Rui, in your terms, will the minimum or optimum maintenance cost result in the highest availability?
Hello Josh, Thank you for reaching out. In response to your inquiry, I would like to discuss the importance of optimizing preventive maintenance intervals to minimize overall costs. This involves considering labor, materials, and opportunity costs per unit time, known as a cost-centric maintenance policy. However, in certain industries such as process plants, power facilities, and emergency equipment, equipment availability takes precedence over repair and maintenance costs. In these cases, it is more beneficial to focus on reducing downtime per unit time, also known as an availability-centric maintenance policy, rather than solely minimizing costs.
When selecting a maintenance policy, there are two main options to consider: constant interval replacement or block replacement based on calendar time, and replacement at a predetermined age based on accumulated component time. The equations used to determine optimal preventive periods differ for minimum cost versus maximum availability strategies, but results may be similar depending on specific data and desired accuracy. Ultimately, the optimal preventive maintenance strategy for minimizing costs may not align with the strategy for maximizing equipment availability, although in most cases, the differences are minimal.
- 27-08-2024
- Quentin Foster
Balancing opposing forces is essential for achieving Optimum performance. It is not necessarily the minimum point, but rather the point of inflection. For instance, when it comes to maintenance costs, aiming for the lowest possible cost in a specific situation is crucial. Optimal performance can be defined as minimizing downtime and maintenance costs, along with energy costs over the lifespan of a system. Additionally, it includes maximizing economic life and sustainability. The choice of what constitutes optimal performance depends on various factors and can be determined using mathematical tools like Monte Carlo simulation. Defining what "optimum" means is the first step in the process. It is important to note that minimum maintenance cost may not always translate to optimal costs. Similarly, maximum availability may not be the most cost-effective choice, as the marginal cost of achieving higher availability increases rapidly. For example, adding redundancy by installing additional pumps can enhance availability, but the economics eventually reach a point where further increases are not viable. This demonstrates that Optimum performance is not the same as maximum performance.
- 27-08-2024
- Jessica Freeman
Hello Vee, I appreciate our thought-provoking conversation. While it appears that we have similar opinions, it seems like we may be discussing different aspects of the issue. To clarify, my previous posts focused on determining the best time for preventive maintenance to achieve optimal results. This involves balancing various costs associated with repairs and preventive actions, such as third-party labor, materials, and potential downtime expenses like energy loss. These costs, known as marginal costs in economic terms, impact the overall cost-effectiveness of maintenance schedules.
If the goal is to maximize equipment availability, it is crucial to consider the downtime caused by maintenance activities. By finding the right timing for preventive actions, you can ensure that maximum availability is achieved. Your example of redundancy raises a separate issue, emphasizing the importance of determining when to replace existing equipment based on economic viability. This involves forecasting operational, maintenance, and potential investment costs for both the current and alternative equipment options.
Utilizing polynomial regression analysis and estimating useful life spans, we can compare costs and determine the most cost-effective solution. By conducting a marginal cost analysis, we can decide whether to continue using the existing system or switch to a new one. Ultimately, the decision is based on whether the marginal cost of another year of service is lower than the annual cost of the new system. Do you share this perspective?
Hello Rui, I noticed that your most recent post seems to contradict your initial one, where you mention that the minimum maintenance cost is equivalent to the optimum maintenance cost. Did I misunderstand your point? I am unsure about the necessity of advanced math skills for these calculations. Personally, I often find that a basic spreadsheet calculation suffices for most situations. Many individuals are intimidated by math, which can discourage them from taking action. Therefore, I prefer to limit the use of complex math whenever possible. V. Narayan.
Rui, I respectfully disagree with your statement. Contrary to the idea that the optimal preventive maintenance interval is determined by minimizing costs, it is actually determined by assessing risks. These risks include tolerable risk for HSE and factors such as downtime costs and probability of failure for production-related failures. Therefore, a cost-centered maintenance policy may not always lead to technically sound solutions. Maintenance costs only come into play when there are multiple solutions with similar risk levels but different costs; in such cases, the option with the lowest total cost is selected through the process of optimization. - V. Narayan.
- 28-08-2024
- Penelope James
Although my thoughts may not always be perfectly articulated in my words, there is no contradiction in my beliefs. The annual maintenance cost of equipment is determined by the balance between preventive actions and corrective actions. By factoring in marginal costs, you can identify the optimal period where costs are minimized. This period, known as the "optimum" mathematically, is crucial for determining the equipment's economic life and when it may be more cost-effective to salvage it. Whether you are considering periodic refurbishments or evaluating long-term usage, advanced software can streamline these complex calculations. By mastering the underlying concepts, you can effectively manage equipment maintenance. Personally, I have developed software to assist in tackling such issues efficiently. While understanding the problem and obtaining relevant data can be time-consuming, having the right tools and knowledge is essential. Rui Assis.
Attached is a Vee that emphasizes that maintenance intervals should be determined by risk considerations, not cost considerations. When it comes to HSE, the focus should be on tolerable risk, while production-related failures should consider downtime cost and probability of failure. A cost-centered policy may not lead to technically sound solutions. However, when faced with options with similar risk levels but different costs, the lowest total cost option should be chosen through optimization. The Excel software attached showcases the analysis process, accounting for the probability of failure before preventive maintenance is due. For further reading on this topic, references such as ALBRIGHT, Winston, Zappe, Data Analysis and Decision Making with Microsoft Excel and MOUBRAY, John, Reliability Centered Maintenance are recommended. Feel free to explore the other sources listed for more insights.
- 28-08-2024
- Vanessa Carter
Rui, is there an English translation available for your Portuguese paper? Many people do not have the luxury of time to read through all the references. These discussions can be very informative and specific.
According to Rui Assis, when prioritizing between costs and equipment availability in maintenance policies, it is essential to consider both factors to determine the most efficient approach. While a cost-centered maintenance policy focuses on minimizing total costs per unit time for labor, materials, and opportunity costs, an availability-centered maintenance policy emphasizes reducing downtime per unit time for critical equipment in industries like process industries, power plants, and emergency services. The decision to choose between these approaches may depend on various factors, including the nature of the equipment and the specific goals of the maintenance strategy.
In some cases, like the scenario presented by Rui Assis, choosing a mixed preventive maintenance (PM) and corrective maintenance (CM) policy may be the most effective solution. By analyzing data on availability and costs, it may become evident that a mixed PM+CM policy strikes the optimal balance between maintaining equipment availability and controlling costs.
In discussions on maintenance strategies, it is crucial to also consider predictive maintenance strategies, which can help anticipate potential issues before they escalate. Additionally, incorporating costs related to training and improving the competency of maintenance personnel into these calculations can provide a more comprehensive understanding of the overall maintenance strategy's effectiveness.
Hello Rui, I experienced difficulty accessing the zipped files you shared earlier. Could you please upload them as Excel files instead? Your extensive list of 15 references showcases your expertise. With approximately 3000 to 4000 pages of text, it may be helpful to provide page references or excerpts to highlight key points. Regarding 'maximum availability' and optimizing downtime for PM and PM+CM, I agree with your perspective. It's important to consider Return on Investment and Net Present Value when discussing optimization in a business context. While maximum availability is crucial, the cost of increasing it significantly can outweigh the benefits. My viewpoint is based on this consideration. Regarding software, I believe in using specialized tools to enhance tasks I can already perform manually or with basic software like Excel. Understanding the process is essential before relying on automation. V.Narayan.
Thank you, Josh and Vee, for your interest. I apologize for not being able to address your questions at the moment due to my involvement in a critical reliability project with a deadline on Friday. I will get back to you the following Saturday. Keep up the good work until then!
| view attached quote: Originally posted by Josh: Rui, how can I access your Portuguese paper? Is there an English translation available? Many people do not have the time to read all the references included. Discussions like these can be very informative and specific. The title of my book translated into English is "Decision Making in Maintenance Management." This book, along with 20 Excel files, is the first of its kind in Portugal with no translation available to other languages. It covers various maintenance-related topics, such as reliability measurement, risk calculation, maintenance policy analysis, redundancy decisions, inspection scheduling, spare parts management, and investment feasibility assessment. By using quantitative methods like statistics, probabilities, and financial calculations, I aimed to bridge the gap between academics and practitioners successfully, which has been rewarding. quote: Originally posted by Josh: Rui, I have some clarifying questions regarding your arguments: I believe in prioritizing availability over cost control. Can you explain why the difference between the two approaches is not significant? It all comes down to the data. Consider this example: If the primary failure mode of a critical machine part is degradation (such as erosion) and the failure behavior follows a Weibull distribution, with specific parameters, the optimal periodicity can be determined based on cost minimization or maximum availability criteria. The provided Word document showcases the calculations and sensitivity analysis around the optimal periodicity. Additionally, an adjustment in corrective action time does not affect the optimal periodicity in a cost minimization scenario. quote: Originally posted by Josh: Based on the attached information, a mixed preventive-maintenance and corrective-maintenance policy seems to be the most cost-effective option. Is this the optimal availability level? The example provided demonstrates the economic advantage of a preventive-maintenance approach over a purely corrective-maintenance strategy, with a 41% cost difference. These comparisons are solely focused on maintenance policy periodicities rather than overall cost optimization or availability. quote: Originally posted by Josh: Do you factor in predictive maintenance strategies in your calculations aside from preventive and corrective maintenance? Predictive maintenance is not explicitly addressed in the example, but it can be considered as a form of corrective maintenance with costs and durations similar to preventive maintenance. The efficiency of predictive maintenance lies in preventing imminent failures by scheduling planned actions, aligning with preventive maintenance practices. quote: Originally posted by Josh: Should training and competency improvement costs for maintenance personnel be included in the maintenance equations? I am not entirely clear on your question. Can you provide further clarification? quote: Originally posted by Vee: Your extensive reference list indicates your expertise in this area. Perhaps summarizing key points or providing page references would be helpful for readers. I recommend looking into an e-book on reliability and maintainability from Reliasoft for a different perspective on the subject. Their website offers valuable information. Additionally, I suggest reviewing specific sections in the book "Case Studies in Reliability and Maintenance" for further insight. quote: Originally posted by Vee: In discussing maximum availability, the focus should also be on optimizing Return on Investment (ROI) and Net Present Value (NPV). Balancing high availability with cost-efficiency is crucial, as excessive costs may outweigh the benefits of increased availability. Achieving the minimum NPV involves reducing overall costs, including maintenance expenses. A trade-off between availability and cost can be attained through mathematical optimization algorithms, although practical implementation may vary. quote: Originally posted by Vee: When it comes to software, understanding the processes manually before utilizing automation tools is essential. I prefer developing my software using C++ or Visual Basic.NET to ensure comprehension and maintain a thorough understanding of the results. Thank you, and best regards. Rui Assis Attachment(s) Example_of_PM_optimization.doc 123 KB 1 version
Hey everyone, I wanted to contribute to the discussion by sharing my thoughts. I believe that optimized costs and least costs are not the same thing. It's important to consider both risk and performance when optimizing costs, as Vee also pointed out. Unfortunately, this crucial aspect is often overlooked when weighing the cost-risk trade-off. Maintenance frequencies are not always determined by risk alone. In certain situations where the focus is on managing operational or economic costs, the goal is maximum cost-effectiveness over time. The hidden side of consequence calculations involves finding the right balance between the cost of performing a task and the cost of the consequences if an event were to occur. In these cases, the focus is on costs rather than risks. Risk plays a role in almost every other instance.
Ensuring Cost-Effectiveness in Maintenance Strategy: How to Confirm Required Reliability and Availability at Optimal Cost?
To view the attached quote, originally posted by Vee, requesting Rui to provide excel files instead of zipped files, here are two snapshots of the software used to select between CM, PM, and PdM. While I cannot share the software itself as it was developed for a company, I can explain the mathematical principles behind it as mentioned in a previous post. It is important to note that the PM time intervals for the nine components are chosen based on minimum PM/CM cost individually before being combined. In this case, the optimal solution for the entire system is achieved by summing up the optimal solutions for each part, although this may not always be the case.
Please take a look at the attached example for the Project Management policy document.
Quote by Josh: How can we verify that our maintenance strategy is cost-effective and achieving the required levels of reliability and availability at the optimal cost? I apologize if my previous posts were unclear, as well as the example I provided. These topics have been extensively researched and documented in papers and books by experts in the field. The study of reliability and maintainability in systems is a well-established science, not a subjective matter. I am at a loss for words... Best regards, Rui Assis.
In my role as a management controller, I have a deep understanding of the concepts of "performance" and "risk" and have utilized quantitative methods for decision-making processes for many years. Numbers play a crucial role in managing wisely to achieve maximum value at minimal costs, as the saying goes, "you can't manage what you can't measure." When it comes to maintenance, various costs come into play, such as operation costs (direct labor, energy, depreciation), maintenance costs (labor, parts, services), opportunity costs (lost production/sales, extra time, variable costs), capital costs (if equipment was purchased with a loan), and renting costs (if equipment is under a rental contract). These costs are factored into overall maintenance costs, including predictive maintenance (PdM) and preventive maintenance (PM), to address potential risks. Risk in maintenance involves the probability of corrective maintenance due to operational failures, which can be managed through proactive measures to mitigate economic consequences. By considering factors like the failure distribution pdf and Cumulative Density Function (CDF), businesses can analyze risk to ensure long-term investment viability and return on investment.
When comparing the costs of preventive maintenance (PM) and predictive maintenance (PdM) interventions, it is often found that they are similar in terms of labor, materials, and miscellaneous expenses. On the other hand, the costs of corrective maintenance (CM) tend to be higher, sometimes significantly so. This is because CM interventions are usually unplanned, leading to confusion, decreased productivity, longer downtime, and excess materials. Additionally, downtime and lost production can result in opportunity costs. There is a risk that a wear-out failure may occur before scheduled PM, so this should be taken into consideration in calculations to mitigate potential consequences. Risk is defined as the probability of an undesirable event multiplied by its consequence, illustrating the importance of proactive maintenance strategies. Optimal maintenance practices involve finding the best compromise among various variables through methods like multi-objective optimization or AHP (Analytic Hierarchy Process) by Saaty. By balancing these factors, maintenance operations can effectively optimize performance and minimize risks.
- 28-08-2024
- Rebecca Murphy
Dear Rui, Thank you for sending over the photographs. I have not had the chance to fully review them yet but may require some clarifications in the future. Allow me to reiterate my stance on risk management and maintenance strategies. The timing of maintenance activities is determined by the level of risk we can accept and the likelihood of survival at the time of maintenance. As you correctly stated, risks include those related to health, safety, environment, production losses, asset damages, and financial implications. It is crucial to consider all these factors together rather than separately. Additionally, non-quantifiable risks, like reputation damage, must not be overlooked as they can greatly impact an organization. While it is true that you can't manage what you can't measure, we must also account for subjective evaluations, such as the value of negative publicity. Neglecting qualitative risks can lead to catastrophic consequences, as seen in past incidents like Longford and Brent Spar. Therefore, understanding both quantitative and qualitative risks is essential, particularly in safeguarding Technical Integrity. When faced with multiple maintenance strategies offering similar risk mitigation, the choice must prioritize the method that provides the most comprehensive coverage. It is important to approach maintenance optimization with caution, as decisions based solely on financial considerations may overlook crucial qualitative aspects. The ultimate goal should always be to reduce risks to acceptable levels, rather than focusing solely on cost optimization. Thank you, V.Narayan.
In the realm of risk management, it is crucial to not only focus on quantifiable risks, but also take into account qualitative risks such as reputation. While quantifying risks is essential, it is not always sufficient. Understanding and evaluating qualitative risks, especially when safeguarding Technical Integrity, is equally important. The ability to manage adverse publicity is imperative for organizations to thrive in the business world. Loss of goodwill may be harder to quantify, but with historical data and decision tree analysis, it can be achieved. For instance, when deciding whether to reorder spare parts for a discontinued production line, the question of maintenance optimization arises. Should one rely on the mileage of the tire or inspect tread depth and overall condition when replacing a car tire? Opting for the tread depth method may offer better risk coverage. When dealing with financial risks, the choice between different strategies like PM, PdM, or CM is often influenced by guesswork. It is crucial to gather input from stakeholders and use statistical methods to translate opinions and experiences into quantifiable data. Ultimately, the goal is to reduce risks to tolerable levels rather than strictly focusing on cost optimization. Balancing quantitative methods with common sense and experience is key to effective risk management.
Rui - Engaging dialogue that provided valuable insights. Effective leadership requires a balance between intuition/experience and data-driven approaches. It's essential for great leaders to leverage both skill sets. Collaborations between experts like Vee and yourself contribute valuable knowledge to fellow forum participants. Currently learning Spanish, I hope to also enhance my reading skills in Portuguese to dive into your book. Grateful for your contributions to this forum. Terry O
- 28-08-2024
- Shawn Thompson
Thank you, Terry, for your generous words of praise. I am truly honored and motivated by your kind feedback. For the past 5 to 6 years, I have developed a strong passion for Reliability and Maintainability. It brings me great joy to engage in discussions and share ideas with like-minded individuals. I am committed to continuing to strive for excellence in this field. Best regards, Rui.
Rui, you are correct in pointing out the importance of taking a business-driven approach rather than solely relying on common sense or strict mathematical methods. I believe in starting at the top and focusing on what will bring a good Return on Investment (RoI). While I am data-driven and utilize tools like RBD, FTA, Weibull, and Simulation modeling, I am not afraid to also incorporate common sense and qualitative data gathered from operators and maintainers. I have extensive experience managing large Weibull studies and complex simulation projects, emphasizing the importance of utilizing all available data for reliability engineering. By bridging the gap between theoretical and practical approaches, we can help organizations increase profitability and reduce HSE incidents. I appreciate our discussion and respect your perspective. It is refreshing to engage in a civilized exchange of ideas. Thank you. V. Narayan.
- 28-08-2024
- Heather Coleman
Thank you, Vee, for sharing your valuable insights. It has been a pleasure exchanging ideas with you, and I look forward to continuing our discussion. Best regards, Rui.
Hello Rui, I have a few points to address in response to your post. Firstly, I want to clarify that I have not read all the previous posts, so I may have missed some context. The discussion seems to revolve around cost optimization. In this regard, let's start with the following quote: "Performance" refers to managing resources efficiently to obtain maximum value at minimal cost. The initial step in any reliability initiative is to determine the required level of performance, which could range from maximum to exceeding current capabilities. Subsequently, asset management interventions are identified to achieve this desired performance level. Performance sets the standard, while cost considerations come into play during the strategic planning phase. Further discussion can delve into determining acceptable costs for achieving performance goals.
Regarding risk in maintenance, it involves the likelihood of facing consequences due to operational failures that could be mitigated through predictive or preventive maintenance strategies. However, I believe there is a distinction between risk in maintenance and asset management. Risk in maintenance pertains to potential consequences related to safety and environmental impacts, where cost considerations may not apply. The decision to manage risk involves evaluating acceptable levels of risk exposure and allocating resources accordingly.
I agree with the concept that everything, including opinions, can be quantified. Quantifying risks and measuring them proactively is crucial for effective risk management. While some risks may be quantified in monetary terms, others can be evaluated through a hierarchy of acceptable to unacceptable events. Safety risks should take precedence over operational and economic considerations when assessing risk consequences.
In terms of maintenance interventions, preventive maintenance and predictive maintenance costs are often similar and encompass labor, materials, and miscellaneous expenses. Predictive maintenance may be preferred for its cost-effectiveness and ability to prolong the economic life of assets. On the other hand, corrective maintenance costs can vary significantly based on asset configurations, failure consequences, and performance requirements. Redundancy and over-design elements in assets can impact the cost-effectiveness of corrective maintenance measures.
In conclusion, managing safety and environmental risks involves reducing the probability and consequences of adverse events to acceptable levels. The goal is to minimize the overall cost of managing failures while ensuring operational efficiency and safety. The ultimate aim is to make informed decisions based on data and insights to mitigate risks effectively. The forum provides a platform for engaging with peers globally and exchanging diverse perspectives without unnecessary contention. Thank you for the insightful discussion.
Thank you, Daryl, for your detailed feedback. While our opinions align on many points, there are still areas where our views diverge.
In terms of risk assessment, it is crucial to consider the likelihood of undesirable events occurring and their potential consequences, often financial in nature. This is a key aspect that insurance companies focus on. In business, various risks need to be evaluated, such as the risk of a capital investment not yielding returns, the risk of incurring fines for exceeding deadlines, or the risk of unexpected expenses from subcontracts.
I have encountered situations where quantifying and managing risks required extensive research and analysis. Assessing probabilities accurately can be challenging, sometimes necessitating access to specialized databases at a cost. Currently, I am examining a scenario where a company is weighing the benefits of keeping bus rear axles in stock versus specific components prone to failure.
In the realm of predictive maintenance (PdM), advancements in technology have made it a more viable solution as equipment costs decrease. However, there are instances where safety concerns restrict accessibility, making preventive maintenance (PM) a preferable option. When comparing costs, it is essential to consider the expenses associated with offline inspections and maintenance interventions. Despite PdM typically being slightly more expensive than PM tasks, its effectiveness in minimizing the need for corrective maintenance actions can ultimately make it a more cost-efficient choice.
In my experience, managing risks has been a constant priority, particularly during my time in capital ventures. The evolution and benefits of PdM in addressing maintenance challenges are evident, underscoring its potential value in ensuring operational efficiency and reliability.
Rui, while some risks can be quantified, there are many others that cannot be easily measured. For example, how do we determine the value of a negative headline in the national press? Does it vary based on the size of the company, its sales, its customer base, or the prominence of the headline? Similarly, how do we assign a value to a human life? The police may use a certain value for purposes such as pedestrian signals, but can this value be applied universally or hold up in a legal setting? Additionally, what is the cost of an oil spill? Is it just the clean-up expenses, or does it depend on factors like the location of the spill (river, high seas, tourist coastline)? Should we prioritize investments in traffic safety over homicide prevention, considering that more people die in road accidents than due to murders? These moral and ethical dilemmas do not have straightforward answers and cannot be solved with a simple formula. V.Narayan.
In order to effectively implement Condition Monitoring, specific criteria must be met, including a identifiable degradation mechanism, a sufficient P-F interval for timely corrective action planning (typically in weeks or months, not days), the ability to measure degradation (thanks to advancements in PdM technology), and visible failure indicators. While the decreasing cost of PdM technology is facilitating a transition towards a CBM strategy, it is not a cure-all solution. - V.Narayan.
Hello Vee, I understand your perspective on risk, but apart from your first point, if you are working for an insurance company or advising a company on creating financial provisions for potential future challenges, you will inevitably have to delve into numerical analysis. In the case of a negative headline, it's wise to be prepared to lay low for a while! Decision trees can be a valuable tool when evaluating various approaches to risky situations and determining the best course of action based on specific criteria. Best regards, Rui.