Can you quantify the financial impact of your maintenance program on your business? Do you take into account not only the direct costs of maintaining equipment, such as labour and parts, but also the costs of not maintaining equipment effectively, such as unplanned downtime, equipment failures and production losses?

The total financial impact of maintenance can be difficult to measure, yet it is a very valuable task to undertake. It is the first step in finding ways to improve profit and loss. In other words, it is the first step towards an optimised maintenance strategy.

In a 2001 study of maintenance costs for six open pit mines in Chile [1], maintenance costs were found to average 44% of mining costs. It’s a significant figure, and it highlights the direct relationship between maintenance and the financial performance of mines. More recently, a 2013 Industry Mining Intelligence and Benchmarking study [2] reported that mining equipment productivity has decreased 18% since 2007; and it fell 5% in 2013 alone. Besides payload, operating time was a key factor.  

So how do you know if you are spending too much or too little on maintenance? Certainly, Industry Benchmarks provide a guide. In manufacturing best practice, benchmarks are less than 10% of the total manufacturing costs, or less than 3% of asset replacement value [3].

While these benchmarks may be useful, a more effective way to answer the question is to look at the symptoms of over- or under-spending in maintenance. After all, benchmarks cannot take into account your unique history and circumstance.

Symptoms of under-spending on maintenance include:

  • Rising ‘hidden failure costs’ due to lost production
  • Safety or environmental risks and events
  • Equipment damage
  • Reputation damage
  • Waiting time for spares
  • Higher spares logistics cost
  • Lower labour utilisation
  • Delays to product shipments
  • Stockpile depletion or stock outs

Other symptoms are explored in more detail in our guide: 5 Symptoms Your Maintenance Strategy Needs Optimizing.

Man in front of computer screen

Figure 1

In most cases, it is these ‘hidden failure costs’ that have the most impact on your bottom line. These costs can be many times higher than the direct cost of maintenance – causing significant and unanticipated business disruption. As such, it is very important to find ways to measure the effects of not spending enough on maintaining equipment.

Various tools and software exist to help simulate the scenarios that can play out when equipment is damaged, fails or, conversely, is proactively maintained. A Failure Modes Effects and Criticality Analysis (FMECA) is a proven methodology for evaluating all the likely failure modes for a piece of equipment, along with the consequences of those failure modes.

Extending the FMECA to Reliability Centred Maintenance (RCM) provides guidance on the optimum choice of maintenance task. Combining RCM with a simulation engine allows rapid feedback on the worth of maintenance and the financial impact of not performing maintenance.

Armed with the information gathered in these analyses, you will gain a clear picture of the optimum costs of maintenance for particular equipment – and can use the data to test different ways to reduce costs. It may be that there are redundant maintenance plans that can be removed; or a maintenance schedule that can become more efficient and effective; or opportunity costs associated with a particular turnaround frequency and duration. Perhaps it is more beneficial to replace equipment rather than continue to maintain it.

It’s all about optimising plant performance for peak production; while minimising the risk of failure for key pieces of equipment. Get it right, and overall business costs will fall.

Want to read on? Download our guide: 5 Symptoms Your Maintenance Strategy Needs Optimizing.

 

[1] Knights, P.F. and Oyanander, P (2005, Jun) “Best-in-class maintenance benchmarks in Chilean open pit mines”, The CIM Bulletin, p 93

[2] PwC (2013, Dec) “PwC’s Mining Intelligence and Benchmarking, Service Overview”, www.pwc.com.au

[3] http://www.maintenancebenchmarking.com/best_practice_maintenance.htm

Figure 1:  This image shows Isograph’s RCMCostTM software module which is part of their Availability WorkbenchTM. Availability Workbench, Reliability Workbench, FaultTree+, Hazop+ and NAP are registered trademarks of Isograph Software. ARMS Reliability are authorized distributors, trainers and implementors.

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