Know When to Stop Sweating Your Assets

I was with a client recently discussing their annual maintenance budget. Like most Australian mines, cost reduction had been a huge driver of asset strategy over the last few years. And while ‘running lean’ provided much needed cash-flow relief, this is not a long-term strategy if asset performance and safety are to be maintained.

This year, commodity prices have improved, and the cash-flow of this mine is strong. But the continued theme from management was more cost reduction. The problem is that assets may continue to perform well; even when under-maintained for several years. Availability and productivity can be kept high, or at least meet targets, sustained by heroic efforts from the maintenance team … and good luck. We all understand these are lagging indicators are not sustainable over the asset life cycle unless the right maintenance is performed.

After years of driving down costs and continued good performance. it can be hard to convince management that an increased investment in asset maintenance is needed to keep the assets performing well.

To make your case, you need to look beyond the headline numbers to see what is coming. To demonstrate a need to invest in your equipment, the following indicators can be reviewed.

Backlog Work Volume

Backlogs are non-breakdown work orders that have been identified and logged for future completion. Backlog volume is measured as the number of hours required to complete all of the work. A certain level of backlogs is tolerable, and it is rare for this number to be zero. However, what is the trend? Has it increased over time? An increase in the backlog work may indicates that not enough time is being allocated to complete work. You’ll also want to dig deeper into the types of backlogs. Are there many high-priority items outstanding? If so, it’s time to act.

Backlog Ageing

A secondary backlog measure is the age of backlog work, measured as the average number of days backlog work orders have been outstanding. If this number is trending up, review the older backlogs to understand why they are there, and why there are not getting done. Highlight old critical work as a priority.

Breakdown Ratio

Review the ratio of breakdowns work to planned work over time. Is the breakdown percentage trending up? If so, it can be a symptom of under-maintaining as asset. This is still lagging indicator, but you will see this trend up before performance is impacted.

Types of Defects

Count the number and type of defects being reported. Are there safety critical defects continually being reported? Look at defects relating to broken hand-rails, structural bolts, missing guard, critical hose failures. There is no excuse for not addressing these critical items. If these items are being picked up by operators, and not maintains, an urgent review of inspection checklists and processes may also be required.

Are other types of common defects increasing? A high number of hose failures or broken bolts and clamps can indicate basic maintenance is not being performed

Overdue Components and RVIC

Is the number of overdue components increased over time?

A common strategy to reduce expenditure is to use push component change out points out using a condition-based approach. This will often allow components to exceed their target life and assist in delaying maintenance expenditure, or indeed reducing life cycle cost. However, at some point the components will need to be replaced, or they will fail in service. The number of components that are in this ‘risk zone’ can tell us the overall risk level of the fleet.

A measure I like to use to assess this overall maintenance liability is RVIC, or Residual Value in Components. This measure shows the remaining value in components expressed as a percentage of the component replacement value, plotted over asset life. A typical RVIC chart for one mobile asset is shown in the chart below.

Residual Value in Components (or, RVIC)

A high RVIC percentage indicates a lot of value installed in the fleet. A low percentage indicates that many components are near their replacement point and you have a high maintenance liability.

There is nothing wrong with pursuing a low-cost strategy. The essence of strategy is to balance performance, cost and risk. However, the trick is to ensure the equipment performance is sustainable over the life-cycle. The above metrics will help you identify the risks within your fleet and adjust your maintenance strategy and tactics accordingly.

Our consultants hold a wealth of industry experience and partner with our clients to build intelligent, sustainable, high-value asset management solutions. Get in touch with us today for a confidential discussion.

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