Unit 1 Maintenance Management and Terotechnology: An Overview
Unit 1 Maintenance Management and Terotechnology: An Overview
Unit 1 Maintenance Management and Terotechnology: An Overview
1.1 INTRODUCTION
Production organizations are usually concerned with converting inputs such as raw
materials, labor and processes into finished products of higher value at minimum cost
satisfying the customer needs. Increased competition for timely delivery of high
quality products has forced manufacturers to adopt automation. This has resulted in
very high investments in plant and equipment. In order to achieve maximum return on
investments the production systems will have to minimize plant downtime, increase
productivity, improve quality and deliver orders to customers in a timely fashion. This
has brought to the forefront the role of maintenance as a key function in any
production system.
The focus of the maintenance function is to insure that all company assets meet and
continue to meet the design function of the asset. Maintenance involves a
combination of activities by which equipment or system is kept in, or restored to, a
state in which it can perform its designated functions. It is an important factor in
product quality and can be used as a strategy for successful competition. Many
companies consider maintenance as a necessary evil, an expense to the organization,
or a non-value-added function. More progressive companies view maintenance as a
way to reduce costs of producing their product or providing their services. They are
using this cost advantage to lower prices and increase their life cycle profits.
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Maintenance Overview and
Management System 1.2 PLANT MAINTENANCE AND LIFE CYCLE
PROFITS
Life cycle costs are total costs from inception to disposal for equipment and plant.
It is the sum of all costs incurred during the lifetime of an item, that is, the total
procurement and ownership costs. It is the total cost of ownership. A typical cost
element structure is as follows:
Cost categories
a) Acquisition costs
• Research and development
- Management
- Engineering
• Design and prototyping
- Engineering design
- Fabrication
- Testing and evaluation
• Production
- Manufacturing
- Plant facilities and overhead
- Marketing and distribution
b) Operations and support costs
• Operations
- Facilities
- Operators
- Consumables (energy and fuel)
- Downtime
• Support
- Repair resources
- Supply resources
Repairables
Expendables
Tools, test, and support equipment
- Failure costs
- Training
- Technical data
c) Phase out
• Salvage value
• Disposal costs
Life cycle cost = Acquisition costs + operation costs + failure
Cost + support cost – net salvage value
Where, Net salvage value = salvage value – disposal cost
To discount monetary values over time, all revenues and costs can be expressed in
present day equivalent values
If P = present value
f = inflation rate
e = annual return on investment rate
i = real, or effective, discount rate
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i ≈ e – f for small values of e and f
PF (i ,d) = present value of a future single payment ‘F’ at the end of year ‘d’ Planned Maintenance
Management System and
1 Controls
= ––––––––
d
F
(1 + i)
PA (i, d) = present value of equal annual payment ‘A’ over ‘d’ years
[(1 + i ) d − 1] 1 − (1 + i ) − d
= A = A
[i (1 + i ) d ] i
In case Cu =Unit acquisition cost
N =Number of identical units to be procured
Fo =Fixed cost of operating
Co =Annual operating cost per unit
Fs =Fixed support cost
Cs =Annual support cost per unit
Cf =Cost per failure
to =Operating hours per year per unit
td =Design life (in years)
S =Unit salvage value (a negative value is interpreted as disposal cost)
to
Life Cycle Cost = Cu N+[Fo + PA (i, td)Co N] + [PA (i, td)Cf ––––––.N]
MTTF
+ [Fs + PA (i, td) Cs N] – [PF (i, td) S N]
And Cf is Cost per failure may be a repair cost, replacement cost, or a warranty
cost. Our objective is maximization of life cycle profits, which can be defined as:
t0 Life Cycle Profit = Revenue Generated – Life Cycle Costs
MTTF
Figure 1.1 illustrate the expected variation of profit during the life cycle as a
difference between achieved revenue and the sum of operation, maintenance,
downtime and capital costs. The factors affecting life-cycle profitability are given in
Table 1.1.
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Maintenance Overview and Activity A
Management System
Visit a manufacturing unit. Take an audit of few machines and calculate their life
cycle cost.
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Investment in the plant occurs from its conception to its commissioning. It all goes
well the return on the investment begins when the plant comes into use and continues
until the plant is finally disposed off. The management objective is to maximize life
cycle profits within the constraints imposed by the need for safe operation. The
nature of maintenance activity is determined by the manner in which plant and
equipment is designed, selected, installed, commissioned, operated, removed and
replaced. Best time to influence maintenance and unavailability costs is before the
plant comes into use.
The specification for the new plant should include reliability and maintainability
(availability) requirements in addition to performance, cost and safety requirements.
As far as possible the expected, or useful life of the plant should also be specified. To
support this the equipment manuals, drawings, spares needed, spares security of
supply and training needs should be specified and included in the contract.
During the design stage in addition to performance due consideration should also be
made for reliability, maintainability and useful life. Design stage considerations of
8 reliability and maintainability can also affect the duration and cost of commissioning.
At the installation stage, maintainability continues to be an important consideration as Planned Maintenance
it is at this stage that the multidimensional nature of many of the maintenance Management System and
Controls
problem become clear. Similarly many design faults are known and designed out at
the commissioning stage of the plant. Failure to do this may cause serious mainte-
nance problems and high unavailability in the beginning of the operational life. Operat-
ing equipment past its useful life stage will result in low availability and high mainte-
nance cost.
The total costs to the user throughout the lifetime of the plant can often be many
times the initial capital costs. It is essential that the costs of owning plant and equip-
ment are minimized over its working life. To achieve this objective it is necessary to
lower the traditional barrier between design, maintenance, operation, finance and
other functions. Terotechnology embraces both the aims of life cycle cost optimiza-
tion and the multifunctional approach to achieve it.
1.3 TEROTECHNOLOGY
The name Terotechnology is based on the Greek word ‘terein’, which means to guard
or look after. It is defined as -
Activity B
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Maintenance Overview and Corrosion phenomenon, which is only a moderate fraction of all failure of plants and
Management System equipments, costs India in the region of Rs.24,000/- crores in a year. Recent survey
of maintenance, condition monitoring and safety engineering practices of different
sectors of Indian Industry by National Productivity Council has indicated that 50% of
the maintenance work performed was reactive, 35% preventive periodic, 10%
predictive and very few proactive or root-causes based. Average availability of plant
and equipment in many industrial sectors range from 40% to 80%, whereas the
international best practice benchmark for plant availability is more than 95%.
Similarly, capacity utilization figures of some of our core sector industry hover around
60% to 80%, as compared to a world-class level of 85% to 95%.
Activity C
Visit a manufacturing set up. Examine its maintenance functions and the extent of
integration among all the functions.
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PLANNING
Maintenance Philosophy ORGANIZING
Maintenance Load Forecasting Job Design
Maintenance
Maintenance Organization Standards
Process OUTPUT
INPUT Maintenance Schedule Work Management
Project Management
Plant Output
Facilities Plant Safety
Labor MONITOR
Plant Condition
Equipment Product Quality
Spares
Management
FEEDBACK
CONTROL
Work Control
Material Control
Inventory Control
Cost Control
Managing for Quality
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Maintenance Overview and
Management System 1.6 SUMMARY
With increased automation and very high investments in plant and equipment mainte-
nance has become a key function in the present day production systems. The focus
of maintenance function is to ensure that all company assets meet and continue to
meet the design function of an asset. Maintenance management is the management
of all the assets owned by a production organization, based on maximizing the return
on investment in the asset. The nature of maintenance activity is determined by the
manner in which plant and equipment is designed, selected, installed, commissioned,
operated, removed and replaced. It plays an important role in maximizing the life
cycle profits for equipment and plant. Terotechnology is a multidisciplinary concept
and its aim is to achieve economic life cycle costs. Role of maintenance has become
significant for Indian industry for maximum utilization of all kinds of assets and to
face the challenges of the open economy. A systematic approach to maintenance
management will help to optimize the resources for maximizing the output of the
maintenance system.
2) What are the life cycle cost components for any plant?
3) Which are the factors affecting life cycle profits of any industrial plant?
4) How can maintenance affect the life cycle profits of any equipment and plant?
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Planned Maintenance
1.9 BIBLIOGRAPHY AND SUGGESTED READINGS Management System and
Controls
1) Kelly A., “Maintenance Planning and Control”, Butterworths, 1984.
2) Kelly A., “Maintenance and its Management”, Conference Communication,
1989.
3) Levitt J., “Managing Factory Maintenance”, Industrial Pres Inc., 1996.
4) Wireman T., “Developing Performance Indicators for Managing Mainte-
nance”, Industrial Pres Inc., 1998.
5) Duffuaa S.O., Raouf A. and Campbell J.D., “Planning and Control of
Maintenance Systems: Modelling and Analysis”, John Wiley & Sons, 1999.
6) Krishnan G.S., “Maintenance in the New Millennium Theme Paper”, Proc. of
National Seminar on Maintenance in the New Millennium by National
Productivity Council held at New Delhi, 20-222nd Dec, 2000, PP 1-XVI.
7) Ebeling C.E., “Reliability and Maintainability Engineering”, McGraw-Hill
Companies, Inc., 1997.
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