Benchmarking Best Practices in Maintenance Management

Copyright 2004, Industrial Press, Inc., New York, NY

Benchmarking Best Practices in Maintenance Management

Benchmarking
BEST
Practices in
Maintenance
Management

Terry Wireman
C.P.M.M.
6477 West Buckskin Road
Pocatello, ID 83201
www.TerryWireman.com
[email protected]

Industrial Press

Copyright 2004, Industrial Press, Inc., New York, NY

 Benchmarking Best Practices in Maintenance Management

Library of Congress Cataloging-in-Publication Data

Wireman, Terry.
Benchmarking best practices in maintenance management / Terry Wireman.
p. cm
ISBN 0-8311-3168-3 (hardcover)
1. Plant maintenance. I. Title.

TS192.V548 2003
658.2’02--dc21
2003051106

Benchmarking Best Practices in Maintenance Management

Interior Text and Cover Design: Janet Romano

Managing Editor: John Carleo

Industrial Press Inc.

200 Madison Avenue
New York, New York 10016

Copyright © 2004. Printed in the United States of America.

All rights reserved. This book or parts thereof may not be reproduced,
stored in a retrieval system or transmitted in any form without the
permission of the publisher.

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 Benchmarking Best Practices in Maintenance Management

Table of Contents

Preface v
Foreword vii
Chapter 1 Analyzing Maintenance Management 1
Chapter 2 Benchmarking Fundamentals 27
Chapter 3 Maintenance Organizations 55
Chapter 4 Maintenance Training 85
Chapter 5 Work Order Systems 97
Chapter 6 Maintenance Planning and Scheduling 105
Chapter 7 Preventive Maintenance 121
Chapter 8 Maintenance Inventory and Purchasing 135
Chapter 9 Management Reporting and Analysis 147
Chapter 10 World Class Maintenance Management 169
Chapter 11 Integration of Maintenance Management 181
Chapter 12 Benchmarking Best Practices in Maintenance
Management 191

Index 209

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Copyright 2004, Industrial Press, Inc., New York, NY

Benchmarking Best Practices in Maintenance Management

Copyright 2004, Industrial Press, Inc., New York, NY

 Benchmarking Best Practices in Maintenance Management

Preface
Maintenance. Many times the word is viewed with a negative at-
titude. In almost all organizations, the maintenance function is
viewed as:

• a necessary evil,
• a cost,
• insurance
• a disaster repairing function
• prima donnas

Because of this attitude, too little time or effort is spent on try-

ing to control maintenance activities and costs. In the past, mainte-
nance has received little budgetary attention other than a nominal
increase or decrease from year to year. Most organizations today are
trying to increase profitability. Because maintenance expenditures
make up a percentage of production or occupancy costs, attention
is being turned to financial accountability for maintenance expen-
ditures. As organizations audit their maintenance expenses, they
find a sizable amount of money spent with little management con-
trol. Proper management controls must be applied to maintenance
if costs are to be curbed. But to successfully control maintenance,
proper management policies and practices must be instituted.
Again, many organizations have tried to use standard production
or facilities-oriented methods to control maintenance. This has not
and will not be successful.
Maintenance is a unique business process. It requires an ap-
proach that is different from other business processes if it is to be
successfully managed. The purpose of this book is to present in-
sight into what is required to manage maintenance. The book can-
not provide a complete answer to every maintenance management
problem. However, it will provide a framework with options, allow-
ing maintenance decision makers to select the most successful way
to manage their business.

Copyright 2004, Industrial Press, Inc., New York, NY

Benchmarking Best Practices in Maintenance Management

Copyright 2004, Industrial Press, Inc., New York, NY

 Benchmarking Best Practices in Maintenance Management

Foreword
Status of Maintenance in the United States
According to estimates, over 200 billion dollars were spent on
maintenance in the United States in 1979. This is a sizable figure in
anyone’s estimation. However, more disturbing than this amount is
the fact that approximately one-third of the total was spent unnec-
essarily; it was wasted. In subsequent years, there have been no sig-
nificant changes in maintenance policy, indicating the waste trend
is probably still about one-third. The largest change in the main-
tenance costs is the amount. Since 1979, maintenance costs have
risen between 10% and 15% per year. Maintenance expenditures in
the United States, therefore, are probably now over a trillion dollars
per year. If the waste ratio is holding steady, and there are no indica-
tions that the ratio is changing, companies are likely wasting today
many times more than what they were spending on maintenance 25
years ago, as illustrated in Figure P-1. Where do these wastes occur
in maintenance? How can they be controlled? These questions can
best be answered by looking at some statistics.

Figure P-1

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 Benchmarking Best Practices in Maintenance Management

Figure P-2

1. Fewer than 4 hours per day (out of a possible 8) are spent by

maintenance craftsmen performing hands-on work activities (See
Figure P-2). This fact is even more alarming: In the majority of
maintenance organizations, these craftsmen spend as low as 2 hours
per day performing hands-on work. These individuals are not lazy,
nor are they shirking their job responsibilities. Instead, they are not
provided the necessary resources by management to perform the
assigned job tasks. Providing these resources becomes important to
increasing maintenance productivity and producing a substantial
maintenance labor savings. When we view maintenance salaries as
a resource for which we are paying approximately $20.00 per hour,
yet we are utilizing the resource at only a 50% level, we can see a
tremendous cost waste. Methods that may be employed to increase
labor productivity will be explained in chapter 6.
2. Only about one-third of all maintenance organizations employ
a job planner to schedule and supervise maintenance activities (see
Figure P-3). Most experts agree that better use of planners provides
one of the largest potential areas for cost savings in maintenance.
These planners help insure that maintenance work is performed ef-
fectively and efficiently. Estimates show that planned work versus
unplanned work may have a cost ratio as high as 1:5. Performing a
$100 planned job could save as much as $400 if the same job was
unplanned. We will explore maintenance planners, their qualifica-
tions, and assignments in a later chapter.

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 Benchmarking Best Practices in Maintenance Management

Figure P-3

3. The majority of all maintenance organizations either are dis-

satisfied with their work order systems or do not have them (see
Figure P-4). The presence of a work order system is one of the
most important indicators of a maintenance organization’s status.
If a maintenance organization does not have in place a work order
system that works correctly, it is impossible to measure or control
maintenance activities. The importance of a maintenance work or-
der system, how to set one up, and how to use the system will be
discussed in chapter 5.
4. Of the one-third of all companies that have work order sys-
tems, only about one-third, or approximately 10 percent of all orga-
nizations, track their work orders in a craft backlog format (see Fig-
ures P-5 and P-6). The craft backlog allows managers to make logical

Figure P-4

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 Benchmarking Best Practices in Maintenance Management

Figure P-5

staffing decisions based on how much work is projected for each

craft. It provides a departure from the “I think I have enough craft
technicians” or “let’s work overtime to get caught up” modes that
most organizations find themselves in today. Being able to justify
employment levels to senior management is a necessary function of
good maintenance management. We will discuss backlogs and their
significance in chapter 3.
5. Of the one-third of all companies that have work order sys-
tems, only one-third compared their estimates of the work order la-
bor and materials to the actual results (see Figure P-7). Therefore,
only about 10% of all organizations carry out some form of perfor-
mance monitoring. Successful maintenance management requires
performance monitoring. Proper methods, including maintenance
analysis, will be covered in chapter 9.
6. Of the companies with work order systems that allow for feed-
back, only one-third, or about 10% of all companies, perform any

Figure P-6

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 Benchmarking Best Practices in Maintenance Management

Figure P-7

failure analysis on their breakdowns (see Figure P-8). Most of the

other companies just change parts. For an operation to be cost ef-
fective, good practice in failure analysis must be followed. We will
discuss this topic in chapter 7.
7. Overtime, another key indicator in the United States, averages
about 14.1% of the total time worked by maintenance organizations
(see Figure P-9). This figure is almost three times what it should be.
Higher levels of overtime indicate the reactive situation that is stan-
dard in the maintenance process. Reducing overtime is essential if a
maintenance organization is to be truly cost effective. Proven meth-
ods for reducing overtime will be explored in chapters 6 and 7.

Figure P-8

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 Benchmarking Best Practices in Maintenance Management

Figure P-9

8. Preventive maintenance, another major part of any successful

maintenance program, currently satisfies the needs of about 22% of
the company’s surveyed (see Figure P-10). This low level suggests
major problems for the maintenance organizations. Without suc-
cessful preventive maintenance programs, maintenance can only
react to given situations. Preventive maintenance allows the organi-
zation to be proactive. While preventive maintenance means more
planning, it also leads to reduced maintenance costs. Over three-
fourths of the organizations show needs for major improvements.
Methods of implementing and improving preventive maintenance

Figure P10

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 Benchmarking Best Practices in Maintenance Management

Figure P-11

programs will be discussed in chapter 7.

9. Related to preventive maintenance, almost three-fourths of
the organizations have some form of lube routes and procedures
(see Figure P-11). While this fact seems to be positive on the surface,
it is not. Too many organizations believe that preventive mainte-
nance is nothing more than lube routes and procedures. Therefore,
once they have these developed, they stop further maintenance ef-
forts. However, preventive maintenance encompasses much more
than lubrication routes. Additionally, the lubrication position (of-
ten called an oiler or lubricator) is generally an entry-level posi-
tion. The technician’s lack of proper skills and training often results
in substandard performance of the lubrication program which, in
turn, leads to excessive breakdowns, even though the company has

Figure P-12

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 Benchmarking Best Practices in Maintenance Management

Figure P-13

a lubrication program. To be successful, maintenance organizations

must go beyond the preliminaries and fully develop their preventive
maintenance programs.
10. An additional fact related to preventive maintenance is the
lack of coordination between operations/facilities and maintenance.
Almost three-fourths of all organizations experience problems co-
ordinating preventive maintenance with the operations/facilities
group (see Figure P-12). The problem lies with communication.
Either the maintenance organization has not effectively communi-
cated the need for the preventive maintenance or the operations/
facilities group is not educated properly about the benefits of pre-
ventive maintenance. Good, credible communication must be estab-
lished if preventive maintenance is to be effective.
11. Second only to the cost of maintenance labor is the cost of
maintenance materials. Depending on the type of operation/facility,
maintenance materials can range between 40% and 60% of the main-
tenance budget (see Figure P-13). To successfully manage mainte-
nance, materials must be given close scrutiny. The details of proper
maintenance inventory management will be explained in chapter 8.
12. Many companies try to remedy maintenance materials prob-
lems by overstocking the storeroom. This remedy creates its own
problem because most companies do not then take into account the
fact that inventory carrying costs are over 30% of the price of the
items per year. For example, the cost of carrying a $1 million inven-
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 Benchmarking Best Practices in Maintenance Management

tory is over $300,000 per year. To reduce these costs, inventories

must be kept low while still providing a satisfactory level of service
and avoiding stock outs.
13. Another concern regarding maintenance materials is that
maintenance is only responsible for its inventory in about half of
all organizations. The other half of the time, someone else is telling
maintenance what to stock, how many to stock, and how many to
issue. It is the classic example of a support function telling their cus-
tomers how to run their business.
14. While most maintenance managers will agree that mainte-
nance costs are high, they don’t know how high they are for their
own site. In most cases, the costs of maintenance repairs are calcu-
lated as the cost of maintenance labor and the maintenance materi-
als to effect the repair. However, that calculation leaves out the cost
of lost production. This cost may range from two to fifteen times
the cost of the maintenance repair (see Figure P-14). The average is
usually 4:1. For example, a maintenance repair may be $10,000 in
labor and materials, but the actual cost is really closer to $50,000
once lost production is factored in. Is it any wonder that mainte-
nance costs are coming under closer scrutiny and control? Over the
next several years, annual maintenance costs are likely to exceed
the amount spent on yearly new capital investment. With the scru-

Figure P-14

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 Benchmarking Best Practices in Maintenance Management

tiny given to yearly capital expenditures, it is indeed no wonder that

maintenance expenditures are being closely examined.
This foreword has looked at the general condition of the mainte-
nance function in facilities and industry today. Through a detailed
set of questions, Chapter 1 provides an opportunity to analyze the
specifics for each company. The survey will enable a company to
closely scrutinize its maintenance/asset management function.

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 Benchmarking Best Practices in Maintenance Management

Index

A-B-C analysis 142-143, 165 systems 40, 71 73, 75, 147-153, 181-182
abuse failures 128 condition based maintenance 125-126
accountability 198 consumables 141
accounting 99 continuing education 89
analysis/decision justification reports 161 continuous improvement 20-21, 43, 44
asset care 20-21, 32 contract staff 63-64
asset management 176-179 contracting 21-23
asset-value based benchmarks 199 control system 81
attitudes 171, 173-175, 196-197 copycat benchmarking 52
automation 11-12, 121-122 core competencies 30-31
automation technology 175-176 corrective maintenance 61, 75
correspondence programs 90
backlog 116 cost comparisons 194
backlog by craft/crew/department 158 cost information 57-58
batch data-transfer 183 cost of maintenance vii, xv
benchmarking 27-54, 195-197 cost reductions 56
benchmarking partners 201 cost savings 144-145
best practices 27-30, 35-36, 170-173, 191-208 cost variance report 167
bin stock items 140-141 costs 31-34
blanket work orders 100-101 craft training 88, 90-91
breakdown analysis report 162 craft usage summary report 159-160
breakdowns 126-127 critical equipment units 128-129
budget variance report 162 critical spares 141
cross reference listing 160
CAD/CAM systems 182 cross training 92-93
canceled PM work 167-168
capacity 115-116 daily reports 153-155
capital equipment 58-59 delivery dates 137
catalogs 136-137 document management 23-24
cell dependency 122-123 downtime report 159
centralized organization 64-65
classifying spares 142-143 EAM systems (see enterprise asset
CMMS (see computerized maintenance management systems)
management systems) emergency report 154
code of conduct 51 emergency work orders 101-102
collective bargaining 71 employee/craft/crew listing 160
combined staff 63 enablers 29-30, 114, 197
competition 171-172 energy consumption 59, 123
competitive analysis 28-29 energy management systems 182
competitive benchmarking 35 engineering 98-99
completed work orders report 158 engineering-centric model 67-69
components 129 enterprise asset management systems
computers maintenance management 181-182, 188-189
environmental regulations 71

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 Benchmarking Best Practices in Maintenance Management

210 Index
EOQ report 164 key performance indicators 43-44
equipment 148 KPIs (see Key Performance Indicators)
equipment availability 179, 192
equipment failure 127-128 labor controls 103
equipment history 104 labor costs 177-178, 193-194
equipment history report 161 labor productivity 114
equipment life 123 list parts issues 166
equipment listing 160 lubrication xiii
equipment performance 203-204
equipment service 60 maintenance and ROFA 31-34
ERV (see estimated replacement value) maintenance and work order systems 97-98
estimated replacement value 199 maintenance controls 145-146
maintenance costs 57-58, 177-179,
facilities 12-13, 98, 179 193-194, 200-201
failure 133 maintenance organizations 1-2, 55-84
financial optimization 19-20, 42-45 maintenance performance 201
first-line foreman or supervisor 69-72 maintenance planners 72-74, 105-111
foreman 69-72 maintenance prevention 62
maintenance problems 105
gap analysis 45-47 maintenance records 56-57
general information reports 160-168 maintenance reporting 14-15
general practices 18-19 maintenance resources 58
geographical organization 64-66 maintenance spares 140-143
goals 55-60 maintenance stores 139-143
maintenance strategies 38-43
hands-on activities viii maintenance and management 60-69
hands-on time 113 maintenance, status vii
hard copy catalogs 136-137 maintenance-centric model 66
hybrid organization 65-66 management analysis 147-168
management reporting 147-168
improvement 37 mandatory tasks 131
infant mortality 127 material delays 135
in-house staff 63 material requirements planning 181,
in-house training 89-90 185-187
inspections 132 materials costs 178-179
insurance spares 141 maximizing production 55-56
integrating systems 183-184 MES systems 181
integration of maintenance management meter-based work order report 154-155
181-189 monthly reports 158-160
interfacing systems 183 MRPII systems (see material requirements
internal analysis 37 planning)
internal benchmarking 35 MTBF/MTTR report 162
international marketplace 169-179
interpersonal training 40-41 non-mandatory tasks 131
inventory 9-11, 39, 59-60, 73, 99, 103, 122, non-pyramiding tasks 131-132
135-146, 148, 165, 192-193, 204-206
inventory over max report 164 on-hand quantities 137
issue/returns report 164 operations 12-13, 41, 98
organization by area 65
JIT (see Just In Time) organization evolution 81-84
job skills 110-111 outage/shutdown report 163
journeyman training 92 outages 102
Just-In-Time manufacturing 122 outstanding P.O. report 167

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 Benchmarking Best Practices in Maintenance Management

Benchmarking Best Practices in Maintenance Management 211

overdue P.O. report 166 reliability centered maintenance 16-18, 42,
overdue P.R. report 163 126
overtime xi reliability-focused organization 197
overtime report 167 reorder list 165
reorder report 154
P.O. history report 167 repair-focused organization 197
partners 37 repair length report 162
parts activity 164 repetitive repairs report 162
parts adjustment transaction 166 reporting structure 66-69, 195
parts master list 160 residual parts 142
parts receipt list 165 resource requirements forecast 161
parts warranty report 166 restocking report 166
past due work order report 158 return on fixed assets 31-34, 176-179
performance goals 51-52 return on net assets 176-179
performance indicators 43-44, 77 ROFA (see return on fixed assets)
performance measurement 104,139 roles and responsibilities 69-79
personnel 149 RONA (see return on net assets)
personnel summary report 155
planned work orders 100 safety 70
planner training 94 sales costs 200-201
planners viii-ix, 72-74, 106-111 schedule compliance report 155
planning 6-7, 103-104, 105-114, 129-130, schedule progress report 154
192 schedule projection report 156-157
planning effectiveness report 158 scheduled refurbishings 125
planning failures 111-112 scheduled work orders 100
PM compliance report 156 scheduling 6-7, 72-73, 103-104, 105, 114-
PM due/overdue report 156 120, 130, 192
PM efficiency and compliance report 163 scrap 142
PM route listing 163 shop-floor control systems 182
predictive maintenance 15-16, 41-42, 61- shutdowns 102
62, 71-72, 76, 125 similar industry benchmarking 35
predictive work order report 154-155 slow moving parts 164
premature benchmarking 52 spare parts xiv
preventive maintenance xii-xiii, 8-9, 38-39, staffing 62-64, 79-81, 200
61, 71-72, 76, 102-103, 121-134, 149, 195 stand-alone system 183
price change report 165 standardization 75
priority system 117-119 standing work orders 100-101
proactive maintenance 71, 125 statistics report 161
procurement 39 status codes 115
procedural review 53 stock out report 165
production-centric model 66-67 stores (see inventory)
purchasing 9-11, 73, 99, 135-146, 148-149 supervisor training 94-95
pyramiding tasks 131-132 supervisors 69-72, 106-108
supervisory effectiveness report 159
quality 70, 123, 171, 173 surplus parts 142
survey of maintenance management 1-26
random failures 127-128
RCM (see reliability centered maintenance) technical training 40-41
reactive maintenance 60-61, 71 tools and equipment 142
real-time parts 136 top ten report 162
rebuildable spares 141 total productive maintenance 42
redundancy 122 TPM (see total productive maintenance)
tracking assets 138

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 Benchmarking Best Practices in Maintenance Management

212 Chapter 12
training 3-4, 40-41, 73-74, 78, 85-95,
206-207

unethical benchmarking 52
upper management 99
useless spares 142

vendor performance analysis 167

vendor training 89
vocational schools 88-89

wear out 155-158

where used listings 137
work controls 39-40
work flows 39-40
work order listing 155
work order status report 157-158
work order systems ix-xi, 39-40, 97-104
work orders 4-6, 149-150
work summary report 153-154
world class maintenance management
169-180
wrench time 113, 203

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