Having recently delved into Joel Levitt's article on "Guaranteed Maintainability," available on Springfield Maintenance's website, I am curious to hear from fellow forum users about their company's approach to maintenance and reliability. A close friend of mine shifted from a maintenance/reliability engineering role to an Engineering Procurement Management firm and noted a trend among customers prioritizing cost efficiency over maintenance and reliability considerations. Working with major oil and gas companies, his firm engaged in a focus group session with competitors and clients to explore ways EPM firms can enhance their services. The feedback from customers highlighted a strong desire for EPM outputs to be treated as commodities, leading to further cost reductions and quicker delivery times. Reflecting on this, we recognized a common oversight in the industry - the lack of emphasis on life cycle costing. This could be attributed to a shortage of trained resources and executives failing to recognize the benefits of this approach in enhancing corporate performance. I am interested to know if others have observed a similar lack of interest in prioritizing maintenance and reliability within their project groups. Additionally, I pondered the potential losses incurred by neglecting practices outlined in Joel's article. In my own workplace, we encountered a corrosion issue during the project phase, which was ultimately more cost-effective to address through maintenance and component replacements post-project completion. It is crucial to assess the measurable value of implementing strategies proposed in the article, such as the corrosion example mentioned. Companies should strategically select initiatives based on the value they contribute, rather than just 'cherry-picking' the most appealing ones. Aligning project group performance measurements with these opportunities, rather than just focusing on cost and time, can lead to significant value capture for organizations.
While I'm not a tax expert, there are potential advantages to reducing capital spending and focusing on enhancing maintenance and repair (R + M) processes. For instance, we often find ourselves using undersized fan motors, leading to burnouts and necessitating upgrades in the long run. It may seem unusual, but optimizing R + M can ultimately save costs and increase efficiency.
Will it be more costly in the operations and maintenance phase if maintainability considerations are not accounted for initially?
Hey Mike66 and Josh, I'm starting to believe that the timing and financial impact play a crucial role in project decisions. If the repercussions of a decision are not felt until later on, the return on investment could potentially outweigh the initial costs. On the other hand, if immediate issues arise that result in costly fixes or ongoing maintenance, then getting it right during the project phase is essential. It all comes down to the present value of money compared to the future value. Mike, for instance, how long did the fan motors originally last? What was the initial investment during the project phase (any bundled deals?) and how much does it cost to replace the motors now? Have you considered your company's discount rates at 10%, 12%, 15%, etc.? Were there any productivity or environmental setbacks due to the fan motor malfunctions?
Jaz, there are two significant factors to consider in this situation. The first issue revolves around the concept of the time value of money. For example, if we invest $1 today, it could potentially grow to $1.63 after 10 years at a 5% interest rate, $1.96 at 7%, $2.59 at 10%, $3.11 at 12%, and $4.05 at 15%. With a 25-year equipment lifespan, the corresponding numbers increase to $3.39, $5.43, $10.83, $17.00, and $32.92. This highlights the importance of minimizing initial costs, especially when interest rates are high. Secondly, project managers typically focus on overseeing the setup and performance of plants, with maintenance costs falling under the jurisdiction of maintenance managers. This separation of responsibilities can lead to a disconnect between long-term maintenance expenses and present-day financial decisions. Ultimately, this can result in future challenges for maintenance managers who must justify expenditures that were approved by project managers years earlier. This discrepancy underscores the need for a more integrated approach to financial planning and project management in order to ensure long-term success.
The retention of key project personnel during the operations and maintenance phase is crucial for overall project success. Despite the importance of considering lifecycle cost and total cost of ownership in design and procurement decisions, many lack the necessary awareness and training in this concept. It may be beneficial to provide training for both procurement professionals and engineers to promote the integration of these cost factors in decision-making processes. Is it time to prioritize and push for this agenda within project teams?
I completely agree with your observations. It's surprising but true that many companies, regardless of their industry, often overlook the concept of life cycle costing. In my experiences, short-term thinking tends to overshadow long-term reliability and maintainability. Quick solutions often don't yield efficient results in the long run. It's better to invest adequately in maintenance and reliability at the outset to prevent costly repairs or replacements down the line. I believe that Joel Levitt's article articulates this point wonderfully. It's crucial to remember that the cheapest solution isn't always the most efficient or beneficial one in the grand scheme of things.
I couldn't agree more with your points. I've noticed in my own company that maintenance and reliability aren't always given the attention they deserve. And as your example shows, failure to address these issues early on can rack up higher costs down the line. I think there's a tendency to look at short-term gains over long-term sustainability and efficiency. Joel Levitt's article indeed highlights the importance of lifecycle costing and it's high time businesses started acknowledging its significance. Aligning project performance with maintenance strategies, even if they seem costly at first glance, can save invaluable resources in the future. This essential shift in perspective could be revolutionary for industry standards.
It’s interesting to see how the industry’s focus has shifted towards cost-cutting measures at the expense of reliability and maintenance. I've noticed a similar trend in my own experience where short-term savings often overshadow the long-term benefits of investing in maintenance strategies. The lifecycle costing approach you mentioned is so crucial; it allows for a more holistic view of costs over a project's lifespan rather than just upfront expenses. I think it’s important for firms to really invest in training and raising awareness among executives about the long-term gains associated with reliable practices. Your example of managing corrosion highlights a real missed opportunity many projects face—if companies could understand the value of these maintenance decisions, they might just change their priorities.
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Answer: - Joel Levitt's article emphasizes the significance of guaranteed maintainability in maintenance and reliability practices, highlighting its role in enhancing corporate performance and reducing potential losses.
Answer: - There is a noted trend among some companies prioritizing cost efficiency over maintenance and reliability considerations, potentially leading to a lack of emphasis on life cycle costing and other crucial practices.
Answer: - Companies can enhance their services by treating EPM outputs as commodities, focusing on cost reductions and quicker delivery times while also considering the long-term benefits of prioritizing maintenance and reliability practices.
Answer: - Neglecting maintenance and reliability practices can result in issues such as corrosion, which may require more cost-effective solutions post-project completion and could have been avoided through proper prioritization of maintenance practices.
Answer: - Companies should assess the measurable value of implementing strategies proposed in articles like Joel Levitt's, align project group performance measurements with opportunities for value capture, and avoid 'cherry-picking' initiatives based solely on cost and time considerations.
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