Implementing and Managing a Maintenance Plan The Maintenance Plan Ken Henman

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 2 The Maintenance Plan What is a Maintenance Plan Why have Maintenance Plan How to develop a Maintenance Plan Implementing and managing a Maintenance Plan

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 3 What is a Maintenance Plan Part of the total effective management of railcar assets A structure under which railcar maintenance and repair can be proactively managed Allows for aggressive control of maintenance costs and procedures

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 4 Why Have a Maintenance Plan Meet regulatory requirements Improve and sustain reliability Risk management and loss control Avoid opportunity loss Sustain asset function Sustain asset value Maintenance of assets viewed as contributor to business success

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 5 How to Develop a Maintenance Plan Understand objectives Understand responsibilities Evaluate Organize Develop Implement Measure effectiveness Re-evaluate Adjust

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 6 Implementing and Managing a Maintenance Plan Establish a scope of work- SOW Selection of repair facilities Logistics and scheduling Commence maintenance activities Evaluate- leading and lagging KPI’s Adjust

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 7 Establish a Scope Of Work Objectives - State your intent  Goals  Types of maintenance  Overall expectations List of specific cars involved  Individual, group or series Repair scope  Focus of repairs according to objectives  Applicable attachments (i.e. prints, schematics etc.)  Overall car condition and other repairs

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 8 Establish a Scope Of Work Responsibilities  Maintenance responsible party Who approves and pays the bills  Expectations of shop Quality Reporting Estimating Turnaround Contact information  Maintenance responsible party and shop

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 9 Distribution of the Scope of Work Treat as a controlled document  Titled and dated per latest revision  Confirmation of receipt and understanding by shop

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 10 Selection of Repair Facility Capacity  Size suitable for level of performance and turn around expected Capabilities  Meets quality and quantity expectations Location  Within boundaries of serving railroad without off line transportation charges Relationship  Familiarity of service expectations  Agreements covering rates and material

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 11 Logistics and Scheduling Maintenance Activities Car service demands  Loading schedule  Availability of railcars Relationship of car location to shop(s) Criticality of condition Shop availability Materials

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 12 Maintenance Activities Equipment inspection results  Inspection summary or estimate as needed  Distributed to maintenance responsible party for approval  According to SOW criteria  Adherence to stated objectives  Report of overall car condition Estimate  Per SOW  Within expectations

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 13 Maintenance Activities Approval of inspection summaries- estimates In process inspections Status reports Completed car inspections Track all warranties and claims Equipment return to service

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 14 The Scope of Work as a Living Document Inspection and repair results meet expectations Flexible according to need Revised as needed Revisions distributed in controlled manner

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 15 Maintenance Plan Evaluation-KPI’s Leading KPI - Indicators that measure performance before problems arise  EHMS exposure  Last major repair event Lagging KPI - Historical information measuring performance results  According to budget  Reliability – effectiveness measure Maintenance costs to deliveries  Reactive to proactive maintenance Unplanned to planned maintenance

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 16 Evaluate-Leading KPI’s Periodic maintenance  Time or mileage based maintenance Component life cycle based maintenance  According to known component life expectations Equipment condition base  According to baseline and periodic inspections

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 17 Evaluate-Leading KPI’s Estimated cost of repairs according to the SOW  Relationship to budget and expectations – meets objectives EHMS exposure  Review current car information for open “Alerts” Quality assurance  Avoidance of rework

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 18 Evaluate-Lagging KPI’s Quality control  Avoid after repair rework Tracking actual maintenance cost  Estimate to final invoice audit  Final invoice to SOW  To budget Gather information  Equipment inspection and performance information Results measured against plan

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 19 Evaluate-Lagging KPI’s Repair facility performance  Quality  Quantity  Out of service –Turnaround time Time the car is bad order or awaiting disposition Time the car takes moving to shop Time the car is in the shop for repair  Arrival to inspection and estimate  Approval to completion Time the car takes to move back into service  Results measured against plan  All this “out of service” time decreases utilization

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 20 Key Performance Indicators Association of leading and lagging KPI identifies trends  Time between component failures or repairs  Per car per month  Life cycle cost to asset value  EHMS exposure  Actual cost to budget  Car status monitoring  Shopping performance  Continuous improvement

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 21 Plan Effectiveness - KPI Reporting Gather data and measure results  Provide results in detailed, summarized format  Periodic reviews Internal Contractors Repair facility  Results used to adjust plan and SOW  Insure quality of work and cost control  Re-focus on specific problem cars or components

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 22 Fleet Per Car Per Month Cost CAR SERIES

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 23 Major Components, Contractor Only ABCX $1,786 $3,645 $78,531 $53,969 $25,003 Cost per Car per Month AAR $ $ Contractor $ $ Combined $ $111.15

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 24 Major Components, Contractor Only ABCX $285$536 $11,093 $1,803 $761 Cost per Car per Month AAR $ 7.17 $ Contractor $ $ Combined $ $ $3,933

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 25 Budget Review

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 26 Budget Review – YTD

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 27 Yearly AAR Billing Percentage Reactive to Proactive

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 28 Wheel & Bearing Defects All Wheels Replaced by AAR & Contract Shop *Total includes wheels changed for other reasons

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 29 Average Wheel Set Mileage, by Group CAR SERIES

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 30 EHMS Exposure

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 31 Major Shopping Event, Last Air Brake Test

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 32 Shop Process Cycle Times

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 33 Evaluate- Continuing evaluation of SOW according to maintenance goals  Did the plan accomplish the objectives?  Adjusted - revise  Determining revisions to Scope of Work  Select revisions to meet objectives Process of continuing improvement

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 34 Maintenance Types Maintenance TypeDescriptionPlanBudgetResults Corrective- Reactive Fix it when it breaks- BreakdownUnscheduled Unexpected, uncontrollable costs Costs of Doing Nothing PeriodicTime or mileage basedScheduled Planned, controllable costs Tends to over maintain-shorten component life PreventativeDefensive maintenanceAnticipated Planned, controllable costs Dependent on condition evaluation PredictiveCondition basedPredicted Planned, controllable costs Dependent on information evaluation ProactiveCombination of all According to criticality Flexible plan, controllable costs Best mix – Best results!

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 35 Journey From Repair-Focused to Reliability-Focused Culture Contributor To Business Success Don't Just Fix It- Improve it! Fix It Before It Breaks Alignment (Shared Vision) Fix It After It Breaks Performance Improvement Integration: Business Processes Predict Plan Asset Function Proven Plan Performance Schedule Coordinate Asset ValueBusiness Reliability Cost CenterCost FocusReliability Customer/Supplier Relationship Rewards: Staged Decay Short Term Savings Uncontrolled CostLimit Surprises Competitive Advantage Business Success Motivator: Meet BudgetBreakdownsAvoid LossUtilizationGrowth Behavior: DecayingRespondingInitiate DisciplineDisciplinedAlliance Don't Fix It Reactive Planned Proactive Strategic

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 36 Maintenance Plan Cycle Maintenance- Continuous Improvement Cycle PLAN SCHEDULEANALYZE EXECUTE

May 23, 2008 DTE Rail Services, Inc. Maintenance Management Seminar 37 Summary Maintenance and value to assets Risks of not maintaining Maintenance philosophies Technology Maintenance plan Measuring effectiveness