1. Reliability and Maintenance (RAM)
The Path to World-Class Performance
27th Brazilian Congress on Maintenance
Rio de Janeiro, Brazil
September 12, 2012
Al Poling
RAM Study Project Manager
HSB Solomon Associates LLC
Dallas, TX

2. Survival in Nature
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
- Charles Darwin

3. Survival in a Global Market
“It is not the strongest, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
“Reliability and maintenance are tools in the manufacturing survival tool kit!”
- Al Poling 3

4. Reliability and Maintenance Benchmarking
Benchmarking is the use of actual operating data to compare performance of multiple entities (e.g., companies, sites, production units, etc.).
A benchmark is a performance threshold used for comparative purposes (e.g., first quartile, median, etc.).
Benchmarks can be average values (e.g., overall average, better half or poorer half average, etc.) of a peer group’s performance indices.
Benchmarks can also be any breakpoint used to distinguish performance between better and poorer performers.

5. Reliability and Maintenance Benchmarking
Monetized margin loss (maintenance downtime times standard margin) due to a facility’s mechanical unavailability and failure to perform as designed compared to peers in the same industry
Maintenance
The normalized cost of conserving a facility’s physical assets so they operate at design performance levels compared to peers in the same industry

6. International Study of Plant Reliability and Maintenance Effectiveness (RAM Study)
Implemented in 1996 to compare company, site, and unit
Maintenance Costs
Mechanical Availability
Process Industry
Chemicals and Petrochemicals
Refining
Redesigned in 2010/2011
Focused on Factors that Impact RAM Performance
Utilizing Contemporary Measures of Performance
Benchmarks Against Better Half Average Performance

7. RAM Study – Core Indices Maintenance Cost Index (MCI)
Maintenance Cost Type
Expense
Capital (replacements due to end of life)
Maintenance Cost Categories
Labor
Material
Overhead/Support
Maintenance Work Types
Corrective
Preventive
Predictive/Condition Monitoring
Maintenance Work Categories
Routine Maintenance
Turnarounds Including Short Overhauls

8. RAM Study – Core Indices Mechanical Availability Index (MAI)
Captures all reliability and maintenance related downtime
Breakdown
Turnarounds and Short Overhauls
Slowdowns and Rate Reductions
Monetizes all reliability and maintenance downtime
Assigns a standard margin for each production unit
Plant replacement value (PRV) × 40% × annual RAM downtime
Captures downtime by equipment category
Rotating
Fixed
Instrument/Electrical
Benchmarks Mean Time Between Failure (MTBF)
Pumps, compressors, motors, heat exchangers, etc.

9. RAM Study – Core Indices Reliability & Maintenance Effectiveness Index (RAMEI)
Reports Net Performance Gaps
Reliability
Maintenance
Highlights Areas of Excellence
Where performance is equal to or better than first quartile performance
Need to understand what enables excellent performance and replicate throughout the site
Sums Total Improvement Opportunities
Maintenance Cost Improvement Opportunities
Mechanical Availability Improvement Opportunities
Provides a Basis for a Performance Improvement Plan

10. Reliability and Maintenance Culture
Behaviors are driven by the local culture
There are two distinct cultures in the reliability and maintenance community
Traditional Culture – based on the belief that failures are inevitable, so they focus on being good at reacting
Contemporary Culture – based on the belief that failure-free operation is the objective, so they focus on failure elimination 10

11. Traditional Culture High Maintenance Costs (Cost/PRV >1.4%)
Low Equipment Reliability (<96.7% mech. avail.)
Reactive Culture (reinforce reactive behaviors)
Majority Corrective Maintenance (80/20)
Annual Turnarounds (T/As) with Little Scope Management
Change (Risk) Averse
Focus on Optimizing Reactive Behaviors
Reinforce the Current Culture and Related Behaviors
Inefficient and Ineffective Organizations 11

12. Consequences of Traditional Reliability and Maintenance
Increased risk of a catastrophic incident
Higher recordable injury rate
Increased downtime, therefore less production
More off-spec product, thus lower margins
Larger replacement capital requirements (4–10%)
Reduced revenue, therefore lower profit
Resource intensive
Lower return on assets
Cannot compete in a global marketplace 12

13. Contemporary Culture Low Maintenance Costs (Cost/PRV <1.4%)
High Equipment Reliability (>96.7% mech. avail.)
Proactive Culture (reinforce proactive behaviors)
Majority Condition-Based Maintenance (80/20)
Efficient and Effective Organizations
Failure Averse
Low T/A Frequency (5–7 years) w/Scope Management
Accept Failure-Free Operation as Normal
Focus on Optimizing Overall Performance 13

14. Benefits of Contemporary Reliability and Maintenance
Lower risk – both safety and environmental
Uninterrupted operation
Higher product quality
Increased throughput
Higher return on assets
Smaller replacement capital requirements (0–2%)
Increased revenue and profits
Optimum resource requirements
Competitive globally 14

15. Traditional vs Contemporary Reliability and Maintenance
Which one are you?
How do you know?
You know by measuring and comparing performance! 15

16. The Relationship Between Reliability & Maintenance
Reliability and Maintenance Are Inextricably Linked
Reliability
Cannot cost cut your way to improved reliability
Maintenance
Maintenance costs are driven by reliability…or the lack thereof
Best performers achieve high reliability at low cost!
Poor performers have high cost with low reliability!
Each 1% increase in mechanical availability can translate into a 10% reduction in maintenance cost!

17. Traditional Approach Pressure Applied Here Maintenance Costs
Reliability
(Margin)

18. Initial Traditional Result
Pressure Applied Here
Lower
Reliability
(Margin)
Lower
Maintenance
Costs

19. Long-Term Traditional Result
Higher
Maintenance
Costs
Lower
Reliability
(Margin)

20. Contemporary Approach
Maintenance
Costs
Reliability
(Margin)
Apply Pressure Here

21. Progressive Result Higher Reliability (Margin) Apply Pressure Here
Lower
Maintenance
Costs
Apply Pressure Here

22. RAM Optimization Total Maintenance Costs Reactive Proactive 100%
Mechanical Availability

23. Profit Optimization Total Cost Costs Maintenance Cost Lost Revenue
100%
Mechanical Availability

24. Maintenance Cost, % (US $/PRV)
Path to First Quartile
<95 95 96 97 98
>98 1
1.4
>10
Maintenance Cost, % (US $/PRV)
Mechanical Availability, %
High Mechanical Availability and Low Cost
Industry Leaders
Sustainable
Effectiveness
Low Mechanical Availability and High Cost
Not Sustainable
Facility
Efficiency and Cost

25. World-Class Manufacturers
Recognize the value of reliable operations
Focus on failure elimination (uninterrupted operation)
Build reliability into their corporate strategy
Engineering Design
Procurement
Operation
Compete effectively in a global marketplace

26. Summary
If maintenance costs are not below 1.4% of plant replacement value, you are not a world-class performer.
If mechanical availability is not above 96.7%, you are not a world-class performer.
Best performers continue to get better while poor performers continue to fall further behind.
Regrettably, for some, it is already too late!
The path to world-class performance begins with the first step… what are you waiting for?

27. Questions? Thank You! Al Poling RAM Study Project Manager
HSB Solomon Associates LLC
Dallas, TX