. Overtime.
4. Work completion, project status, variance analysis.
5. Special reports as directed.
IV Supervisor (foreman):
A. Reviews scheduling and planning and details of job.
B. Assigns work to a selected employee.
C. Supervises work, serves as resource, expedites changes.
D. Ensures job is completed to the satisfaction of the customer.
E. Reviews completed work order, returns it to control center.
E Reconciles labor charges with proper jobs.
G. Reviews weekly reports and seeks performance improvements.
V Mechanic (technician):
A. Performs work directed by the work order.
B. Records time and materials used on correct forms.
C. Writes comments and delay information on the order.
D. Requisitions additional materials as needed.
E. Records completion date, downtime, cause and effect, and other
appropriate information.
F Reviews work with supervisor, requester, and other appropriate per-
sonnel who are involved with the job or its effect.
VI. Materials Department (or storekeeper):

A. Reviews supply documents to provide relevant materials informa-
tion to the planner, mechanic, and others.
B. Adds cost information and forwards materials usage information to
work control center or accounting.
C. Generates oversight reports as directed for management.
VII. Accounting:
A. Distributes expense information against designated accounts, cost
centers, programs, areas, user departments, etc., as directed by
management.
B. Reviews cost and budget information and variances.
Work Order System Advantages

To review, the primary advantages of work order systems are:
They provide an efficient means of requesting, assigning, and following up

on work done by maintenance personnel.
They provide a method of transmitting written instructions on how work
is to be done.
They provide a method of estimating and accumulating actual mainte-
nance costs by machine, facility, cost center, and department; and support
issues of planning, quality, and cost control.
They provide the data needed to prepare management information reports,
upon which corrective action may be taken.
PRIORITY SYSTEMS
Priority systems help establish the importance and, consequently, the order
in which maintenance jobs should be performed. It is evident that a well-run
maintenance function cannot operate effectively without a priority system to
which all affected parties have agreed. To maintain support and commitment,
the system must be developed with input from all sections of the facility. This
leads to more objective thinking in the assessment of priorities and type of
work values, and in the order in which work will be done. Even the simplest
priority system is better than none.
The most important aspect of a priority system is the frame of reference
it provides for scheduling work. Jobs that are most important or critical to
the operation of the facility or plant should be done first. Logically, jobs that
are necessary, but do not require immediate attention, should be scheduled
for a future date. Central to every priority system is some concept of safety,
and safety-related jobs must be assigned top priority. In most maintenance
priority systems an identifying number or symbol is used to designate a
period of time during which a work order request is to be completed.
Emergencies that threaten lives or could cause serious

injuries. Work required immediately because it affects
scheduled operation of equipment, building, or utilities.
Immediate attention.
Important day-to-day repairs that are necessary for

equipment or building preservation. No immediate threat
of equipment or building failures, but potential threat of
deterioration with neglect (for example, slow leaks, signs
of wear, and minor rearrangements). This category
would include PM schedule and safety items that require
correction, but do not present an immediate hazard. It
also includes routine, repetitive work done daily, or in
cycles, during the current week. One to five days after
work order is received.
Jobs similar to urgent routine (except PM), but also

includes minor rearrangements, alterations, new safety
devices, and modifications. Seven to ten days after work
order is received.
Equipment or building modifications that can be sched-

uled. These would include project work, jobs waiting for
materials or those that require engineering, and planned
equipment overhauls. They would also include any alter-
ations or cosmetic improvements of safety devices that
are sufficient for current conditions. Three to five weeks
after request. However, the priority would become No. 1
on the day it was scheduled to begin.
The 1,2,3,4 System

One of the most widely used priority systems is the 1,2,3,4 System. Exhibit
3-7 illustrates one example of this system. There are several "time-to-com-
plete" definitions of the 1,2,3,4 System. A popular one is:
1. Emergency-now.
2. Urgent-within five days.
3. Routine-five to ten days.
4. Deferred-two to five weeks.
The major shortcoming of the 1,2,3,4 System of priorities is that no

matter how it is defined, it is not completely objective, nor does it set values
to determine which emergency in which department or area should be han-
dled first. Compounding this problem, most clients using maintenance ser-
vices consider their need to be the most pressing. This can lead to abuse of
the priority system and to excessive requests for emergency service. How-
ever, a written definition of each priority category inhibits the number of
emergency requests. While the 1,2,3,4 System does not define which request
is most important, maintenance managers can rely on their own knowledge
of plant responsibilities and operations to determine relative rank of prob-
lems. The drawback to this type of subjective judgment is that it frequently
favors the client who complains the loudest.
There are a number of more objective priority systems that use a combi-
nation of comparative equipment values, plus values that represent the type
of work to be performed (such as emergency, routine, project, preventive
maintenance, or deferred). For example, adding a comparative value to a
piece of equipment helps determine which pieces should be worked on first,
and the 1,2,3,4 System can then set values for indicating when to do those
jobs. There are many variations of these dual value systems. Some use two
sets of numbers to identify work and equipment, while others use an alpha
numeric system.
The Alpha Numeric System

In the Alpha Numeric System, the classification of work to be done is shown
by an alpha symbol, such as: A equals Safety/Emergency; B equals Urgent;
C equals Routine; D equals Deferred; E equals Future Schedule. The prior-
ity is then shown by a number from 1 to 10, with 10 representing the high-
est priority value based on the importance of the equipment to the operation
of the plant. A process pump that has no in-line replacement might rate a
priority of 10. The same pump, if it had a parallel pump in-line for back-up,
might rate a priority of 8. Sidewalks and grounds might rate a priority of 3,
since no great adverse impact would occur if repair work to these were
delayed. Thus, the selected priorities for these examples might be expressed
as B-10, C-8, and D-3. Even so, judgment still enters into the priority
process.
No matter what the numerical value of the work order request, if it is an
"A/Safety" request, it should receive immediate response because a safety
problem could pose a hazard or be a serious threat to life if not corrected
immediately. However sophisticated a priority system is, the experience and
judgment of the maintenance manager and supervisors must be applied to
the work schedule. For example, an A-7 job might be the job to be done
first, but the supervisor might decide to temporarily bypass the situation by
roping off the area and posting a security guard. This would permit the allo-
cation of critical skills to an important job in production first, and returning
to the safety task later.
REPORTING SYSTEMS
Effective management requires the use of current and historical information
to assist in making technical and business decisions in maintenance. Good
information helps avoid guesswork. Reporting systems are the channels
through which appropriate information flows to the people who need it to
make informed decisions. The nature of maintenance is such that reporting
systems figure heavily in daily activities.
Every level of management uses information in making decisions. Some
examples of decisions related to maintenance activities might be:
High-level decisions to replace a production process line because of high

operating costs.
The production department's decision to call a planned shutdown because
of excessive downtime losses.
An engineering decision to rebuild, redesign, or replace certain plant
equipment.
The financial department's decision to recommend replacing certain
equipment because repair costs are exceeding depreciation reserves.
A plant manager's decision to review maintenance staffing needs due to a
reduced backlog of work requests.
A top management decision to embark on a continuous improvement pro-
gram because of increased automation and robotics.
These decisions are aided considerably by accurate and pertinent support

data. Better decisions result from better information. A discussion of reports
that relate specifically to maintenance management issues will be found in
Chapter 8. The section that follows deals with reports that are based on data
that maintenance gathers on an ongoing basis.
Record Keeping Systems

Most maintenance managers maintain either a manual (noncomputerized) or
a computerized record keeping system. Central source information comes
principally from:
1. The work order.

2. Material and parts usage (stores issue slip).
3. Labor expenditure records (labor ticket).
These sources provide a wide array of detailed information that form the
basis for routine or special reports, including:
Costs. These are recorded and distributed many ways.

Engineering Data. Cause and effect of breakdowns. The visibility from this
information alone often justifies the entire work order record keeping efforts.
Effectiveness Measures. Actual time and costs versus estimates, on a job-by-

job, cost center, product area, project, or entire facility basis.
Skills Required and Skills Used. It is important to know how much of each skill
is required and how much is available, both currently and in the future.
Log of Maintenance Work. Control and listing all maintenance work is
important for reference and tracking progress.
Types of Maintenance Activity. Divided by types of activity and skills used.
The types usually include: preventive maintenance; predictive mainte-
nance; routine maintenance; project work; cycle work; emergencies; rear-
rangement work; and other tasks unique to the facility in question. The
type categories help flag a review of high demands in any account.
Equipment History. The total activity and costs can be determined for each
piece of designated equipment, system, integrated line, or other defined
item. Such data can lead to a critical review of any equipment item that
costs more to operate and repair than it's worth, in terms of its current
depreciation reserve.
Priority Reporting. A proper distribution of priorities is essential to the con-
trol of schedules and completion of planned jobs. Reporting on this basis
helps to identify the areas where realistic priorities need closer attention.
Service Orders. Controls on service orders require records so that manage-
ment can see when the acceptable level for these is exceeded.
Downtime Records. By definition, downtime is "the interruption of scheduled
operations due to some unplanned event or failure." To plan corrective action
that leads to more uptime, a record of downtime information is necessary.
Computer Versus Manual Systems

The difference between computerized and manual (noncomputerized) sys-
tems is not only the degree of sophistication, but also the amount of time
consumed to acquire and process decision-making information. It is often
the question of whose time is involved. The less clerical time used, the more
time a highly paid professional must spend massaging the data for specific
decision making. Computerized systems rapidly process input information in
many ways and present a variety of management "looks" that aid in making
decisions.
Computerized maintenance management systems are almost universally
used in maintenance functions today. However, they are not absolutely nec-
essary to achieve a first-rate maintenance capability. What is more important
is to have a vision of what is needed to manage maintenance at a particular
site and then develop systems of operation and controls to achieve the
desired goals. Computerized systems unquestionably are an asset when they
are well-conceived and correctly supported. Such systems are useful in creat-
ing graphics that show the impact and trends of designated activities. To
track trends, a series of small graphs or bar charts are helpful, such as those
shown in Exhibit 3-8. By reviewing two or three pages of such graphs, it is
possible for managers to see exactly what is happening in the areas that inter-
est them most. The graphs are even more meaningful when they indicate
established goals, as shown in Exhibit 3-8.
SUMMARY
The maintenance organization has many functional responsibilities and uses
a number of integrated systems and procedures to manage those functions.
The basic work order, priority, and record keeping systems are fundamental
to maintenance management control. Whether these systems are computer-
ized or manual is simply a matter of degree of sophistication, although today
most maintenance departments do use computerized systems, which can rap-
idly process information.
Work orders are usually used for planning, communicating, directing,
recording, and tracking work activities, and may come from sources both
within and outside of the company. They give the maintenance staff such
information as where the work should be performed, what method to use to
get the job done, and what priority each job deserves. Work orders also pro-
vide information on scheduling and cost and are helpful in compiling man-
agement information reports, upon which corrective action might be taken.
Priority systems are used to establish the importance and, thus, the order
in which maintenance jobs are performed. Typical priority systems are the l,
2, 3, 4 System and the Alpha Numeric System. Central to both of these sys-
tems is the concept of safety; safety-related jobs are always assigned top pri-
ority, followed by jobs that are most critical to the operation of the facility.
Even the simplest priority system leads to more objective thinking about the
order in which work should be completed.
Record keeping, or reporting, systems are channels through which
appropriate information flows to the people who need it most. These systems
allow managers to rely upon historical data regarding staffing, equipment
operating costs, work order requests, and so forth, when making mainte-
nance decisions and preparing routine or special reports.
1. The work order request most essential to maintenance manage- 1. (d)

ment controls is initiated by the:
(a) production manager.
(b) maintenance manager or supervisor.
(c) superintendent.
(d) any of the above.
2. To maintain the discipline of the work order system, a written 2. (a)

work order should be issued for each job. An exception to this rule
occurs when:
(a) there is an emergency.
(b) the work will be done by outside contractors.
(c) the president requests the work.
(d) there is overstaffing.
3. is required to ensure success of a disciplined work 3. (a)

order system.
(a) Total management commitment
(b) Daily collection of data
(c) A forceful foreman
(d) A computerized management system
4. A service order is used for: 4. (c)

(a) large jobs.
(b) special projects.
(c) small jobs.
(d) everyday, routine work.
5. The work order system is the chief source of all historic data. This 5. (d)
helps in decisions concerning:
(a) costs and budgets.
(b) design and replacement needs.
(c) schedules, estimating, and planning.
6. The most popular priority system is the: 6. (a)

(a) 1,2,3,4 System.
(b) Alpha Numeric System.
(c) Requester Choice System.
(d) High Value Equipment System.
7. Some priority systems are more objective because they 7. (b)

the equipment used and the type of work performed.
(a) estimate the prices of
(b) place comparative values on
(c) place a limit on
(d) carefully identify
8. Effective maintenance management requires informa- 8. (a)

tion for making decisions of an economic and technical nature.
(a) historic and current
(b) detailed
(c) engineering
(d) breakdown
9. The three sources of maintenance record keeping are: 9. (a)

(a) the work order, labor usage, and materials usage.
(b) the priority system, labor usage, and materials usage.
(c) the service order, graphic illustrations, and materials usage.
(d) computer reports, work orders, and required drawings.
10. A basic element of priority systems is that jobs involving 10. (c)
must be scheduled for earliest possible completion.
(a) production
(b) personnel comfort
(c) safety
(d) large projects
Inventory:
Parts and Materials
Learning Objectives
Calculate the economic order quantity (EOQ

for items that are held in the maintenance
inventory.
List eight important features of a maintenance
inventory system.
Define the two main elements of a maintenance
part, or stock, numbering system.
Define the relationships among maximum and
minimum stock levels, safety stock, reorder
point, and delivery point.
List seven important indexes of the effective-
ness of stores management performance.
INTRODUCTION
If labor is available but parts and materials are not, necessary work cannot be
performed, contributing to costly downtime. On the other hand, an over-
abundance of materials in inventory can be costly, running as high as 20 to 40
cents on the purchase dollar each year. So optimal purchase and storage
efforts are valuable considerations. Typically, stores follow the 80/20 rule: 80
percent of the items stored represent 20 percent of the total inventory value.
Conversely, 20 percent of the items represent 80 percent of the value. How
to control and optimize this distribution is a key concern. Maintenance man-
agers must manage inventory with an understanding of inventory control
methods, storage techniques, and a knowledge of what, when, and how much
to order and hold in stores.
57
THE MAINTENANCE INVENTORY

It is certainly true that more of a manager's time is spent on equipment
problems and directing people than on matters pertaining to parts and
materials. However, it is just as certain that an effective maintenance opera-
tion must have the correct physical inventory on hand when needed. The
challenge is to determine what a correct inventory should be and how to
manage it. Although it would be nice to have on hand a large quantity of
everything needed so that any work could proceed without delay, obsoles-
cence, investment costs, and storage costs make that uneconomical. The
opposite effect-too little inventory-is even worse because of lost time
on high-priority repairs, expensive emergency buying, lost operational or
production time, and inefficient work by maintenance staff. Neither too lit-
tle nor too much inventory can be tolerated if a truly effective maintenance
operation is desired.
Maintenance stores can be set up in a variety of ways: (a) as a separate
entity within maintenance; (b) as part of a facility-wide common inventory;
or (c) combined with the production or operations department stores.
Maintenance stores might also be centralized, distributed to various geo-
graphic locations, or a combination of both that best suits the functions and
tasks maintenance must support. Maintenance management must be
involved in and responsible for decisions concerning the maintenance
inventory.
Let's review some typical items found in a maintenance inventory.
Exhibit 4-1 shows a list of items kept on hand in maintenance plus a list of
outside resources, or vendors, where other kinds of items are kept in stock.
This example is limited. For a large maintenance organization responsible
for many kinds of equipment (plant, production, laboratory R&D, and
other equipment and systems), the list could contain hundreds of categories
and thousands of items.
ORDERING AND INVENTORY COSTS

To have the highest level of inventory on hand, rules and guidelines that
work best for each organization should be established. Those who order and
store items for maintenance must follow them and improve them where pos-
sible.
What are the real costs that pertain to items in the inventory? First is the
purchase cost of the item plus the costs of shipping, receiving, unpacking,
inspecting (if applicable), and getting it into stores. Next is the cost of capital
needed to finance the inventory, which can add as much as 15 percent to
inventory costs. Then there are overhead costs of the procurement function
that processed the order. Ordering a larger quantity of the item results in a
lower unit cost but higher storage costs, which might wipe out the purchase
savings. Storage costs include occupancy costs, such as utilities, cleaning, and
the cost_ of the space itself. Special requirements, such as security, storeroom
attendants, and inventory management systems are cost factors. On an
annual basis, the costs of maintaining an inventory can range anywhere from
20 percent to 40 percent of the value of the items stored.
The Economic Order Quantity (EOQ)

An optimum number, called the economic order quantity (EOQ) can be
determined for each item desired in the maintenance inventory. The EOQ
takes into account the reduction in price for ordering larger quantities, turn-
over (the rate of use over time), and the cost of space where the item will be
stored. It may also be necessary to consider the shelf life and required deliv-
ery time (lead time) of the item. The EOQ can change over time as the result
of changes in the elements of the procurement situation.
The traditional formula for calculating EOQ is:
2 AS
EOQ =
IC
where:
A = annual demand in units (n)

S = cost per purchase order ($)
I = inventory carrying cost (%)
C = the average unit price ($)
The EOQ formula can be used to determine the most economical quantity
for the purchase of equipment, parts, or materials. For example, using the
following values, the EOQ for an order of spare parts is:
A = 1,000 units demanded (required) annually

S = $20 cost (average) per purchase order
I = 20 percent of unit purchase price
C = $5 unit price
The calculation shows that the most economic purchase quantity would be
200 units:
Some organizations keep a fixed quantity of items on hand as safety stock.

Others figure an amount into the annual demand on the same basis. For
instances of high value or critical items, close evaluation or judgment calls
might be needed to determine safety stock quantities.
Need Versus Cost

Balanced against the cost of purchasing and storing is the degree of need to
keep the items in stock. That need can best be determined by considering
the extent of the trouble that would result if an item were not available when
required. It is more economical to store a supply of frequently used nuts and
bolts than to send someone to the supply house every time some are
required. On the other hand, a spare drive motor for a large production
machine might cost thousands o dollars and be stored for years before a
need develops. What is the effect of not having a motor on hand if one fails
catastrophically and production ceases? Can one be obtained quickly and
with certainty? If your manufacturer is close and always has them in stock,
you might take the chance and not keep one on hand. But if the motor must
be obtained from Europe, it would be reasonable to buy and store one on-
site despite higher inventory costs. It might be possible to negotiate with a
local supplier to keep some items in stock because other customers in the
area might also need them. When you need one of the items, the order
could be awarded to the supplier at an arranged price and delivery commit-
ment.
The Role of Purchasing

In most organizations, the purchasing department works closely with
maintenance to assist with handling the maintenance inventory. Included
in such help is development of economic order quantities; determination
of lead times and delivery schedules for purchases; location, qualification,

and negotiations with vendors; and arrangements for alternate sources of
supply. In most cases, purchasing actually does the buying for mainte-
nance, although some maintenance organizations perform this task them-
selves.
MAINTAINING THE STOCK

A maintenance inventory constantly changes. Each day, a range of items is
removed from stock to be used and replacement items arrive. To keep control
of the flow, a detailed system of record keeping should be set up to assist the
manager to:
Record items issued or removed from inventory.

Maintain records used in machinery history and financial reports.
Maintain a record of how many or how much of each item is currently in
stock.
Record items that are received and put into stock.
Record and update the unit price of each item in stock.
Provide security for the inventory in general and particularly for valuable
items and those requiring proper authorization.
Record dates and details of purchase requisitions.
Record delivery dates of new items or shipments received.
For proper inventory control, it is necessary to assign a number to each

item. Modern computerized inventory management systems do not need
precisely formatted numbers to keep track of inventories. However, non
computerized organizations can benefit from formatted numbering schemes
to identify the types of items, such as electrical, mechanical, and so forth.
Regardless of the scheme, the numbers should be cross-referenced with man-
ufacturers' part numbers to simplify future ordering and to avoid duplication
of parts manufactured by different sources.
If formatted part numbering is adopted, it might follow the system
described in Chapter 5. That system works as follows: The first digit
describes a generic, or primary, group; the next two digits can represent up
to 99 groups or subgroups within the family; the last three digits can repre-
sent up to 999 items within the group. Large, diverse inventories may
require larger and more varied numbering systems. Computerized control
systems can accommodate a great variety of numbering schemes and can
keep track of the geographic location of parts so that the efficient use of
space and optimum routing within the stores area is possible. For manual
systems, the part number might also serve as a clue to the location of the
item. For effective operation of the inventory, the assigned numbers must
be used diligently to establish pinpoint control of what is issued, used,
returned, and replaced.
Bar coding is useful for identifying items in the inventory, as well as for
identifying equipment and systems throughout the facility. This technique
is virtually error free and is easily integrated with computerized programs
for inventory control. Bar codes permit positive, errorless data capture of
transactions in the storeroom and in the field. There is a substantial cost for
setting up a bar-code program, but that investment is quickly offset by bet-
ter control of the inventory, more accurate transaction data, fewer mistakes
in part usage, and more confidence in the contents of the inventory.
STORES CATALOG
The storeroom organization can provide a parts and materials catalog that
enables users of the maintenance inventory to define more accurately what is
required. These catalogs are frequently an assemblage of machinery manuals,
brochures, cut sheets, lists of items held in the storeroom, and related docu-
ments. No description fits every organization's stores catalog. Some organi-
zations have a computerized catalog on a video display terminal, which
provides the same or even more information. Either way, the user is able to
get better information about what is located in the inventory, get descriptions
of the items, and learn details of technical specifications, properties, operat-
ing information, and related matters. To simplify retrieval, the user should be
able to access and update the catalog in various ways-for example, by using
manufacturer's part numbers, inventory numbers, generic numbers, alpha
descriptions, key words, or system groupings.
Technical Database
The stores catalog should not be confused or combined with the technical
database found in many organizations. The technical database, manual or
computerized, contains information about equipment, systems, and installa-
tions that maintenance personnel and engineers may have to refer to over
time. Included in such information might be manuals, specifications, draw-
ings, schematics, operating procedures, safety procedures, engineering
change orders, customer bulletins, and a variety of related or helpful infor-
mation. Where applicable, the technical database may also include some
generic information about safety, environmental issues, hazardous materials,
and other topics.
CONTROL OF INVENTORY LEVEL

An inventory level should be established for each item in the inventory. As
mentioned earlier, this level depends on the value of the item, expected or his-
torical use , the importance of maintaining the stock, and the cost of storage.
Actually, designating a maximum and a minimum stock level is necessary for
administering stock levels properly. The maximum stock level represents the
EOQ plus a safety stock quantity. The minimum stock level represents the
number below which we encounter an unacceptable risk and is equal to the

safety stock quantity. The reorder point is the stock level at which a purchase
must be made to get replacement stock on board before the safety stock is
breached. In setting a reorder point, maintenance managers should consider
the use of the item and the expected lead time associated with reordering.
Exhibit 4-2 illustrates the relationship of these stock levels.
Any of many available computerized systems can facilitate a well-disci-
plined system of reporting withdrawn and added stock items. Bar coding is a
modern technique for ensuring accuracy of stock transactions. Computerized
systems are even capable of automatically generating replacement purchase
orders when the reorder point is reached. Addition or withdrawal of parts can
also generate much of the basic data needed for management reports perti-
nent to inventory management. Maintenance organizations that are not com-
puterized can maintain control manually. Exhibit 4-3 shows a typical form for
this purpose. An appropriate method of recording use and stock levels and for
indicating the time to reorder is necessary to prevent stockouts. In manual
systems (see Exhibit 4-4), the source information is the material requisition
The back side is used to track purchasing information-when part was requisitioned (REQUISITION NO.), when the purchase order
was written (PURCHASE ORDER NO.), amount ordered, balance on hand when ordered, vendor from whom ordered (VEN. NO.),
and other pertinent data. This card can even be used as a traveling requisition. As such, the requisition for parts and data is entered
by the stores attendant. The purchasing department places the order; enters the P.O. number; date, vendor, amount, and price; then
returns the card to the storeroom.
This is a three-part form used for a computerized stores system whenever material or parts are used for a job, whether it is material
from stock or material that is spot-purchased to complete the job. The cost of the materials used are brought back to the total job cost
and identified separately from the labor required.
slip or its electronic equivalent for computerized systems. To tie material or

parts costs to a piece of equipment or job or project or customer department,
the work order number must be indicated clearly on all maintenance materials
transactions.
FREE USE ITEMS

Determination of maximum-minimum levels, reorder points, and so on for
each item stocked and the need to account for each item added or removed
seem to be a heavy administrative load. They are necessary, especially when the
items are expensive or the risk of being out of stock is high. One way to reduce
record keeping is by using free use bins, a system under which low-cost;
expendable items, such as nuts, bolts, screws, nails, washers, common gaskets,
and belts, are located in bins outside the secure stores area. These are for free
use as needed by maintenance workers. This system successfully reduces the
overall cost of supplying these items. Typically, a supply equal to the EOQ of
each item is kept in the store room, which can be placed in the appropriate free
use bin when the previous supply is used up, at which time another EOQ is
ordered. It should be a matter of training that when these free items are con-
sumed in a significant repair task, they should be recorded by the worker on
that job so that the information finds its way into the machinery history when
the work order is closed out. Referring again to the 80/20 rule: Don't give
much time or control to stores items that probably represent only a fraction of
the total value of the inventory, no matter how many there are.
STORAGE LOCATION
Generally, maintenance stores should be centrally located to reduce workers'
travel time when obtaining parts and supplies for jobs. However, some excep-
tions apply where the geographic spread is large or where islands of activity
exist, such as cellular manufacturing or R&D work. For economy and secu-
rity, it is also worthwhile storing safety stock, seldom-used high value items,
and other unusual item in a more remote storage area. Large items and mate-
rials may be stored more economically outside the buildings if climate and
security factors can be satisfied. It is important to have complete records of
the locations and quantities of remote items. In large facilities, a regular
delivery system for requisitioned materials and parts may be more efficient
than requiring maintenance workers to get them. Some plants might require
satellite storerooms in various locations, especially if they operate satellite
shops. Inventory control at the satellite is still required, although an atten-
dant may not be justified. Items kept at the satellite are usually supplied and
controlled from central stores. These are typically free use items, frequently
used spares, and items requisitioned for use every day or week. Control can
be maintained just as it is with a central stores activity, although the mainte-
nance personnel in the area must pay extra attention to which items are used
or returned to stock.
Pre-kiting of Parts
Pre-kiting is a way to organize and provide all the parts and materials needed
for a job, scheduled or not. In Chapter 6, we note that pre-kiting of parts can
be called for and scheduled by the planner. This is important because it
assures parts availability and reduces requisition writing, travel, waiting, and
returns for forgotten items. Storeroom personnel are essential in this process.
Inventory Accuracy
It is important to make sure that inventory records accurately reflect what
is held in stores. Many modern maintenance organizations confirm their
inventory by audits on a cyclic basis. This method permits more frequent
counts and better control of critical or valuable inventory items. It also
helps to prevent stockouts of important inventory items. This is another
example of applying the 80/20 rule. Although every item in the inventory
may not be physically counted each year, the important items are checked
more frequently. A physical count is usually done with such an audit,
although spot-checking a computerized system is often just as effective.
Many maintenance organizations opt for the more traditional audit
method of an annual or biannual physical count of all items in stores. This
may be satisfactory but often leads to surprises when discrepancies are
found between items counted and quantities shown on the records.
Regardless of the audit method, the purpose of the inventory audit is

to verify that the inventory control system is operating correctly and to
bring attention to unusual usage rates of items. Such audits often show that
some items are overstocked or understocked for their usage, while others
may have become obsolete and should be removed from the stores. Some-
how, it always seems easy to procure and stock new items but hard to
reduce or eliminate those that are rarely used or obsolete. Storage of excess
items is expensive and dilutes tight control of items that are needed. Avoid-
ing overstocking requires constant study of current needs, usage, risk fac-
tors, and procurement opportunities.
Lubrication Materials
Storage and use of lubrication materials is an important maintenance func-
tion and needs to receive proper attention from management. Some man-
agement issues involve health, safety, environment, regulatory agencies,
equipment warranties, and insurance. An effective lubrication program can
contribute heavily to gains in productivity and quality, prolong equipment
life, and cut untimely failures. Oils, greases, solvents, and other lubricant
types pose special storage and handling problems. They require properly
designed, safe, and, if possible, remote storage locations. People who handle
or use lubricants should have special training. It is also important to use the
correct lubricant for each situation, so training in handling, proper applica-
tion, and knowledge of each lubricant's purposes is a high priority. A compe-
tent survey of actual needs can usually reduce the number of lubricants
stored. Stocking fewer types permits buying larger quantities of those
needed, with possible savings in purchases, as well as in the labor for apply-
ing the lubricants.
MEASURING STORES EFFECTIVENESS

Because smooth supply of parts and materials is essential to maintenance
excellence, measurements of storeroom performance effectiveness are
needed. Some of these measurements are:
Stockouts. How often are parts requested but not in stock? This can be
expressed in terms of percentage of parts not in stock. A good goal is 3 to 5
percent.
Service level (corollary of Stockouts). How often are stocked items available? A
good goal is 95 to 99 percent.
Availability of a substitute. If a substitute is available, a stockout can and
should be avoided.
Service time. How long does it take to pick a part and get it to the
requester? In most cases, an average time is calculated and used as an indi-
cator of responsiveness. Some organizations calculate times that reflect
important conditions, such as routine requests, emergencies, production
items, planned work, and unplanned work.
Transaction volume. How many requisitions are processed during the day,
by shift, by maintenance function, by skill, by equipment types, or other
groupings?
Number of items per requisition. There might be 100 requisitions but a total
of 1,250 requested items. Therefore, transaction volume should be quali-
fied by the size of the request to determine staffing needs for optimum ser-
vice. Other activities, such as receiving, pre-kiting, returning parts to
stores, and record keeping, must also be considered in staffing decisions.
Turnover rate. The number of times the initial inventory is replaced each
year. Because the annual cost of maintaining inventory is 20 to 30 percent
of value, it is important to turn over most items several times a year, with
the exceptions of critical spares and perhaps safety stock levels. A small
turnover rate or too much turnover might signal a need for a review of
EOQ and reorder points.
SUMMARY
One of the challenges of effective maintenance management is determining
the optimum level of inventory. The level depends on a number of related
factors, such as the value of a given item, expected or historical use, how
i mportant it is for the item to be readily available, and the cost of storage.
Several methods can be employed to guide maintenance managers in this
determination. The economic order quantity (EOQ), for instance, tracks
inventory on an item-by-item basis. The need versus cost method is used to
decide which items must be accessible at all times.
No matter what method is used for determining the appropriate inven-
tory level, an accurate inventory management system is crucial to controlling
the flow of inventory and to set reorder points. A computerized stock num-
bering system is typically employed for this purpose although some organiza-
tions continue to keep these records manually. Equally important is a system
for storing and delivering requisitioned materials; this is especially true in
large organizations.
Once these systems are in place and distribution is controlled and opti-
mized, the effectiveness of storeroom performance should be continually
monitored to ensure a smooth supply of parts and materials.
1. It is necessary to develop an economic order quantity for: l. (a)

(a) all maintenance inventory items.
(b) only the most expensive items.
(c) only safety stock items.
(d) only items in remote storage areas.
2. The risk factor in deciding what level of inventory to retain is the: 2. (c)
(a) cost of storage.
(b) amount of savings from ordering big quantities.
(c) cost incurred by not having an item available.
(d) damage done in shipping delicate items.
3. Part numbers or stock numbers are used to: 3. (a)

(a) facilitate identification of a part.
(b) allow parts to be stored by packaging appearance.
(c) allow substitution of different parts.
(d) facilitate filling out requisition slips.
4. The inventory level of an item should be expected to: 4. (c)

(a) fluctuate between the maximum level and the reorder point.
(b) always be greater than the reorder point.
(c) always be greater than the stockout point.
(d) never fall below the maximum level.
5. The part numbering system suggested in this chapter allows parts 5. (b)
to be located by:
(a) packaging size and appearance.
(b) location in the storeroom.
(c) location of the equipment for which the part is intended.
(d) price of the item.
6. The department usually assists maintenance in run- 6. (c)

ning the maintenance inventory.
(a) sales
(b) accounting
(c) purchasing
(d) operations
7. The delivery point is always the reorder point. 7. (b)

(a) higher than
(b) lower than
(c) the same as
(d) more important than
8. Perhaps the most important part of keeping maintenance inven- 8. (d)

tory under control is:
(a) establishing remote storage areas.
(b) having several vendors for each item stocked.
(c) limiting the amount of free use items people can take.
(d) keeping accurate records.
9. Removal of items from stock can be reported in either of two ways: 9. (a)
and .
(a) by requisition . . . by computer entry
(b) by supervisor ... by mechanic
(c) by storeroom clerk ... by accounting
(d) by telephone ... by requisition
10. In addition to numbering a part, it is important to give it: 10. (a)

(a) an alpha description.
(b) an easily accessed location.
(c) an indicator of who supplied it.
(d) a weight and color symbol.
Maintenance
Support Programs
Learning Objectives
Explain 12 types of maintenance support pro-

grams.
List two kinds of risk factors associated with
evaluating maintenance support programs.
Distinguish between two actions that charac-
terize inspections in preventive maintenance.
Explain the difference between reactive and
proactive maintenance programs.
List the two essential elements for scheduling
preventive maintenance work.
Discuss five types of management report for
monitoring effectiveness of maintenance sup-
port programs.
INTRODUCTION
Modern maintenance departments, regardless of size, face increasing pres-
sure to be characterized by (1) equipment and systems operating at near-
perfect reliability and (2) maintenance so effective that equipment and sys-
tem breakdowns and other problems are virtually nonexistent. This chal-
lenge has forced a change in management concept from reactive to
proactive maintenance. Reactive maintenance has meant that efforts are
made to keep equipment and systems in satisfactory operating condition
through a modest level of servicing and preventive maintenance, respond-
ing to breakdowns or trouble calls when something happens. In today's
competitive climate and high technology facilities, the direction involves
proactive maintenance activities characterized by programs of continuous
73
equipment improvement and measurement of equipment performance so

that potential problems can be predicted and avoided. Proactive mainte-
nance is supported by management programs that embody principles of
continuous improvement in all aspects of maintenance work. Two such
examples are total quality management (TQM) and total productive main-
tenance (TPM) programs.
Some of the earlier techniques, such as preventive maintenance (PM),
still apply and are central to support efforts by today's maintenance func-
tions. By incorporating newer techniques over the past few years, mainte-
nance organizations offer a variety of responsive proactive services to meet
the challenges of competitive operations in the global marketplace.
HISTORY OF PREVENTIVE MAINTENANCE (PM)

In the early 1960s, the term preventive maintenance (PM) became widely
known. This is not to say that work of this sort had not been going on before,
but the effort had not been organized in this formal manner. The concept
behind PM is that periodic scheduled inspections, minor repairs, and parts
replacements and repairs, adjustment, lubrication, calibration, and so on,
would increase the time between overhauls and eliminate costly unscheduled
failures of equipment or systems. The idea was sound and was eagerly
received. For a time, PM was practiced so much that its cost approached that
of the breakdowns it was intended to avoid. Over time, the concept has been
refined and expanded to include other programs mentioned in this chapter.
When used with discipline and judgment, these programs save millions of
dollars yearly and reduce equipment breakdowns:
CATEGORIES OF MAINTENANCE
SUPPORT PROGRAMS (MSP)
In the dynamic maintenance field, programs are being developed and an-
nounced all the time. They seem to fall into three categories:
Reliability improvement
Planned maintenance
Unplanned maintenance
These programs and others that are. constantly emerging are available
to the maintenance function to assist in addressing the problem of support
for the increasingly complex modern facilities. The problem is that too few
organizations adopt or follow these programs, and the poor performance
of their plants offers mute testimony to this. Increasingly, more profes-
sional maintenance managers are using these programs to get closer to
equipment and analyze problems in a sharper way. The result is usually

fewer but more focused maintenance efforts coupled with constant
i mprovement activities that eliminate or diminish the occurrence of fail-
ures over the long term.
As an example, in 1991 the National Research Council, an arm of the
National Academy of Sciences, published "The Competitive Edge: Research
Priorities for U.S. Manufacturing." The report urged manufacturers to shift
from breakdown and preventive maintenance to predictive maintenance to
keep up with worldwide competitors. It looked at research needs in five areas,
one of which was equipment reliability and maintenance. Maintenance was
described as in the backwater of manufacturing research and needed to be
brought to the forefront. The report said: "Predictive maintenance, in use in
U.S. industry for only a few short years, is usually understood to involve the
use of sensors, analysis, and computer software to detect conditions that
might eventually lead to equipment failure. Predictive maintenance is a little-
used approach that has great potential." Newer strategies help maintenance
managers ensure that the right maintenance technicians do the right thing to
the right equipment and system at the right time, using the right techniques,
tools, parts, and methods.
Reliability Improvement Programs

Reliability improvement programs are generally considered proactive in
nature because they focus on continuously improving the reliability of equip-
ment and systems. Some of these programs follow:
Predictive Maintenance (PDM)

This is a performance-based surveillance method that depends on measured
parameters to reveal wear or performance that must be corrected before poor
operations, quality losses, or breakdowns occur. Often sensors are used so
that continuous observation of equipment is possible. Other data might be
obtained by periodic observations. Still other information might be obtained
by subsequent analysis of data gathered in the field, for example, oil sample
analysis. A number of factors are taken into account to determine what is cur-
rently happening to the equipment and what should be done to correct prob-
lems that are happening or might happen in the future.
Because most measurements are taken while the equipment is operating,
this surveillance does not require as much equipment shutdown as do most
PM inspections. Corrective actions suggested via PDM may take the same
form as in PM. For example, restorative actions, such as lubrication, adjust-
ment, replacement, and certain calibration, may be required. The chief dif-
ference is the timing of these actions. PM calls for a regular schedule; PDM
is on a demand, or predicted, basis.
Predictive maintenance provides some clues to the causes of problems,
most often by analyzing equipment history and current operations, sensing
trends, diagnosing undesirable conditions, indicating possible causes of these
conditions, and making this information available to appropriate people or

control devices so that maintenance action can be taken before the situation
gets beyond desirable limits. Although analysis may be done by hand or
direct observation, a computer program is most likely to be the main tool
used. Contributors to PDM systems range from the human operator on the
line to automated sensing and monitoring points in the equipment or system,
even to expert or intelligent control systems. But, with all the potential of
predictive maintenance systems, it is evident that they are little used by many
organizations that invest heavily to implement automated factories and
advanced facilities. Almost any investment in predictive maintenance efforts
offers the possibility of great returns.
Reliability-centered Maintenance (RCM)
RCM systems are specialized management systems that optimize preventive
and predictive maintenance efforts to achieve high levels of sustained opera-
tions and reliability, such as those found in nuclear power plants, public utili-
ties, commercial aircraft, space craft and their launch facilities, and hazardous
chemical processing plants. RCM depends heavily on analytical methods and
structured decision logic to determine maintenance tasks and schedules nec-
essary to maintain equipment at the highest level. These systems are also
dependent on good, reliable, and contemporaneous information concerning
each component in the system and focus greatly on the timely, thorough
completion and documentation of each element of prescribed maintenance
work.
Total Productive Maintenance (TPM)
TPM improves the organization by improving the personnel and equipment
and systems of the plant-as one of the founding developers of TPM put it,
"changing the basic culture of the organization." The title is misleading
because TPM involves everyone in the facility concerned with high levels of
equipment performance. A more descriptive term might be: total productive
equipment management (TPEM). The focus of TPM is on the equipment.
Simply, TPM permanently improves the overall effectiveness of equipment
by actively involving operators and all others directly concerned with that
goal (this could mean top management to workers on the floor, even ven-
dors). Started in Japan in 1971, TPM has spread throughout the industrial-
ized world, and its revolutionary results in improved productivity and quality
currently enjoy much favor. TPM has five features.
1. It maximizes unit equipment effectiveness, improving overall system

effectiveness.
2. It establishes a total system of preventive and predictive maintenance cov-
ering the entire life of the equipment.
3. It covers all departments, such as equipment users, planners, maintainers,
and all related operations or administrative activities.
4. It requires participation by all staff members from top management to
workers at the machines.
5. promotes productive maintenance through small group activities that are
more responsive to motivation.
There is no question of the success of a carefully planned TPM system

i mplementation. In the final analysis, TPM-oriented systems encourage
employees at every level to take responsibility for the equipment, process,
quality, productivity, and all information involved with what is going on at
their location.
The three ingredients of TPM are:
Equipment utilization
Equipment performance
Equipment availability
Implementing TPM is a long-term effort that may span three to five

year, and involves the following phases:
Improvement of existing equipment.

Maintaining improved or new equipment at a higher level of performance
and availability.
Procurement of new equipment with high levels of performance and avail-
ability.
Because TPM is organic and long-term in nature, it may be undertaken

as a stand-alone program or in concert with related management efforts,
such as computerized maintenance management systems, training programs,
and others. Complete details of TPM programs and implementation may be
found in the bibliography at the end of this course.
Total Quality Management (TQM)
Books and courses have been published on this popular topic. Application of
TQM to maintenance practices and problems has been widely used. TQM
contributes heavily to improvements in almost every sector of the mainte-
nance function. It should be pointed out that total productive maintenance
(TPM) and total quality management (TQM) complement each other: they
do not compete or overlap. The chief difference is that TPM focuses entirely
on improving all aspects of equipment operations; TQM focuses on the peo-
ple and processes by which things get done. Together, these two programs
afford the maintenance manager powerful means for improving maintenance
performance across the entire function.
Planned Maintenance Programs

Planned maintenance programs are based on some concept of fixed schedul-
ing, although in some cases the schedule may be flexible to a degree. Planned
maintenance programs are considered to be reactive in nature, although some
latitude is necessary because proactive activities are part of some planned
maintenance work. The following programs fall into this category:
Preventive Maintenance (PM)
Preventive maintenance is planned, scheduled inspection, assessment, adjust-
ment, and minor repair of equipment. It is most often characterized by a pre-
scribed interval (frequency) of activity, which may be altered. Performance of
the PM inspections and other tasks may require that machinery be shut
down. When PM inspections reveal conditions that indicate action needs to
be taken, a maintenance function is performed to restore the equipment to
a satisfactory level. This work may be done at once or scheduled for a later
time if conditions permit. This restoration work gives people confidence
that the machine will perform adequately until the next scheduled PM
activity.
PM may also be referred to as routine maintenance. However, routine
maintenance is generally ongoing or repetitious, involving daily lubrication,
monitoring or testing, adjustment, cleaning, and supply of consumables to
equipment. Preventive and routine maintenance often include proactive
repairs, which, if not done at once, might lead to breakdowns or inadequate
equipment performance. Preventive maintenance is usually done by mainte-
nance specialists from outside the manufacturing or operations department;
routine maintenance is generally accomplished by personnel who operate the
equipment. However, broad exceptions occur in both cases.
Lubrication Program
Some maintenance organizations assign lubrication throughout the facility to
a special group trained in the application, handling, and safety of lubricants.
Others might incorporate this function into the preventive maintenance pro-
gram. The lubrication program is planned and scheduled and may be consid-
ered both reactive and proactive maintenance, depending on the nature of
the application itself.
Periodic Maintenance
This is often included in preventive maintenance. But if it is shown as a sepa-
rate maintenance effort, it typically refers to activities considered bigger than
most PM tasks. When bigger tasks are undertaken, such as annual overhauls
of major equipment or systems, the equipment may be removed from service
for a time. This work might be accomplished by contractor organizations,
the company's own staff, or equipment suppliers.
Project, or Upgrading, Tasks
Project tasks are perhaps overlooked as planned maintenance tools in the
continuing quest for maintenance improvement. Projects are almost always
planned, estimated, and scheduled. During the life cycle of an equipment
item or system, inventions, evolutionary technology improvements, new
materials, and process improvements may enter the picture. Some of these
items, if incorporated into the equipment or systems, might improve speed,
reliability, cost, quality, or life of the system itself. A project task can pay
handsomely if it is made a regular part of planned maintenance and orga-
nized and pursued with a purpose.
Opportunistic Maintenance
This type of maintenance is a planned form of response that can be accom-
plished when almost any unplanned event interrupts the operation of a
device, subsystem, or system. For example, if a production department expe-
riences a parts shortage or a machine goes down and thus stops activity at
other machines or a power outage occurs, there is an opportunity to use the

time thus created as a maintenance opportunity. If a machine or device is
down due to some unrelated problem, opportunistic maintenance can be
accomplished within the time envelope needed for the primary repair. Real-
izing good value from opportunistic maintenance requires innovative
advanced planning by maintenance planners and schedulers. Preparation by
technicians and operators is needed to avoid missing the opportunity or
spending more time and effort on the situation than justified.
Unplanned Maintenance Programs

Unplanned maintenance programs are totally reactive, as one might expect.
However, they occupy a large amount of time and responsibility in most
maintenance organizations and therefore are important management issues.
Some of these programs are:
Emergency Maintenance
Emergency maintenance is self-explanatory. As stated earlier, any failure that
produces downtime in a critical or an automated system is probably an emer-
gency. However, other failures may also be classed as emergencies such as
environmental, fire, and accident situations. Resources at every level should
be used to respond to a genuine emergency. Avoiding emergency situations is
best addressed by design reviews, equipment redundancy, modular devices,
preventive and predictive maintenance systems, expert or vision systems, and
continuous training of personnel and supervisors.
Breakdown Maintenance
Breakdown maintenance does not necessarily imply emergency conditions,
although almost any breakdown in an automated factory or similar type of
facility is a potential emergency. Breakdown maintenance can range from
adjusting or calibrating equipment and systems to improve quality or perfor-
mance to difficult repairs requiring quick response and considerable exper-
tise. Breakdown maintenance usually results from the spontaneous
appearance of a problem; it can also result from predictive or preventive
maintenance activities, statistical process control analyses, alarms from the
control subsystem of an automated system, or complaints of the operator of
the affected equipment. Many organizations have special crews or techni-
cians who respond to breakdown situations; others station personnel in spe-
cific areas, such as production departments, to tend equipment on a
continuous basis.
Corrective Maintenance
This term is often confused with breakdown maintenance and other programs
named above. Anything done to equipment can be regarded as a correction.
However, used here, corrective maintenance refers to a maintenance engi-
neering approach that seeks causes of failures. This effort is used when failures
are frequent, costly, or significant in terms of quality or environmental impact.
Engineering and technician efforts are put to the study and analysis of the fail-
ures, causes are determined, and possible fixes are developed and tested. If the
elimination of a failure can be confirmed and economically justified, correc-

tive action is taken or installed. This program contains an element of planning
but generally comes about because of unplanned problems. It might be argued
that corrective maintenance can be both reactive and proactive.
THE COST OF MAINTENANCE

SUPPORT PROGRAMS (MSP)
In this course, maintenance support (MSP) refers to programs or activities
discussed in the earlier sections of this chapter. There is no fixed basis for
indicating how much effort or money should be spent on maintenance sup-
port programs. The cost of maintenance support programs can be compared
with the cost of an insurance premium. As with an insurance policy, when the
premium cost exceeds the risk that whatever is being insured against will
happen, the amount of insurance and the premium should be reduced. In
most cases, an empirical judgment about the costs of MSP versus the reduc-
tion of risk of equipment failure is satisfactory. Consider two examples.
First, consider a gas-fired unit heater in a large, open warehouse area.
There are 20 identical units. If one becomes inoperative but is safe, there
would probably be little or no loss of warehouse performance. It would be
difficult, therefore, to justify more expense for PM than an annual inspection,
cleaning, and adjustment.
Now consider a large air-conditioning system that heats, cools, and ven-
tilates a six-story laboratory building. This equipment is more complex than
that in the previous example and therefore more likely to have problems.
The critical nature of its role in the facility and the lack of redundancy make
failures more serious. A more comprehensive and frequent PM schedule plus
some PDM and other advanced technology attention are justified because
the risk of failure is greater than the cost of responsive maintenance support.
The same kind of reasoning is required for each item included in main-
tenance support programs, reactive or proactive. For larger, complex equip-
ment, accessory items or equipment units may be considered separately and
assigned more frequent or more comprehensive attention.
MEASURING THE RISK OF

MAINTENANCE SUPPORT PROGRAMS
It is possible to work out a numerical rating system to help assess compara-
tive risks and to determine to what extent MSP should be applied. Because
the cost of individual support tasks, such as PM, can easily be determined,
the scheduling decision hinges on the size of the risk involved. Risk, used
here, consists of two factors: the probability of a failure occurring without
MSP or with very low or no attention, and the severity of the problem that
results if the failure occurs. A hierarchy of numbers, on a scale of 1 to 10, is
assigned to each of the two risk factors and then combined. A numerical
assessment of the comparative risks results. A maximum total risk of 20

means the highest levels of MSP would be indicated for an item of equip-
ment or system. Examples of typical numerical assessments are shown in
Exhibit 5-1. To simplify further discussion and examples of maintenance
support programs (MSP), we will use the preventive maintenance (PM) pro-
gram as representative of MSP
EQUIPMENT INSPECTION
Maintenance support programs, regardless of type, usually include peri-
odic inspections of equipment or they generate orders for inspections in
response to ongoing conditions. The frequency of these inspections varies
to accommodate the nature of the equipment, its usage, and its impor-
tance. The schedule can be developed for 12 months in advance, with
work orders issued on a weekly or demand basis.
Inspections usually include an audio-visual (listen and look) inspec-

tion of the equipment while it is operating, combined with the use of
instruments to determine specific indicators, such as power consumption,
speed, vibration, pressures, and so on. Other items are checked, such as
condition of filters, belts, tolerances, lube levels, and so on. Typically,
minor problems or repairs are handled immediately if they can be done
within a limited time. If more time is required, a standard maintenance
work order is requested by the inspector or someone in the supervisory
chain. In many cases, the lubrication program is considered to be a part of
the PM program, although it may be handled with a separate schedule and
perhaps by different personnel, who follow a prescribed route to service
equipment.
Equipment Identification
Whether using a manual or computerized system, establishing maintenance
support programs need not be difficult. Using a preventive maintenance
(PM) program as our example, setting one up requires a considerable amount
of effort but is really straightforward. First, each item of equipment included
must be selected, evaluated, and identified; any method of accomplishing this
may be used, but several pitfalls should be avoided. A usual tendency is to
identify every component, which greatly swells the database, complicates
scheduling, and makes for voluminous reports. It is best if only major or crit-
ical components have a separate identity.
Computerized or not, the PM system needs item numbers to keep track
of items. If using a computerized system, the number can be simple; manual
systems might work better with a formatted number. One equipment num-
bering system can use six digits to identify pieces of equipment or their major
components. The first digit identifies a generic or primary grouping, such as
plant mechanical system. The next two digits identify subgroups within the
primary group, such as boilers. The last three digits identify individual units
within the subgroup. An example of an equipment numbering system is
shown in Exhibit S-2. Many computerized PM management systems suggest
numbering schemes that are more applicable to their systems as applied to
individual sites or industries.
Inspection Procedures
When the equipment has been identified, the inspection procedures should be
developed and written. This is best done by the technicians, supervisors, and
engineers most familiar with the condition and use of the items. Some help
may be obtained from manufacturer's manuals and typical industry practices,
but customizing to the unique needs of the local site is best. Inspection proce-
dures should be as specific and detailed as the importance of the equipment or
the inspection dictate. They should be objective (test valve pressure for 20 lb.
minimum-30 lb. maximum), not subjective (check valve for proper opera-
tion). As a guide, the total annual prescription for dealing with the item
should be considered first. Then periodic tasks such as tests, filters and parts
replacements, adjustments, calibrations, and so on, can be grouped by fre-

quency, by whether the equipment is running, and finally organized into sepa-
rate work packages for optimal scheduling. Maintenance management should
establish a periodic review of inspection procedures so that pertinent changes
and improvements can be made. To do this well, feedback from the mainte-
nance support systems will be needed.
Inspection Frequency
The frequency with which components are inspected can be scheduled
according to the type of inspection. Most computerized systems contain a
powerful scheduling program that organizes inspections by craft, geographic
location, risk factors, elapsed time of equipment usage, and such overriding
factors as production schedules or hours of business operations. The gas unit
heaters discussed earlier would be included, although the frequency might be
very low unless a safety issue were involved. In fact, they might be treated as
one complete group of items and the inspection of all of them covered by one
work order instead of 20. As discussed earlier, many items should not be
included in the PM program because the risk of failure does not justify the
cost (safety items excepted). However, they should be included in the overall
equipment history file because when work is done on them, the work should
be recorded against the proper equipment item. It may be best to begin a PM
program on a small scale so that sufficient time can be given to the problems
of detailing inspection and scheduling. As experience is gained, decisions on
expanding and including additional equipment will become easier.
The frequency of PM varies: It can be based on judgment by the local
staff, on the manufacturer's recommendations, or on other criteria. Better yet
are indications of past problems found in the machine history records. After
frequencies are set and the program has been in operation for a time, fre-
quencies should be reviewed and adjusted up or down. If frequencies can be
reduced safely, the cost of the PM program is also reduced. A candidate for
increasing time between inspections would be a PM work order that docu-

ments few adjustments or repairs required over several consecutive visits to
the equipment. Again, an important part of inspections is to observe how the
equipment is running and to estimate if frequency should be increased or
stretched out for best effect on the equipment in its own operating environ-
ment.
PM WORK ORDER SCHEDULING AND ROUTING

A simple PM work order, as shown in Exhibit 5-3, can be used for instruc-
tions and scheduling. It lists all pertinent equipment information, location,
description of what is to be done, frequency, time required, and a method of
indicating what was actually done, with verification of work completion. If a
computerized, on-line system is used, the work order can be delivered to and
closed out by the employee by means of a computer terminal in the field or
shop.
Scheduling PM
Scheduling is almost universally done through computerized programs. But
many competent maintenance organizations schedule PM work by hand.
Either way, the job of scheduling depends on two elements: a defined method
for the task and an estimate or historical time budget for doing it. If the
scheduling is done manually, the PM work orders should be listed in the
months in which they are to be done, then shifted into weeks within the
months so that the workload is balanced. It is important not to divide the
tasks on one piece of equipment into different weeks. For large organiza-
tions, it might be necessary to go to a daily breakdown. Some PM jobs may
be repetitive and show up regularly throughout the year. Others might be
sensitive to seasonal or production influences and fall irregularly throughout
the year. Continue to list the jobs until all are in the yearly schedule. Then
some decisions can be made about combining, based on skills, areas, systems,
or other logical designations. Computer-based scheduling programs allow
flexibility in achieving an optimal PM schedule. They permit a master sched-
ule to be produced at the beginning of each week, accompanied by detailed
work orders.
Routing PM
Routing PM becomes a simple task of organizing the schedules according to
the proximity of one piece of equipment to another. Again, this can be done
by computer or manually and indicates the sequence of PM jobs. In some
facilities, routing can be complicated by having to avoid interrupting the
operation of critical equipment units. For example, PM may not be allowed
during a production run of a chemical process line. Therefore, the routing of
the PM job will indicate that the work should be done during down time or
perhaps during a product changeover or on an idle shift. Another complicat-
ing factor is the routing of trades or contractors who must coordinate their
services in performing combined PM so that equipment is interrupted or out

of service as little as possible.
TIE MANAGER'S ROLE
The manager must ensure that inspections are performed on schedule and
must continuously review the preventive maintenance program to make cer-
tain that the results meet technical and economic goals. The manager does
this by supervising the work in the field to see that it is properly executed and
by generating reports informing maintenance and other organizations about
the performance and cost of the PM work.
MSP REPORTS
Several types of reports help the manager monitor the effectiveness of main-
tenance support programs. The reports discussed in the next sections are
general suggestions; a facility may well develop unique reports that make
sense in meeting local needs.
Uptime Report
One of the objectives of the maintenance function is to reduce downtime.
Records should be maintained to measure how effective MSP is in reduc-
ing it. Downtime is defined as the interruption of scheduled operating time
because of failure or poor performance of the equipment. Uptime would
be the inverse of that definition, or the percentage of time that the equip-
ment is operating or ready to operate. The term is positive and easy to
measure and understand. Scheduled downtime, such as PM, does not count
against uptime evaluations.
A good way to measure the effectiveness of MSP is to record and ana-
lyze the uptime of the equipment. Uptime percentages can be maintained
for individual units, averaged for a small number of critical units, or for the
entire list of equipment in a department included in the PM program.
Uptime reports shed visibility on pockets of downtime and show trends
that might signal potential downtime in particular areas, systems, or units.
Marginal or substandard uptime implies that excessive costs are being
incurred because of downtime. However, determining the cost of down-
time can be daunting. If a conveyor fails and 20 people are idled, the cost
of labor could be greater than if a drill press with only one operator fails.
But the parts lost or delayed by the drill press failure may have a greater
impact because of missed shipping dates than the conveyor line mishap.
Extensive analysis may be needed to determine the true cost of a downtime
situation. But the existence of downtime itself is usually enough of a signal
to maintenance that action should be taken. This is why we concentrate on
the critical few and try to record the actual productive time this equipment
is idle.
Compliance Report
A portion of available labor hours each week must be devoted to whatever
maintenance support programs are in operation and that the work be distrib-
uted as evenly as possible. When scheduled MSP inspections are missed, they
are difficult to make up, and the benefit of that work can be lost. The affected
equipment is put at risk for wear and reduced quality of output.
A compliance report indicating the percentage of scheduled MSP work
that was accomplished each week or month reveals the current performance
of work by craft, shop, geographic area, and critical equipment and takes into
account other desired standards of compliance.
Ten-Most-Critical Report
It may be worthwhile to produce an uptime report for the 10 most critical
pieces of designated equipment (or some other useful quantity). In fact, this
is a good place to begin reporting uptime on equipment. In time the report
can be expanded to include all important units.
Work-Generated Report
Another way to monitor maintenance support programs is to determine the
ratio of repair work orders generated as a result of MSP-related inspections.
These results can then be graphed to illustrate trends. Initially, inspections
will generate more remedial work. After the various inspection efforts settle
down and the repair work is taken care of, the amount of generated repair
work will decrease. At this point, inspection frequencies for individual equip-
ment can be adjusted up or down to obtain maximum benefit from the dol-
lars spent on the PM program. The work generated report, if used carefully,
can be a great aid to the manager in fine-tuning inspection activities in three
ways:
Adjusting frequency and timing of the inspections.

Changing the content of work included in the inspections.
Reviewing the work order process to ensure the remedial orders are prop-
erly handled.
When work generated by MSP decreases, it is a signal that management

oversight of inspection activities is needed.
Graphical Data
It is helpful to display the data contained in MSP reports in a series of graphs
or curves, as shown in Exhibit 5-4. For example, the relationship between
the amount of PM work done, the amount of remedial work generated by
PM, and the resulting percentage of equipment uptime are good visual indi-
cators of the effectiveness of the PM program.
SUMMARY
In this chapter we discussed programs broadly referred to as maintenance
support programs (MSP). Although much maintenance work may not be
included in maintenance support programs, it still can be planned and sched-
uled in advance by way of regular work orders or standing work orders. This
work might include routine filter changes, belt replacement, delivery of sup-
plies, seasonal changeover of equipment, cleaning of equipment spaces, and
other routine jobs. When the various maintenance support programs are
implemented and stabilized, consideration should be given to including these
tasks in MSP Whether by manual or computerized means, all jobs worth
doing, large or small, should be scheduled and covered by a work order to
ensure that they are done properly and on time.
Well conceived and established maintenance support programs can be
accurately costed into the maintenance budget. Analysis of budget variances
provide yet another measure of how well the programs are doing throughout
the year. Management should monitor results and make timely changes to
the support programs based on feedback from the field and changes in the
number and type of equipment. Close and careful attention to MSP pays off
in achieving maximum results for the dollars spent on them.
1. Measuring the risk of equipment failure consists of two factors: the 1. (c)
and the of failure(s).
(a) consistency ... number
(b) scheduling ... identification
(c) probability ... severity
(d) cost ... physical effects
2. Inspection of equipment should include listen and look inspections 2. (a)

when the:
(a) equipment is operating.
(b) equipment is shut down.
(c) piece of machinery has failed.
(d) work order is requested.
3. The first step in setting up a PM program is to: 3. (a)

(a) identify the pieces of equipment.
(b) get management funding and approval.
(c) determine if a program is feasible.
(d) find out legal obligations for having one.
4. The last three digits of an equipment number such as shown in this 4. (a)
chapter identify the:
(a) individual units within a subgroup.
(b) manufacturer of the unit.
(c) equipment purpose or function.
(d) general class of the equipment.
5. In a PM program, identification numbers should be assigned to: 5. (b)

(a) every component of every machine.
(b) major components of every machine.
(c) large equipment units only.
(d) machines that need daily attention only.
6. When the frequency of PM has been established, it: 6. (b)

(a) remains the same on an annual basis.
(b) may change as conditions involving the equipment vary.
(c) should be increased every six months.
(d) cannot be modified unless there are equipment failures.
7. If inspections can be safely reduced, the: 7. (a)

(a) cost of the PM program is also reduced.
(b) probability of more failures increases.
(c) equipment experiences uptime improvement.
(d) effect on equipment performance is adverse.
8. Routing PM work refers to issuing scheduled work according to: 8. (c)

(a) the identification numbers on the equipment.
(b) the generic grouping of the equipment.
(c) the proximity of one piece of equipment to another.
(d) the day's schedule of other activities.
9. Downtime is the interruption of scheduled equipment perfor- 9. (d)

mance because of
(a) the failure of the PM program.
(b) minor parts replacements.
(c) the installation of field upgrades in the unit.
(d) degradation, or mechanical failure, of the equipment.
10. A compliance report indicates the: 10. (d)

(a) percentage of uptime.
(b) percentage of downtime.
(c) number of maintenance employees needed for PM inspec-
tions.
(d) percent of scheduled PM work accomplished during a desig-
nated period.
Planning
and Scheduling
Learning Objectives
Identify jobs or projects that require planning

and scheduling.
Identify the six elements of planning and
scheduling.
Identify the four methods used in estimating
times that jobs should require for completion.
Identify the contents of information contained
on job planning sheets.
List the nine items typically included in job
schedule reports.
Know the characteristics of planners and sched-
ulers, and criteria for selecting them.
INTRODUCTION
Planning and scheduling are the means by which maintenance work is effi-
ciently organized and prioritized and available resources-labor, materials,
equipment, and time-are assigned to accomplish the tasks in the most effi-
cient, timely, and economical manner. To establish an effective planning and
scheduling system, as much work as is economically possible should be done
via planned, scheduled, written work orders.
THE KEY ELEMENTS OF

PLANNING AND SCHEDULING
The six key elements of planning and scheduling shown in Exhibit 6-1: Note
that the complete cycle includes not only planning and scheduling but also
93
execution of work, even if supervised and completed by others; a review of

results; and records that develop a history of what was done. A good planning
and scheduling system should allow for control of each step along the way as
a job is authorized, planned, estimated, scheduled, executed, recorded, and
reviewed by management. PER (planning, execution, and review) is an acro-
nym for remembering the key elements.
Identification of Jobs to Be Planned

When the maintenance department receives a work order or work request,
including self-generated work, it should time stamp and log the request. It is
virtually impossible to plan and schedule 100 percent of all jobs requested.
However, the intent should be to plan and schedule at least 80 percent of
jobs considered to be in need of such treatment. The remainder might be
handled more efficiently through standing work orders or in unplanned field
visits by maintenance staff responsible for the area or equipment. The
response to all jobs, planned or unplanned, should be monitored or con-
trolled by the planning-estimating function because even unplanned jobs
might provide clues regarding more serious work needs or safety issues that
should be addressed. As a rule, the more jobs planned and scheduled, the
better results one might expect in terms of efficiency, cost, response time,
and user satisfaction. A job should be planned and scheduled if it requires
any of the following: purchase of equipment or supplies, interruption of a
vital system or production, more than two craft hours to complete, multiple
crafts or outside contractors. Management should determine policies and
definitions that describe the type or class of jobs that must be planned and
scheduled.
Authorizing Work Orders

Authorization of work orders can be achieved in a number of ways. Planners
may be delegated authority to permit routine work. Limits on dollar amounts
or labor hours should be designated as a measure of authorization for work
that is not routine. Because the preventive maintenance program is planned,
it can be given a blanket authorization via budget approval. Repetitive work
can be handled with standing work orders. The levels of management might
be given different levels of authorization. Requesters of work should provide
the planner with the proper authorization for jobs they submit. Most large
jobs are high profile and probably will already be authorized by management
before they reach the detailed planning stage.
Assigning Priorities
Planners are usually delegated authority for assigning priorities to work
requests if priorities are not indicated. In the planning stage, a priority sys-
tem (Chapter 3) is essential. Priority designations should be formal written
definitions that are well thought out and clear, simple, and concise. The sys-
tem should be flexible because plant problems can cause changes in the
urgency of in-process requests. All areas served by maintenance should agree
to definitions and priorities.
THE PLANNING PROCESS

Planning is a broad, inclusive term indicating that work is organized and set
forth in written sequential steps. Instructions, special advisories, and draw-
ings are given, parts and materials are listed, and an estimate of time for com-
pleting the job is shown. It has been said that good planning, as opposed to
doing no planning at all, has the effect of doubling the impact and productiv-
ity of a maintenance staff.
Estimating Labor Hours

Planners must provide an estimate of the type and number of labor hours
needed to accomplish the job so that they can schedule it properly. This esti-
mate can be arrived at via any of the following methods:
A historical estimate for routine or similar jobs that have been done many
times before and for which data are present in an active data bank.
An engineering estimate by which the job is broken into its logical compo-
nents and required time for each component is estimated from experience
or from tables of standard times. In this method, the total time is then
added up.
A so-called slotting technique, which involves the broad classification of
jobs into one of several slots, such as "2 to 4 hours." The average time
reported for jobs in these slots is then the new estimate for each new job
put into the slot in the future.
Engineered time standards, or standard data. Although accurate, this
method is difficult and expensive to apply to maintenance work because
so much of it cannot be defined before it is done. This type of estimate is
compiled by using predetermined accurate times for elements of the
work. The size of the elements varies between different collections of
standard data but is generally small in relation to the time required for
the entire job. Standard allowance for travel, fatigue, delays, and other
factors are applied, and the sum of the time elements becomes the job
time estimate. Packaged job estimates, used by the U.S. Navy public
works organization or from commercially available estimating manuals,
offer standard data for everyday use.
Any o these types of estimates can be used by planners for work orders.
The larger, more complex jobs require more accurate estimates. An estimate
of time to complete each job is essential before the scheduling step can be
taken. The exception to this rule is emergency jobs, which should be done
immediately-with or without a time estimate.
Providing Information: Sketches, Prints, and Special Tools

The planner is also responsible for obtaining or providing information
needed by the crafts to accomplish the assigned task as quickly and safely as
possible. This may involve working through others, such as engineering,
vendors, and contractors. The information may involve sketches, drawings,
instruction books, special safety instructions, and special tools. It is not nec-
essary to list every tool, but special tools should be indicated. For example, if
electrical power circuits are being repaired, then approved equipment shut-
down and tag-out procedures should be provided with the work order, and
required special safety locks should be listed.
Parts and Materials Needed

It is the responsibility of the planner to ensure that necessary parts and mate-
rials to complete the work are available before the job is scheduled and
released for execution. This task may involve working through the purchas-
ing and stores and materials organizations. One way to increase the effective-
ness of the maintenance organization is to pre-kit the necessary parts,
supplies, special tools, drawings, and other items. This involves gathering in
the maintenance storeroom all necessary items for doing the job before it is
released. This assures parts availability for the crafts, reduces requisition
writing, and reduces mobilization time at the work site. The degree of effort
to pre-kit could be relatively high, but substantial reductions in labor and

confusion at the job site are possible.
Planning Sheet for Larger Jobs

It makes sense that larger jobs are better accomplished if an agreed course of
action is set forth in advance of the job. The way to do this is by using a plan-
ning sheet that is at once a means to forecast, communicate, and measure
what is done. These sheets usually provide the following:
Forecast of labor, material, tools, equipment and costs.

Communication of job method, job elements, time estimates, safety and
permit requirements, and performance data requirements.
Measurement of actual cost and performance of job, and completion data.
Planning sheets generally include pertinent information about the job's

definition and scope, location, priority, method to be followed, materials,
special tools and equipment, skills and number of craft personnel needed,
and estimated labor hours. Requirements for recording actual performance
are also stated. It should be noted that these planning sheets do not replace
work orders.
Ordering Materials
In the maintenance operation, it is usually the planner's responsibility to
determine what materials are to be used for jobs and projects. The ordering
might be handled by others, such as storeroom personnel or the purchasing
department, or might be initiated by the planner. The aim in materials and
services procurement is to obtain them from competent, reliable sources at
reasonable, but not necessarily the lowest, costs.
Scheduling Work
Almost any maintenance organization can afford to operate a computerized
planning and scheduling system. However, it is not necessary to have such a
system to carry out first-rate efforts. Manual methods have been used suc-
cessfully for years.
Scheduling jobs, large or small, begins by putting them in a priority
sequence. This list must then be altered to conform to:
Available staffing each day or for the period of the schedule.

Availability of parts and materials.
Special labor skills needed from in-house staff or contractors.
Scheduled equipment shutdowns or other important activities.
Availability of special tools and other unique needs.
If a low priority job is scheduled for a date in the future, its priority does not
automatically change to a higher rating as the days pass. For example, a low-
priority job promised for a week in the future may not get done on that day.
A review may be in order to determine if its priority should move up or

remain as is.
The planner should prepare for the maintenance manager a schedule for
the next day's job activities. This schedule, which probably will change as
each day unfolds, will include preventive maintenance, routine jobs, projects
that are underway, and work orders. (The next section of this chapter deals
with a daily listing of small jobs.) Some jobs must be scheduled well in
advance. For example, utility shutdowns must be well planned and coordi-
nated, and the equipment to be worked on during the event made available
by the host or using departments. Every effort must be made to complete the
daily schedule of jobs. Those left over may be considered for carrying for-
ward to future days.
The planner and scheduler should meet briefly with the craft supervi-
sors) the afternoon before to plan the next day's work schedule. Based on
information about how the current day's work is progressing and about
emergencies that have developed, they can decide which of today's jobs, if
any, will have to be carried over. This provides the scheduler with an idea of
remaining work possibilities for the following day. By comparing the new
schedule with the old schedule (leftover work and expected labor hours avail-
able), a final schedule can usually be agreed upon quickly. If the maintenance
control system is computerized, a log of open work orders can be analyzed
and an updated scheduling sheet generated, as shown in Exhibit 6-2. Below
is a list of items on the typical scheduling sheet:
Priority-any priority system may apply.

Authority number-work order number or charge number.
Job description-brief statement of the work to be done.
Skill requirements-what crafts are needed to do the job.
Days of week-when the work is scheduled. Note that each day is divided.
The upper half is intended to show the scheduled hours; the lower half
may be used to show the actual hours used. The actual hours should be
filled in by the field supervisor; the planner-scheduler transfers this infor-
mation to the master copy of the schedule where it eventually winds up in
the historical and estimating databases.
Total estimated time-total estimated time to complete the specified work.
Planner's name-planner's name or initials.
Assignment-craft or person's name assigned to the job. The master copy
of the schedule eventually shows who performed the job.
Completion date-date the work order was completed.
Remember that the scheduler is responsible for deciding when the job
should be done while the craft supervisor is responsible for determining who
will do the job. The scheduler's objective is to assign sufficient work to each
department or craft to ensure that 100 percent of the labor hours each day
are used.
Some maintenance organizations are small and unsophisticated and may
not be computerized. In such cases, a visual system may suffice. A popular
one is a rack with pigeon holes of sufficient size to hold a number of work
orders. The work orders are placed in the proper pigeon hole as they are
assigned. A running account of committed and uncommitted labor hours is
kept with a grease pencil in the space provided above each pigeon hole, as
shown in Exhibit 6-3. As changes in the day-to-day schedule occur, jobs can
be reviewed by the supervisor or scheduler and shifted from one pigeon hole
to the other.
An effective maintenance department also provides a means of notifying
a customer when jobs or projects are delayed or rescheduled because of
emergencies, parts shortage, labor unavailability, and other problems discov-
ered as the job progresses. If the scheduler is aware that a craft will be
required because of special skills or knowledge, the job should be discussed
with the affected supervisor to confirm the availability of the craft or outside
contractor.
Scheduling Small Jobs

Small jobs are the mainstay of daily activity in most maintenance organiza-
tions. Much care should be exercised in ensuring that daily work is effectively
carried out and that all personnel and assets are used as much as possible. It is
recommended that schedulers prepare a daily schedule of small jobs, similar
to the overall daily schedule previously described, and that they review and
reissue the schedule each work day. Small job scheduling is driven primarily
by the availability of craft skills, labor hours, and priorities. Some flexibility is
necessary to find ways to get the most small jobs completed during a shift or
work day.
Scheduling Large Jobs

Smaller jobs are, by far, the most numerous. Larger jobs that take several
days or even weeks and months represent the bulk of hours expended in most
organizations. Therefore, these jobs definitely should be scheduled with
some precision, and there are several techniques for doing this. All the tech-
niques described here are available in computerized form and easily imple-
mented; however, manual approaches are also effective.
First, and perhaps the most widely used technique, is the Gantt, or bar,
chart. Exhibit 6-4 illustrates how a Gantt chart can be used to schedule the
removal and rebuilding of a sump pump in a large central sewage system.
The job includes rebuilding all valves, replacing insulation, and rebuilding
the pump itself. This method allows elements of a job to be scheduled or
overlapped as desired, or as possible, so that proper work sequence is pro-
vided and the duration of the job is minimized. In this case, the Gantt chart is
adequate and easier to develop than the next technique.
The next technique, called the critical path method (CPM), can be used
to prepare detailed schedules for projects or large jobs. This may be done
manually or, preferably, by computer. A variation of this technique is the pro
gram evaluation and review technique (PERT). The CPM method allows
the relationship of all elements in a project or individual job to be dia-
grammed, as shown in Exhibit 6-S. The critical path is indicated by the dot-
ted line. Note that the arrows in the diagram indicate the necessary sequence
of work. In effect, each element must have something done ahead of it before
the element can be started. The critical path is determined by the combina-
tion of critically related elements that requires the most time to complete.
Because the critical path represents the longest combined time, with no lag
between elements (each starts only after the previous one is completed), great
flexibility is possible in completing the elements of the job that do not lie
along the critical path. However, it should be noted that any delay in the ele-
ments situated along the critical path will delay the entire job, creating con-
ditions that might cause a new critical path to occur. CPM and. PERT allow
managers to focus on the important elements of a job and to make decisions
about using extra efforts to stay on schedule or to achieve earlier completion
dates, if desired.
The application of a Gantt chart or a CPM diagram can be fit into the
work order system by using a prime work order number for the entire job
and then identifying each element with a suffix number.
EXECUTION OF WORK
The execution of work is the responsibility of line management rather than
planners and schedulers. The execution phase of work generally consists of the
performance of the jobs by the crafts, supervision and coordination of the work
by managers, and checking on the progress of the work. However, it is impor-
tant that pertinent information, such as the time spent on a job, problems
encountered, supplies and parts used, and whether the job was completed or
not, be captured and returned to the planning function so that records may be
completed, job orders closed out, and estimates of accuracy checked and
improved. Planning must devise means of capturing these data in an accurate,
simple, and complete manner. The availability of on-line computer systems,
optical character recognition (OCR) devices, and bar-coding equipment offer
The critical path method uses the same elements to diagram the sump pump job as does the Gantt chart in Exhibit 6-4. The critical
path is indicated by the dotted line. The beginning of each arrow represents the time when work begins on that element, and the
arrow's point represents the time when this element is completed. The number located above the arrow represents the number of
days or hours needed to complete this element. The arrow points to a circle, or node, inside of which is a number that identifies the
next element. Below each node are two numbers. For example, below node No. 9 are the numbers 4 and 10. The left-hand number,
4, indicates the earliest starting day for this element. The right-hand number, 10, means that this element must be completed by the
tenth day. The number 20 is above the arrow. These three numbers taken together mean that this particular element of the sump
pump job can be started as early as the fourth day, must be completed by the tenth day, and will require 20 hours of work. Elements
outside the critical path depend on elements within the path, but there is much more flexibility in scheduling them. Probably, this par-
ticular job would not be placed on a critical path, but it serves as a way of illustrating the CPM technique.
opportunities in this area at relatively low cost. Information must then be

stored and compiled by the planning function and necessary reports pro-
duced.
REVIEW OF WORK
Review of work may be thought of as closing the loop on work done by main-
tenance. It is a way to measure effectiveness, collect data for improving the
operation, report to management, and support future plans. The two main
areas of review are measuring what is done and recording information in var-
ious databases for further use.
Measuring Effectiveness
Any well-run maintenance function should gather data on what is done in the
areas in which maintenance is active. Comparison with what had been
planned and scheduled reveals how effective ongoing activities are. A number
of commercially available software programs are available for accumulating

and presenting this information. By paying steady attention to this informa-
tion, management can aim for continuous improvement in the maintenance
function.
Records Upkeep
The nature of the maintenance function necessarily generates the need to
maintain appropriate databases to achieve control of the operation. These
databases might be numerous and large, requiring a lot of time and effort
for their support. Provision for this should be built into the maintenance
budget. Not only should routine accounting information be collected, but
also important information regarding job times, methods, parts, materials,
skill needs, estimating and scheduling, standards for job planning and esti-
mating, equipment histories, new technology files, energy planning factors,
training profiles, and other data relating to the unique needs of the organi-
zation.
SELECTING THE PLANNER AND SCHEDULER
Criteria vary for selecting who should plan and who should schedule. A key
factor involves training in the appropriate planning and scheduling skills
needed to carry out the duties. Logical thinking and an even temperament
are also important in the planner and scheduler role. Generally, individuals
with experience in the craft or work involved are chosen. However, many
examples of nontechnical personnel who are excellent planners and schedul-
ers have been reported. The planner and scheduler are generally different
individuals or functions. However, in some situations, especially in small
organizations, the position may be combined, or the supervisor or manager
of the maintenance organization might even perform the duties. The need
for these two functions remains, no matter what the size or scope of the orga-
nization. If the operation is small enough to be handled by one person acting
as both planner and scheduler, someone with craft experience should be
selected because these skills can be taught more easily than craft skills.
The Planner
Planner duties are different from those of line supervisors. The primary
responsibility of the planner is to aid, advise, and assist craft personnel in
getting jobs done in the shortest amount of time and in a high quality man-
ner. Ideally, the planner should be an individual who is from the craft or skill
represented by the work and with sufficient experience in the plant to be
familiar with most of the equipment, areas, and problems that have to be
addressed. Experience is important because there are not many opportuni-
ties for on-site observation before or during the work execution. The plan-
ner spends a lot of time at a computer, a feature of the job that may not be
desirable to people who formerly worked in the crafts, and handles paper-
work on a daily basis. The planner selection process can be simplified by use
of the factors listed below:
Good craft skills, meaning the individual merits the respect of workers
who must perform the work.
Good verbal, computer, and written communication skills.
Good administrative skills, meaning the person is able to handle paper-
work with ease.
Good design comprehension and sketching ability.
Good understanding of priorities, work orders, and schedules.
The Scheduler
The scheduler must match job time estimates, labor hours, and priorities. the
scheduler, therefore, should be proficient in abstract problem solving rather
than having a great deal of craft skills or on-site experience. Computer pro-
grams can provide assistance in the science of scheduling, but a certain
amount of broad vision is involved in producing schedules that are truly
responsive to the organization's needs. Some of the factors that help identify
good schedulers include:
Ability to solve abstract problems.

Ability to integrate maintenance schedules with production and operations
requirements.
Good verbal, computer, and communication skills.
Understanding the relationships between the crafts.
SUMMARY
Of the many administrative activities associated with the maintenance func-
tion, planning and scheduling work has by far the most profound effect on
the timely completion of the work. Without an effective planning and sched-
uling operation, it is virtually impossible to properly manage the scope of the
maintenance organization. Planning and scheduling, when performed well,
multiplies the effect of maintenance work.
1. To establish an effective planning and scheduling system, all main- 1. (b)

tenance work should be represented by:
(a) historical records.
(b) work orders.
(c) job cards.
(d) stores issue slips.
2. A job estimate that is broken into several components, with a time 2. (a)
estimate for component, is called:
(a) an engineering estimate.
(b) a historical estimate.
(c) a slotting technique estimate.
(d) a standard data estimate.
3. The decides when a job will be done; the 3. (d)

decides who will do it.
(a) line manager ... planner
(b) scheduler ... laborer
(c) supervisor ... scheduler
(d) scheduler ... supervisor
4. The scheduler should try to schedule percent of the 4. (d)

labor hours available each day.
(a) 10 to 20
(b) 30 to 50
(c) 70 to 80
(d) 80 or more
5. permits scheduling different elements of the job, 5. (a)

allowing them to overlap if desired.
(a) The Gantt chart
(b) The critical path method
(c) The pigeon hole schedule method
(d) The PERT system
6. Execution of the work is the responsibility of the: 6. (c)

(a) scheduler.
(b) planner.
(c) line supervisor.
(d) production department.
7. The should make sure all necessary parts and materi- 7. (b)
als are available before a job is released for execution.
(a) line supervisor
(b) planner or scheduler
(c) storeroom clerk
(d) production manager
8. Ideally, the should be an individual with skilled craft 8. (c)

experience, while the should be proficient in abstract
problem solving.
(a) craft supervisor ... planner
(b) scheduler ... production foreman
(c) planner ... scheduler
(d) production foreman ... craft supervisor
9. The responsibility for assigning priorities to a work order lodges 9. (d)

with:
(a) the planner.
(b) the top management.
(c) the maintenance manager.
(d) any of the above
10. are responsible for providing craft workers via a work 10. (c)
order with all the information they need to complete a job quickly
and safely.
(a) Field supervisors
(b) Maintenance managers
(c) Planners
(d) Design engineers
Craft
Training
Learning Objectives
State the three main areas of maintenance

training concerns.
Prepare a skills analysis for designated crafts.
List five types of training most often followed
in maintenance.
State three classifications of vendor training
programs.
List two kinds of controls that can improve
existing on-the-job training programs.
INTRODUCTION
The increasing technological direction of facilities, systems, and equipment
over the last decade places greater demands on the maintenance function to
keep pace. One of the main signs of this phenomenon is that maintenance
technicians are spending more time on trouble shooting and problem solving
and less time applying their basic craft skills. The changing knowledge
requirements for maintenance workers is reflected in:
The move from single craft to multicraft knowledge.

The migration of technicians from basic skills or crafts to higher technolo-
gies involving computers, electronics, and system analysis.
The rapid rate of obsolescence of equipment and technology and of the
knowledge requirements that go with them.
The aging of the maintenance work force and the knowledge voids that
occur unless training is conducted on a continuous and planned basis.
109
In most organizations, the training task is assigned to the personnel or

industrial relations functions. But managers of maintenance should be aware
of the training needs of their own departments. There are three areas of
training concern: supervisory training craft and support personnel training
and technical and managerial training. Although training professionals may
design and present training programs, these efforts will be more effective
with input from the maintenance function itself. Specifically, recommenda-
tions for the training needs analysis, technical content of courses, proper
instructors, and appropriate case examples are best made by the maintenance
department. The essential thing to remember is that any training program is
only as good as the maintenance manager's input and participation.
An organized, continuous training program enhances the effect of learn-
ing curves. This means that repeating a task reduces the time needed to do
the task next time because the task has been learned. Good training shows
the worker the better way to do the task, enhancing the potential for faster
learning and greater progress on the learning curve.
In this chapter, we will focus on training needs analysis, skills analysis,
and types of craft training.
TRAINING NEEDS ANALYSIS

Craft training programs are often developed from four-year apprentice pro-
grams in use elsewhere. Some programs are excellent and applicable to train-
ing needs. But many are generalized and do not relate to needs of a particular
maintenance department. Moreover, programs that are too complicated, aca-
demic, or esoteric often fail. Programs are needed that are practical and
applicable to the unique situations found at the job level. Local input makes
the training program job-related and functional, which is why training needs
analysis is important.
DOCUMENTING T RAIIVING NEEDS

When the skills and staffing distribution and the optimum number of people
required to run the department have been determined (Chapter 1), the next
task is to determine the number and type of people who should be trained
over the next five years. Assessing the training needs over a five-year period
helps the maintenance manager anticipate appropriate lead times for training
new, as well as replacement, personnel. The program should be reviewed
annually and an updated five-year forecast issued. Without training pro-
grams, factors such as nonavailability of skilled help, union commitments,
and introduction of advanced technology equipment and systems loom large
as critical management challenges. Where there are no formal training pro-
grams in progress, it is necessary to hire higher-paid, experienced workers to
replace personnel who leave or retire. The training profile should encompass
entry levels through highest skill levels and continue on to include support
personnel, supervisors, and managers. Therefore, knowing the predicted
personnel turnover and retirement rates is important. To determine the

number of employees who will leave, retire, or transfer during the next five
years, a form such as Exhibit 7-1 should be used. This form estimates the
number of currently employed skills and the number anticipated to leave
each year. The normal rate of attrition can also be established this way. Local
definitions of personnel attrition and retirement are necessary.
Historical information may be helpful in estimating future events, but
this should be used with some care because organizations are constantly
changing in mission, products, growth, and composition. Exhibit 7-2 is a
form that may be helpful in reviewing past history and projecting future
attrition. As the bottom line shows, the number of replacements can be
determined by adding the average level of attrition to the number of retirees
of each year of the five-year period. Replacements can come through hiring
new staff who are qualified or by training personnel already on staff. It is usu-
ally best if this forecasting is based on a plantwide policy so that all depart-
ments approach the subject uniformly.
After a determination is made on how many skilled employees should be
hired, the remaining slots are filled by trainees. This projection suggests a
fairly long-range program with objectives that will fill the department's
unique training needs. It shows the number of personnel each year who must
be trained and the crafts that are involved. The projection also shows those
years in which a projected high number of retirees might offset requirements
of planned staff reductions. Some care should be taken to ensure that the
right number of crafts are retained rather than a straight head count tally.
Informed decisions about staffing and training are essential.
SKILLS ANALYSIS
Skills analysis assists in determining the training needs for crafts by providing
an outline for an entry level training program, or apprenticeship, or for evalu-
ating the skills of more experienced workers. Skills analysis is developed by
plant personnel who ensure that it reflects the needs of the plant. Consultants
often assist or validate these efforts, but the overview of skills is a management
responsibility.
A skills analysis represents the many tasks and tools that pertain to a skill.
The tasks are then related to unique jobs in the plant. Some skills are general,
such as "knowing the function of and trouble-shooting circuit breakers." Oth-
ers, such as "analyzing synchro-control systems and effectively making repairs
on them," might be specific to the local plant. Some tasks require more experi-
ence and knowledge than others, but they are all part of a single skill, defined
by the organization performing the analysis. In fact, an accumulation of smaller
tasks is usually necessary to successfully accomplish one of the larger ones in a
defined skill.
A skills analysis can be accomplished through a series of interviews with
craftpeople and knowledgeable supervisors. Each task they handle is listed and
described in detail. This leads to a master list of tasks, which is reviewed by
supervision, management, training, and engineering, where appropriate. Such
reviews might result in additions and deletions to the tasks, greater emphasis
on certain tasks, or tasks broken down into more appropriate elements. Finally,
the skill may be stratified to show different grades of experience, such as junior,
senior, specialist, master, and so on, needed for accomplishment.
A final list can now be compiled for all the tasks that make up a skill. A
typical page from a skills analysis is shown in Exhibit 7-3. A group of tasks
common to all crafts is then added. Some of these might include:
Familiarity with safety rules that apply to each job.

Understanding of tools, instrumentation, and equipment items involved
with the craft.
Ability to interpret sketches, blueprints, schematics, or specification docu-
ments that might apply to the craft work.
Ability to make sketches and write up descriptions to communicate the
needs of jobs undertaken by the craft.
The finalized skills list, as agreed from the analysis, provides a guideline
for developing a craft training program. Because the skills analysis determines
Is able to adjust chain drives.

Is able to troubleshoot pump installations.
Understands workings of centrifugal, reciprocating, and rotary pumps.
Uses books, catalogues, and company manuals to determine parts, materials, and equipment
operations.
Knows how to disassemble, repair, and install hydraulic and pneumatic cylinders.
Knows the principles of mechanical seals and stuffing boxes, lantern rings, and O-rings. Is also
able to install, repair, and so on.
Does shaft alignment within indicator reading of .002
Does layout work within close tolerances with detailed print.
Is able to repair a complex gearbox or gearhead motor, such as a double reduction gearbox.
Uses shop math to make or sketch cams, angles, threads, radii, circumferences, and so on.
Knows how to identify types of bearings and how to use bearing identification number for inter-
changes.
Knows all tagging procedures in plant, such as electrical safety.
Determines proper belt and pulley speeds in FPM feed.
Uses transit and level in making layouts for long conveyor runs.
the real needs, the training program can now be a functional, job-related, and
hands-on product.
JOB-RELATED TRAINING
Job-related training means that the results of the skills analysis are reflected
in training programs designed to meet the requirements for craft training of
assigned workers. If part of a trainee's instruction is provided by a local tech-
nical school, it is important that the courses are applicable to the job the
trainee does or will be doing at the plant. However, circumstances and bud-
gets frequently make it impossible for those schools to provide specific train-
ing. General training is acceptable if two properties are met. First, the
training should relate to the craft-electrical, mechanical, electronic, and so
on. Second, the course should stick to the designated subject matter-for
example, blueprint reading should be just that, not preparing mechanical
drawings. Training within the plant is usually more focused in terms of job-
related emphasis because the course contents are under strict local direction.
FUNCTIONAL TRAINING
Functional training takes job-related training one step further. A functional
electrical blueprint reading program applies universal electrical symbols and
basic schematic practices to the electrical needs within the local plant. Using
this approach, the trainee learns principles of universal electrical blueprint
reading along with the functional application of this knowledge to situations
within the plant. Functional training cannot be learned in the classroom or
on the workbench alone, and for this reason, it is a valuable element of the
training program.
HANDS-ON TRAINING
Job-related functional training is further reinforced by hands-on training or
doing the job as part of the customized training. A good example is blueprint
reading. Job-related electrical blueprint reading deals with, say, motor con-
trols and transformers used in a plant, not home wiring. It becomes func-
tional when we use the actual line diagrams, schematics, and prints that
pertain to the plant. Theoretical aspects of electrical blueprint reading are
further reinforced by hands-on assembly and disassembly of actual units, or
si mulators, shown on the blueprints. Hands-on training is a continuous,
repetitive application of the task to reinforce what has been taught. This type
of training is more effective than on-the-job training (OJT), with which it is
often confused. OJT requires a trainee to tag along with a more skilled
worker, watch what is done, and perform some tasks under supervision. OJT
generally lacks the formal, planned aspects of hands-on training.
INSTRUCTORS
Some of the best instructors can be found in one's own organization. Engi-
neers can teach math and blueprint reading; supervisors can teach craft skills;
experienced workers can teach techniques or topics. If there is sufficient
demand, a local technical school staff member can be brought in. The identi-
fication and selection of instructors is important and should be done early.
Each instructor represents another resource to become involved in the pro-
gram, from needs analysis through the design and implementation stages of
the training program itself.
Vendors and suppliers are another source for instructors. They are not
used as much as they could be. Training by these outside sources can be clas-
sified into three groups:
Original equipment manufacturer (OEM). These organizations provide

major or critical equipment. Most of them run training programs at their
own sites, although many provide training at customer locations.
Component vendors and suppliers. These sources generally provide train-
ing programs at customer sites. These include vendors of bearings, pumps,
lubricants, hydraulics, electronics, and computer devices.
Specialist vendors and suppliers. These sources also provide training pro-
grams at local sites and include suppliers of ultrasonic testing, vibration
analysis, electrical testing, environmental monitoring, computer system
operation, electronic devices, and so on.
Entire customized programs for skill, crafts, and specialist training can
be designed around vendor and supplier training. However, some care should
be exercised in deciding how much plant personnel training should be given
over to outside organizations that are motivated to enhance their own prod-
ucts and points of view. Overview by the maintenance manager is essential.
UPGRADE TRAINING
To keep pace with changes in the field of maintenance, workers and supervi-
sors need focused, formal training to continuously upgrade their skills and
knowledge. New technology, which is being introduced into industry and
facilities of all kinds, presents continuing challenges in training. New skills
have been developed but greater emphasis is also being placed on some old
ones. Maintenance managers and skilled workers need a broader knowledge
of electronics, computer-based devices and controls, environmental and pol-
lution technology, automated equipment, and solid-state components. More-
over, some new metals and nuclear-related materials require advanced
knowledge and skills for operations, maintenance, and repair. Mechanical
systems now use hydraulic and pneumatic components that had not been
dreamed of a decade ago. Some organizations, such as chemical and pharma-
ceutical firms, have complex, automated continuous processes that present
new dimensions to the maintenance and support responsibilities. In the near
future, repairs to robots and repairs accomplished by robots will be part of
daily routines. International, federal, and state regulations concerning envi-
ronmental, safety, and accountability matters have proliferated so that it is
virtually impossible for maintenance personnel to keep up with them, let
alone comply. In-plant training programs have not always kept abreast of
these many changes. In many cases, self-originated, informal, on-the-job
training among the maintenance personnel has saved the day.
Skills analysis provides an approach to meeting upgrade training
requirements. This can be done by adding a rating column to the listing of all
tasks that make up a skill. Exhibit 7-4 shows how to use the skills analysis
task listing to rate the needs in upgrade training.
TRAINING MATERIALS
Some of the best books and materials on the market today for maintenance
craft training are programmed instruction, or self-paced learning, manuals,
written in an easy-to-comprehend style. Many are accompanied by audiotapes
or videotapes. These materials make self-study or group study easier and more
effective. However, when selecting such materials, it is important to compare
what is offered with the training requirements of the local organization. Some
providers sell only those portions of the materials that apply to the needs of the
maintenance function.
Finding sources for training materials is not difficult. Many companies and
technical organizations offer comprehensive and effective programmed instruc-
NAME SUPERVISOR
Rating Code
1 -Training necessary.
2-Upgrade training suggested-not required.
3-Fully proficient-no upgrade training required.
1. Is familiar with safety rules as they apply to each

job assigned.
2. Knows how to use shop tools, such as drill presses,
arbor presses, pedestal grinders, and so on.
3. Is able to interpret any sketch, blueprint, or
specification on job.
4. Is able to sketch parts for shop fabrication with
proper tolerances.
" This form lists a number of tasks that are part of the skills used by millwrights. These are only four of the sixty tasks used in a mill-
wright's skills analysis. Each individual is not expected to be completely knowledgeable in all the tasks. For upgrade training, each
craftperson should be rated on every task listed. The numerical ratings appear at the top of the form. The numbers 1, 2, and 3 are
used to rate each task. For example, if No. 3 is placed after task No. 2, then training is not needed in that task. The purpose is not to
rate individual performance but to identify tasks or groups of tasks that need training programs or manuals.
tion materials on maintenance. A good cross-section of these can be found by

checking advertisements in trade magazines, professional and technical jour-
nals, and facilities-oriented publications. Correspondence courses should not
be overlooked either. Many are good for specific needs. The American Society
of Training Directors (ASTD) can assist in identifying providers of appropriate
training materials. The field is dynamic, and new products appear almost daily.
Maintenance managers should look to these sources for cost-effective materials
for in-house training programs.
Earlier, simulators were mentioned as an aid in training. For those who
don't care to build simulators, there are a number for sale by vendors. Manufac-
turers who provide equipment often sell simulators of their equipment for
training needs. There are firms in business solely to sell simulators for many
kinds for training.
EXISTING PROGRAMS
An organization that already has a formalized program for training mainte-
nance personnel will find in this chapter criteria to evaluate and validate
those programs. Training for training's sake fails. By reviewing programs
periodically and removing things no longer needed and adding new capabili-
ties, costs can be reduced and maintenance personnel trained faster. Trained
personnel are more productive, particularly when the trainee's understanding
is enhanced by hands-on, programmed instruction in groups run by a super-
visor or specialist who knows the material.
Organizations that now use some form of hands-on or on-the-job train-
ing can improve an existing program by using the following controls:
A breakdown of tasks and the number of hours that should be spent by the
trainee over the period of the employee's hands-on or OJT program. An
example is shown in Exhibit 7-5.
A monthly evaluation or check-off of the trainee's proficiency, new skills,
effectiveness, and so on. This evaluation can be made by the senior worker
or supervisor assigned to the trainee. An example of this is shown in
Exhibit 7-6.
Hands-on or OJT training is often weakened or doomed by assuming

that job training is completed when the trainee is assigned to a more senior
worker or supervisor for guidance in field work.
SUMMARY
There are three areas of training concern: supervisory, craft and support per-
sonnel, and technical and managerial training. Regardless of who is responsi-
ble for presenting the training program for these three areas, in order to be
successful the program must be practical and applicable to the job or plant,
and the maintenance manager must have input into its content.
If plans for formal training programs do not exist, and if turnover and
retirement rates have not been estimated, factors such as staff shortages and
the purchase of new advanced equipment can become major and costly man-
agement challenges. One way to determine training needs is to employ skills
analysis. Such an analysis allow a trainer to create a master list of tasks, which
provides guidelines for creating a training program.
Frequently, workers receive general training at a local technical school,
although further training within the plant is usually necessary to provide
more focused job-related information. Functional training, whereby the
worker learns universal task information along with the functional applica-
tion of the knowledge, is very effective. Taken one step further, hands-on
training, in which the worker actually applies the theoretical and functional
aspects of training, reinforces what has been taught. This differs from on-
the-job-training-in which employees simply learn by doing-because it
lacks the formal, planned focus of hands-on training.
Of course, the training program is only as good as the training materials
used, which are widely available from a variety of sources, and the instructors
employed, who can be staff members, teachers at technical schools, or even
equipment vendors or suppliers.
This form can be used to rate work performance and the personal traits of a trainee. The trainee's supervisor should fill in the appro-
priate box in each area being rated (one for each of the six rating categories). There are six areas to be rated under "work perfor-
mance" and five under "personal traits." The small numbers are the percentage points associated with the selected rating. For
example, in the area of "accuracy," a trainee who "seldom makes mistakes" would receive 18 percentage points, or a rating of very
good.
The trainee should sign the sheet after a consultation to get an understanding of why each rating was made.
Copyright 1981 by TPC Training Systems, a division of Telemedia, Inc. Reprinted with permission.
1. is used to determine the training needs of a specific 1. (b)

craft.
(a) Training needs analysis
(b) Skills analysis
(c) Job-related training
(d) Functional training
2. The list of tasks in a skills analysis can also be used to determine: 2. (a)
(a) upgrade training requirements.
(b) safety measurements.
(c) optimum staffing requirements.
3. A skills analysis is established by interviewing and 3. (c)

reviewing results with the
(a) trainees ... maintenance workers.
(b) maintenance workers ... personnel department.
(c) maintenance workers ... supervisors.
(d) trainees ... supervisors.
4. Applying training programs to a specific job is called 4. (c)

training.
(a) functional
(b) hands-on
(c) job-related
(d) vendor
5. Job-related blueprint reading should be done for a specific: 5. (b)

(a) program.
(b) craft.
(c) piece of equipment.
(d) skills analysis.
6. Simply doing the job as part of a formal training program is a fea- 6. (a)
ture of
(a) hands-on training.
(b) job-related training.
(c) vendor training.
(d) functional training.
7. Vendor training may be classified as: 7. (d)

(a) OEM training.
(b) component vendor training.
(c) specialist vendor training.
8. Blueprint reading may be taught by: 8. (d)

(a) the personnel department.
(b) the equipment manufacturer.
(c) the industrial relations department.
(d) the engineering department.
9. New technology increases the need for training. 9. (a)

(a) upgrade
(b) basic skills
(c) apprentice
(d) safety
10. An effective training program reflects good cooperation between 10. (a)
the and departments.
(a) maintenance ... industrial relations
(b) maintenance ... engineering
(c) personnel ... engineering
(d) personnel ... industrial relations
Measuring
Effectiveness
Learning Objectives
List the two categories of measurements of

maintenance effectiveness and activity manage-
ment.
List four important types of measurements that
indicate effectiveness of maintenance manage-
ment.
List eight other types of measurements to fol-
low specific areas of maintenance activity.
State the five adverse effects that excessive
overtime has on maintenance operations.
State the three phases in the implementation of
total productive maintenance.
INTRODUCTION
"How am I doing?" is the question we ask ourselves, and the question others
ask us, as well. In this course, we have developed tools to improve efficient
and productive maintenance operations. But how effective are they? The
answer lies in measuring maintenance efforts. Intelligent measurements pro-
vide a basis for making better decisions about managing maintenance. There
are a number of ratios and indexes that measure the effectiveness of the orga-
nization and management and the activities that affect the overall success of
the organization. Each type of measurement contributes solid feedback to
the responsible manager, indicating where problems exist and what attention
might be needed.
These measurements are related. Too much emphasis on cost reduction
will eventually result in unacceptable performance maintaining equipment
123
and facilities. Other relationships will also be discussed. To understand the

maintenance operation and to effectively balance the use of available
resources to achieve the most effective program, measurements similar to
those that follow should be implemented, reviewed, analyzed, modified, and
customized.
SAFETY MEASUREMENTS
One of the best measurements of a manager's effectiveness is the ability to
run a safe operation. Achieving high levels of safety involves training and use
of people. Consequently, a department with a minimum of lost time acci-
dents reportable to the Occupational Safety and Health Administration
(OSHA) exhibits managerial concern for people in the department and dem-
onstrates overall management effectiveness. A safety audit of such a depart-
ment would show a set of safety policies and standards, a daily review of
hazardous conditions, a record of periodic safety orientation meetings, and
appropriate discipline meted out to violators of safety requirements. These
activities can be measured and reported on a continuous basis.
BUDGET VARIANCE
Budget variance is a simple measurement of how well maintenance expendi-
tures conform to estimates in the budget or to references such as industry
averages for similar activities. Variance should be monitored for expense, or
operating, and capital budgets. Variance is usually shown in terms of percent-
ages or dollars over or below the current budget on a monthly basis and year-
to-date. In Chapter 2 we looked at ways to analyze budget variances and at
how ongoing awareness of variances aids in effective management. Budget
variance is likely to be smaller as the size of the budget increases and varies
with individual items included in the budget. All line item variances should be
reviewed, but experience tells which ones are high-leverage indicators of
problems and management challenge. Some managers keep watch on the
budget variances alone, but this may be an incomplete review. Other measure-
ment indexes allow the manager to know how much was actually spent on the
items that caused the variances and whether the expenses were justified.
MAINTENANCE COST PER UNIT

Maintenance cost per unit is another method of measuring the cost, or effec-
tiveness, of maintenance. The unit in maintenance cost per unit can be
defined in any way local management considers important. Generally, the
unit is a unit of production or service. Examples include number of manufac-
tured products produced, pieces of equipment maintained, pounds, barrels,
tons, geographic areas, departments or plants, energy systems, or any other
unit used by the cost accounting organization to measure products or service.
Watching the maintenance cost per unit figure provides valuable trend infor-
mation for the manager. Specific indicators, or measurements, can be
affected by changes in volumes or processes in manufacturing, introduction
of new products, changes in the weather or seasons, introduction of new or
different equipment, and by more or less effective maintenance activities.
These factors that influence the maintenance contribution to the cost of pro-
duction or to the cost of operations in nonmanufacturing organizations, must
be taken into account when determining the portion of the total product cost
that can be attributed to maintenance.
Some costs included in maintenance, such as building maintenance,
heat, light, grounds, and depreciation, are constants and are therefore not
proportional to the level of production. Consequently, maintenance cost per
unit of production increases when production decreases, and decrease when
production levels peak. The maintenance cost per unit only indicates that a
closer look should be taken if the figure makes a change in either direction.
Action should be taken quickly to reduce costs of all kinds whenever there is
a drop in production or operations.
A similar index is maintenance cost per sales dollar. The same problems
exist as with maintenance cost per unit. There is also a concern with the time
lag between the time sales are credited and the time production levels change
to reflect the sales volume.
AUINTENANCE COST AS A
PERCENTAGE OF CAPITAL INVESTMENT
The function of maintenance is to maintain equipment, systems, buildings
and grounds, and other assets at an optimum level of performance and with
an optimum outlay. Because equipment, systems, buildings, and grounds are
included in the capital investment of the business, the cost of maintaining
them can be compared with the capital invested as another way of measuring
maintenance effectiveness.
Accountants look at capital investment in several ways. One is the book
value, the original purchase cost less the accumulated allowance for deprecia-
tion. When book value is used, the maintenance cost of individual assets
always show an increase each year because the book value decreases while
maintenance and inflation generally increase as the asset gets older.
The original purchase price of the asset (not depreciated) can also be
used, but this generally has little relevance in measuring current maintenance
performance. A better value to use as a base for calculating an index is the
cost of replacing an asset. This appears to be the best method for measuring
maintenance cost as a percentage of capital investment, although it makes no
allowance for the fact that the physical plant is always aging and more main-
tenance is required. An allowance figure is often used to recognize this cost.
The insurance department in most companies keeps asset replacement value
information. If not, estimates should be made by persons having knowledge
of current costs of equipment and facilities.
The three measures mentioned-budget variance, maintenance cost per

unit, and maintenance cost as a percent of capital investment-can be used
individually or together to monitor trends in the cost of providing mainte-
nance.
ADDITIONAL MEASURES
Additional measures follow specific areas of maintenance activity and are
used to: highlight trends, problems, and areas of improvement; gauge the
success of changes in methods or equipment; and create special reports for
activities of special interest designated by management. In the following sec-
tions some of these measurements are discussed. These are valuable tools if
properly developed and diligently pursued and should be used where appro-
priate to monitor progress and performance.
Percentage of Uptime
This measure is the percentage of time a piece of equipment is operable.
The percentage might also be shown for a system, line, department, facility,
product area, or any meaningful designation. An average for all equipment
or groups of equipment is more valuable as an indicator of trends over time.
Some organizations measure downtime, but measuring uptime is a more
positive approach.
The index can be constructed using the 24 hours of the day or, more
reasonably, a number such as the hours the department is scheduled to oper-
ate for the month. Managers should take care working out the basis for this
measure. A high uptime rate must be balanced against the cost of obtaining
it; the last few percentage points will probably be costly. Each case has to be
judged separately, taking into consideration the number of machines avail-
able, redundancy, importance of the equipment (that is, the risk factor if it
fails or does not run up to par), costs of overtime, and many other factors.
Maintenance managers concerned with achieving high uptime must make
informed decisions about preventive maintenance, overhauls, replacement,
and interruption of operations or production. Exhibit 8-1 shows the rela-
tionship of maintenance efforts to uptime results. Creative planning and
scheduling of maintenance can increase the uptime without being exces-
sively costly.
Percentage of uptime, budget variance, maintenance cost per unit of
production, and maintenance cost per dollar of investment offer four mea-
surements of the effectiveness of the maintenance organization. Other mea-
sures important to individual organizations could and should be developed
and used.
The next series of measures indicates how well management uses the
work force. Improvement in these ratios indicates the effects of proper plan-
ning and scheduling, employee training, motivation, and management's
direction.
This classic graph has appeared in maintenance procedure manuals in many companies. It illustrates the point at which the attempts
of maintenance to provide the availability of equipment (or uptime) becomes more costly than the return realized from continuous
production. The last few percentage points are the most expensive. The desired effort is where the two lines intersect. To the left of
this point are the combined costs indicating not enough maintenance (meaning the return from production is decreasing because of
the unavailability of equipment); to the right are the combined costs indicating too much maintenance. Maintenance can only guaran-
tee the availability of equipment to a certain point. At that point, the cost of maintenance to avoid the unavailability of equipment
becomes greater than the losses because of reduced production. In other words, maintenance costs are rising faster than the return
from guaranteed uptime.
Using a buffer of plus and minus 10 percent helps in controlling the desired level of maintenance. To maintain the lowest practi-
cal cost of maintenance, costs must stay within this 10 percent range. The cost of the availability of equipment in this graph is not the
measure of a single uptime statistic alone. It represents the total maintenance effort.
Workload Backlog
Workload backlog compares the amount of work on hand, assigned or ready
to be assigned, with the amount of labor hours available. It should include
work required by blanket work orders and planned preventive and predictive
maintenance for the period. It is generally thought that a lack of backlog
indicates overstaffing. In some operations this is not the case. On the other
hand, a 10-day backlog may signal the need for more staff or overtime or per-
haps a need to review the work to see what can be postponed or eliminated.
Days of backlog are usually expressed as crew days, although some organiza-
tions prefer total labor hours. For example:
Mechanic section employees = 15 employees

Normal work week = 40 hrs.
Total available hrs./wk.(15 x 40) = 600 hrs.
Absenteeism = 2.1
Dept. meetings, administration, etc. = .5%
Available hours/wk. 600 - (2.1 +.5)% = 584.4 hrs.
Regular PM allocated (16 hrs./day) = 90 hrs./wk.
Blanket work orders allocated (8 hrs./day) = 40 hrs./day
Reserve for emergency order response* = 0 hrs./day
Average actual hours available/wk. = 454.4 hrs./wk.
Hrs./day avail. for backlog (454.4 + 5) = 91.98 hrs./day
Estimated hours of work orders to issue = 981 hrs.
Workload backlog (981 -.91.98) = 10.66 crew days
May be provided for in planned work estimate as allowance %.
Overtime Ratio
The amount of overtime, expressed as a percent of regular hours, is called the
overtime ratio. It affects budget performance employee morale and plans for
staffing. Overtime is an important factor in preventive maintenance, backlog,
uptime ratios, and other forces within maintenance. The objective of manage-
ment is to keep the ratio within planned limits. If no overtime is ever needed,
it may be a signal that staffing may be too high. Excessive overtime usually
means poor management. The ratio should be monitored to indicate trends,
to highlight major problems, and to evaluate supervisory effectiveness.
Excessive overtime also creates classic personnel problems when it
becomes a way of life with employees. If it is suddenly reduced or eliminated,
employees may suffer great reductions in take-home pay. Overtime often
masks management deficiencies in workload planning and scheduling, train-
ing, labor planning, and discipline. Moreover, constant use of overtime works
to decrease productivity as work tends to expand to fill available time to do it.
It is the maintenance manager's responsibility to keep the overtime as close as
possible to the optimum planned levels.
Emergency Work Ratio

The emergency work ratio is the number of hours spent on emergency work
(Chapter 3) as a percentage of the total hours worked by the maintenance
department. Some managers break it out according to regular and overtime
hours. It is common to find maintenance groups so busy putting out fires
they cannot find time to plan and schedule properly, do preventive mainte-
nance, and control overtime costs. As a result, emergency work increases.
To control this situation, it is necessary to redefine emergency work,
establish a more reasonable set of priorities, eliminate trying to satisfy all cus-
tomers immediately, and enlist top management of the organization in the
quest for scarce maintenance resources. Users of maintenance usually coop-
erate if they are convinced their work will be done according to a fair set of
schedules and priorities. Constant review of the emergency work ratio pro-
vides timely ammunition in gaining control of this work and in getting sup-
port from the users of maintenance services.
Labor Versus Materials Ratio

The average labor cost compared with average materials cost is called the
labor-materials ratio. It can be calculated for trades, shops, department, or by
units of production or operations. For example, the ratio might be 1.2: 1.0,
or 1.2 dollars of labor for 1.0 dollars of materials used.
The labor versus materials ratio is useful only when measuring a large
amount of work over a period of time because many labor jobs require little
material. This ratio is a general indicator of the effectiveness of labor in using
or installing materials. But it is also useful for evaluating training, supervi-
sion, and planning. The ratio can be affected by such variables as overtime,
the balance between new work and repairs, and new construction. Some
trades are more affected than others: auto mechanics typically use a lot of
parts, for example, whereas electricians might not.
WORK MEASUREMENT
One measurement desired by management and perhaps the most difficult to
obtain is the measurement of actual work rather than counting work. A num-
ber of methods compare actual time spent on maintenance jobs with an
established norm. Counting the actual time it takes to complete a job is rela-
tively easy if structured and supervised correctly. Comparing the actual time
with the estimated time on a work order is also a routine accounting task. But
ways of determining how long it should take to do the work are numerous
and varied. The question remains: Are the maintenance personnel accom-
plishing their jobs in a reasonable amount of time and at the right pace? This
is an important issue because it has been shown that major contributions can
be made to improvements in productivity and profitability through properly
planned and scheduled work, coupled with efficient execution of that work.
The time estimated for a work order is based on a specific work method
and is used primarily for scheduling the job at a particular time. The esti-
mated time should be a reasonable indicator of how long a competent worker
needs to complete the work. However, determining if jobs are being accom-
plished at the right pace can be a daunting task. Work of almost any type is
influenced by training, motivation, methods, planning and scheduling, super-
vision, and time. However, the manager who pursues this subject will be
rewarded because even a simple system that collects and assigns the average
time to accomplish similar jobs or tasks usually shows an increase of 10 per-
cent or more in effectiveness over a short period. There seems to be a natural
increase in productivity just because someone is keeping a record. A number
of systems that help in determining norms for performing maintenance
work. Among these are systems that provide historical standard data, engi-
neered time standards, and even elemental time study data for specific tasks.
Increasingly, machine operator tasks in manufacturing situations occur
within the time cycles of automated machinery, so worker pace is not a prob-
lem unless the worker exceeds the time the machine is taking. This may
apply in some maintenance activities, as well. However, most maintenance
work tends to be largely unstructured and nonrepetitive, so the task of estab-
lishing budgets for how long jobs or activities should take can be difficult and
illusive.
In meeting this challenge, maintenance planners often use time esti-
mates based on recent local experience for similar jobs or based on best esti-
mates of people familiar with the tasks. Some resort to published standards or
information from manufacturers' manuals. Still others use sophisticated
computerized techniques of estimating, coupled with databases filled with
locally derived time estimates or purchased time estimates. Allowances for
travel, personal time, fatigue, delay, and so on are unique to each local site.
Planned work must have a time budget because this is key to being able to
schedule it. Completed work should be audited to compare actual versus
budgeted times so that time estimate databases can be updated and improved.
A job post audit is less costly than developing new time standards for each job
that comes along.
Estimated Time Versus Actual Time

Actual time versus estimated time ratios can be generated and published for
management. These can be created on the basis of total hours worked, by
craft, customer, class of work, project, or any other category that makes sense
to maintenance management. As an example, Exhibit 8-2 shows a list of esti-
mated and actual times for each completed work order.
Many computerized systems generate useful reports and graphs that
depict comparisons of estimated versus actual hours and dollars. Exhibit 8-3
shows graphs that represent efforts of a maintenance project of new installa-
tions. Graph A shows that work is being completed fairly close to the esti-
mated times. The graph also shows that the amount of labor devoted to
projects is growing. Graphs B and C show that some of the close-in details of
work management need closer attention.
WORK SAMPLING
Although work sampling is not a precise measurement of effectiveness, it
does indicate how time is being used and, therefore, assists in pointing out
problem areas. This technique is a statistical system that uses ratio delay and
is based on the principle that what happens in a large sector of activity tends
to happen in a smaller one. Managers may draw inferences about the overall
situation by sampling the small sector. Most public opinion polls are based
on this method.
In maintenance, work sampling is most often used to determine the per-
centage of time spent on a number of items associated with performance of
observed jobs or activities. These items may include travel time, waiting for
parts, actually doing a job, idle time, and interruptions. The results are often
unexpected and startling. A typical work sampling report might indicate ten
mechanics in a certain part of the facility spend 20 percent of their time trav-
eling, whereas their assigned work orders might have allowed much less. In
effect, the equivalent of two out of ten people assigned are doing nothing but
traveling from one place to another. The reasons for the high travel require
examination by supervisors. Work sampling studies and reports offer oppor-
tunity for understanding activities in operations such as maintenance, where
people move around a lot and perform varied tasks.
SUMMARY
In this chapter, we looked at ways to measure the effectiveness of the mainte-
nance function. We have also reviewed some indicators of specific activities
in various functional areas. The relationship among these data and their
effect on each other is important. An astute manager considers them as a
group and continuously balances maintenance resources while getting the
job done the best way possible.
To answer the question stated at the beginning of this chapter- How
am I doing?-the maintenance manager must set goals and measure the
results by using the mix of indicators agreed upon within the department and
with those in top management. A preferred way to record, measure, and
present results is to _employ computerized systems to generate reports and
graphs similar to those discussed in this chapter.
1. Budget variance is a measure of how maintenance con- 1. (b)

form to the costs.
(a) safety standards ... unit
(b) expenditures ... estimated
(c) audits... production
(d) projects ... contractor
2. The maintenance share of the product's cost is the: 2. (c)

(a) backlog.
(b) work measurement.
(c) maintenance cost per unit.
(d) labor versus materials ratio.
3. The percentage of time that equipment is operable is called: 3. (a)

(a) uptime.
(b) available time.
(c) effective time.
(d) scheduled time.
4. Uptime becomes more expensive because of 4. (a)

(a) the aging of the equipment.
(b) decreases in inflation.
(c) greater manufacturing lot sizes.
(d) the labor ratio.
5. It is best to assign a or a(n) for controlling 5. (c)

desired maintenance costs.
(a) range ... buffer
(b) priority system ... emergency schedule
(c) workload ... overtime ratio
(d) dollar limit ... automatic stop order
6. Work order backlogs generally are stated in: 6. (c)

(a) work years.
(b) work days.
(c) crew days.
(d) number of jobs.
7. A high overtime ratio indicates that: 7. (d)

(a) more labor staff may be needed.
(b) a temporary workload exists.
(c) there may be poor planning and scheduling of work.
8. One of the best measurements of a manager's effectiveness can be 8. (a)

found in the of the operation.
(a) safety record
(b) frugal cost
(c) low backlog
(d) staff morale
9. Work sampling is a statistical method of determining the 9. (b)

that maintenance workers use on tasks associated with
completing a job or activity.
(a) cost of materials
(b) percentage of total labor time
(c) amount of skill time
(d) type of training
10. Comparison of actual work hours with estimated work hours on 10. (a)
planned jobs is a way to:
(a) improve estimates on future job planning.
(b) assign responsibility for excessive time expended.
(c) confirm that the work was done.
(d) look for steps that were missed.
Computerized Maintenance
Management Systems (CAIMS)
Learning Objectives
Define the five basic operations that CMMS

should perform.
List the nine system features exhibited by most
CMMS.
Identify three important actions to take to ensure
successful implementation of CMMS.
List the seven categories of reports generated
by CMMS.
Name seven measurable benefits or savings that
can be realized through use of CMMS.
Identify at least 12 other benefits or savings
enhanced by the use of CIVIMS.
INTRODUCTION
Throughout the first eight chapters of this course book, we made numer-
ous references to computerized systems for such things as preventive main-
tenance, work orders, scheduling, inventory management, maintenance
management, facility control, and reports. We pointed out that it is not
necessary to use a computerized system for successful management of any
part of a maintenance function. However, we would not do justice to the
subject of maintenance management if a full discussion of modern comput-
erized maintenance management systems (CMMS) were not included in
this course. The need for a CMMS is not specific to any one situation,
industry, or mission. However, use of computer technology in the adminis-
tration of a complex business enterprise such as a maintenance department
is almost a given these days. Most organizations, no matter what size, have
137
little difficulty justifying such systems. It is hard to imagine situations

where CMMS would not be beneficial, considering the easy availability,
low cost, and convenience of computerized systems targeted for various
applications in the maintenance field.
Early computerized maintenance management systems typically auto-
mated the manual, paper-type systems in use at the time. Many buyers were
grateful to have a faster and perhaps more detailed solution to the growing
difficulty of tracking and scheduling maintenance work and projects, post-
ing equipment history records, and keeping the financial books. Early
CMMS also offered improved scheduling abilities and on-line data access.
But they did not improve the capabilities of maintenance technicians or
their managers to fix or to manage. Early systems were designed primarily
to feed information forward with no feedback functions or only limited
ones.
Continuous design advances in CMMS allow users to harvest benefits
far beyond those that initial systems provided. Improved computer func-
tion and improved CMMS programs now provide improved and timely
feedback functions. The real value of modern systems comes from the way
advanced software programs improve the organization and interpretation
of data. This capability allows maintenance to respond with more insight
and efficiency to situations. CMMS are now used to ensure the high quality
of equipment condition and performance, not just as a way to control the
work of maintenance personnel. Enhanced quality results are primary rea-
sons for having CMMS, and should be stated among the goals when a
maintenance department implements computerized systems. When those
quality objectives are recognized as goals, they can be measured and used as
indicators of system effectiveness.
WHAT SHOULD CMMS DO?

In simplest terms, CMMS should cover the following basic operations:
Identifying the maintenance tasks to be done, listing each job and the steps
to complete it.
Describing the contents of each job or step.
Planning jobs: specifying the craft, number of hours, time required, parts
needed, and other pertinent information; providing specific objective
information (tighten to 15 lb./ft.) rather than subjective (tighten).
Scheduling jobs: ensuring all supporting assets are available and a fixed
. time or date is set.
Supporting the actual performance: monitoring execution of the work,
generating reports, and reacting and expediting to assure completion.
Many of these operations can be handled on-screen by CMMS. Vari-

ous modules and databases can speedily fetch and process information in
response to commands keyed in by the system user. The output is compre-
hensive work orders and supporting information. When progress has been
made or the job completed, further information can be entered into the
system, allowing status reporting and updating of databases. CMMS, in
effect, handle a lot of planned tasks that formerly would have been accom-
plished, if time permitted, by knowledgeable persons involved with mainte-
nance activities.
Certain support operations may be carried out by CMMS as enhance-
ments to the basic operations. CMMS can:
Keep a history of what was done in the past.

Manage parts and materials in the inventory.
Provide access to of repair procedures, bills of materials, drawings, and
sketches.
Monitor and report on equipment condition.
The foregoing descriptions do not consider the technological breadth

and scope of a particular system. Whether a system is large, sophisticated,
multifunctional, on-line, real-time, interactive with the operator, or inte-
grated with business and financial packages is not the issue here. Most, if not
all, CMMS are based on carrying out the basic operations and some systems
have useful enhancements.
HOW DO CMMS WORK?

Computerized maintenance management systems are computer software pro-
grams designed to assist in the planning, management, and administrative con-
trol required for effective maintenance. The output of these programs may
involve writing, planning, and recording work accomplished; collecting a his-
tory of work accomplished; recording shipping and receiving transactions; and
generating reports. CIVIMS consist of system programs and information in
databases. The software programs retrieve, manipulate, display, and update
data in the databases; perform calculations of various types; and generate
reports. Most CLAIMS are designed to portray information in ways that support
what the system users wish to communicate.
No system design applies to every maintenance department. In fact, each
user's system is a collection of smaller systems that address needs within a par-
ticular facility. The total system is influenced by the nature of the business or
activity, the size and composition of the maintenance organization, unique
equipment requirements, environmental issues, sophistication of the computer
capabilities at the site, regulatory and legal requirements, industry practices,
staff computer literacy, and many other factors. Hundreds of computerized
systems are available commercially. The systems offered range from narrow,
specialized applications to broad, multifunction integrated systems. The
CMMS Directory and Comparison Guide, published by the Thomas Marketing
Information Center (1993, New York), lists 175 companies that sell systems.
There are probably an equal number of firms in the field, as well. Even so,
many maintenance organizations develop their systems on a customized basis,

through choice or necessity.
Basic System Features

Certain features seem to be common to most computerized maintenance
management systems. These include:
Work order management.

Project management.
Preventive and predictive maintenance.
Equipment listing.
Equipment history.
Parts and stores inventory.
Management reports generation.
Work planning, estimating, and scheduling.
Financial and budget controls.
Almost all commercially available systems contain these features and a

selection of others that enhance the desirability of their product.
System Modules
In rare cases, systems are developed around one, large program. It is more
likely that systems in general use comprise several program modules. It is the
number and organization of the modules that determine the system's
attributes, capability, power, flexibility, and utility. By combining functions
and operations associated with a particular area of maintenance operations
into a single program module, the user is able to access related operations
more easily. These modules permit greater speed, convenience, and user-
friendly system operation. Some of the more prominent modules available in
current systems include:
Preventive maintenance Planning and scheduling

Predictive maintenance Corrective and improvement
Project management work orders
Inventory control Materials management
Fleet management Facilities management
Personnel management Financial management
Equipment list and management Work estimating
Expert systems Equipment monitoring and control
Energy management Training administration
Service contract management Cost and budgeting
Buildings and grounds Bar-code reading and printing
Fuel and other consumable Task standards library
resources allocation Maintenance procedure library
Tool management Vendor and contractor data file
Financial interface Integrated graphics systems
Lube routing Invoice matching

Event tracking Report generator
CAD/CMM interface Catalog file
Defect analysis Condition-based monitoring
Archiving CPM/PERT diagramming
Hazardous materials file Forecasting
Purchasing management Subcontract management
Not every module is contained in every system. It is the choice of modules,
their content, and the organization, or architecture, of the system that
makes each unique and attractive to a user. The same is true for customized
systems that are developed in-house.
Buyers can look for a provider that offers modules covering all the per-
ceived current and future needs for their maintenance management func-
tion. Or they might purchase several systems that offer the best fit for their
needs and operate them on a stand-alone basis or integrate them into a
super system they operate on their own. For best results, it is important
that a great deal of planning and evaluation be done before making deci-
sions about the computerizing of a maintenance function. Assistance from
outside consultants or from in-house information systems experts is recom-
mended in this vital up-front phase of CMMS development. After a system
is chosen, some modification of the software to fit local conditions may be
necessary. This is not uncommon. The user's organization and ways of
doing business may need to be modified to achieve effective management
and operation of the maintenance department in a computerized environ-
ment.
Functions Included in Modules

The following list, by no means complete, indicates functions typically found
in widely used modules:
Work order status reporting Equipment drawings and

Work order backlog reporting graphic displays
Work order schedule development Maintenance procedures
on screen Library update
Work order priority setting Stores inventory management
PM schedule setting on screen Availability checking on parts
PM detailed task description for work orders
PM multiple scheduling bases Allocation of stores for
Equipment downtime tracking open work orders
Equipment listing, or inventory Automatic generation of
Equipment maintenance stores pick list
Labor history Just-in-time inventory
Equipment maintenance planning
cost history Automatic stores inventory update
Equipment materials Automatic purchase order creation
usage history Work standards file
Equipment repair cause history Work standards update

Equipment repair On-screen job planning
procedure history Skills resources planning
Equipment specifications Reports on individual employees by
Equipment bill of materials skills, training, availability
Not all these functions are found in every module of every system sold. But a
representative mix of these functions will be found in almost every system,
depending on how it is organized. An informed maintenance manager should
study the needs of the local maintenance function and make sure the system
contains functions that will support those needs.
System Operating Details

Computerized systems offer a variety of powerful operating details that
make them convenient, attractive, interactive, and secure. These vary ac-
cording to the producer of the system and the unique circumstances in
which the user will want to operate it. A list of some of these qualities
include:
File retrieval from history On-line query of databases

Browse function in databases Built-in help screens keyed to the
Customizing report generator current activity
Security (password protection) Built-in data backup and recovery
Data entry validation procedures
Multitasking Graphics in reports
Link to mainframe computer Foreign languages available for
Programmable user keys outputs to screen
Archiving, cloning, transfer Local area network capability
equipment Auto CAD (computer aided design)
Pop-up windows in all databases Multiple databases with file and
Built-in file packing and module sharing
re-indexing Bar-code interface
Not every system has all these operating details, but most of them contain a
large number and new technical developments are happening all the time to
make the list grow.
CMMS IMPLEMENTATION
Second only to CMMS needs evaluation, implementation of the chosen
package is critical for CMMS success. No matter how good and user-friendly
a system, if the implementation is not carried out in a proper manner, it will
be impossible for the system to live up to its expectations. The implementa-
tion of CMMS can be broken into three parts: user training, evaluation of the
facility, and entry of data into the system. All three parts are equally impor-
tant to the success of the CMMS.
The user often does not have the resources or expertise to perform these
three parts. If that is the case, the user should select a CMMS vendor that can
supply the needed implementation services as part of the total solution.
Obviously, the user will still have to be involved in the implementation, but
this load will be considerably reduced by vendor support.
User Training
User training should be focused on the work situation of the people who will
be using CMMS and not just a learning exercise on how to push the right key
on the computer. The training should be more of a workshop in which the
trainer and users work with life examples from the maintenance management
system environment. The trainer must teach personnel about how the system
is designed and operated, and procedures must be developed about data col-
lection. Also, decisions need to be made regarding who will act on the
system's outputs and the actions they will take. The system is only a means of
improving the quality and speed of communications within the maintenance
function.
Evaluation of the Facility

During the evaluation of the facility, an implementation team prepares a plan
for guiding all activities that support the installation of the computerized
maintenance management system. A major portion of the plan must deal
with how to obtain inventories, databases, and pertinent files pertaining to
other topics. Some of these topics include capital assets, manufacturing and
facilities equipment, miscellaneous equipment, preventive maintenance
schedules, predictive maintenance schedules, spare parts and materials, finan-
cial and budget information, personnel files, and reports. The information
may be developed through data already on file, or it may be necessary to
obtain it by physically counting assets and equipment or other items at the
site. Usually, a combination of these two approaches is necessary to evaluate
the facility completely and obtain all information needed to ensure the sys-
tem is set up properly. The team will prepare all information in a format suit-
able for further action by the data entry function.
Data Entry
Data entry is the most time consuming but also the simplest part of the
implementation. A team of data entry personnel needs to enter the data, or
information, into the computerized system databases in the format and quan-
tity the system requires. The data entry persons do not have to have extensive
knowledge of the system. However, this stage needs to be supervised by peo-
ple who thoroughly understand the system.
SYSTEM OPERATION
With the advent of powerful personal computer (PC) technology, most avail-
able CMMS are supported by microcomputers. This is true even for large
organizations with much equipment and workload. At some point in the

growth process, the systems may require larger capability, such as minicomput-
ers or even mainframe computers. Even so, there are often PCs in the work
areas which serve as terminals for communication with the host computer.
Some organizations use a service bureau where all data reside on a contractor's
system at a remote location. For a monthly fee, the user gains access to the sys-
tem via local terminals. The advantage of this arrangement is that system tech-
nology advances are implemented by the service bureau contractor; the
maintenance manager can concentrate on maintenance matters alone.
Whether services are in-house or contracted, users of any system do not need
to know the size of the computer system used to support their efforts. What
matters is their access to information they need to get the maintenance job
done in the most effective way.
CMMS are usually operated by maintenance department personnel who
enter instructions at the computer keyboard. Typically, these entries are made
in response to questions, or prompts appearing on the monitor screen. A whole
screen full of prompts is called a menu. The simplest and easiest CMMS use
menus. Many systems are designed to serve several users at once, providing all
with simultaneous access to the data files they need. The majority of current
systems operate in an on-line, real-time mode; some are even interactive.
However, some very able systems are set up in an older technology called batch
operating mode that features fewer functions, slower turnaround, and limited
computational ability. It is more important that the technology work well for
the users than that they have the latest software. Managers should be alert for
improvements in CMMS capabilities just because constantly changing man-
agement responsibilities require timely and appropriate information for mak-
ing effective decisions.
REPORTS
A dizzying array of reports are possible with CMMS. These vary from fixed,
standard reports that are common to most all systems to highly customized
reports useful only to users having unique information requirements. Sellers
of commercial CMMS have made great strides in offering report generators
that suit virtually every need for user information desires. Generally, reports
are offered in categories such as:
Work orders: remedial, corrective, project, preventive, predictive, alarm-

based. routine, administrative
Workload reports: current, backlog, project, priority, shop
Labor utilization: trades, shift, customer, priority, dates
Equipment: uptime, history, trends, class, problems, cost
Budget variance: shop, equipment usage, labor, program, energy
Inventory: purchases, turnover, stockout, obsolescence, status
Custom: schedule analysis, repair history, work completed, quality assur-
ance, overtime, part and equipment cross reference, labor and materials
distribution, and more
A report need not be printed to be useful or effective. Often, for effec-

tive communication, it is sufficient that the report be viewed on the screen.
Exhibit 9-1 shows the kinds of reports available in one commercial system.
These reports may be viewed on the screen or printed out. The list is not
complete because the custom report capability can generate many additional
reports. A user rarely exhausts the ability of CMMS to generate reports. It is
i mportant to think through carefully what report information is really
needed to manage the maintenance function best and then set up suitable
reports. As needs for reports change over a period of time, CMMS can gen-
erally supply them if the database information is in the system and kept up to
date.
Report Samples
As shown by Exhibit 9- l, the vast number of reports available through
CIVIMS makes it possible to obtain just about any type of information useful
in managing maintenance. The few samples that follow in this chapter are
views of what can be seen on the CAWS screen and then printed out. These
exhibits illustrate the variety of reports possible. Exhibit 9-2 demonstrates
work and purchase order functions; Exhibits 9-3 and 9-4 deal with database
inquiry and analysis; Exhibit 9-5 shows inventory management functions;
Exhibit 9-6 indicates some of the preventive maintenance reports.
BENEFITS OF USING CMMS

The purpose of operating CMMS is usually to improve performance of
equipment or plant capability, as well as save maintenance time and costs. It
may be difficult to specify why excellent maintenance is a necessity for pro-
ducing a product or service of higher quality at lower cost than the competi-
tion. But it is widely accepted that lack of excellent maintenance can inhibit
this goal. In fact, popular concepts such as total quality management (TQM)
and total productive maintenance (TPM) emphasize that maintenance must
be performed optimally to ensure competitiveness.
There are benefits from minimum maintenance with or without a man-
agement system. The advantage of computerizing the management of main-
tenance is that it allows monitoring of more activities, information, and
knowledge, without spending more money in the process. Some specific
measurable benefits of using CMMS include:
More effective use of maintenance workers' time.

Less production loss.
Improved equipment life and resale value.
Improved product quality.
More effective use of parts and materials.
Lower parts and inventory requirements.
Improved equipment reliability and dependability.
These benefits come with the identification, description, planning, and

scheduling of maintenance work required to keep a plant, or any operation,
for that matter, going smoothly. CMMS enhances maintenance and leads to
savings. Versions of these benefits are reflected in Exhibits 9-7 through 9-9.
These exhibits show results of surveys by a national organization on the sub-
ject of actual and perceived benefits of using computerized maintenance
management systems.
Identifying Benefits and Savings

Maintenance management should set up a procedure for local monitoring of
benefits or savings that accrue by using CAWS. If such a system is already in
use, it should be reviewed periodically. Sometimes, obvious benefits or sav-
ings are overlooked because they were taken for granted. Among the catego-
ries to consider are:
Increased equipment uptime.

Increased maintenance labor efficiency.
Overall maintenance cost reduction.
Improved supervisor effectiveness.
Improved parts and materials availability.
Lower production costs or fewer interruptions.
Lower cost of maintaining the equipment.
Lower parts and materials inventory levels.
Lower purchase costs for maintenance parts and materials.
Reduced manual data input, with better quality data availability.
Improved life-cycle and equipment life expectancy.
Reduced outside maintenance contractor costs.
Some of these benefits are measurable in percentage changes or

changes in levels of effort; others can be quantified in dollars or hours of
work. Some thought is needed to determine how a benefit or saving can be
measured and reported best.
There are other, less tangible, benefits or savings: improved safety,
compliance with regulatory requirements, reduced energy consumption,
tool savings, reduced overtime, and more. Items that should be tracked are
those that make the best sense in the local situation. But the real aim of
using CMMS is to afford managers an effective mechanism for getting the
maintenance job done better and with highest quality. The resulting bene-
fits or savings are the main force behind the decision to implement CMMS
and ought to be looked at closely when considering whether the system is
effective.
SUMMARY
The time and effort needed to select and implement CMMS are well spent
because of the benefits and savings they offer in managing the maintenance
function. Intense evaluation of the requirements of the user should be under-
taken before any system is chosen. There is a support cost associated with
using CMMS. Constant attention must be given to keeping the system up to
date and supplied with input data. Growth of the maintenance department's
responsibilities may require expansion and upgrading, even replacement, of
the system. These represent added cost. But the added dimension CMMS
offer in managing the maintenance function is well worth the investment.
1. CMMS basic operations should be to: 1. (a)

(a) identify, describe, plan, schedule, support.
(b) take the place of a manual system.
(c) manage the work hour charges.
(d) provide security for the manager.
2. Computerized maintenance management systems are software 2. (b)

programs designed to assist in the required for effec-
tive maintenance.
(a) training and discipline
(b) planning, management, and administrative control
(c) safety and labor harmony
(d) production of official reports
3. All CLAIMS: 3. (c)

(a) perform the same tasks for users.
(b) comprise a single program module.
(c) depend on databases and user instructions.
(d) can run on any type of digital computer.
4. In developing CMMS, it is important to: 4. (d)

(a) find a well-recommended provider.
(b) hire employees who can operate a computer.
(c) select desired computer hardware, then software.
(d) conduct a needs survey for the particular location.
S. The two most important actions to ensure successful CMMS are: 5. (a)
(a) a needs survey and good user training.
(b) adequate funding and management backing.
(c) staff enthusiasm and plenty of time.
(d) a completed equipment inventory and PM procedures.
6. Characteristics of CMMS are determined by how their software 6. (b)

and are organized.
(a) is chosen ... databases
(b) modules ... functions
(c) performs ... work stations
(d) is installed ... work procedures
7. CMMS are most easily operated through: 7. (a)

(a) screen menus.
(b) ad hoc instructions.
(c) maintenance supervisors.
(d) customized digital scenarios.
8. CMMS reports are generally: 8. (b)

(a) difficult to obtain from the system.
(b) plentiful and quickly obtained from the system.
(c) inaccurate in terms of work actually completed.
(d) of more value to managers than to maintenance workers.
9. A key benefit of using CMMS is: 9. (a)

(a) increased equipment uptime.
(b) elimination of PM.
(c) foreknowledge of major equipment breakdowns.
(d) elimination of field supervision of workers.
10. After CMMS is installed and running, it: 10. (c)

(a) requires no changes for three years.
(b) replaces first-line supervisors.
(c) must be evaluated periodically to see if changes are needed.
(d) needs to be expanded on a continuous basis.
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Sink, D. Scott, Thomas T. Tuttle. Planning and Measurement in Your Organi-

zation of the Future (1993)
Stevenson, William J. Production/Operations Management, 4th ed. (1993)
Thamhain, Hans J. Engineering Program Management (1984)

. Engineering Management (1992)
Tompkins, J., J. White. Facilities Planning (1984)
Westerkamp, Thomas A. Maintenance Manager's Standard Manual (1993)
Wireman, T. World Class Maintenance Management (1990)

Post Test
Course Code 95039

How to Manage Maintenance
1. The structure of an organization is affected by:

(a) the functions it performs.
(b) the resources available to it.
(c) the size of the operation.
2. The categories listed in the maintenance budgets are called:

(a) estimates.
(b) statistics.
(c) line items.
(d) projects.
163
3. In addition to maintenance, the department is sometimes re-

sponsible for the maintenance budget.
(a) accounting
(b) sales
(c) production
(d) operations
4. Specialist, component, and OEM are all types of training.

(a) vendor
(b) craft
(c) in-house
(d) community college
5. Of the three types of training mentioned in question 4, is the

one dealing with special parts and materials, such as pumps, lubricants, and
hydraulics.
(a) specialist
(b) component
(c) OEM
(d) none of the above
6. In a typical work order system, the planner or scheduler:

(a) prepares the work schedule.
(b) performs the work.
(c) authorizes the expenditure of funds.
(d) sets the priority of work.
7. A preventive maintenance schedule should contain work for a period of

(a) one week.
(b) six months.
(c) one year.
(d) five years.
8. Maintenance managers are usually involved in:

(a) composing rules on standard operational procedures.
(b) designing manufacturing process lines.
(c) negotiations with trade unions.
(d) acting as official host for visitors to the plant.
9. As time passes, the priority of a low-priority job should:

(a) be reviewed.
(b) remain the same.
(c) decrease.
(d) fluctuate.
10. jobs can be scheduled using PERT or CPM.

(a) Large
(b) Small
(c) Preventive maintenance
(d) all of the above
11. The percentage of time a piece of equipment is operable is called:

(a) running time.
(b) uptime.
(c) service level.
(d) productive time.
12. A manager who manages well will usually manage

well too.
(a) the human resource ... all resources
(b) the physical resource ... all resources
(c) the financial resource ... the physical resource
(d) the dollar budget ... energy consumption
13. Perhaps the most important issue in controlling maintenance inventory is:
(a) the number of jobs to be supplied with materials.
(b) record keeping.
(c) computerization.
(d) the size of the inventory itself.
14. Capital work done by maintenance can cause:

(a) overstaffing and deferred maintenance.
(b) cost savings and faster delivery.
(c) interruption of labor tranquillity.
(d) hard feelings with outside contractors.
15. Preventive maintenance consists of

(a) regular inspection, test, and lubrication of equipment.
(b) response to equipment when manufacturing reports trouble.
(c) redesign of equipment to avoid trouble possibilities.
(d) calling manufacturers when equipment performs badly.
16. A lot of overtime:

(a) can become a habit with employees.
(b) can reflect personnel problems.
(c) is a symptom of understaffing.
17. The department will help develop economical order quantities

for maintenance inventory.
(a) production
(b) administration
(c) purchasing
(d) sales
18. Training to keep up with the continuous technological advances is called

training.
(a) hands-on
(b) OEM
(c) component
(d) upgrade
19. After a trainee is assigned to an experienced worker, training:

(a) is finished.
(b) should be monitored by management.
(c) has just begun.
(d) must start over.
20. Using area assignments:

(a) discourages loyalty among workers.
(b) may possibly set conditions for overstaffing.
(c) is excellent for small to medium-size plants.
(d) increases time for travel to get parts.
21. In a manual system, the planner retains the copy of the work
order.
(a) open
(b) closed
(c) originator's
(d) work
22. Book value is the original cost of the facility:

(a) plus allowance for depreciation.
(b) less allowance for depreciation.
(c) plus allowance for inflation.
(d) less allowance for inflation.
23. The ratio of one supervisor to hourly employees:

(a) is the same for labor-intensive and capital-intensive industries.
(b) should always be about 10 to 1.
(c) depends on the type of industry or operation.
(d) is not important.
24. Numbers must be assigned to:

(a) bulk maintenance inventory items only.
(b) high-cost maintenance inventory items only.
(c) safety stock quantities only.
(d) all maintenance inventory items.
25. Nuts, bolts, and similar items are often items.

(a) free-use
(b) tightly controlled
(c) user-provided
(d) discretionary
26. The percentage of scheduled PM work that is completed during a given

week is shown in the:
(a) compliance report.
(b) work generated report.
(c) work order.
(d) expense budget.
27. Ensuring that the work is executed is the responsibility of

(a) planners.
(b) line management.
(c) schedulers.
(d) engineering.
28. Ideally, a new planner should have experience.

(a) supervisory
(b) managerial
(c) craft
(d) engineering
29. The maintenance department should strive to control account variances:

(a) as close to zero as possible.
(b) between 10 percent and 2 S percent positive.
(c) around 10 percent negative.
(d) in accordance with production volume changes.
30. Considerations in measuring the risk of omitting PM on a piece of equip-

ment are and
(a) labor available ... time needed to do the job.
(b) severity of problems that could arise ... probability of equipment failure.
(c) cost of parts ... inventory on hand.
(d) size of workforce ... number of skilled trades.
31. The must approve job requests for planning and scheduling ac-
tivity.
(a) maintenance manager
(b) planner
(c) requester
(d) accounting department
32. In the 1,2,3,4 system, number 2 indicates a(n) type of job that
must be completed after the work order is received.
(a) emergency ... immediately
(b) urgent ... five days
(c) routine ... seven to ten days
(d) deferred ... three to five weeks
33. Variances in maintenance budgets can be caused by:

(a) price changes.
(b) unexpected breakdowns.
(c) improperly prepared budgets.
34. The day-to-day costs of doing business are reflected in the:

(a) expense budget.
(b) capital budget.
(c) weekly payroll.
(d) profit and loss statement.
35. The first step in setting up a PM program is:

(a) writing up work orders.
(b) hiring PM staff.
(c) identifying all equipment.
(d) obtaining funding commitments.
36. The list of all parts, which allows maintenance to choose the materials to
complete assigned jobs is called the:
(a) work order.
(b) alphanumeric description.
(c) stores catalog.
(d) maintenance inventory.
37. Maintaining inventory usually costs to percent of

the inventory value.
(a) 6... 10
(b) 10...20
(c) 20...40
(d) 40 ... 50
38. Effectiveness of the maintenance function can be measured by:

(a) budget variances.
(b) skills analysis.
(c) overtime costs.
(d) training requirements.
39. Breaking a job into components and estimating the time required to com-
plete each component is the estimate.
(a) slotting
(b) engineering
(c) historical
(d) CPM or PERT
40. It is important that you plan your training needs for years.
(a) one
(b) two
(c) five
(d) ten
41. Maintenance managers should give attention to their own training needs in
the area of
(a) technical and managerial skills.
(b) financial management.
(c) OSHA regulations.
(d) environmental and pollution abatement.
42. Determining attrition information allows you to:

(a) assess training needs.
(b) reduce the work force, if necessary.
(c) determine salaries and fringes.
(d) (a) and (b).
43. A maintenance manager will benefit from experience gained by:

(a) working in other departments in the facility.
(b) designing HVAC systems.
(c) working for a utilities company.
(d) visits to the employer's customers.
44. In a formatted equipment numbering system, the first number indicates:

(a) the geographic location of the equipment.
(b) the generic, or primary, equipment group.
(c) the ownership of the equipment.
(d) the value class of the equipment.
45. If maintenance has no job backlog, this indicates:

(a) high productivity among the mechanics.
(b) understaffing.
(c) overstaffing.
(d) customer satisfaction.
46. Work sampling is a way to determine:

(a) what kind of work is being done.
(b) the efficiency of observed work.
(c) which employees are taking too long to do a job.
(d) work order compliance.
47. Computerized management control systems are:

(a) a great aid but no substitute for enlightened managers.
(b) necessary in managing any size maintenance department.
(c) required for insurance purposes.
(d) easily paid for by savings in the PM program they support.
48. The TPM program focuses attention on:

(a) equipment performance and condition.
(b) training needs of mechanics.
(c) manufacturing schedules.
(d) equipment breakdown response.
49. The annual maintenance budget should be prepared by:

(a) the maintenance manager and staff.
(b) the financial department.
(c) users of maintenance services.
(d) accounting, based on the previous year's results.
S0. For effectiveness and cost control, the maintenance inventory should be lo-
cated:
(a) where the mechanics spend most of their time.
(b) in any place(s) that make(s) good sense.
(c) only in a covered, locked, heated facility.
(d) as close as possible to the receiving dock.
The Practice Case
INSTRUCTIONS: The practice case enables you to sharpen the ideas and methods you
have studied by applying them to a realistic business problem. The answers you pro-
vide to the questions are not submitted to Educational Services for grading. Rather,
as its name implies, the practice case gives you the chance to practice for the examina-
tion case by having you put your newly acquired knowledge to work through analyz-
ing and solving problems in a realistic setting.
After reading the case, summarize and analyze the situation as it has been pre-
sented. Ask yourself, "What is really going on here?" Read and answer the review
questions, and then prepare a written analysis and solution.
FJTURE AIANUFACTURING COMPANY

The Future Manufacturing Company is a small producer of components for
the growing electronics industry. If the company is to avoid being swallowed
by its competitors, it must anticipate growth of its own. To retain the com-
pany's competitive edge and meet the challenge of anticipated growth, execu-
tives of Future Company have developed an action plan. The plan takes into
account the major characteristics of the entire industry and how these char-
acteristics affect the company's growth. Among these characteristics is the
industry's relative newness, which creates the need for high capital invest-
ment in technological research and development. That, in turn, will lead to
designing and building the unique equipment required for manufacturing the
components.
A by-product of the research efforts could be the development of a new
product that would put the Future Company in the business of manufactur-
ing original equipment instead of supplying parts to others. Consequently,
research and development are essential to the long- and short-term plans of
the company.
Because of the rapid growth in this industry, many problems exist. Man-
agement efforts at the new plant, including an investment of $30 million for
171
equipment, have been overwhelmed by the rapid growth and the need to
meet increasing demand almost daily. It's a high technology industry, it's new,
and the necessary skills are not available. Future Company began in a garage
two years ago. Its founders were two brilliant science majors just out of col-
lege. They had no manufacturing knowledge and no exposure to it. They
concentrated on the technical development area, and the company just grew.
Recognizing the problem, they recently hired an experienced operations
manager, Ron Tuit.
RON TUIT COMES ABOARD

Ron assessed the needs for production, scheduling, materials, planning, man-
power, and equipment use. Although the problems were many, the solutions
were pretty straightforward. The area that needed most attention was main-
tenance. Downtime had been a major problem. Ron was satisfied from his
own investigation that the downtime was not caused by a lack of equipment,
raw materials, or labor. His conclusion was that maintenance management
was inadequate. Technical know-how, procedures, systems, and controls were
lacking. He decided that the top priority was to hire an experienced mainte-
nance manager. Ron justified hiring an experienced manager by the antici-
pated growth of the company and the immediate need to catch up with
current growth. After an extensive search, Harry Aldo was hired to fill the
new position of maintenance manager.
During their first meeting, Tuit and Aldo jointly evaluated Tuit's find-
ings. Ron proposed that Aldo think about the maintenance department's
operation and come up with a plan for immediate controls as well as long-
term needs.
Review Questions
1. What systems should Aldo review to implement immediate control?
2. List other areas Aldo should review.
ALDO'S REVIEW
Aldo decided to review existing control systems first. Aldo planned to review
all functional activities, as well, including inventory, preventive maintenance,
planning and scheduling, and training. However, he felt the best place to
start was with the three basic systems for running a maintenance department.
As Aldo put it, "You can't do anything without a work order, a priority sys-
tem, and feedback or a reporting system."
Work Order Review

The first step was to review the forms and systems currently being used. He
obtained a copy of the single-part work order, the list of priorities, and the
reports generated by the department. The work order contained the follow-
ing information:
Originator's name and department

Request (place to write request)
Priority
Date
Date desired for completion
Date completed
This information seemed limited, and many of the work orders were lost
after being written. This created concern and arguments and claims that
work orders were not written or that the work was not done.
Next, Aldo reviewed 50 completed work orders. He obtained the follow-
ing information:
Originator's name appeared on 40 orders.

Requests read "fix machines;" "repair press," "spindle broken," and so on.
Priority: Of the 50, 36 were, No. * 1, 6 were No. 2, 8 were No. 3.
Date: All were dated.
Date desired: Of the 50,40 requested same-day service and 10 required
service the following day.
Date completed varied from the day of request to as many as 30 days later.
Review Questions
1. What weaknesses did Aldo find by reviewing the 50 work orders?
2. How many parts should there be to a work order? What would each part
be used for?
3. What are the advantages of a good work order system?
Priority Review
After reviewing the work orders, Aldo obtained a copy of the priority proce-
dures. The system was short and simple. It stated:
Priority Description
1 Emergency-do right away
2 Urgent-within 24 hours
3 Routing-within 48 hours
4 Planned-within 5 days
At this point, he remembered the breakdown of priorities on the 50

work orders he had reviewed and compared them with the expected priority
completion times listed in the procedure manual.
Review Questions
1. Are these priorities emergency oriented? Why
2. Would you alter these priorities?
Reporting System
The third function Aldo reviewed was the communication, or reporting, sys-
tem. He found that a monthly report containing the following information
was issued:
The number of work-order requests written

The number o work orders completed
The average cost per job
The amount of maintenance work done in the production department
In addition to this report, which was Aldo's primary concern, there were
a number of other reports that were prepared on a monthly basis - absen-
tee, overtime, and vacation reports, as well as OSHA forms and so forth.
Review Questions
I. What would you expect a report generated from the work-order system
to contain?
2. Would you use average time to complete a work order as an index?
3. What information about effectiveness would you expect from a work
order system?
OBTAINING FEEDBACK
Next, Aldo decided to interview some foremen in maintenance and manufac-
turing to obtain their opinions of the control system. The maintenance
department employed 55 craftsmen, 3 foremen, and one general foreman.
The manufacturing department included 2 production managers, 2 superin-
tendents, 7 foremen, and 220 hourly employees. He gave himself a week's
time to interview all managerial personnel and some of the hourly employees
and obtain the information he needed. After completing the interviews, he
summed up the comments as follows.
Production Comments
Priorities
Production should assign priorities. It's our responsibility to keep the equip-
ment running. Besides, we know what is critical; others don't. We ask for a
No. 1 priority because we need to get the work done now. We can't trust
maintenance to get repairs done on time anyway.
Work Orders
No more information is required. The orders tell maintenance what to do
and when to do it.
Work Orders
There isn't any more information required. The orders tell maintenance
what to do and when to do it.
Reporting Information
It's fine because we know how much was spent, and how many jobs were
done in our departments. We know the average cost to complete each work
order. It also proves our point that priorities aren't met.
General Comments
The systems are fine for our needs, the people are okay, but something seems
to be wrong with the way maintenance is managed.
Maintenance Comments
Priorities
Everything has to be done right away. There isn't enough time. Rome wasn't
built in a day! It's no wonder we don't get the jobs done on time. Who could?
We should set the priorities. After all, we know the amount of work we have
to do.
Work Orders
The work orders just add up to a blizzard of paperwork because we have so
many small jobs. We spend most of our time trying to keep up with the paper
work. Why don't we assign men to production departments to do what is
requested? It would save the foreman a lot of headaches.
Reporting Information
We wouldn't know because we don't get the reports anyway. Sure, we would
like to know what's going on.
General Comments
Every day new equipment is installed. How can we keep up with repairs?
Anyway, parts are never available.
Aldo knew he had all the information he needed and started to write his rec-
ommendations on controls that should be instituted immediately.
Review Questions
1. Why aren't priorities met?
2. What problems could develop if mechanics were assigned to production
departments?
3. Is there a solution to excess paperwork?
4. Should the maintenance foremen receive reports?
5. If you were Aldo, how would you answer these questions? Outline your
answers.
REVIEW OF OTHER ACTIVITIES

Some comments made during Aldo's interviews confirmed his feelings about
other functional maintenance activities. Aldo knew that a high technology
industry with a shortage of skills certainly needed skills training. Comments
that reinforced this notion came from both production and maintenance.
Because the equipment was uniquely designed and built for the Future Com-
pany, his solution was to develop training programs using this equipment. In
fact, he proposed that some maintenance people participate in building the
equipment as part of their training.
To justify training costs, Aldo pointed out that this early interface with
design and building would aid in developing the preventive maintenance pro-
gram and identify routine repetitive tasks required on the equipment. This
knowledge would help ensure uptime.
"It isn't just the priority and work order systems that need revamping,"
Aldo reported. "It is impossible to schedule or plan work on the basis of
must-be-done-right-away philosophy. Under these circumstances, even if
there were a planner, it would be difficult to succeed."
DESIGNING THE NEW

MAINTENANCE DEPARTMENT
At this point, Harry Aldo began designing a maintenance organization for
presentation to Ron Tuit. Aldo realized his ideas would require money. At
that time, the only money formally budgeted for maintenance was the labor
pay roll ($1,252,680) and the foremen's salaries ($135,500). Each of these fig-
ures included 30 percent for fringes. He decided to assume a one-to-one
ratio of material to labor. He also subtracted the fringes from the labor cost,
added them to the salaries, then added in his salary, utilities, and other costs
to determine overhead. After Also completed this, he knew the approximate
maintenance budget base. After determining the percentage of replacement
value this budget base represented, he was in a position to present a case for
the money he thought necessary to effectively maintain the plant. To support
his request, he also did a work sampling to determine the daily time distribu-
tion of the mechanical organization. Aldo was sure he would find more areas
for improvement, but he also knew he must have these organizational
changes first if he were to make further improvements.
Review Questions
1. What functions are needed for Aldo's maintenance department?
2. Prepare an organization chart for this department.
3. By how much will the maintenance budget be increased? If you were
Aldo, how would you justify this increase?
Aldo felt that the following functions would be required to operate the
new maintenance department:
Employee relations
Safety
Repairs
Stores control
Controls
Budgeting
Engineering
Preventive maintenance
Training
Planning
Scheduling
Construction
Record keeping
Energy conservation
Regulatory compliance
Because the Future Company is a small- to medium-size operation, Aldo

sketched out an organization chart similar to the one illustrated in Exhibit 1-3.
He also determined that the budget for the maintenance department would be
$3 million because the equipment was new and cost $30 million. Aldo knew
that in a high-technology industry, its replacement value should be estimated
at 10 percent to 12 percent of its original cost.
Because he would undoubtedly be asked to justify this figure, he figured
the budget again using the following reasoning:
Cost of labor with 30% in fringes deducted would be $972,400 for 55

employees.
Assuming a one-to-one labor-material ratio, $972,400 must be budgeted
for materials.
Using the historic rule of thumb that labor should be about one-third of
maintenance costs, $972,400 should also be budgeted for overhead.
The total of these figures would be $2,917,200-approximately $100,000
short of 10 percent of the equipment replacement cost. This amount
might be enough to support his own staff buildup.
The Practice Case Solution
In a complex case such as this, there is no single or textbook solution. As

there are a number of variables, the traits of the individual student will be an
important factor in approaching the solution. The objective is to call the stu-
dent to make a broad, in-depth analysis of the problems and the industry that
is presented in this practice situation.
To implement immediate control, Aldo needs to find out what controls,
if any, are currently in place. This means looking at the department organiza-
tion, control measures, and reports that are being used, as well as work
orders, priorities, and formal departmental procedures.
Close behind these, Aldo would review the entire staff in terms of skills,
training, and qualifications. He should also find out what is being done with
staff training, planning and scheduling of work, safety records, work backlog,
budget performance, and various pertinent maintenance ratios, especially the
ratio of labor hours to materials used.
His review of the work orders revealed serious deficiencies in details
concerning the work requested, prioritization, planning and scheduling, and
management control of the work process itself. It appears that the priority
system had been subverted, and most of the work requested was given an
emergency priority. This was compounded by date desired requests of one
day (40 requests) and two days (10 requests). Clearly, there was no control on
setting reasonable priorities or due dates. There was virtually no manage-
ment control over the work response because the actual completion dates
bore little resemblance to the priorities or requested due dates. The work
order request form itself was inadequate because of lack of information, flow
control, management review, planning and scheduling, and even number of
copies. If Aldo sticks with a manual work order system for the time being,
there should be a minimum of four copies of the work order form: one for
the originator, one for the planner's office, one for the foreman, and one for
the craftsperson. In a computerized system, fewer copies may be printed, but
more people will have access to the information by viewing the work order
on video screens.
179
Getting a grip on the work being done via an improved work order con-
trol, would give Aldo a means of requesting, assigning, and following up on
work done; providing a method of communicating written, detailed instruc-
tions on work; providing a method of estimating and comparing actual costs
of work; and providing data from which reports can be prepared.
The requested priorities were emergency oriented, probably because the
requesters had found that this was the only way to get some action on their
problems. This suggests a big problem with ongoing preventive maintenance
activities in the plant. Moreover, it suggests that overall management of
maintenance work is deficient.
A first attempt at easing the priority problem is to meet with the produc-
tion management team and others who make significant requests for mainte-
nance work to discuss the allocation of maintenance response capability. The
aim is to achieve more realistic priority ratings on requests and more com-
plete information about the work or problem involved. Aldo would have to
make the commitment that maintenance supervision will review the requests
more closely and seek to satisfy the higher priority requests first, with others
at realistically scheduled dates later. Administratively, the maintenance man-
ager should reassess the definition of priorities No. 3 and No. 4, and redesig-
nate them for more credible response times, such as one week and 30 days,
respectively.
It appears to Aldo after his review that the work order activities were not
reported very well. Managers should develop reports that point out achieve-
ments and highlight problem areas. In this case, they should attempt to
develop and produce monthly reports that indicate the following:
Safety record of the department

Budget variance, all maintenance line item accounts
Maintenance cost per unit of production
Maintenance cost as a percentage of capital investment
Percentage of equipment uptime
Workload backlog, by client department
Weekly overtime ratio
Emergency work ratio
Labor versus materials ratio
Estimated time versus actual time
Using the average time to complete a work order as an index in this case
might be misleading for Aldo because there are a lot of current organizational,
supervisory, and training problems in the maintenance area. Moreover, the
plant is in an industry characterized by rapid change in technology and growth.
He could also be given the wrong signals by an average time to complete a
work order index because so few of the jobs actually done in the plant are cov-
ered by work orders. It would probably be a meaningless index.
Typically, a comprehensive and well-supported work order system would
offer Aldo a detailed picture of how effectively the maintenance department is
doing its work. It tells what work was done, for whom is was done, who did it,
what work is yet to be done, and whether the work was done in accordance
with labor and materials estimates. By analyzing this basic information, Aldo
can get a true measure of departmental effectiveness.
From Aldo's interviews, it is apparent that priorities are not being met for
two main reasons: First, it looks as if there is no preventive maintenance pro-
gram in place. Second, between production and maintenance, there is no over
all management coordination of priorities, hence the numerous requests for
No. 1 priorities and immediate due dates. Assigning maintenance workers to
the production areas on a full-time basis would only worsen the problems
because there would be an imbalance of skills and ultimately a shortage of per-
sonnel to respond to major equipment outages elsewhere. In addition, the
assigned mechanics would lose the benefit of timely advice by supervisors in
the maintenance department and their training would probably be neglected
while under informal supervision by production managers.
Implementing a computerized maintenance management system
(CIVIMS) could considerably ease the paperwork problem. This would
allow for electronic means of requesting work to be done, planning and
scheduling of the work, priority ranking, work order creation (with a good
bit more information in it), and progress tracking as the job is completed.
Ironically, CMMS result in more paperwork, but it is accomplished mostly
within the systems, relieving the maintenance workers of having to prepare
and process it.
Maintenance workers should receive all reports that pertain to the area of
their responsibilities and, where applicable, they should see management
reports, as well. After all, maintenance supervisors and workers are the people
closest to the work, so the reports could only make them more aware of the
results and effectiveness of their work.
Aldo's assessment of maintenance probably would produce an organiza-
tional need as follows: work control-that is, job tracking and reporting, plan-
ning and scheduling, training, equipment design, mechanic support for the
facility (mostly in production), tool control, inventory control, repair shop,
preventive maintenance, outside technical services contractors, and construc-
tion. Aldo's proposed organizational scheme is presented in Exhibit PCS-1.
Projected Maintenance Budget
In the Practice Case, Aldo prepared an initial budget in the range of
$2,917,200 to $3,000,000. By contrast, a more definitive, or built-up, budget
might look like the following:
Current labor ($1,252,680 less 30% benefits) $963,600

Material (1:1 ratio assumption) 963.600
Subtotal 1,927,200 (A)
Proposed staff
Manager (excl. 30% benefits) $50,000
Foremen (4)($135,500 less 30% ben.) 104,230
Sec'y (excl. 30% benefits) 15,600
Engineer (excl. 30% benefits.) 25,000
Planner/scheduler (excl. 30% benefits) 18,000
Inv. control (excl. 30% benefits) 18,000
Services admin. (excl. 30% benefits) 18,000

Subtotal $248,830 (B)
Benefits on 55 workers Ca3 30% $289,080
Benefits on salaried staff (B) @ 30% 74,649
Subtotal $363,729 (C)
Other costs (estimated):
Utilities $480,000
Training 120,000
CMMS operating costs 50,000
Misc. 25,000
Subtotal $675,000 (D)
Total est. budget. (A)+(B)+(C)+(D) $3,214,759
(At 5% of sales, this suggests a company annual sales level of $64,295,180. Is
this a close figure or not? We don't know at this point because the practice
case did not give the sales figure.)
Aldo's current budget (labor for mechanics and foremen plus benefits)
would apparently be increased by 13.5 percent ($1,388,180 to $1,576,159),
materials, utilities and other charges excluded. This increase can be justified
because it should provide better work management and supervision, more
planning and estimating for the work, an improved priority system review, and
the prospect of less downtime and interruption of production operations.
Assuming a cost of sales of 50 percent, an improvement of only 1 percent in
production efficiency would yield almost twice the amount of the added new
staff costs in maintenance. One would expect actual productivity improve-
ments of much more than that small percentage. Unless something is done
about maintenance, the company's growth will surely be halted, if not put into
decline.
In the practice case example, to justify his proposed budget Aldo re-esti-
mated his annual budget at $3 million, based on 10 percent of the original
equipment cost of $30 million. Aldo appears to be in the right ballpark, but
may be taking a big chance because of the way he arrived at the $3 million fig-
ure. Because we don't know the actual annual current or projected sales, the
best information is the amount invested in the plant's equipment, which is $30
million. But replacement of that equipment might now run as high as $3 5 mil-
lion, or $30 million plus an assumed inflation figure of 8 percent, compounded
over two years). So Aldo's annual budget estimate, instead of $3 million, might
well be $3.5 million if based on 10 percent of calculated replacement cost.
Viewed another way, his $3 million estimate could be low by around $215,000,
compared with the earlier calculation we show for a proposed budget of
$3,214,759. However, he may not be as far off as it seems. We don't really
know the amount he has included in his first budget pass for utilities.
It appears Aldo needs to do more investigation and gathering of useful
facts to arrive at sound justifications for his proposed staffing and budget rec-
ommendations. He could be fairly close to the right estimates at this point or
dangerously low. However, the gross judgments and solutions he has arrived at
so far show the mark of good judgement. He has put the maintenance function
on the right course and appears to be firming up a good plan to keep it moving
that way.
Selected Readings
Effective Maintenance
Management RAMESH C. GULATI, PE.
INTRODUCTION
American industry is facing the most critical time in its history since the Indus-
trial Revolution. Never before has the challenge to its very existence been so
clearly threatened. Not only must we compete with U.S. manufacturers, but
we must also consider off-shore competition. Today, the automotive, elec-
tronic, textile, and toy industries and many more, including the aerospace
industry, are being severely challenged by the foreign-based manufacturer.
Producing a quality product or providing quality services at competitive prices
has become a key issue for survival in today's environment.
If a facility is not kept operable within reasonable cost limits in today's
competitive environment, the whole organization will suffer, or perhaps even
be forced to close its doors. To keep a facility operationally cost effective, the
resources required (such as people, equipment, and material) must be utilized
efficiently. All activities should be evaluated in light of the total operating sys-
tem and be optimized to reduce the total cost.
Availability of equipment/plant to manufacture a product or to produce
services (such as testing in the ground testing facilities) is a key factor in con-
trolling the cost of testing and maintaining the competitive edge. If the equip-
ment is down because of failure or other operational problems, it delays the
testing causing an increase in testing cost. It is not cost effective to operate
equipment/plant at less than their rated capacity on a continuing basis.
Source: Reprinted with permission from Sverdrup Technology, Inc., Arnold Engineering Development
Center, Air Force Systems Command.
195
A facility operating at low availability usually has higher maintenance and

operational costs and requires additional equipment to compensate for lost
capability. Therefore, the cost of the products produced or the services pro
vided usually goes up. There are several other factors contributing to the
upward trend in maintenance costs:
Increasing labor cost.

Complex and state-of-the-art equipment.
Specialized training cost.
Union/company policies-culture.
Low labor utilization/high work delays.
To reduce maintenance cost and improve productivity, changes in the tradi-

tional way of managing maintenance must be made. We can't afford to live
with the old way of thinking: "If it ain't broke, don't fix it." It is time to
think: "If it ain't broke, predict when it will break and fix it before it hap-
pens" so that it is available whenever you need it and ready to produce.
Maintenance plays a key role in meeting the operational/organiza-
tional goals. However, there is evidence of lack of management support
resulting in part from an existing perception that maintenance is a neces-
sary evil and cannot be managed effectively. On the contrary, maintenance
can be managed effectively. An effective maintenance program is a key ele-
ment in keeping equipment or facility running smoothly and efficiently to
keep product costs down.
There are several techniques/tools available which can be used to
improve maintenance effectiveness. Implementation of the appropriate
techniques/tools is essential to establish an effective, maintenance manage-
ment program.
We at the Arnold Engineering Development Center (AFDC) were fac-
ing similar issues to those found in industry. The trends in equipment fail-
ures were up. Facility operations and maintenance costs were rising,
causing testing costs to go up significantly. A need to establish an improved
maintenance (work) management system was identified. This paper pro-
vides a framework for establishing an Effective Maintenance Management
program to reduce the product/service cost.
FACYLITY BACKGROUND
Arnold Engineering Development Center (AFDC) is an Air Force-owned,
contractor-operated research and development test facility. It has contributed
to the development of virtually all of the nation's top priority aerospace, pro-
grams, including the Atlas, Minuteman, Peacekeeper, Space Shuttle, F-5/16,
ATF, Tomahawk, and NASP (National Aero Space Plane).
AFDC operates the most advanced and largest complex of flight simula-
tion test facilities in the world-some forty aerodynamic and propulsion wind
tunnels, rocket and turbine test cells, space environmental chambers, ballistic
ranges, and other specialized units. Facilities can simulate flight conditions
from sea level to altitudes around 1,000 miles, and from subsonic velocities to
those well over Mach 20.
The mission of AEDC is to test aircraft, missiles, and space systems at the
conditions they will experience during flight. The objective is to help develop-
ers qualify their systems for flight, improve system designs, establish perfor-
mance levels before production, and help users in resolving operational
problems.
To support its mission, AEDC maintains a variety of equipment/systems
in several major facilities. Large air compression systems are the basic type of
equipment used in these facilities. In addition, a wide range of support equip-
ment, including the fastest and most advanced computer systems, are installed
in these facilities to support testing. The total installed capacity of the equip-
ment/systems at AEDC is in excess of 1,300,000 HP The cost of electric
power to operate these facilities is over $2,000,000 per month.
The Engine Test Facility (ETF) is one of the key facilities at AEDC used
for testing the propulsion systems for advanced aircraft, missiles and space
vehicles. These propulsion systems include rocket motors, turbojet, and tur-
bofan engines. The ETF is operated and maintained by Sverdup Technology
Inc. under contract with the Air Force.
Propulsion testing in the ETF provides the test variables such as pres-
sure, humidity, temperature, and air flow, throughout the environmental con-
ditions that an engine is expected to encounter in actual flight. There are
three plants located in the ETF that can generate conditioned air in excess of
1,400 lbs/sec (1,300,000 cfm) in the range of 0 to 300 psi. This air is then
channeled through various test cells to create the required environmental
conditions. These plants have over 20 axial and centrifugal compressors in the
range of 5,000- to 50,000-hp capacity, refrigeration systems, process air heat-
ers, and miles of air-piping/ducting, along with other associated equipment.
MAINTENANCE OBJECTIVES
Maintenance is any activity designed to keep equipment or other assets in
working condition. Poorly maintained equipment can be unsafe to operate
and can create high costs in the form of delays, defective products, and idle
ti me. Maintenance usually deals with servicing equipment, replacing worn-
out parts, and performing emergency repairs.
The goal of an operations and maintenance organization should be to
ensure that equipment/facility capacity is maintained and operated cost-
effectively. Maintenance activities should be evaluated in light of the total
operating system and optimized to reduce the total cost. Therefore, overall
maintenance objectives should be to:
Improve equipment/facility availability.

Optimize maintenance activities.
These objectives should be met without sacrificing any product or service

quality.
T ECHNIQUES/TOOLS TO ACHIEVE OBJECTIVES

There are several techniques/tools that can be applied to the maintenance
area to improve its effectiveness. These techniques/tools can be classified
into three categories:
Prevention.
Resources/tasks optimization.
Culture.
PREVENTION
The prime reason for higher maintenance costs is equipment failures. Exces-
sive equipment failure causes two problems: It increases the cost of mainte-
nance; and it reduces the production capacity. The application of prevention
techniques to reduce failures is an important strategy which should be
adopted. The following are some of the prevention techniques:
Preventive Maintenance (PM).

Predictive Maintenance.
Reliability Centered Maintenance (RCM).
Preventive Maintenance
Preventive Maintenance (PM) involves a pattern of routine inspections and
servicing at regular intervals. These activities are intended to detect potential
failure conditions and take steps to prevent their occurrence.
Traditionally, PM programs are set up to carry out equipment mainte-
nance, on a regular calendar schedule or by hours of operation, based on the
manufacturer's recommendations. These recommendations are usually based
on average operating environment. However, questions we must answer
include: Is our operating environment different? What is the failure rate of
the equipment? We must adjust/modify the PM program to met our equip-
ment's operating environment and reflect our experience.
Predictive Maintenance
The primary objective of Predictive Maintenance is also to detect potential
failures, but it goes beyond this to predict equipment condition by monitor-
ing vital equipment performance parameters such as vibration levels, flow
rates, pressure, etc. Inspection or repair is only conducted when measured
values reach predetermined limits.
This technique is currently being applied very effectively to rotating and
reciprocating types of equipment. In addition, new measurement and assess-
ment techniques utilizing artificial intelligence are being developed to
enhance the system.
Ideally, Predictive Maintenance should be utilized whenever feasible.
However, it may not be cost effective in every case. The cost of preventive,
predictive, and failure maintenance must be evaluated for every application

to optimize total cost.
Exhibit SRI - I illustrates types of maintenance activities and their rela-
tionships. Our goal should be to reduce failures through preventive or pre-
dictive maintenance.
Reliability Centered Maintenance
Reliability Centered Maintenance (RCM) is an improvement to the Preven-

tive Maintenance process. It takes a logical and more scientific approach in
developing PM tasks. RCM processes require identifying dominant failure
modes and establishing and prioritizing PM tasks based on function needs.
Preserving the equipment/system function becomes the key thrust (Objec-
tive) of a RCM program.
RESOURCES/TASKS OPTIMIZATION
Maintenance tasks, sometimes known as repair activities, can be grouped into
two major categories: Planned and Unplanned. The "Unplanned" tasks, also
known as "Failures" or "Breakdowns," are usually an emergency and are per-
formed when equipment fails to operate, often at a premium cost. Planned
tasks can be further divided into two classifications: Prevention (preventive
maintenance tasks) and scheduled (corrective repairs) resulting from PM
findings.
There are a number of techniques/tools that can be applied to optimize
the resources required for maintenance activities. Some of these techniques/
tools include:
Equipment History Analysis (Pareto Analysis, Trend Analysis, Cause &

Effect Analysis).
Applications of Work Standards (including improved planning/scheduling
techniques).
Application of Optimization Models.
Life Cycle Costing Analysis.
Computerized Maintenance Management System (CMMS).
Equipment History
An equipment history data base is the foundation of any maintenance organi-
zation. This data base aids in the decision-making process to maintain the
facility in a cost-effective manner. The equipment data base should contain
the following information:
Failure-breakdown events.
Preventive Maintenance (PM) data.
Planned/scheduled repairs.
Operating/usage hours.
Repair time and cost.
In addition, it could have:
Equipment name plate and specifications.

Spare part/component data.
Drawings data.
Information from the equipment data base can be used to perform failure
analyses to identify problem areas. This allows cost-effective corrective
actions to be taken to reduce failure rates and repair time, thereby increasing
equipment/plant availability.
The results of a failure analysis using data from an equipment data base
and utilizing a simple Pareto approach (an analysis tool) are shown in Exhibit
SR 1-2.
The number of failures for a large compressor system, including those
due to human error, are shown in the exhibit.
As the data indicate, 72 percent of the problems are contributed by two

subsystems, "electric controls" and "lube oil." Problems in these two systems
should be addressed first to reduce system failures. "Human error" is not a
subsystem or a component of the compressor system; however, it is the sec-
ond major contributor of the downtime. It warrants a training program to
improve workmanship. Pareto analyses assist in prioritizing work so that fail-
ures are reduced cost effectively. In fact, it supports the overall optimization
of maintenance resources.
Statistical Process Control (SPC) principles can also be applied to main-
tenance to control cost or failures. SPC charts can provide an advance warn-
ing if a controlling parameter is heading out of control to allow timely
corrective actions.
Exhibits SRl-3 and 1-4 are examples of trend control charts showing
the number of failures in a facility. Exhibit SR 1-3 shows the failure trend of
hydraulic systems in A, B, and C plants. Exhibit SR 1-4 is an example of an
SPC control chart for B plant failures. It appears that failures were rising ini-
tially; however, with some emphasis (corrective actions) they were brought
under control.
Cause and Effect Analysis is another technique that can be used very
effectively to identify problem areas. It is a structured technique for uncover-
ing, layer-by-layer, the most probable causes associated with a failure (defect)
category. Once the probable causes are known, an investigation can focus on
determining the actual root causes.
Exhibit SR1-S is a type of Cause and Effect diagram called a "Fishbone"
diagram. It is a simple diagram illustrating the effects and causes of "down-
time." It is a general template which can be adopted for any type of equip-
ment failure analysis.
The Cause and Effect diagram is a road map to chart routes for investi-
gation when problems arise. It can be very useful in helping to reduce the
number of possible causes and categories to be investigated. It optimizes the
process for determining root cause and taking corrective action.
Application of Work Standards and Planning

The average utilization rate of the U.S. maintenance work force is approxi-
mately 40 percent. The low utilization rate is one of the major contributors
of poor maintenance effectiveness and high maintenance cost. To improve
utilization of a maintenance work force, an improvement in maintenance
planning is required. Planning is best facilitated by reviewing the total work
flow process, from work requests to job completion, and then making
changes for improvements. A typical work process chart is shown in Exhibit
SR1-6.
To plan maintenance work effectively, it is very important to know how
long it should take to do a specified job. Estimating the time required to do a
job is a key element in maintenance planning. Work/time standards have been
used in production areas very effectively. It has been generally perceived that
the work/time standards concept can't be used in the maintenance area since
every job is unique. However, work/time standards for maintenance work have
been developed and are being used successfully with positive results.
In developing standards, the maintenance tasks are usually broken down
into smaller elements which are common to many processes. An example of
this would be replacing the gasket in a 6-in. flange, removing a 10-HP motor
of a xx frame size, connecting/disconnecting lead wires of a 10-HP motor to a
control box, etc. These small task elements, also known as benchmarks, can be
developed and aggregated to make a standard time for a particular job. A
work/time standard includes:
Work content (from benchmark and standard tables).

Job preparation.
Area travel.
Allowances.
It is not necessary to have standards for every job or task. "Slotting'`-similar

job techniques can be effectively used to obtain a standard benchmark value for
some new tasks. This approach reduces the overall standards development time.
Results of work standards and planning techniques as applied to the rocket
preparation/installation test area are shown in Exhibit SR1-7.
Some benefits of a work/time standards technique are:
Improved adherence to the schedule.

Methods improvement potential.
Work delays-identified problem areas.
Improved work force utilization.
Improved morale.
Application of Optimization Models

Maintenance tasks can be optimized by utilizing statistical, expected value
and simulations technique to estimate and compare alternatives to help mini-
mize total maintenance costs. The next example illustrates how the preven-
tive and the breakdown maintenance cost can be estimated and compared to
minimize the total cost.
PM and Breakdown Cost Model

A well-organized equipment database can provide information to develop a
cost model, using the concept of expected value. This model helps in the
decision process used in establishing cost-effective maintenance policies. In
the following example, this concept is used to determine the cost advantage
of a PM policy over breakdown-type maintenance.
A typical equipment history database contains the following repair cost
information on a machine for the last 20-month period.
The plant engineer is in the process of developing a PM program for the

machine. It is estimated that it would cost $225 to perform the PM that
would reduce the breakdowns (service calls) to one per month. Is the PM
proposal cost effective?
The above data can be grouped by the number of breakdowns (service
calls) and the number of months they occurred. The average cost of a break-
down is also calculated.
Breakdown frequencies can now be converted to a probability distribution to

determine the expected cost per month of all breakdowns.
Other examples include how simulated breakdown and repair time values can
be used to estimate breakdown cost, and how these values assist decision
making in determining the appropriate crew size or selecting a preventive
maintenance policy (i.e., how often service should be performed based on
probability model).
Life Cycle Costing (LCC)

LCC is a method of calculating the total cost of ownership over the life span of
the asset. It is another tool to help us in the decision-making process. Usually
LCC will help in justifying replacement for high maintenance cost equipment.
Four major factors which may influence the economic feasibility of apply-
ing LCC analysis are:
Energy-LCC should be considered when the anticipated energy costs of

the purchase are expected to be large throughout its life.
Life Expectancy-For items with long lives, costs other than the initial pur-
chase price take on added importance. For short-life items, the initial cost
becomes an important factor.
Efficiency-The efficiency of operation and maintenance can have signifi-
cant impact on overall costs. LCC is beneficial when savings can be
achieved through reduction of maintenance costs.
Investment Cost-As a general rule, the larger the investment, the more
important LCC analysis becomes.
Computerized Maintenance Management System

An effective maintenance management program requires accurate and timely
information relating to the resources available, work required or to be per-
formed, and equipment history including failure data, materials, and inven-
tory costs. A Computerized Maintenance Management System (CMMS) can
provide the necessary information. A CAMS is an essential tool in today's
environment. It helps the maintenance department operate in a much more
structured environment.
CMMS, or simply maintenance software, can allow maintenance depart-
ments to organize and plan all maintenance-related activities (e.g., preventive
maintenance, equipment records, work orders, spare parts, etc.). It can help
to establish a good equipment history database to perform a variety of analy-
ses. Most of the software utilizes a relational database which provides flexibil-
ity, rapid access, and the efficiency to accommodate a larger amount of data
as the information level need grows.
The market is currently flooded with maintenance software with a wide
range of capabilities. The cost of this software ranges from $500 to $200,000.
Selecting the right software for an application becomes a complex task. The
maintenance software can be grouped in three classifications:
Mainframe
Mini based
PC based
PC based software has the largest selection available. This software can be
subgrouped again in three classifications: Low, medium, and high.
Software at the low end of the spectrum usually has limited capabilities
and may cost less than $6,000. Software on the high side of the spectrum usu-
ally costs between $15,000 to $25,000 and has a broad range of capabilities.
In fact, in some cases, better features are available than in a mainframe sys-
tem. Almost all of them can be used in a multiuser environment.
Selecting CLAIMS or maintenance software to meet your needs usually is
not an easy task. Current processes and future needs should be evaluated --to
establish CLAIMS requirements it may require a thorough investigation or
audit of the maintenance department operation. In general, the functions of a
CIVIMS should include:
Equipment Records: Name plate data-Identification numbering scheme-

Drawings and component listing
Work Order Planning/Scheduling and Tracking: Work order generating and
tracking by types-Work forecasting/scheduling-week/month/year-
Resource balancing-work/people-Backlog and work status
Preventive Maintenance: PM based on fixed interval-PM based on usage
rate and health monitoring data-PM task/procedures linking
Equipment History and Analysis: History by failure, PM, and others-
Failure analysis-Pareto Analysis, etc. -Reliability analysis-MTBF,
MTTR, etc.
Inventory/Materials Management: Parts list-"where else used" by mfg.
no.-Tool crib management-Purchasing module
Project Management: Schedules/Pert/Gantt Chart-Resources manage-

ment
Reports and Graphs: Standards reports-Ad hocs/special report generator-
Graphics
The subsystems listed above can be used as criteria for evaluating main-
tenance software. To improve the selection process, these subsystems could
be weighted according to importance factors based on requirements. In addi-
tion, three other factors should be considered before making the final selec-
tion.
Adaptability/Flexibility : Changing/masking data fields - Adding/deleting

data fields
User Friendliness: Pop up windows/menu driven - System navigation -
Ease of learning/help utility - "Copy" feature - Screen layout
Cost and Expandability: Cost versus features/capabilities - Training sup-
port and cost - Modularity for expansion and enhancement plan
Industry Week magazine and A. T. Kearney conducted a survey of over

500 users of CMM Systems. The study report was published in the February
5, 1990 issue of Industry Week. Some of the improvements reported as a result
of CMMS implementation include:
Enhanced PM program.
More complete equipment repair history.
Improved planning and scheduling performance.
Improved inventory control.
Increased labor utilization.
Improvement in communication/decision-making ability.
The study also listed the top twenty vendors of CMMS based on user
satisfaction ranking. The author also performed a somewhat similar evalua-
tion of CMMS vendors and grouped them in three categories based on the
capabilities spectrum. Details of this evaluation will not be discussed in this
paper because of space limitations.
CULTURE
The success of some techniques/tools used in optimizing the work is very
dependent on a company's culture. A spirit of cooperation and a cordial rela-
tionship among the labor work force and the company management is a key
ingredient for successful application of these techniques/tools. Some of the
techniques/tools that can be categorized under this classification are-
Total Productive Maintenance (TPM).

Integration of Operations and Maintenance.
In typical operations, when failure of equipment occurs, a maintenance

crew is usually called in to fix the problem. The maintenance crew could be
late in responding to the request as they may be tied up with other repairs. In
the meantime, the operations crew is idle during this period and throughout
the repair. It would be ideal if the operations crew (operators) could fix the
equipment themselves, if the fix is small, instead of waiting for a maintenance
crew. If the fix is major and requires large resources, they could become part
of the repair crew. Operations and maintenance could become partners in
maintaining the equipment, as well as in producing quality products. They
exchange their work (partial or full) as the need arises to meet production of
maintenance requirements. Operators are considered the real owners of the
equipment and maintain them in good condition. This is what Total Produc-
tive Maintenance-TPM-is! It's a new culture-philosophy, although it's not
exactly a new idea. This type of environment has existed in the past.
Some salient features of a TPM approach are:
Operator has ownership of his machine

Operators perform: First-level maintenance-Minor adjustments and
fixes
On large repairs, operator becomes part of the maintenance team
Maintenance personnel train operators
Operators and maintenance are partners
Integration of Operations and Maintenance groups can be a first step toward

implementing TPM, particularly in a labor union environment. The imple-
mentation of TPM requires an entirely new culture-environment. Changing
a culture cannot be accomplished overnight. It's a step-by-step process. Inte-
gration of operations and maintenance into one group can be a first step
toward attaining the benefits of TPM. In this approach, operators, as well as
maintenance personnel, are trained to perform the others' tasks in some spe-
cific areas. They can work as either operators or maintenance technicians as
the workload warrants. This arrangement provides flexibility to meet cus-
tomer needs. The side benefit of this approach is that it provides an appro-
priate medium for developing the new culture. They, the operators and
maintenance technicians, will start thinking like a team or as partners.
A teamwork environment must exist between company management
and the labor work force (labor union) to implement these types of pro-
grams.
MEASURING AIAINTENANCE EFFECTTVENESS

We all are in a mode of CHANGE for continuous improvement. When a
change is made for improvement, we must be able to measure the impact of the
change. The application of several techniques/tools to improve maintenance
has been discussed. We must establish a measurement system to measure the
effectiveness of these techniques/tools.
Effectiveness of maintenance programs should be measured at two levels:
Equipment/System Level
Maintenance Department Level
The suggested key parameters that should be measured and tracked on a

continuing basis are:
Downtime
Cost: Repair-Downtime penalty
Reliability-Availability-Maintainability Parameters: Availability percen t
Mean Time Between Failures (MTBF)-Mean Time to Repair (MTTR)-
Mean Time to Maintenance Actions (MTTMA)
Typical downtime and percentage availability data are shown in Exhibit

SRI-8. There is a downward trend in downtime and a corresponding
increase in availability. The maintenance cost data for the plant shown in
Exhibit SRI-9 indicate a downward trend in cost.
CONCLUSION
Maintenance is an important function in any organization which can be
planned and managed effectively. Maintenance must receive emphasis and
support from the top management to meet objectives, which are to maintain
and increase the equipment or plant capacity to cost effectively deliver a
quality product.
Using the appropriate type of techniques/tools to improve the mainte-
nance function, maintenance can become a major contributor of enhanced
ability and improved profitability in an organization. Some of these tech-
niques/tools require a cultural change and should be implemented with a
well-planned strategy.
BIBLIOGR"HYIREFERENCES
Moss, Marvin A. Designing for Minimal Maintenance Expense. Marcel Dekker,
Inc., New York, 1985.
Monks, Joseph G. Operations Management. Theory and Problems. McGraw-
Hill, Inc., New York, 1977.
Gulati, Ramesh C. "Preventive or Predictive ... Ways to Optimize Mainte-

nance." 5th International Maintenance Conference, Atlanta, Sept. 26-28,
1988.
Gulati, Ramesh C. "Reliability in Maintenance." 4th Annual Fall Quality
Conference, Nashville, TN, Sept. 21-23, 1989.
Welter, Therese R. "Move the Wrench Over ... and Pass Me the Com-
puter." Industry Week, Feb. 5, 1990.
Capacity Assurance Through "T.P.M."
and Equipment Reliability B. N. MAGGARD
INTRODUCTION
For many years, industries have focused on equipment reliability through ser-
vice groups such as plant engineering and/or maintenance organizations.
Appropriate technologies were developed and administered by these "cham-
pion groups." The actual owner of a given piece of equipment (the operator)
had very little knowledge of his equipment and usually less of the technologies
necessary to enhance its reliability.
At Tennessee Eastman, in 1986, a process called Total Productive Mainte-
nance (TPM)* was developed. Simply stated, TPM is a conscientious, system-
atic, data-based approach to skills transfer. Through TPM, the operators have
become "owners" of their equipment and craft workers have become more
process-oriented. We'll discuss the TPM culture in depth later in this article.
Currently, TPM is progressing toward TPM 2. In TPM2, the entire man-
ufacturing process has to be reviewed with a focus on the social and technical
changes required for continual improvement. This analysis revealed a needed
change in the way that production equipment was made and/or maintained in
a reliable state.
As a result, the concept of Total Equipment Reliability (TER) was devel-
oped. TER is a process which empowers "community teams" in a plant to
apply reliability technologies that will reduce or eliminate major production
losses including start-up, defects, throughput, idle and minor stoppage, pro-
duction changes, and failures. TER, when implemented with commitment, is
the philosophical and practical foundation of Capacity Assurance.
* A glossary of abbreviations is located at the end of this reading.

Source: Reprinted with Permission. Copyright Eastman Kodak/Maggard.
215
Capacity Assurance is the ability to make sure that your equipment and
processes are capable of producing the desired quality product for the best
value possible.
Historically, "maintenance" has been viewed in a negative light, a neces-
sary evil to be lived with. Think of car repairs ... or a broken-down washing
machine ... or perhaps, most frustrating, an expired warranty.
In industry, "maintenance" has had a similarly negative image: downtime
. . . broken equipment ... production stoppage. "Good maintenance" is often
considered to be an oxymoron whose two words contradict one another.
Capacity Assurance requires that maintenance in the '90s become a part of
a company's management strategy and not just a job performed by the trades-
man. Management must make a paradigm shift to view maintenance costs as a
percentage of replacement costs (i.e., of assets), not as a percentage of sales.
The primary reason for this shift is global competition. When sales are
affected by currency fluctuations in foreign markets, the use of "per cent of
sales" becomes an unsteady criterion for budgeting maintenance in contempo-
rary industries.
A more realistic, less volatile standard is benchmarking a company against
the "Best of the Best" from various international sources. This benchmark will
provide a more accurate foundation on which to base true costs of mainte-
nance. Successful world-class companies of the '90s will be those which shift
their corporate strategies by benchmarking on like businesses in their respec-
tive fields. (See Exhibit SR2-1.)
Capacity Assurance also recognizes that corporate management methods
of maintenance must change due to undeniable trends: the evolution of new
technologies; and the emergence of new, people-based realities. As noted ear-
lier, these two trends are addressed at Tennessee Eastman in the implementa-
tion of Total Productive Maintenance.
The following discussion of TPM is excerpted from "Total Productive Mainte-
nance; TPM That Works, " B. N. Maggard, Tennessee Eastman Company, 1989.
TOTAL PRODUCTIVE AZAINTENANCE

TPM is a partnership between the maintenance and production organiza-
tions to improve product quality, reduce waste, reduce manufacturing cost,
increase equipment availability, and improve our state of maintenance. TPM.
emphasizes the involvement of all employees in maintaining facilities and
equipment.
TPM is composed of six concepts, which are built on operators and
mechanics working together to (1) understand how their roles interact, (2)
broaden their skills, and (3) support one another. These concepts are:
Utilization of operators to perform specified routine maintenance tasks on

their equipment.
Utilization of operators to assist mechanics in the repair of equipment
when it is down.
Utilization of mechanics to assist operators in the shutdown and start-up

of equipment.
Utilization of lower skilled personnel to perform routine jobs not requir-
ing skilled craftsmen.
Utilization of computerized technology to enable operators to calibrate
selected instruments.
Transfer of tasks between operating groups.
THE NEED FOR TPM
As mentioned earlier, there is a need to improve product quality, reduce

waste and reduce manufacturing cost. Traditional organizational lines pre-
vent the operator or mechanic from taking the immediate action necessary to
support these goals. The existing system is highly structured and limits the
particular actions that may be taken. To correct an equipment failure the
individual must interact with an administrative system which impairs operat-
ing efficiency and productivity. (See Exhibit SR2-2.)
TPM, on the other hand, removes the inefficiency of the organizational
barrier by allowing trained operators and/or mechanics to correct problems
without the "administrative hassle." The zone approach to TPM illustrates
why TPM is effective. (Exhibit SR2-3.) This approach gets both operators
who spots the problem can go ahead and take remedial action. This elimi-
nates the nonproductive administration cycle and equipment is restored to
operation with significantly less downtime.
WHO NEEDS TPM
Companies with multi-crafts.

Companies seeking enhanced earnings.
Companies with multi-cultures.
IMPLEMENTING TPM
The Existing Culture

To be successful with TPM implementation requires a sensitivity to the
underlying culture which controls the way things get done in the organiza-
tion. In other words, who are the key people in the organization, what are
their approaches to administration, do they support change, and any other
strong influences which could impact the success of the implementation plan.
Paying close attention to this detail and cultivating a "management cham-
pion" could very well provide the driving energy needed to get the TPM
effort off to good start. Spend some time getting the right people on board,
make sure they are committed, and utilize their input/influence to design and
sell the TPM plan.
Designing to Change the Culture

TPM is a significant cultural change. Getting individuals to change from,
"That's not my job," to "This is what I can do to help" will require a significant
adjustment by everyone involved. Don't overlook the important fact that even
though the change is desirable, people will have to alter their routines, and
alteration has the potential for creating discomfort. Keeping the people
involved who will be impacted by the change will help to minimize this dis-
comfort. Be sure to identify the particular groups who will be influenced by the
change and the particular way in which the change will evidence itself-How
will top management be impacted? Middle managers? First-line supervisors?
Operators and maintenance personnel? Staff groups? Understanding how they
interface in the current culture, as well as in the new culture, will help to deter-
mine how to best involve them in the plan for bringing about the change.
Building Commitment
Information and involvement are the key elements here. Make sure that
everyone who will be involved with the TPM effort gets first-hand informa-
tion about the nature of the change, how the change will take place, and the
extent of the change (if known). TEC's approach to keeping everyone
informed has been to develop a slide presentation and video which TPM
Team Leaders use to educate individual operators and maintenance person-

nel who will be involved with the change. Involvement of everyone, espe-
cially in the early stages, is not always possible. The next best thing is to use
team representatives from the groups which will be involved. These individ-
uals become the ears, eyes, and voices for everyone else. They are encour-
aged to keep their groups apprised of progress and to provide feedback from
the work group to the team which is planning TPM application in their area.
USE OF PERFORMANCE MANAGEMENT

Another important step in building commitment is to provide reinforcement
to participants as they progress through important stages of the implementa-
tion plan. Some examples of important milestones:
All personnel trained to perform TPM tasks.

Achieving cost reduction goals.
TPM expansion goals (new tasks undertaken).
TPM task performance goals (total task count).
Equipment uptime.
The main thrust of Performance Management is to reinforce the

employees for their TPM behaviors, that is, giving them symbolic tangible
and social rewards for doing TPM tasks.
Providing reinforcement/recognition for achieving major milestones
acknowledges appreciation for results and provides a necessary catalyst for
moving to each successive level in the implementation plan.
The Team Approach

The importance of keeping people involved with the change has already been
mentioned as a vital element of success. A good implementation plan draws
heavily on the element of involvement. From top management in the operat-
ing and maintenance divisions, down to the production operators and
mechanics, a conscientious effort should be made to involve all levels in the
organization. This can be accomplished by building interlocking teams to
support the implementation process. (See Exhibit SR2-4.) Each of these
teams has a specific role in the plan. From deciding where to implement, to
defining team membership, and so on to actual identification of TPM tasks,
each team has a unique responsibility. Interlocking team membership pro-
vides the necessary communication link between these teams and helps to
build ownership and pride in results. This approach is further enhanced by a
central TPM staff group whose purpose is to provide facilitation support to
all teams involved with the TPM effort.
Opportunity Audit
Before embarking on a TPM effort, an opportunity audit should be con-
ducted to provide additional insight into areas having the greatest potential.
Such an audit needs to take into consideration the interests of both the
maintenance organization and the operations group-and these interests
aren't necessarily the same. From the standpoint of improving productivity
and cost reduction, the maintenance group is usually quick to identify high-
frequency, low-skill tasks which consume a lot of resources. Operations, on
the other hand, is concerned about equipment downtime, product quality,
waste levels, and schedules. The opportunity audit should consider the
needs of both groups and produces best results when both parties partici-
pate. The audit is intended to help identify the areas of opportunity, not to
identify specific tasks-the TPM implementation team should have the free-
dom to identify specific tasks without management interference. The focus
should not be restricted to task value alone but should also consider the
interests of people. The theme is to start small, ensure success, and build on
strengths.
Implementation Steps
Implementation of TPM is accomplished in a more expeditious manner if a
well-defined implementation sequence is used (See Exhibit SR2-5.)
Anticipating Concerns/Resistance
The introduction of TPM represents a change which impacts on the day-to-
day work routine of both operating and maintenance personnel, a change
which alters job content and may be perceived as a threat to earnings, job
security, and safety. These issues should not be avoided but should be
accepted as a normal response from concerned individuals. A conscientious
effort should be made to anticipate concerns which will arise. With these in
mind, responses should be developed which address the concerns as directly
as possible. Management should establish a definite position on particular
items which are likely to be major concerns. A definite statement outlining
that position should be issued at the beginning of the TPM effort. The key is
to make sure that potential resistance is removed or minimized by providing
"up front" information which will help individuals reach rational conclusions
about the expected impact of TPM.
PROBLEMS AND/OR ADVERSE CONSEQUENCES

TO ADDRESS/OVERCOME IN TPM PROCESS
1.Will operators have an incentive to buy into TPM-promotion option?

2.Will TPM be a structured or voluntary program for employees?
3.Will operators/mechanics have the time to take on additional tasks?
4.Who will audit to see if work is done right?
S.Training will need to be on an individual basis, because all operators are
not at the same level of aptitude for mechanics/electricity.
6. Will operators/laborers doing TPM have first chance to enroll in an
apprentice program?
7. Determining percent of mechanics to remove from area of operations
once TPM's implemented.
8. Will operators/mechanics assume ownership?
9. Will maintenance and operations supervision buy into program?
10. Will operations supervision expect an incentive for taking over some
maintenance work?
11. Safety for employees and equipment.
12. Labor laws.
13. Culture response.
14. Will mechanics/operators only get bad jobs? (Clean up after others)
15. What tools to give to operators.
16. Will operators/mechanics work in boundary of zone responsibilities?
17. Will operators major on mechanic work and let operations slip?
18. Deadline for program must be realistic-moving to fast or too slow.
19. Team concept to be used? How many teams? Who should be on teams?
20. Develop PM-goals, feedback, and reinforcement.
21. History of what has been done to equipment? How to collect what oper-
ations does?
22. Management styles-selecting the right people for the pilot areas.
23. Work within comfort zone of all employees.
24. Selection of the mechanic trainers.
25. Setting of priority for TPM.
26. Access to shops, electric rooms, and tools.
27. Will operators have to buy their own tools?
28. What will be accounting practice for charging operator's time on mainte-
nance?
29. Authorization to buy parts?
30. Perception-"doing their work"-has to be overcome.
31. Budget control with operators doing maintenance.
32. Will maintenance mechanics/supervisors feel threatened at lost jobs?
33. Will TPM demands on employees' time conflict with Quality Manage-
ment?
34. "OSHA" concerns over electrical rooms.
35. Will operating departments set up their own maintenance force?
TPM KEY RESULTS/BENEFITS

TEC has experienced significant benefits as a result of TPM. Some of these
have been measurable; others have been difficult to quantify. Some which
have been identified are shown below:
Improved product quality.

Reduced cost.
Improved equipment uptime.
Improved teamwork between operators and mechanics.
Job enrichment.
Improved skills and flexibility of all employees.
Reduction in emergency work.
"Are You Ready to Do TPM"

Take a few minutes to assess your company's rating in each of the eight pro-
file areas shown in Exhibit SR2-6-you may be more ready for TPM than
you thought!
Regardless of where your company's TPM profile falls it is clear that
Total Productive Maintenance can assist management in addressing those
two undeniable trends of the '90s-new technologies and the emerging peo-
ple-based realities.
For these reasons, TPM is the keystone for successful implementation of
a company's Capacity Assurance-the assurance "that the equipment and
process are capable of producing the desired quality product for the best
value possible."
IMPLEMENTING CAPACITY
ASSURANCE IN TODAY'S WORLD
Traditionally, management focus has been on "preventive maintenance." If
something did break down, technological champions (such as service groups)
would ride down on their white horses, solve whatever the problem was, and
then ride out of town. Maintenance personnel were left feeling, "Why
couldn't I have done that?"
Predictably, the result was fragmentation, no consolidation, no "owner"
input. And everyone waited until the next breakdown, when the white horse
champions would ride into town again.
MANAGEIVIENT MUST RETIIINK

WHAT "AUEVTENANCE" IS
Corporate thinking must undergo a turnaround, a paradigm shift that works
toward a goal of balanced input from equipment "owners" (the operators),
plant maintenance personnel, and, yes, the white horse champions.
The result will be a maintenance process that is both technology-based

and owner/stakeholder-based. It defines how the technology is used, as well
as who uses it.
Before, the focus was on "doing things right"; now, the focus shifts to
identifying "the right changes" as part of the total picture.
This identification process is called Condition Based Maintenance, or
CBM. Condition Based Maintenance involves:
Preventive or Predictive Maintenance "PM."

Diagnostic Based "DBM."
Owners' Input (feel, smell, sound, or sight).

Equipment age or life.
Equipment signatures.
Equipment history.
The CBM strategy derives its strengths from a TPM concept-Total Equip-
ment Reliability (TER).
TER is founded on four principles:
Empowerment-when an employee has the knowledge, skills, tools, desire,

and accountability to manage his own job.
Community teams-consisting of all stakeholders that are focusing and/or
serving to get quality products "out of the door."
Reduction of major losses to critical equipment-equipment failure, production
changes, effectiveness of equipment, idle time or minor stoppages, defects
and/or rejects, start ups and loading/unloading losses.
Reliability technologies-consisting of all the currently available technolo-
gies whose use can be justified by the organization.
Let's address these last two principles in detail.
REDUCTION OF MAJOR LOSSES TO

CRITICAL EQUIPMIENT
Equipment Failure
One of the most costly downtime situations a production unit can experi-
ence. It has been estimated that breakdown failures cost 10 times more than
planned maintenance, and take four time longer. This type of failure is where
most engineering and maintenance groups focus their efforts.
Production Changes
A loss of many days can be incurred when equipment has to be cleaned
before another product can be made in it: when equipment is down, not a
pound of product is being made.
Effectiveness of Equipment
While the first two losses are sporadic in nature, this loss (often called
"throughput") is a chronic problem of major proportions. Most industries will
live with this type of loss, yet calculations show that a piece of equipment
operating at 80 percent efficiency is so ineffective that it might as well be tak-
ing 1.4 days of unearned leave every week! For example, because it's 30 years
old, a water pump rated for 25,000 gallons a minute is pumping only 19,000
gallons, a 20 percent loss of efficiency. Yet, the pump could be repaired to
operate at optimum capacity.
Idle Time or Minor Stoppages

These losses are unexpected yet they occur frequently, making it difficult to
maintain process stability. For example, taking a process sample to the lab for
analysis may cause a minor stoppage in production; however, if operators
were empowered to analyze samples at the point of production, the process
could continue uninterrupted.
Defects and/or Reject Losses

Most production units already focus on this type of loss through their Qual-
ity Management process of Statistical Process Control. To maintain quality
requires that instrumentation be kept accurate for highest reliability.
Start Ups and Loading/Unloading Losses

Not all losses occur because of equipment problems or failures. Other losses
can occur when equipment is being warmed up or shut down. Another loss
often occurs when the product is run as waste until it is qualified to specifica-
tions.
RELIABILITY TECHNOLOGIES
In order to assure the capacity of a unit, the equipment must be made and
maintained reliably. Numerous reliability technologies are available to do
this, some of which are:
Computer integrated maintenance

Maintenance management systems
Alloy analyzers
Computerized instrument calibration
Failure analysis
Noise abatement
Eddy current testing
Radiographic testing
Ultrasonic testing
Vibration monitoring/analysis
Leak detection
Laser alignment
Coordinate measuring
Electrical disturbance analyzer
Infrared thermography
Vendor testing
Dye penetrant testing
Balancing
Lubrication analysis
ISO scan
Some of these technologies have highly specific uses and should be employed
as a custom fit. However, many of the technologies can be employed in:
Preventive Maintenance Programs

Predictive Maintenance Programs
Equipment signatures/histories
Reliability Centered Maintenance
Total Productive Maintenance
Bear in mind that reliability technologies should only be one of the means
to accomplish Capacity Assurance. The other major driving force toward
equipment reliability is employee (stakeholder) involvement.
Think of the reliability of a piece of equipment in the same way you
think of your body-there's a definite "bathtub curve" in the respective lia-
bilities (see Exhibit SR2-7). When a baby is born it's associated with high
front-end costs and low capabilities. As its body matures, the accompanying
cost of healthcare decreases with the increase in capability. In the later years
of life, the body requires considerable Restoration Maintenance (for instance,
recovery from gallbladder surgery). By the end of its useful life, the body
requires enormous expenses to keep it operating with very little capability.
It's the same with a piece of equipment. When it's new, there's a high
front-end cost and a low initial capability. As its capabilities increase, mainte-
nance costs are minimal. However, as it ages, the equipment needs consider-
able Restoration Maintenance to keep it operating effectively. Finally, the

costs of keeping it functioning are enormous compared to its capabilities.
Whether its your body, or your company's maintenance process, bow do you feel?
Is your equipment operating reliably? By implementing Total Equipment
Reliability, of Capacity Assurance, your physical assets will remain in good
condition. Your management strategy based on good condition (CBM) will
direct you to a state of Total Productive Maintenance. And this state of well-
being, this TPM, will enable you to implement the paradigm shift required
of corporate management in the 1990s-Capacity Assurance.
That's the blueprint, the plan ... but what will it take for you to make
the commitment to Capacity Assurance as a "way of life"? What will it take
to give you the competitive edge?
KEY SUCCESS FACTORS
A management team willing to commit resources.

Centralized, dedicated TPM managers and coordinators.
Dedicated team leaders and trainers.
A well-defined implementation process.
A team approach involving all employees.
A flexible program.
Tasks identified at lowest levels, not management-dictated.
Emphasis placed on safety.
Training done and developed by area mechanics and operators.
A performance measurement plan to recognize and reinforce behavior and
results.
Capacity Assurance works. As an example, at Tennessee Eastman Com-

pany we discovered the cost of one of our chemicals was 40 percent above
standard, primarily because of long cycle times. Our average cycle time was
34 hours and many batches had to be redistilled. A "TER" team was formed
to look at the problem. The team consisted of building operators, a shift
supervisor, TPM operators, mechanics from pertinent areas, and manage-
ment representatives.
The reliability of the chemical still was reviewed from the various per-
spectives of operators and maintenance, resulting in minor recommendations
for improvements to the still. Consequently, some procedural and analytical
changes were made.
The result? The average cycle time was reduced to 20.4 hours with an
upper control limit of 2 S hours, a savings of 14 hours per batch! Additionally,
no batches had to be reworked due to high acidity or low assay. (See Exhibit
SR2-8).
This marked the first time that operators and maintenance worked
together in a TER team to problem-solve a process. This approach has been
shown to be a very effective way to tackle problems where the equipment is a
major source of the problem.
SUMMARY
Capacity Assurance, or TER, appears to be a successful management tool for
industry. By providing management a framework for redefining mainte-
nance's place in the corporate strategy, Capacity Assurance will enable a com-
pany to assume a leadership role for its employees, its shareholders, and its
customers.
GLOSSARY OF ABBREVIATIONS
CBM-Condition Based Management. A maintenance process based both in
technologies and in operators/maintenance.
ECC-Eastman Chemical Company. Parent company of TEC.
PM-Performance Management. The use of industrial psychology to manage
the desired behavior of employees. Its three major component are Anteced-
ents, Behaviors, and Consequences.
TEC-Tennessee Eastman Company. Based in Kingsport, Tennessee. Where
TPM has been implemented for several years, with significant results.
TER-Total Equipment Reliability. A maintenance program founded on

employee empowerment, community teams, reduction of major equipment
losses, and reliability technologies.
TPM-Total Productive Maintenance. A systematic approach to skills transfer
in which operators become "owners" of their equipment while craft-workers
become more process-oriented.
Index
Alpha numeric systems, 50 reports and, 144 equipment identification and,

American Society of Plant system modules, 140-141 82
Engineers, 14 system operating details, 142 frequency of, 83-84
Area organizations, 18-19 system operation and, 143-144 inspection procedures and,
Area responsibility, 18 user training, 143 82-83
Availability of substitutes, 68 Communication sources, work Estimating labor hours, 95-96
orders and, 43 Execution of work, 101-103
Bar charts, 101 Compliance reports, 87 line management and, 101
Bar coding, 62, 102-103 Component vendors, training on-line computer systems and,
inventory and, 62 and, 115 102-103
Breakdown maintenance, 79 Computerized control systems, Expense budget, 24-30
Budget, 23-24 versus manual, 52
accountability and, 30-31 Computerized maintenance Financial resources, 11
capital, 30 management systems Foremen, 14-15
chart of accounts and, 24 (CMMS). See CMMS Free use items, 66-67
deferred maintenance and, 30 Control systems, 37 Functional training, 114-115
expense, 24-30 Corrective maintenance, 79-80
preparation, 32-33 Cost information, 40-43 Gantt charts, 101
Budget variances, 124 job cards and, 40 Graphical data, 87
Costs, 11-12
Capital budget, 30 capital investment and, Hands-on training, 115
Capital investment 125-126 Human resources, 11
maintenance cost and, control of, 12
125-126 maintenance, 80 Identifying equipment, 82
Capital projects, budget and, 33 Critical path method (CPM), 101 Information resources, 11
Certified plant engineers (C.P.E.),
14 Data entry, CMMS and, 143 Inspection frequency, 83-84
Chart of accounts, 24 Deferred maintenance, 30 Inspection procedures, 82-83
Classic area assignment, 18-19 Drucker, Peter, 10 Instructors, training and, 115-116
CMMS, 137-138 Inventory, 57
basic features of, 140 Economic order quantity accuracy, 67-68
basic operations of, 138-139 formula, (EOQ), 59-60 bar coding and, 62
benefits, savings of, 152 Emergency maintenance, 79 free use items, 66-67
data entry, 143 Emergency service orders, 46 lubrication materials and, 68
evaluation of facility and, 143 Emergency work ratio, maintaining stock and,
functions in modules of, 128-129 61-62
141-142 EOQ formula, 59-60 maintenance, 58-59
how, works, 139-140 Equipment identification, 82 measuring stores effectiveness
implementation, 142-143 Equipment inspections, 81-84 and, 68-69
233
need versus cost and, 60 Maintenance organization Ordering, inventory costs and,
numbering schemes and, 61-62 area assignment and, 18-19 59-61
ordering and costs and, 59-61 large organizations and, 8 Ordering materials, 97
role of purchasing and, 60-61 medium organizations and, Organization, maintenance and,
storage locations and, 67-68 3-8 1-2
stores catalog and, 62 small organizations and, 3 Organization charts, 3-8
technical database and, 62 Maintenance personnel, large organizations and, 8
Inventory level control, 62-66 overstaffing and, 30 medium organizations and, 3-8
economic order quantity Maintenance stores, 58 small organizations and, 3
(EOQ) and, 62-63 Maintenance supervisors, 14-15 Organization rules and
safety stock quantity and, 62-63 Maintenance support programs regulations, 19-20
(MSP), 75-80 Original equipment manufactur-
, lob cards, 40 costs of, 80 ers (OEM), training and, 115
Job-related training, 114 equipment inspection and, Overstaffing, 30
Jobs, identifying for planning, 81-84 Overtime ratio, 128
94-95 measuring risks of, 80-81
planned maintenance, 77-79 Percentage of uptime, 126
Labor tickets, 40 reliability improvement, 75-77 Periodic maintenance, 78
Labor versus materials ratio, 129 reports and, 86-87 Personnel ratios, 16-17
Large jobs, planning sheets and, unplanned maintenance, 79-80 PERT charts, 101
97 Managerial objectives, Physical resources, 11
Line assignment, 18 maintenance and, 8-10 Planned maintenance, 77-79
Lubrication materials, 68 Managers lubrication programs, 78
Lubrication programs, 78 inspections and, 86 opportunistic maintenance,
maintenance, 14 78-79
Maintenance budget. See Budget Manual control systems, 38 periodic maintenance, 78
Maintenance. See also computerized, versus, 52 preventive maintenance (PM),
Maintenance support Measurements, 123-124 77-78
programs (MSP) budget variance and, 124 project, or upgrading, tasks, 78
costs, 11-12 emergency work ratio, 128-129 Planning
managerial objectives and, 8-10 estimated versus actual time, assigning priorities and, 95
organizations and, 1-2 130 authorizing work orders and, 95
proactive/reactive, 73-74 labor versus materials ratio, 129 identification of jobs and,
technology and, 109-110 maintenance cost per unit and, 94-95
Maintenance control systems, 37. 124 key elements of, 93-95
See also Work orders overtime ratio, 128 selecting planner and, 104-105
computer versus manual, 52 percentage of uptime, 126 Planning process
manual, 3 8 safety, 124 estimating labor hours and,
priority systems and, 48-51 work, 129-130 95-96
record keeping systems and, workload backlog, 127-128 ordering materials and, 97
51-52 work sampling, 130-133 parts, materials needed, 96-97
Maintenance cost per unit, Measuring effectiveness planning sheets and, 97
124-125 work review and, 103-104 providing information and, 96
production levels and, 12 5 Measuring stores effectiveness, scheduling large jobs and, 101
Maintenance costs, 11-12 68-69 scheduling small jobs and, 100
capital investment and, MSP See Maintenance support scheduling work and, 97-99
125-126 programs (MSP) Planning sheets, 97
Maintenance department Predictive maintenance (PDM),
functions, 13-14 Numbering schemes, inventory 75-76
primary skills and, 17-18 and, 61-62 Pre-kiting of parts, 67
staffing and, 15-16 Preventive maintenance (PM), 74,
Maintenance department Objectives 77-78
objectives, 12 eight key areas for, 10 routing, 84-86
Maintenance inventory. See maintenance and, 8-10 work order scheduling, 84
Inventory maintenance department, 12 Price changes, budget and, 32-33
Maintenance job orders, 48. See One,2,3,4 Systems, 49-50 Priorities, assigning, 95
also Priority systems Open work orders, 46 Priority systems, 48-50
Maintenance managers, 2, 14 Opportunistic maintenance, one,2,3,4 System, 49-50
profits and, 2 78-79 Proactive maintenance, 73-74
Procedure flow, work orders and, maintenance support programs hands-on, 115
46-48 and, 80-81 instructors and, 115-116
Production levels Routing, preventive maintenance job-related, 114
maintenance cost per unit and, and, 84-86 materials, 116-117
125 Rules, regulations, 19-20 upgrade, 116
Professional engineers (PE.), 14 Training needs
Profits, maintenance managers Safety measurements, 124 analysis, 110
and, 2 Safety stock quantity, 62-63 documenting, 110-113
Project tasks, 78 Scheduling forms and, 111
assigning priorities and, 95 predicting, 111-113
Ratios authorizing work orders and, 95 skills analysis and, 113-114
emergency work, 128-129 identifying jobs to be planned Transaction volume, 69
estimated versus actual time, and, 94-95 Trend information, 124-125
130 key elements of, 93-95 Trends, budget and, 32
labor versus material, 129 preventive maintenance and, 84 Turnover rates, 69
overtime, 128 selecting schedulers and, 105
personnel, 16-17 Scheduling work, 97-99 Unplanned maintenance, 79-80
work sampling, 130-133 large jobs and, 101 breakdown maintenance, 79
Reactive maintenance, 73-74 small jobs and, 100 corrective maintenance, 79-80
Record keeping, 61-62 Selection of planners, 104-105 emergency maintenance, 79
inventory and, 61 Selection of schedulers, 105 Upgrade training, 116
systems, 51-52 Service level, 68 Upgrading tasks, 78
upkeep and, 104 Service order, 43-46 Uptime reports, 86
Records. See Reports emergency, 46 User training, CMMS and, 143
Reliability-centered maintenance small jobs and, 45-46
(RCM), 76 Service time, 68 Variables, budget and, 32
Reliability improvement, 75-77 Skills analysis, training needs and, Variances, 32
predictive maintenance (PDM), 113-114
75-76 Stock levels, 62-63 Work, execution of, 101-103
reliability-centered Stockouts, 68--69 Work generated reports, 87
maintenance (RCM), 76 Storage locations, 67-68 Workload backlog, 127-128
total productive maintenance inventory accuracy and, 67-68 Work measurement, 129-130
(TPM), 76-77 lubrication materials and, 68 Work order flow diagram, 43
total quality management pre-kiting of parts and, 67 Work order numbers, 42-43
(TQM), 77 Stores catalog, 62 Work orders, 37-48
Reorder point, 63 Stores effectiveness, measuring, advantages of, 48
Replacement 68-69 authorizing, 95
costs, 125-126 System operation, CMMS and, closed copy and, 38
value, 15-16 143-144 communication and, 43
Reporting systems, 51-52 copies of, 38
record keeping systems, 51-52 Technical database, 62 cost information and, 40-43
Reports, 86-87. See also Records Technology. See also CAWS open, 46
CMMS, 144 maintenance and, 109-110 open copy and, 38
compliance, 87 Ten most critical reports, 87 originator and, 38
graphical data, 87 Total productive maintenance procedure flow of, 46-48
ten most critical, 87 (TPM), 74, 76-77 service order and, 43 -46
uptime, 86 Total quality management work copy and, 38
work generated, 87 (TQM), 74,77 Work review, 103-104
Requisitions, number of items Training measuring effectiveness and,
per, 69 CMMS users and, 143 103-104
Resources to manage, 10-11 existing programs and, 117-118 records upkeep and, 104
Risk measurement functional, 114-115

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As one course among many offered in the American Management Associa-

Edward Hartmann is a registered professional engineer (P E.) and past

Joseph J. Johnstone, a management consultant specializing in manufac-

Recommended Steps in taking course:

1. Insure you have all the appropriate software on your computer.

3. Begin the chapter readings as recommended below.

of the material and track your progress.

you can use and apply.

The Review Questions

Case Study Exercises

The Final Exam

About This Course xi

2 The Maintenance Budget 23

3 Systems for Control 37

4 Inventory: Parts and Materials 57

Control of Inventory Level

5 Maintenance Support Programs 73

6 Planning and Scheduling 93

Parts and Materials Needed

7 Craft Training 109

8 Measuring Effectiveness 123

Estimated Time Versus Actual Time

9 Computerized Maintenance 137

Define the need and structure of a formal orga-

ORGANIZATION CHARTS AND REPORTING LEVELS

1. Organizational objectives should shape the way an organization is set up.

Very Small and Small Organizations

A. Establish annual growth of 15 percent.

1. Marketing 5. Human resources

Human (personnel, intellectual talent)

Good management of each of these resources is vital to successfully

Production Raw materials

MAINTENANCE DEPARTMENT OBJECTIVES

MAINTENANCE DEPARTMENT FUNCTIONS

Repairs Employee relations

In recent years, we have seen these activities communicated or carried

A maintenance organization, regardless of size, must to some degree

THE MAINTENANCE MANAGER

TIME MAINTENANCE SUPERVISOR

important, but a supervisor must also possess non-technical skills, abilities, or

In selecting a supervisor, it is important to make objective appraisals of

STAFFING THE MAINTENANCE FUNCTION

One method is to multiply the replacement value of equipment by the fac-

million dollars of equipment replacement value and 8 percent as the total

Capital Replacement Value x Estimated Maintenance Cost (%)

Next, the historical portion of labor as a percentage of the total mainte-

Labor plus fringes x hours = Weekly labor costs

Another method used to. determine staffing requirements is to compare

What is striking about these three approaches is their arbitrary or sub-

Number of hourly people

Planner/estimators, and planner/schedulers, although not direct supervisors,

USE OF PRIMARY SKILLS

Line assignment. A technician is permanently assigned to maintain a specific

work, routine repairs, preventive/predictive maintenance, and some emer-

The major advantages of any area assignment are familiarity, dedication,

RULES AND REGULATIONS OF THE ORGANIZATION

1. The four resources maintenance must manage are: 1. (a)

2. A manager who is effective in managing the resource 2. (b)

3. The elements of a maintenance manager's primary concern with 3. (c)

5. To determine which skills are needed in an organization, one can 5. (b)

6. creates ratios of first-line managers to hourly employ- 6. (a)

7. Assigning people responsibility for the day-to-day maintenance 7. (b)