THE MAINTENANCE AND RELIABILITY INITIATIVE AT TECK

FOCUSING ON THE MINE MAINTENANCE DEPARTMENT AT HIGHLAND

VALLEY COPPER PARTNERSHIP

by

Dave Adema
Bachelor of Mechanical Engineering, University of Alberta, 1998

PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

In the EMBA Program

of the
Faculty
of
Business Administration

© Dave Adema, 2011

SIMON FRASER UNIVERSITY
Term Spring, 2011

All rights reserved. However, in accordance with the Copyright Act of Canada, this work
may be reproduced, without authorization, under the conditions for Fair Dealing.
Therefore, limited reproduction of this work for the purposes of private study, research,
criticism, review and news reporting is likely to be in accordance with the law,
particularly if cited appropriately.
Approval

Name: David R. Adema

Degree: Executive Master of Business Administration

Title of Project: The Maintenance and Reliability Initiative at Teck

Supervisory Committee:

___________________________________________
Dr. Ian P. McCarthy
Senior Supervisor
Professor and Canada Research Chair in Technology &
Operations Management

___________________________________________
Dr. Mark Selman,
Second Reader
Special Advisor to the Dean

Date Approved: ___________________________________________

ii
Abstract

There is significant opportunity to drive value by improving maintenance in mining.

Maintenance represents approximately 20% of a mine’s operating costs, and influences
production and capital spend. Teck has begun a coordinated Maintenance and Reliability
Initiative (MRI) across seven mines. The MRI was begun at each mine with a year of accelerated
change to maintenance processes and systems facilitated by a consultant. This paper focuses on
Mine Maintenance at the Highland Valley Copper (HVC). Year one accomplishments are
reviewed. Lessons learned are recorded that could be applied to another mine contemplating an
MRI. Direction is recommended for the next two years, focussing on finishing change already
begun, expanding the role of Reliability and upgrading the Enterprise Resource Planning system.
Recommendations include how to measure and audit long-term maintenance performance
improvement.

Keywords: Maintenance; Reliability; Maintenance Planning; Maintenance Scheduling; Short

Interval Management; Change Management; Performance Management

iii
Dedication

This paper is dedicated to my wife, Esther, who has encouraged and supported me during
my MBA studies, including shouldering an additional parenting load for our young family.

iv
Acknowledgements

I would like to acknowledge and thank those who have contributed to this program and to
this paper. First, the staff employees in Mine Maintenance who have expended so much effort in
implementing the changes included in this program. None of our accomplishments would have
been possible without your hard work and professionalism. Secondly, John Ritter who is my
supervisor and the Teck sponsor for this paper. Thirdly, Lotfi Maroizy, Tom Burke and the rest
of the consulting team involved with the project. Lotfi has been the consultant’s direct contact
with the Mine Maintenance group for the majority of the program and has skilfully guided
external expectations, listened attentively to internal feedback, and conducted himself
professionally in his work. Tom has provided constructive feedback on the paper. Finally, Ian
McCarthy, who is the Simon Fraser University faculty member assigned to be the first reader for
this paper and has provided sound guidance.

v
Table of Contents

Approval .......................................................................................................................................... ii
Abstract .......................................................................................................................................... iii
Dedication .......................................................................................................................................iv
Acknowledgements .......................................................................................................................... v
Table of Contents ............................................................................................................................vi
List of Figures .............................................................................................................................. viii
List of Tables ...................................................................................................................................ix
1: Introduction ................................................................................................................................ 1
2: Teck’s Maintenance and Reliability Opportunity................................................................... 4
2.1 The Maintenance Diagnostic at Highland Valley Copper (HVC)........................................... 5
2.1.1 Job Shadowing ........................................................................................................... 6
2.1.2 The Maintenance Pyramid ......................................................................................... 6
2.1.3 Summary of Findings ................................................................................................. 7
2.2 Implementation of the Maintenance Enhancement Program (MEP) at Highland
Valley Copper ....................................................................................................................... 10
2.2.1 Project Organization Structure ................................................................................. 11
2.2.2 Project Process and Timeline ................................................................................... 12
3: Review of the Maintenance Enhancement Program ............................................................. 14
3.1 Accomplishments .................................................................................................................. 14
3.1.1 Final Maintenance Pyramid Survey ......................................................................... 14
3.1.2 Key Performance Indicator (KPI) Trends ................................................................ 15
3.1.3 Establishment of a Management Operating System................................................. 19
3.1.4 Clarification of Roles and Responsibilities .............................................................. 20
3.1.5 Use of Work Order Status Flow ............................................................................... 22
3.1.6 Maintenance and Operations Commitment and Interaction ..................................... 22
3.1.7 Backlog Control ....................................................................................................... 22
3.1.8 Short Interval Control for Safety and Delay Reduction ........................................... 23
3.1.9 Materials Management ............................................................................................. 23
3.1.10 Haul Truck Pre-PM .................................................................................................. 23
3.2 Cost/Benefit of the MEP in Mine Maintenance .................................................................... 24
3.2.1 Cost of the MEP ....................................................................................................... 24
3.2.2 Benefit of the MEP................................................................................................... 24
3.3 Sustainability Evaluation of the MEP ................................................................................... 30
3.3.1 General Discussion of Sustainability in Change Management ................................ 31
3.3.2 Steps in Change Management .................................................................................. 31
3.4 Lessons Learned .................................................................................................................... 37
3.4.1 Ensure the project is adequately resourced by the client.......................................... 37

vi
 3.4.2 Drive more value from the diagnostic ...................................................................... 39
3.4.3 Learn From Other Sites ............................................................................................ 39
3.4.4 Focus on Communication......................................................................................... 39
3.4.5 Involvement of Information Technology, Materials Management and
Operating Groups ..................................................................................................... 40
4: Relevant Further Site and Corporate Initiatives .................................................................. 41
4.1 Maintenance Functional Audits............................................................................................. 41
4.2 Reliability Coordination within Teck .................................................................................... 42
4.3 Building Strength With People (BSWP) ............................................................................... 42
4.4 HVC Performance Management Project ............................................................................... 42
4.5 Upgrade to Enterprise Resource Planning (ERP) System ..................................................... 43
5: Recommendations and Implementation for 2011 & 2012 .................................................... 44
5.1 Progression of Maintenance Enhancement Program............................................................. 44
5.1.1 Integrating New Employees ..................................................................................... 44
5.1.2 Expanding the Program ............................................................................................ 44
5.2 Expanding the Reliability Program ....................................................................................... 47
5.2.1 Equipment Criticality ............................................................................................... 47
5.2.2 Revision of Reliability KPI’s ................................................................................... 48
5.2.3 RCM (Reliability Centered Maintenance) & RCFA (Root Cause Failure
Analysis) .................................................................................................................. 48
5.2.4 Lubrication Program ................................................................................................ 48
5.2.5 PM Rationalization................................................................................................... 48
5.2.6 Condition Based Maintenance (CBM) ..................................................................... 49
5.2.7 5S Program ............................................................................................................... 49
5.2.8 Reliability Management Operating System ............................................................. 49
5.3 Upgrade to ERP System ........................................................................................................ 50
5.4 Implementing the Change ..................................................................................................... 51
5.4.1 Timeline ................................................................................................................... 51
5.4.2 Managing Recommended Change............................................................................ 52
6: Conclusion................................................................................................................................. 54
Appendices .................................................................................................................................... 55
Appendix A – Functional Audit ..................................................................................................... 56
Appendix B - Maintenance Mission and Vision ............................................................................ 61
Appendix C – Key Performance Indicator Trends ......................................................................... 63
Reference List ............................................................................................................................... 66

vii
List of Figures

Figure 1: 'Day In Life Of' Results for Foreman and Planner (Source: Diagnostic
Presentation)................................................................................................................... 6
Figure 2: Pyramid Results from Diagnostic (Source: Diagnostic Presentation) ............................ 7
Figure 3: HVC Maintenance Spend (AVG 2008 - 2009 Forecast) (Source: Diagnostic
Presentation)................................................................................................................... 9
Figure 4: Project Organizational Structure (Source: Diagnostic Presentation) ............................ 11
Figure 5: Project High Level Timeline (Source: Steering Team Presentation) ............................. 13
Figure 6: Final Maintenance Pyramid Survey ............................................................................... 15
Figure 7: Heavy Duty Shop PM Attainment (Source: Week 39 Milestone Presentation) .......... 16
Figure 8: HD Shop Schedule Loading (Source: Week 39 Milestone Presentation) .................... 17
Figure 9: Heavy Duty Shop Schedule Attainment and Unscheduled Work .................................. 18
Figure 10: % Scheduled Downtime Trend (Source: Author) ....................................................... 19
Figure 11: Trending Haul Truck Maintenance Ratio (Source: Author) ...................................... 26
Figure 12: Correlation of Haul Truck Availability to Delays (Source: Author) ......................... 28
Figure 13: Breakdown of Haul Truck Delay Hours (Source: Author) ........................................ 29
Figure 14: Trending of Haul Truck Availability, Reliability and Delays (Source:
Author) ......................................................................................................................... 30
Figure 15: Breakdown of Employees Impacted by the MEP in Mine Maintenance
(Source: Author).......................................................................................................... 45
Figure 16: Reliability Management Operating System (Source: HVC Reliability Team) .......... 50

viii
List of Tables

Table 1: Summary of Potential for Annual Maintenance Cost Reduction (Source:

Diagnostic Presentation) .............................................................................................. 10
Table 2: MEP Benefits Table (Source: Author) .......................................................................... 25
Table 3: Industry Standards for the Maintenance Ratio ................................................................ 27
Table 4: Summary of Change Management Steps for MEP (Source: Author) ........................... 32
Table 5: Summary of Future Opportunities (Source: Author) .................................................... 45
Table 6: Timeline for 2011 and 2012 (Source: Author) ............................................................... 51
Table 7: Change Management Steps for 2011 & 2012 (Source: Author) ..................................... 53

ix
1: Introduction
Teck has embarked on a coordinated Maintenance and Reliability Initiative (MRI) across
seven mine sites. This paper explains what the MRI is, why it is necessary, and what has been
accomplished to date. This paper is written at the conclusion of approximately a year of
accelerated change to maintenance processes and systems, which was facilitated by a consultant.
Direction is recommended for the next two years.

Teck is Canada’s largest diversified mineral processing and metallurgical company,

which owns or has interests in eight mines in Canada, as well as a metallurgical complex in
Canada, and five mines in the USA, Chile and Peru. Maintenance represents approximately 20%
of each mine site’s operating costs, with a combined annual spend at mine sites of approximately
$700 million. Teck’s maintenance function employs approximately 2,500 people and directly
impacts the availability of production equipment, thus impacting productivity and the need for
capital spend. (See Appendix A)

Teck has contracted a consulting company to assist with the MRI at seven of its Canadian
mines. The consultant is a global consulting company currently operating in a wide variety of
industries in 38 countries. The consultant brings knowledge of best practices, experience in
change management, and additional resources to the mines to enable change.

The Mission Statement of Teck’s maintenance group is: “Doing the right thing – every
time. We will lead our industry in having the right equipment availability, at the right time, and
at the right cost.” The associated Vision statement (see Appendix B for full version) identifies
the key areas of focus in “Doing the Right Thing - Every Time”:

1. Maintenance and Operations taking joint responsibility for equipment and working
together to get things done
2. Using best practices in the core maintenance functions with a focus on planning and
scheduling identified work
3. Applying reliability tools and techniques using proven systems such as Reliability
Centered Maintenance (RCM), Root Cause Failure Analysis (RCFA), Condition Based
Maintenance (CBM) as well as setting critical standards for maintenance and operations

1
 4. Sharing knowledge and learning from others to drive improvement including using
knowledge and resources from outside the mining industry
The MRI will address all of these areas of focus, but the initial phase concentrated on
maintenance process and systems. This phase was called the Maintenance Enhancement Program
(MEP) at HVC and had other names at other mines. The implementation of reliability tools and
techniques (point 3 above) was largely out of scope in the MEP, and will be a major focus of the
next two years. The MEP that took place in the Mine Maintenance group at Highland Valley
Copper (HVC) took 44 weeks. It is now considered complete.

Key accomplishments of the project include:

• Understanding of the building blocks of an effective maintenance program

• Improvement in planning and scheduling processes
• Clarification of roles and responsibilities
• Use of standardized process for work order flow
• Improvements in meeting effectiveness and reporting
• Control of backlog
• Short Interval Management
• Rationalization of preventative maintenance routines
• Improvement in materials management to support the maintenance function
Although much was accomplished in those 44 weeks, the MEP is only the first phase of
Teck’s MRI. Some future advances to maintenance process and systems lead logically from the
MEP that will require time and the integration of new staff to accomplish. Once these employees
are integrated, and both old and new employees become proficient in their new roles, then what
was accomplished can be extended further into the maintenance organization. The reliability
program requires further development and more time to show results.

Some lessons were learned in the MEP that can be applied at HVC or at other Teck sites
that are contemplating an MEP. One of the key lessons is that gaps in staffing should be
determined prior to the start of a project. The paper will apply this learning to a discussion of
HVC’s anticipated upgrade to its Enterprise Resource Planning (ERP) system. Another key
lesson learned is that there is significant potential to improve communication between Teck sites.
This paper postulates that there is significant potential in sharing reliability learning between
sites, and for sharing knowledge of ERP installation.

There are a number of initiatives proposed or underway which are driven either by Teck
corporate or at the site level. To employees busy with their normal duties, these initiatives can

2
appear as a burden and an interruption, particularly when they do not fit well with established
systems and processes. These initiatives include reliability engineering, human resources and
information technology initiatives. These initiatives make more sense when one looks at them
collectively, and in the context of the MRI.

The structure of this paper is as follows. Chapter 2 explains the opportunity and need to
improve maintenance in HVC’s Mine Maintenance group and across Teck. Chapter 3 reviews
the accomplishments of the MEP in HVC’s Mine Maintenance group, assesses cost/benefit, and
discusses sustainability. It also describes lessons that were learned that would be useful for HVC
going forward or for another Teck mine that was contemplating an MEP. Chapter 4 introduces a
number of initiatives driven either by Teck corporate or at the site level and reviews their fit with
the MEP. Chapter 5 provide direction for the next two years and discusses implementation of
those next steps. Chapter 6 is the conclusion of the paper.

3
2: Teck’s Maintenance and Reliability Opportunity
This chapter describes why Teck needs to improve its maintenance program, and then
proceeds to describe the opportunity in HVC’s Mine Maintenance department. It does so by
describing the magnitude of maintenance spend, and the impact of physical availability on capital
spend and production. Then it presents the results of the consultant’s initial audit, which was
called a diagnostic. The results of the diagnostic were considered in justifying the project. A
synopsis is provided for how the project is structured and controlled.

As stated in the Introduction chapter of this paper, maintenance represents approximately

20% of each Mine Site’s operating costs, with a combined annual spend at mine sites of
approximately $700 million. Teck’s maintenance function employs approximately 2,500 people.
As such, maintenance represents a significant opportunity for cost control. Maintenance can also
significantly affect mine productivity or the need for capital expenditure. The amount of
machinery available for production is often the bottleneck in generating additional revenue at
minimal marginal cost of production. Improvements to equipment physical availability
(percentage of time available for production) will result in fewer equipment purchases, or in more
production. Teck’s 2010 Q4 Quarterly Financial Report (Teck, 2011: 9) shows that 2010
revenues from the seven mines included in the MEP totalled $CAN5.22 billion. There is
significant potential to reduce costs or increase revenue by focussing on maintenance. “The
ultimate performance of any piece of mining equipment is primarily dependent upon three critical
factors: the design of the product, the application that it is used in, and the maintenance that it
receives during its time in service... Maintenance is the factor that offers management the best
opportunity to influence and control the resultant performance of its equipment” (Caterpillar,
2005: 2)

Maintenance self-assessments completed at mine sites in 2008 and 2009, and past
internal audits, indicated several areas requiring improvement. (Appendix A) Teck has
recognized that there is significant opportunity to establish common best practices across sites,
and has initiated a project call the Maintenance and Reliability Initiative (MRI) across many of its
sites. Enhanced business guidelines and procedures are being incorporated into day-to-day

4
maintenance operations to provide preferred standards and best practices to the maintenance
process. Expected results from this focused effort include:

• Standardized processes and data at all Teck Sites and an opportunity to implement
company-wide best practices
• Increased communication between operations and maintenance
• More reliable and timely information management which facilitates better analysis,
planning, and decision making
• A shift in employee effort toward more value added activities – more analysis, more
automation, and less administration. (Teck, 2010: 4)
Teck has chosen to begin this project with its seven open pit mines in Western Canada because
they are all wholly managed by Teck, have a long remaining mine life, have geographic and
cultural proximity and have similar equipment and operations. As such, there is significant
opportunity to apply and share best practices across these sites.

A similar project was performed at Shell’s Muskeg River Mine, during which several
root causes of low truck availability were identified including:

• Urgency to fix broken equipment at the expense of preventive activities perpetuating

low equipment availability

• Weak planning process for ensuring completion of preventive maintenance (PMs)

• Lack of active management on the floor (Consultant (a))

These are also areas of opportunity within Teck’s maintenance function.

2.1 The Maintenance Diagnostic at Highland Valley Copper (HVC)

Each site began with a visit from the consultant’s diagnostic team. This section will
introduce the diagnostic and present its findings in a way that will provide a compelling case for
change at HVC.

Four team members visited HVC and were on site for a period of ten days in November
of 2009. During their time on site, the team job shadowed employees, analyzed data supplied by
the mine site, attended and evaluated meetings, conducted employee surveys and assessed the
clarity of roles and responsibilities.

5
2.1.1 Job Shadowing

pent time with a cross section of maintena

The diagnostic team spent maintenance staff employees
(management).. This was called a ‘Day In T
The
he Life Of’ or DILO. The DILO provided a snap shot
of how the employee spent their workday. The figure below is taken from the diagnostic
presentation, and breaks
reaks down the ti
time spent in various functions. The key observation from
these DILO’s is that supervisorss and planners were spending less than half of their time actively
supervising, planning or scheduling.

Figure 1: 'Day In Life Of' Results for For

Foreman and Planner (Source: Diagnostic Presentation)

2.1.2 The Maintenance Pyramid

The Maintenance
intenance Pyramid was a product of a Teck task force that included representation
from the copper, zinc and coal busin
business units and from the Teck corporate office. Together the
task force identified the building blocks of a maintenance system. The diagnostic team conducted
interviews with twenty staff employees to identify areas for improvement. As demonstrated in
the figure below, improvement
mprovement was required in nearly all areas.

6
Figure 2: Pyramid Results from Diagnostic (Source: Diagnostic Presentation)

2.1.3 Summary of Findings

At the end of ten days, the diagnostic team presented their findings, summarized as
follows:

Planning

Long term reliability data is not utilized effectively

Planning responsibilities are not clearly defined between supervisor and planner and there
is a lack of clarity of roles and responsibilities with respect to planning, scheduling and
job execution responsibilities

Time allocated to planning (job preparation) is not adequate

Not all scheduled jobs are prepared in advanced

Required supporting assets are not identified in the planning process

7

Lack of coordination for supporting assets causes work delays

Lack of defined processes for planning/scheduling and continuous improvement

Right parts are not in the right place at the right time

Scheduling

Weekly and daily schedules are not sufficiently loaded

Conversion of the weekly plan to a daily schedule happens too late

Supervision and Execution

Trades time is lost due to job preparation, parts and tools issues

Frequent schedule breaks prevent the execution of planned work and increase
inefficiency

General

The pyramid interviews show that employees have differing views on reliability
processes and tools implemented

Basic maintenance Key Performance Indicators (KPI’s) are not used to drive
maintenance operations

The diagnostic team presented financial data for both the Mill and Mine Maintenance
departments (Figure 3) to categorize the opportunities to reduce annual maintenance costs.

8
Figure 3: HVC Maintenance Spend (AVG 2008 - 2009 Forecast) (Source: Diagnostic Presentation)

The diagnostic team then proceeded to set targets for reductions in maintenance costs in each
category and project annual savings ($CAN millions) available if the project proceeded. As seen
in the table below, the cost reduction opportunity is dominated by the labour and repair
parts/supplies categories.

9
Table 1: Summary of Potential for Annual Maintenance Cost Reduction (Source: Diagnostic Presentation)

A key observation from this table is that improved planning and scheduling will reduce only
labour costs, while improved reliability will reduce both labour and repair parts/supplies costs.
The benefits section of the paper will explain that it will take a further two years to see significant
improvements from reliability efforts.

2.2 Implementation of the Maintenance Enhancement Program (MEP)

at Highland Valley Copper
The diagnostic results were agreed by Teck as justification for an implementation of the
MEP at HVC, which began in June of 2010. This section of the paper will describe the
implementation in enough detail to give the reader an understanding of the MEP so that the reader
will be able to follow the following chapters of the paper. This chapter will include the
organizational structure for the project, and the process and timeline used for implementation.

10
2.2.1 Project Organization Structure

Figure 4: Project Organizational Structure (Source: Diagnostic Presentation)

The project is overseen by a Steering Committee made up of HVC’s General Manager,

other senior management within Teck and senior consultant representation. Four of the members
are on the Steering Team for all seven mines that are implementing an MEP. The remaining two
are involved in just this implementation because they are directly responsible for this particular
site. Together this group is responsible for ensuring that the implementation is on track and
properly resourced. They also serve to coordinate the project between mines.

The Site Project Management Team oversees the MEP, tying the Mine and Mill together
and managing the site’s implementation. The Mine and Mill Maintenance teams have parallel
structures that are responsible for doing the work. Each area has a full time consultant resource

11
continuous through the 44 weeks of the project. During the installation phase, an extra consultant
resource is supplied to each area to help with the increase in coaching that this phase brings.
Each area requires a full time team lead to work closely with the consultant lead. The area task
force is a diverse group of approximately eight employees including representation from
Operations and Materials Management. These employees are expected to work approximately
20% of the time on the project. Their responsibility is to assist the consultant and HVC team
leads in providing direction for the implementation and helping with the rollout of new methods
and practices to the rest of the maintenance organization. The Superintendents are responsible for
giving the task force and team leads direction and ensuring that they receive the support that they
need from the rest of the maintenance organization.

2.2.2 Project Process and Timeline

The project has a 44-week timeline, beginning in June 2010 and ending in April 2011.
Each eight-week segment has a set of milestones and finishes with a presentation to the Steering
Committee. A shorter presentation is provided to the Steering Committee half way through each
milestone, showing progress towards the milestones. The milestones have clearly defined exit
criteria. The first eight weeks of the project are intended to allow the consultants an opportunity
to become familiar with the organization they are tasked with changing, and to work with the
HVC team in designing the future state of the maintenance organization. That includes tailoring
the processes, metrics and standard practices to work at HVC. Weeks nine through 24 are the
installation stage of the project. This is the most difficult and time-consuming portion of the
project and requires the extra consultant resource. Weeks 25 through 40 are the sustainability
stage, in which the previously installed processes are coached to a fully functional and sustainable
level. The project was extended an additional four weeks to assist with integration of new
employees and address some gaps identified at the end of the 40 week period.

12
Figure 5: Project High Level Timeline (Source: Steering Team Presentation)
The milestones are further broken down into weekly Steps To Milestones, and weekly
status reports are prepared and reviewed with the mine and mill project teams. Processes and
Systems are agreed with the client and then developed, coached and monitored until they are
sustainable.

13
3: Review of the Maintenance Enhancement Program
This chapter will list and review what was accomplished in the MEP, assess the
cost/benefit of the accomplishments and evaluate the sustainability of the accomplishments. The
chapter concludes by describing lessons that were learned through the implementation. These
lessons learned will be useful for HVC going forward or for another Teck mine that is
contemplating an MEP.

3.1 Accomplishments

3.1.1 Final Maintenance Pyramid Survey

The initial pyramid survey was repeated at the conclusion of the MEP, and the results are
shown in the figure below. The circled boxes are those that focus on reliability, while the
uncircled boxes are focused on work management. For the most part, the uncircled boxes were
within the scope of the MEP, while the circled boxes will be the focus of the next two years.

14
Figure 6: Final Maintenance Pyramid Survey
Comparing this pyramid with the one from the diagnostic (See Figure 2), one can see that
significant progress has been made, particularly for the lower tiers of the pyramid, and for those
that were within the scope of the project.

3.1.2 Key Performance Indicator (KPI) Trends

Prior to the MEP, HVC focused on lagging indicators such as physical availability and
compliance to budget. Focussing on lagging indicators is like driving your car using the rear
view mirror. There was a lot of information available on performance, but very little of it was
useful for managing the work. “Most companies’ operational and management control systems
are built around financial measures and targets, which bear little relation to the company’s
progress in achieving long-term strategic objectives.” (Kaplan & Norton, 1996: 152) “You
cannot manage what you cannot control, you cannot control what you cannot measure, you
cannot (or at least should not) measure without a target, and, without a target you cannot
improve”. (Caterpillar, 2005: 3) “...many mines tend to collect mountains of data ... some of
which they use, much of which they do not. Furthermore, much of the data that is used is not
used in such a way that it actually helps improve the operation. For the most part, the data that is

15
collected is presented in the form of purely informational reports that present little more than a
historical perspective ... Metrics should help us make sense of our situation and through their use
we become smarter and gain some degree of control over the outcome.” (Caterpillar, 2005: 5)

The MEP has provided metrics that are leading indicators. These KPI’s provide greater
and timelier visibility into issues, which in turn enables control. Examples of these KPI’s are
Preventative Maintenance (PM) Schedule Attainment, Schedule Loading, Schedule Attainment,
% Unscheduled labour, % Scheduled Downtime and Efficiency. Heavy Duty Shop (haul trucks
& major support equipment) examples are included in this report. Additional trends for Field
Mechanical (shovels & drills) and Mine Electrical are shown in Appendix C.

PM Schedule Attainment is the weekly percentage of scheduled Preventive

Maintenance (PM) hours that were completed. Poorly functioning maintenance organizations
often struggle to complete their Preventative Maintenance because they are focused on
completing breakdown maintenance, but the key to breakdown reduction is a functioning PM
program. Such maintenance organizations find themselves caught in a vicious cycle that requires
tremendous discipline to break. PM Schedule Attainment has improved through the MEP in each
of the three major areas in Mine Maintenance.
%

Haul Trucks & Support Equipment PM Attainment

97 100 100 100 98 97
100 88 91 89 89 90 91
78 83 81
90 75
80
70 54
60 42
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

Figure 7: Heavy Duty Shop PM Attainment (Source: Week 39 Milestone Presentation)

Schedule Loading is the weekly percentage of the available resource hours (manpower)
that were scheduled. Schedule loading has increased in all three areas as well. Schedule loading
targets are typically set between 80% and 100% depending on the work area. Work areas that can

16
have days without unscheduled work should be loaded more highly than those areas that always
have some level of unscheduled work.

HD Shop Schedule Loading

%

95 96
100 95 89 86
90 78 80 75 81 84
75
80 69 64 68
63 61
70 57 57
60
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

Figure 8: HD Shop Schedule Loading (Source: Week 39 Milestone Presentation)

Schedule Attainment is the percentage of the weekly scheduled work that was
completed in the week. % Unscheduled Work is the percentage of total hours worked that was
spent on unscheduled work in the week. The higher the schedule is loaded, the more difficult the
schedule is to attain, but Schedule Attainment numbers have also risen through the MEP.
Scheduled work is always more efficient than unscheduled work. (Wireman, 2004: viii)
(Sheremeta et al, 2008: 87) At the beginning of the project, people did not believe that the
schedule could be loaded above 60% or that unscheduled work would average less than 40%.
Unscheduled work results in delays due to looking for parts, tools, coordinating trades and space,
etc. Often unscheduled work causes an uneven workload which results in equipment delays due
to inadequate manpower or space to work on all of the down equipment. Since Loading and
Attainment numbers have risen through the MEP, it follows logically that % Unscheduled work
has gone down during the same period, which can be seen in the Figure below.

17
 HD Shop Schedule Attainment
%
and Unscheduled Work
93 95 91 89
100 83 84 87
90 72 74 80 77 74 68 73
80 63 60 67
70
60
50 63
40 20 53
30 45 43 44 44 43
20
29 34 35 40 39 32 32 31 31
10 22 25
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Schedule Attainment Plan Schedule Attainment Actual
Unscheduled Plan Unscheduled Actual

Figure 9: Heavy Duty Shop Schedule Attainment and Unscheduled Work

% Scheduled Downtime is a percentage of total fleet downtime that is scheduled in

advance, i.e. included in the weekly schedules. Since this metric was recorded prior to the MEP,
it provides a baseline against which later performance can be compared. The design, installation,
and sustainability phases of the MEP and a line of best fit are included on the chart to help
illustrate the effect of the change program on the metric. “Data collected from mine studies has
shown that the average downtime for unplanned / unscheduled work is up to eight times greater
than the downtime for planned / scheduled activity. Aside from MTBS, % Scheduled Downtime
is the most important measure of equipment maintenance management performance ... Mines
with highly effective equipment management processes in place are able to execute 80% of its
maintenance and repair downtime activity on a scheduled basis.” (Caterpillar, 2005: 22)

18
 80%
75%
70%
65%
60%
55%
50%
45%
40%
Install
35%
Design Sustainability
30%
Jan, Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan, Feb
2010 2011

% Scheduled Downtime Linear (% Scheduled Downtime)

Figure 10: % Scheduled Downtime Trend (Source: Author)

Efficiency is a measure of actual hours versus estimated hours spent on a task. When
actual and estimated hours do not correlate well, either the task was not planned and executed
well, or the estimate was poor. Efficiency is most useful when used at the work order or daily
level, and cannot be meaningfully trended over time because task estimates are continuously
being revised. Long-term labour productivity can be trended by the Maintenance Ratio,
explained in Section 3.2.2. Efficiency was tracked, but not meaningfully used prior to the MEP.
Now the KPI is used in daily meetings to identify issues, which are usually gaps in work
preparation. “The primary reason for low wrench time (productive maintenance time) is that they
are not provided the necessary resources by management.” (Wireman, 2004: viii)

3.1.3 Establishment of a Management Operating System

A Management Operating System consists of meetings held at suitable intervals and with
appropriate attendees and reporting. During those meetings, key performance indicators are
reviewed to find root causes of variances from plan and actions taken to recover the plan.

“Diagnostic control systems work like the dials on the control panel of an airplane
cockpit, enabling the pilot to scan for signs of abnormal functioning and to keep critical
performance variables within preset limits. Most businesses have come to rely on diagnostic
control systems to help managers track the progress of individuals, departments, or production

19
facilities toward strategically important goals.” (Simons, 1995: 81) Diagnostic controls allow a
manager to see if he is getting to his target, but have little value in helping him get to that target.
HVC tracked nearly all of the KPI’s noted in the prior section prior to the MEP, but did very little
with the information. Through the MEP process, these control systems have shifted to
‘Interactive Control’ Systems.

‘... Interactive control systems are the formal information systems that managers use to
involve themselves regularly and personally in the decisions of subordinates’ (Simons, 1995: 86)
Interactive control systems have four characteristics that set them apart from diagnostic control
systems. First, they focus on constantly changing information that top-level managers have
identified as potentially strategic. Second, the information is significant enough to demand
frequent and regular attention from operating managers at all levels of the organization. Third,
the data generated by the interactive system are best interpreted and discussed in face-to-face
meetings of superiors, subordinates and peers. Fourth, the interactive control system is a catalyst
for an ongoing debate about underlying data, assumptions, and action plans. (Simons, 1995: 87)

In the past, reports were written to provide basic information to upper management rather
than to identify problems or to drive actions and priorities for problem management. “The real
“meat” of any good report are the conclusions made from the “picture” of the data provided by
the graphics and the resulting action plans that are developed to address problems that are
identified.” (Caterpillar, 2005: 6)

Meeting effectiveness training was one of the most important contributions of the
consultant team. “Meetings have a high level of impactability (potential for improvement) due to
a common lack of organization and process”. (Consultant (c): 7) With the Consultant’s help we
developed a ‘Terms Of Reference’ (TOR) for all meetings. This communicated the meeting
objectives, inputs/outputs, standing agenda and attendee list for all meetings in a standard format.
Each meeting now contains an action log as both an input and an output.

3.1.4 Clarification of Roles and Responsibilities

During the MEP, all staff employees and all clerks provided a breakdown of their regular
duties in the form of an Activity List. The activities were divided into categories.

Consistent with the diagnostic findings, the activity lists demonstrated that planners were
not ‘planning’ enough. Too much of their time was spent doing clerical and scheduling work,
leaving them without sufficient time to plan. There are two ways to fix that. The first is to

20
reduce the non-planning workload by eliminating or streamlining clerical and scheduling
processes. The second is to shift that work to others. Most experts agree that better use of
planners provides one of the largest potential areas for cost savings in maintenance (Wireman,
2004: viii), yet maintenance organizations very commonly place responsibility for too many craft
technicians on planners. (Wireman, 2004: 106) “The Planner position is one of the most critical
in the Maintenance Organization, but planners are frequently tasked with multiple job
responsibilities including helping with emergency or unscheduled work.” (Warmack, 2009: 2)

The Activity Lists also demonstrated that supervisors were doing a significant amount of
clerical and planning work, particularly ordering and expediting parts.

Companies should take a closer look at supervisory activities to determine which portions
of the day can be altered to make more effective use of their time. This means examining
specific roles and ensuring that the right employees are performing the right tasks;
loosely defined roles, undefined expectations, and ineffective practices create a chaotic
and frustrating daily work experience with a great deal of lost time. Implementing a
simple architecture with clear accountabilities is the first step in breaking this cycle, and
each new role must be aligned with measurable expectations and supported with the tools
necessary to achieve them. (Consultant (c): 4)
The following were significant steps to increasing active supervision, planning and
scheduling.

• Developed a scheduling role in both the Heavy Duty Shop and Field Maintenance areas,
and added an employee for each. In a recent survey of maintenance managers, over 40%
of the respondents indicated that scheduling was their biggest problem. (Wireman, 2004:
105) Adding schedulers focuses on that challenge and gives the planners more time to
concentrate on planning. In addition, for someone doing both planning and scheduling,
the urgent always wins out over the long-term, so planning suffers. Separating the roles
eliminates that problem.

• Provided 7 day/week planning coverage in the Heavy Duty Shop

• Developed job descriptions and a RACI matrix for planners, schedulers, clerks and
supervisors. A RACI is a matrix that identifies which function is Responsible,
Accountable, Consulted or Informed for a particular task. A common pitfall for planners
is that they are pulled into helping with emergency work. (Warmack, 2009: 2) Similarly,
supervisors are often pulled into planning work because plans are not adequately
prepared. Clear accountabilities have reduced duplication of efforts and allowed work to

21
 be systematically shifted from supervisors to planners and from planners to schedulers
and clerks.

3.1.5 Use of Work Order Status Flow

Prior to the MEP, the originator of a work order often completed all steps required to
bring the work order to the execution stage. Delineation of planner, scheduler and supervisor
roles required disciplined use of Work Order Status Flow. Movement of a work order between
statuses now is an effective hand off from one function to the next, and clearly identifies whether
a work order has been planned, whether parts have been ordered, whether parts have arrived, and
whether the work order has been scheduled. In the past, work orders often were executed without
having gone through the necessary planning and scheduling steps.

3.1.6 Maintenance and Operations Commitment and Interaction

Even prior to the MEP, HVC had a high-level of cooperation between Maintenance and
Operations. The MEP increased visibility of whether equipment was released for Maintenance
according to the schedule and how it was released. Explanations for deviations from the shovel
and drill schedule are now reviewed at the weekly Schedule Commitment meeting. Operations is
accountable for preparing an adequate work area and moving the shovel for each down.
Maintenance is accountable for returning the shovel to the active face and checking all motions at
the end of each day. Similarly, any deviations from the truck or support equipment schedule are
reviewed daily at the shop Short Interval Control meeting and weekly at the Schedule
Commitment Meeting. These improvements have contributed to the gains in PM Compliance and
have reduced coordination delays.

3.1.7 Backlog Control

Improvements in Roles and Responsibilities and in Work Order Status Flow have enabled
an accurate maintenance backlog. Together with equipment Delay information and overtime
levels, the backlog is a useful tool in determining whether manpower levels are adequate to
support the workload. The backlog is also useful in reviewing whether schedulers and planners
are making good decisions in filtering and prioritizing the work and whether supervisors are
appropriately moving work to the planning and scheduling process.

22
3.1.8 Short Interval Control for Safety and Delay Reduction

Short Interval Control (SIC) is the discipline of measuring a process at the shortest
appropriate time frame in order to identify variations and take corrective action. Benefits of Short
Interval Control include:

Provides focus

Identifies small problems before they become larger

Enables a more detailed understanding of process degraders

Engages those closest to the process (Teck, 2010: 50)

SIC requires tracking the current status of work in progress in a short enough time span
that safety or productivity issues can be identified and fixed. This requires tracking delays and
can be enabled by a whiteboard or by using a tracking sheet on a clipboard. Either way, the key
is for the supervisor to have regular interactions with his crew and to be available when they need
help or guidance. The MEP has resulted in increased time spent in meetings. The supervisor’s
time lost in attending meetings has been offset by improved planning, scheduling and materials
sourcing and by reduced time spent in adhoc meetings.

3.1.9 Materials Management

Sourcing parts and materials is a time consuming and disruptive activity for a
maintenance department. When a job is unscheduled, that burden falls directly on the supervisor.
During the MEP, the percentage of work that is scheduled has increased, and a channel for
supervisors to defer work to the planning process has been provided. Improvements in kitting
and staging and the handling of non-stock parts orders have provided more time for supervisors to
actively supervise.

3.1.10 Haul Truck Pre-PM

The Pre-PM is done seven to ten days ahead of the Preventative Maintenance (PM) event.
It takes about one hour, during which time a mechanic takes fluid samples, reviews a list of
operator complaints with the operator, and performs basic checks. The benefits of a Haul Truck
Pre-PM were documented during a benchmarking trip performed by Teck Coal. (Sheremeta et al,
2008: 87) Advantages include:

• Clarification of issues identified by the operator.

23
 • Opportunity to educate the operator on how his/her activities affect the reliability of
the truck.
• Oil sample results are available prior to the PM.
• An increase in planned work during the shutdown, resulting in better parts
coordination and a better estimate of the work duration.

3.2 Cost/Benefit of the MEP in Mine Maintenance

This section will estimate the cost and benefit of the MEP in Mine Maintenance at HVC.
Where possible, cost and benefit will be expressed in financial terms.

3.2.1 Cost of the MEP

The cost of the MEP consists of consulting costs and the cost of HVC labour. Consulting
costs were budgeted at $2.7 million. Approximately half of that amount, or $1.35 million was
expended in Mine Maintenance. There were approximately 2.5 full time equivalents involved
from HVC’s Mine Maintenance group for 44 weeks, which is a cost of approximately $300,000.
One could argue that these wages are a sunk cost, and that the real cost of HVC labour is the
opportunity cost - the value of the activities that these people would have been able to perform if
they were not involved with the MEP. It is the author’s belief that the opportunity cost exceeds
the actual cost. However, actual cost will be used since the opportunity cost is nearly impossible
to estimate. The total cost of the MEP in mine maintenance is therefore approximately $1.65
million.

3.2.2 Benefit of the MEP

Putting a dollar value to the benefits of the MEP is more difficult. Improvements
occurred gradually through the course of the MEP, gains are still being realized, there has not
been sufficient time to track those gains, and there is a great deal of background ‘noise’. That
background noise includes the timing of major maintenance events and the influence of other
improvements. In the short term, inferences will have to be made to the financial benefit of the
MEP using a sensitivity analysis. In their article ‘Using the Balanced Scorecard as a Strategic
Management System’, Kaplan and Norton describe how to use a Balanced Scorecard to drive
objectives that are not just financial, but also focus on our internal customers (equipment
availability and reliability), on our internal business processes (schedule loading & attainment, %
unscheduled) and learning and growth (continuous improvement). (Kaplan & Norton, 1996)

24
These metrics are widely accepted as being linked to long-term financial performance and are
more easily measured. Measuring them, therefore, provides an earlier and more reliable measure
of project success than directly measuring costs.

The following table summarizes and estimates the potential MEP opportunities, which
are further explained in the following sections of the paper.

Table 2: MEP Benefits Table (Source: Author)

Source of Annual Short Term Long Term Comments

Opportunity Size of Indicator(s) / Indicator(s) /
Opportunity Benefit Benefit

Maintenance $22M %Unscheduled Maintenance Ratio Highly influenced by the

Labour Work / $700K / $1 million per MEP through
per year year improvements in work
management.

Maintenance $28M %Unscheduled Component Not highly influenced by

Materials Work / Rebuild $/hr, $/hr the MEP, but with
negligible by fleet by significant potential
financial component / $1.4 through reliability
benefit million per year improvements.

Production $872M Reliability, PM Reliability KPI’s, Influenced via labour

increase Attainment / Availability / productivity gains. Large
through significant Effect on long short-term opportunity that
Availability financial term capital is difficult to quantify.
benefit requirement

3.2.2.1 Gains in Maintenance Labour Productivity (Maintenance Ratio)

In the short term, trends in % Unscheduled work is the best indicator of improvements in
Labour Productivity. The effectiveness of planning and scheduling in improving productivity is
well documented. Planned and scheduled work can conservatively be considered twice as
efficient as work that is unplanned and unscheduled. (Wireman, 2004: viii, Frampton, 2001: 2)
Qualitative observations about the effect of improved planning and materials management are
also legitimate indicators of productivity improvements. With reference to Appendix C,
approximately 10% less work is unscheduled than at the start of the MEP for the 62% of Mine
Maintenance employees impacted by the MEP (See Section 5.1.2). This translates into $682,000
per year in reduced labour costs, with probable further gains. ($22 million in annual labour x
62% affected x 10% improvement in schedule work x 50% efficiency gain = $682,000 / year).

25
 In the longer term, the Maintenance Ratio is the best metric to measure improvements in
maintenance labour productivity. The Maintenance Ratio is defined as the ratio of maintenance
man-hours to equipment operating hours. The Maintenance Ratio has the advantage of being
independent of escalation. During labour budgeting, the total maintenance head count is often
budgeted as a ratio of the operations head count. That comparison is overly simplistic because it
neglects the effect of fixed positions and makes no allowance for the difference in maintenance
effort for various types of machinery. See Figure 12 for trends in the Maintenance Ratio for the
past decade at HVC for haul trucks. The maintenance hours include all trades. Contractor hours
are negligible. Benchmarks for new and mature fleets are included in the figure. A fleet that has
undergone its first round of major component rebuilds is considered mature. HVC has a fleet of
54 haul trucks. Eight trucks were commissioned in 2007, another eight in 2008, and ten in 2010.
All but the ten newest trucks were ‘mature’ by the end of 2010.

350,000 0.600
300,000 0.500
250,000 0.400
200,000
0.300
150,000
100,000 0.200
50,000 0.100
- 0.000
2002 2003 2004 2005 2006 2007 2008 2009 2010

Operating Hours Maintenance Ratio

New Fleet Benchmark Mature Fleet Benchmark

Figure 11: Trending Haul Truck Maintenance Ratio (Source: Author)

The table below shows industry standards for a mature fleet of haul trucks in this class for
this metric. (Caterpillar, 2005: 28)

26
Table 3: Industry Standards for the Maintenance Ratio

The haul truck Maintenance Ratio is progressing towards industry benchmarks, but could
improve by a further 0.05 maintenance hours per hour of haul truck operation. Using a budget of
200,000 truck hours per year, there is potential to reduce maintenance hours by 10,000 hours per
year. That would translate into a savings of $650,000 per year at $65 per hour. Similar potential
in other fleets could raise the payback to approximately $1,000,000 per year.

3.2.2.2 Reduction in Maintenance Material Costs

Material costs will be reduced by improvements in planning and scheduling, but to a

limited degree. “Planned purchases average 5% less than unplanned.” (Sheremeta et al, 2008:
87). As stated above, approximately 10% less work is unscheduled than at the start of the MEP.
This would indicate that material costs should be reduced by approximately 0.5%. However,
material costs in mobile maintenance are dominated by the cost of component rebuilds,
particularly haul truck engines and shovel transmissions, which are already planned, thus further
reducing the cost saving benefit of the MEP to a negligible amount.

As noted in Table 1, maintenance material costs can be impacted to a high degree by

reliability improvements. Cost per hour, cost per tonne or cost per litre of fuel burned etc are
suitable metrics for component rebuild costs. Fleet cost per hour broken down into the
component level is suitable for looking at total cost of maintenance. All of these metrics must be
adjusted for the cost of inflation. These metrics are already monitored and gains are expected
from our reliability program. It is reasonable to expect the 5% improvement in parts and repair
material costs in two years time, primarily due to reliability improvements which extend the life
of major components. A 5% gain would correspond to $1.4 million annually.

3.2.2.3 Increase in Fleet Physical Availability

There is a direct link between increased availability (particularly for haul trucks) and
revenue at HVC, particularly in the short term. 2010 revenues at HVC were $872 million, thus

27
any impact on revenues is likely to ddominate the benefits of the MEP. It is not immediately clear
whether the MEP has helped to improve haul truck availability. In fact, haul truck availability
has been lower in recent months than the 2010 average. During these recent months, physical
availability was reduced by mine operating conditions, level of planned component replacements,
and availability of labour.

As demonstrated in the following figure, ph

physical availability is highly correlated to
delays. Regression analysis demonstrates that if delays could be eliminated, approximately 91%
availability would be possible.

Figure 12:: Correlation of Haul Truck Availability to Delays (Source: Author)

As demonstrated in the figure below, these delays are predominantly
y manpower delays.
Since HVC’s Collective Bargaining Agreement prevents bringing in contract labour, improving
labour productivity or hiring more employees are the only ways to reduce manpower delays.
delays

28
 SPACE DELAY
PARTS DELAY
TOOLS DELAY
OPERATIONS DELAY
MECH MANPOWER
ELECT MANPOWER
WELDING MANPOWER
TIRE MANPOWER

Figure 13: Breakdown of Haul Truck Delay Hours (Source: Author)

The next figure shows monthly trends of availability, reliability and equipment delays.
Again, the inverse correlation between delays and availability is evident, while reliability
numbers are relatively stable and perhaps trending upwards. There has been no increase in haul
truck PM Attainment during the MEP because it was 100% before and during the program.

29
Figure 14:: Trending of Haul Truck Availability, Reliability and Delays (Source: Author)
It is reasonable to assume that there will be an improvement in availability due to the
MEP. Proving or quantifying the improvement is nearly impossible. Because of a reduction in
mining throughput in Q4 of 2011, availability will not sig
significantly
nificantly affect production for several
years following completion of the MEP.

3.3 Sustainability Evaluation of the MEP

This section reviews the MEP to assess whether the changes will be permanent and
continuing. It begins with a definition of sustainabilit
sustainability and establishes the fact that changes are
often unsuccessful. This is followed by an assessment of how the MEP fared through the stages
of change management identified by Kotter in his paper ‘Leading Change – Why
Transformational Efforts Fail’. (Kotter, 1995) The MEP should be seen as an accelerated start to
a change program that is at least three years in duration. Accordingly,, this section will conclude

30
with an evaluation of whether and to what extent these changes will be sustained and furthered
following the completion of the MEP. This section will build into the Recommendations section
of the paper.

3.3.1 General Discussion of Sustainability in Change Management

Sustainability is the condition in which the implemented systems, processes, and

behaviours are institutionalized and self-correcting resulting in continuous performance
improvement. Since sustainability is the foundation for continuous improvement, it will
allow the continued achievement of results long after any implementation is completed.
In the journey to sustainability, the organization will go through a series of changes in
behaviour that range from the moment the need for change is identified to the time when
everyone in the organization fully understands, uses and believes in the changes
implemented. Sustainability is reached when the changes become the norm, and a pre-
change organization no longer seems possible. Hard work, perseverance and patience are
crucial for getting to this stage; in addition to a personalized, flexible implementation that
ensures the changes are the most appropriate for the organization – not an imposed
standard. (Teck, 2010: 8)
Many change efforts do fail. The Economist Intelligence Unit has commissioned a
survey of the success of changes in a range of organizations. Their findings are that only about
half of change programmes at companies in Western Europe or the US were successful.
(Consultant (b): 4)

3.3.2 Steps in Change Management

In the following sections, this paper will review the MEP in the context of Kotter’s paper
entitled ‘Leading Change – Why Transformational Efforts Fail’. Kotter notes that corporate
change efforts fall somewhere between success and failure, with ‘a distinct tilt toward the lower
end of the scale’. (Kotter, 1995: 96)

The most general lesson to be learned from the more successful cases is that the change
process goes through a series of phases that, in total, usually require a considerable length
of time. Skipping steps creates only the illusion of speed and never produces a satisfying
result. A second very general lesson is that critical mistakes in any of the phases can have
a devastating impact, slowing momentum and negating hard-won gains. (Kotter, 1995: 97)
Table 5 below is a summary of these phases. Further detail on these phases is provided in the
remainder of this section.

31
Table 4: Summary of Change Management Steps for MEP (Source: Author)

Phase Score Comments

Establishing a Sense of Urgency B A slow start, but regular reporting of project

progress helped create a sense of urgency

Forming a Powerful Guiding A Appropriate levels of management were

Coalition involved. The team included people with
subject matter knowledge & expertise and line
leadership

Creating a Vision B Leadership team created an effective vision

Communicating the Vision C Vision was sometimes lost amid other

initiatives and the multitude of installations in
the MEP

Empowering Others to Act on the B Control and empowerment are not always
Vision compatible

Planning for and Creating Short A Milestones were effectively broken down into
Term Wins weekly actions

Consolidating Improvements and TBD New supervisors are coming on board, future
Producing Still More Change steps have been identified

Institutionalizing New Approaches TBD Meeting effectiveness and root cause

identification are embedded

3.3.2.1 Establishing a Sense of Urgency

Chapter 2 described Teck’s opportunity to improve maintenance and reliability. There is

significant payback to the corporation (See Table 1), but no obvious tangible benefit to
employees. The first step to realizing the opportunity is to create a widespread agreement that
change is necessary and urgent. According to Kotter, the required rate of urgency ‘is when about
75% of a company’s management is honestly convinced that business as usual is totally
unacceptable’. Kotter has found that well over 50% of companies that he has observed fail in this
first phase. (Kotter, 1995: 98)

Initially the MEP at HVC suffered from a low level of urgency. There were several
reasons:

32
 • The maintenance organization considered itself high functioning. In particular,
availability of machinery was relatively high. “The vast majority of organizations never
become great, precisely because the vast majority become quite good - and that is the
main problem.” (Collins, 2001: 1)

• The maintenance group was busier than it ever had been. Resources were stretched in
maintaining fleets that were considerably larger than in the previous year, and
approximately double that of four years prior. There was also considerable pressure not
to raise manpower levels due to uncertainty in the future mine plan. The net result was
that the project was not well resourced.

• Despite operational problems, company profits were high due to high Copper prices.

• The MEP followed closely on the heels of a pair of other initiatives. The first was a
performance management initiative facilitated by a consultant and the second was an
employee empowerment initiative. It was difficult to ‘go to the well’ again.

• Many of the employees had also been through similar consultancy reviews of
maintenance by Proudfoot and Ryberg-Levy in decades past. These previous consultants
were efficiency focused, in one notorious case even timing employees’ bathroom breaks.

‘Because there seems to be an almost universal human tendency to shoot the bearer of
bad news... executives in these companies often rely on outsiders to bring unwanted information.’
(Kotter, 1995: 98) The diagnostic was used to establish the need for a change, and was partially
successful. In the process of the diagnostic, employees learned more about the MEP, which also
helped convey the need for change. At the beginning of the project, quick wins were identified
and acted upon, which helped fuel initial enthusiasm. Clearly defined milestones and a rigorous
tracking system also contributed to the sense of urgency.

3.3.2.2 Forming a Powerful Guiding Coalition

Kotter has found that “whenever some minimum mass is not achieved early in the effort,
nothing much worthwhile happens... in the most successful cases, the coalition is always pretty
powerful – in terms of titles, information and expertise, reputations, and relationships.” (Kotter,
1995: 98) “An executive steering team should be established to review progress and break down
barriers for teams on a monthly basis. In addition, a project management team should meet
weekly to measure results of the change program and report to the steering committee.”
(Consultant (c): 7) The MEP is structured to include a powerful guiding coalition in the form of

33
the Steering Team which is updated every four weeks on progress. The regular reporting to a
powerful guiding coalition is also an effective way of maintaining a sense of urgency through the
MEP. On a site level, senior maintenance management is actively involved in the MEP, which is
important because “groups without strong line leadership never achieve the power that is
required”. (Kotter, 1995: 98)

3.3.2.3 Creating a Vision

“In every successful transformation effort that I have seen, the guiding coalition develops
a picture of the future that is relatively easy to communicate and appeals to... employees.”
(Kotter, 1995: 98) “A useful rule of thumb: If you can’t communicate the vision to someone in
five minutes or less and get a reaction that signifies both understanding and interest, you are not
yet done with this phase of the transformation process.” (Kotter, 1995: 99)

Appendix B contains Teck’s Maintenance Mission and Vision. The statements are
simple and written in a way to appeal to employees at all levels within the organization and
serves as a ‘belief system’ control lever. (Simons, 1995) When communicated clearly, the vision
allows employees to view the end goal, and find unique ways of contributing to that goal.

“Without a sensible vision, a transformation effort can easily dissolve into a list of
confusing and incompatible projects that can take the organization in the wrong direction or
nowhere at all ... In failed transformations, you often find plenty of plans, directives and programs
but no vision.” (Kotter, 1995: 99) Since the scope of the MEP was very broad, this proved to be
a very real hazard. Contributing to the danger was the fact that many of the ideas were
transplanted from other Teck mines or even other industries via the consultant. Direct contact
with the Teck personnel at the other mine was helpful in certain circumstances.

3.3.2.4 Communicating the Vision

Drafting and disseminating a clearly articulated vision are the first steps to harnessing the
enthusiasm of the workforce. Executives should draft a statement that communicates the urgency
of the situation, the financial ramifications, the need for change, and how it will impact the
company. “In more successful transformation efforts, executives use all existing communications
channels to broadcast the vision.” (Kotter, 1995: 100) Although the maintenance vision is clear
and concise, it has not been effectively communicated. The objectives of the MEP were shared in
crew presentations at the beginning of the program, and results and mission statement will be
communicated again in crew presentations at the end of the program. Steering team presentations

34
were shared with supervision throughout the program, and relevant topics were discussed with
supervision at weekly meetings.

“The easiest parts of any change programme are the technical aspects such as mobilising
a project team or writing a new value statement. The hardest part, according to our survey panel,
as suggested above, is “winning hearts and minds”. ... survey respondents single this out as the
most difficult element of any change programme. It is one thing to get people to state their
commitment to a change initiative, but if they have not truly bought into the change, the
programme will ultimately fail.” (Consultant (b) : 5)

3.3.2.5 Empowering Others to Act on the Vision

“To some degree a guiding coalition empowers others to take action simply by
successfully communicating the new direction. But communication is never sufficient by itself.
Renewal also requires the removal of obstacles.” (Kotter, 1995: 101) In a company the size of
Teck, or in a site as large as HVC (1200 employees), there are often significant barriers to
change. Part of the Steering Team’s function is to assist with removing those barriers.

Part of Teck’s Maintenance Vision is an increase in the resourcing of planning,

scheduling and reliability engineering, and the need for this was identified and addressed in the
MEP. Other barriers at present include the limitations of our existing Enterprise Resource
Planning (ERP) system, and building of office space to locate planners near supervision. Hiring
the resources, building office space and in particular upgrading an ERP takes time, and will not
be completed prior to the end of the MEP.

Empowerment and a powerful guiding coalition are sometimes at odds. While a

powerful guiding coalition can help remove barriers, it also has the potential to add new barriers
by exercising control at too low a level. “A fundamental problem facing managers... is how to
exercise adequate control in organizations that demand flexibility, innovation, and creativity.”
(Simons, 1995: 80) “Effective managers empower their organizations because they believe in the
innate potential of people to innovate and add value... To unleash this type of potential, senior
managers must give up control over many kinds of decisions and allow employees at lower levels
of the organization to act independently.” (Simons, 1995: 88) “With KPIs outlined, front line
teams should also enjoy autonomy to investigate the best path to reach them. This approach
spreads risk, intellectual investment, and ultimately confidence in the process, and by design it
encourages teams to test their theories and discover what works and what needs redirection.”
(Consultant (c): 7)

35
 While at times the workstream teams were hampered by a lack of empowerment, this was
a necessary sacrifice in order to ensure consistency in the project.

3.3.2.6 Planning for and Creating Short Term Wins

“Real transformation takes time, and a renewal effort risks losing momentum if there are
no short-term goals to meet and celebrate.“ (Kotter, 1995: 102) The process designed by the
consultant includes steps to milestones, and does a good job of dividing the MEP into bite size
chunks. That process is particularly powerful when the local workstream has input to both the
milestones and the steps to milestones, and can tailor them to the unique needs of each site or
group within the site. “Creating short-term wins is different from hoping for short-term wins.
The latter is passive, the former is active.“ (Kotter, 1995: 102)

Short term wins are particularly important because it is often difficult to see the complete
path to a destination from the outset of the journey. “It took Einstein ten years of groping through
the fog to get the theory of special relativity, and he was a bright guy.” (Collins, 2001: 114) The
MEP was particularly effective in creating short term wins.

3.3.2.7 Consolidating Improvements and Producing Still More Change

‘While celebrating a win is fine, declaring the war won can be catastrophic.’ (Kotter,
1995: 102) In many cases, a change is acknowledged to be complete, and then dies out over time.
HVCP is approaching the end of the 44 week MEP, and at this point the structured management
of change that is facilitated by the consultant will end. During the MEP, some resources and
structure were put in place to accelerate change. At the end of the MEP, it will be important to
remind our employees that change will continue, particularly since some of the resources required
to meet our long term goals are just coming into place. Section 4 describes some future steps in
Mine Maintenance.

3.3.2.8 Institutionalizing New Approaches

“Until new behaviours are rooted in social norms and shared values, they are subject to
degradation as soon as the pressure for change is removed.” (Kotter, 1995: 103) Mine
Maintenance is better prepared for future change. Even before consultant has left the site, new
skills and tools have been used to change things that are outside of the scope of the MEP. In
particular, we have used the meeting effectiveness training to improve meetings that are shared
with other departments. These meetings now include a Terms of Reference and Action Log. All

36
maintenance meetings have better structure and better enable us to identify root causes of issues.
Meetings have been added that better enable continuous improvement, and the role of reliability
is better understood. Most importantly, the resources are in place or will be in place shortly to
sustain these new approaches.

3.4 Lessons Learned

One of the staples of project management is to review lessons learned. Ideally this is
logged throughout the project, but a minimum this should be done at the project’s conclusion.
“Those who cannot remember the past are condemned to repeat it” (Santayana, 1905).
Commonly, people focus on the things that did not go well, but it is equally as important to
remember and repeat successes, as it is to avoid repeating failures. It is also important to be
positive and constructive and avoid casting blame. This section of the paper describes lessons
that were learned through the implementation that would be useful either for HVC going forward
or for another Teck site that is contemplating an MEP.

3.4.1 Ensure the project is adequately resourced by the client

As with all projects, the MEP was begun with a budget of manpower required for both
the consultant and the client. The client’s commitment for the Mine Maintenance portion of the
project was approximately 2.5 full time equivalent positions, or approximately 10% of its staff
employees. This requirement existed at a point when approximately 30% more mining
equipment was being maintained than in the prior year and approximately double that of four
years prior. Lengthy absences of some key employees and staff retirements during the project
exacerbated the project staffing shortage. We were reluctant to hire those additional people
because of the potential for a precipitous drop in workload if a mine life extension was not
approved. If we had to do it all over again, it would make sense to hire in advance for staff
attrition, and perhaps even hire additional resources in preparation for a higher standard of
planning and scheduling. Industry standards of planner to trades ratios could have been used to
predict the need for those additional staff.

While the focus of the MEP is on establishing process, the success of the project hinges on
people. Here are some quotes to back up that statement.

Those who build great companies understand that the ultimate throttle on growth for any
great company is not markets, or technology, or competition, or products. It is one thing
above all others: the ability to get and keep enough of the right people. (Collins, 2001: 54)

37
 At Teck, we recognize that our ability to achieve our objectives is directly tied to the
talents, skills and commitment of our employees. The main focus of our human resources
strategy is to recruit and support employee development, to enable people to fulfill the
expectations of their jobs and to have employees who are strongly motivated, highly
competent and successful. (Teck Website)
If I were running a company today, I would have one priority above all others: to acquire
as many of the best people as I could. I'd put off everything else to fill my bus. Because
things are going to come back. My flywheel is going to start to turn. And the single
biggest constraint on the success of my organization is the ability to get and to hang on to
enough of the right people. (Collins, 2001: 51)
The MEP identified the need to hire three additional resources for scheduling and
supervision. In addition there were three staff retirements to fill, creating a need to find six new
staff employees in a short period. We no longer have the luxury of being able to fill all first level
staff positions internally. Filling internally is good for moral, and provides a candidate that has
relevant site experience and easily adapts to a new position. “In determining "the right people,"
the good-to-great companies placed greater weight on character attributes than on specific
educational background, practical skills, specialized knowledge, or work experience.” (Collins,
2001: 51) Filling positions externally can provide a healthy infusion of new competencies and
ideas, but requires a longer training and orientation process. Bringing these new employees up to
speed is a key objective for 2011, and is a continuation of the MEP.

Recommendations to another site just beginning the process would be to increase staffing
in advance of the project, targeting a skill set or attitude over experience, and allow them several
months to integrate with the rest of the workforce prior to the MEP. Similar to an engineering
consultant, a performance management consultant requires strong owner representation to
achieve the desired outcome. Hiring several months in advance of the project start date would
ensure that new employees are in place to free up a full time team lead with the experience and
influence to be effective. Much effort was expended during the project in finding the right new
staff employees, which was equally as important as completing the project goals, but removed
capacity from the project.

A higher level of client involvement in the MEP has three benefits. First, client labour is
less expensive than that of a consultant. Second, the MEP is a significant learning opportunity for
the client. Greater client involvement would result in greater retention of this learning with the
client. Finally, increased client involvement improves buy-in to the change. On the other hand,
change can be difficult using internal change agents. People can be reluctant to challenge the
status quo for fear of jeopardizing their relationship with their peers.

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3.4.2 Drive more value from the diagnostic

The diagnostic was focused on demonstrating the need for the MEP. As a result, it
focused on convincing a decision maker to proceed with the program rather than on
understanding the client and preparing the client for the upcoming program. Further, the
information gathered during the diagnostic was not used in the implementation. The diagnostic
should have been used as a planning tool to prepare the site for the implementation. For example,
the diagnostic might have identified a need for an ERP resource, a need for a scheduling function
and tools or basic computer training for supervisors.

3.4.3 Learn From Other Sites

The MEP was an opportunity to share information, successes, best practices and failures
between the seven mines carrying out the project concurrently. Much of the Steering Team is
common to all seven sites, and the consultants had a weekly conference call between sites. These
venues were helpful in passing along information. It was even more useful to provide direct
communication between appropriate people at two different sites. This was done effectively at
several points during the MEP, but could have been done more often. Learning from other sites
can continue following the conclusion of the MEP. Suggestions for the future include:

• Building a list of key contacts for each site

• Sharing Steering Committee presentations between sites

• Interaction through reliability efforts including joint participation in Reliability

Centered Maintenance (RCM) and Root Cause Failure Analysis (RCFA) and the
annual reliability conference

• Bring Teck team leads and maintenance superintendents together at the conclusion of
the program in a forum similar to the annual reliability conference or perhaps at that
conference

3.4.4 Focus on Communication

Some basics about the MEP were communicated to the crews early in the program, but
that was not followed up through the program other than through their supervisors. The crews
observed some frustration on the part of supervisors and noticed a reduction in supervisor
availability at times during the program. An effort is being made to communicate results to

39
employees at the end of the program, starting with supervisors, but it would have been best to
communicate that information regularly.

The MEP should have had a communication plan that included an article in the company
newsletter, a written communication to staff employees at each milestone, and a one-page update
for hourly employees at each milestone. The one-page updates should be discussed with the crew
by the supervisor and perhaps with the general foreman and superintendent.

3.4.5 Involvement of Information Technology, Materials Management and Operating

Groups

The MEP was focused on the maintenance function. Involvement with other groups was
in scope only to the extent that those groups interacted with maintenance. The reality is that IT,
materials management and operations are tied very closely with maintenance. Early in the
project, a multi-disciplinary task force was very effective in training and communicating. The
task force dissolved as the program proceeded and initiatives became more targeted. There was
no IT representative on the task force, but there were representatives for the materials
management and operations groups. These two individuals continued to play an active role in the
MEP. The materials management lead and the maintenance lead also continue to meet weekly
and report to a steering team of sorts on progress of materials management issues.

Leads for these complimentary groups should be identified early in the program. Senior
personnel from IT, materials management and operations should be included in Milestone and/or
Steering Team meetings. The most significant missing resource during the MEP was an IT lead
with a strong ERP background and knowledge of maintenance processes and systems. This
remains a gap on the site, which is a concern given our expected transition into a new ERP
system in the near future.

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4: Relevant Further Site and Corporate Initiatives
There are a number of initiatives proposed or underway which are driven either by Teck
corporate or at the site level including reliability engineering, human resources and information
technology initiatives. To employees busy with their normal duties, these initiatives can appear
as a burden and an interruption, particularly when they do not fit well with established systems
and processes. The conclusion of the MEP is a good point in time for a high level review of these
initiatives.

4.1 Maintenance Functional Audits

Teck corporate will carry out audits of mine sites as a follow up to the MEP. “The audit
will review, benchmark and evaluate the policies, practices, processes and key controls that
support the Company’s Maintenance function; and, look at opportunities for business
simplification and further process improvements where applicable.” (See Appendix A) The audit
scope matches the MEP’s scope to a high degree, and such audits are recommended by the
consultant.

Follow-up is also key in making sure the changes implemented are sustainable ... Audits
will demonstrate the leadership’s continued commitment to the changes and will be
helpful for the taskforce to identify new areas for improvement. (Teck, 2010: 13)
One of the stated objectives of the audit is to look for opportunities for business simplification.
That goal is often missed in implementations, and should be kept as a focal point for the audit.

The audit makes sense if implemented well, and should be repeated regularly. Audits are
typically focused on finding gaps, but since the same audit team will audit multiple sites, the audit
team also has the potential to identify sites that are functioning well in a particular area and
identify those sites as a resource to other sites which are lagging in that area. The key will be to
include qualified, knowledgeable people, who engage the sites in a manner that provides
assistance for the maintenance function.

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4.2 Reliability Coordination within Teck
Teck is working at coordinating reliability practices and sharing knowledge between
sites. This appears to be furthest advanced at the coal sites. There is tremendous value to
including HVC in that effort. In the fall of 2010, a group of reliability professionals and
maintenance management assembled for the first annual Reliability Conference in Fernie, BC.
This is a valuable networking opportunity, and a chance to share successes and best practices with
colleagues. Sharing of reliability studies, failure analysis, rationalized or optimized PM’s, and
materials management strategies, has the potential to reduce the workload of the reliability teams
at each site. A centralized support group for the coal sites is located in Sparwood, and provides
the resources to maintain a Sharepoint site. There may be further opportunity to tie relevant
information from other industry events such as the Canadian Institute of Mining (CIM) local
branch and national events, and the annual Western Mine Maintenance Association (WMMA)
meetings.

4.3 Building Strength With People (BSWP)

Building Strength With People is a Human Resources initiative that ties Performance
Management, Employee Development, Career Development and Succession Management. The
MEP initiative is relevant to the Performance Management portion of BSWP. The MEP provides
objective, measurable indicators of performance that can be used to determine whether annual
objectives have been met. A balanced set of measures and targets allows a better link between
short-term actions and long-term strategy than strictly financial measures. (Kotter, 1995)

4.4 HVC Performance Management Project

An initiative was started in July, 2010 to enable the transformation of performance
management practices at HVC. In a nutshell, the HVC Performance Management Project
involves collecting the performance metrics that are currently scattered in various software
systems and reports and gathers them into a central dashboard. That dashboard will allow
managers to drill down for information at low levels in the organization to investigate
performance variances.

Phase 1 is focused on setting direction for the project. Phase 2 is focused on

implementing the project to go live in the fall of 2011. Phase 3 will be focused on sustaining and
enhancing the implementation.

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 According to the project charter, the Performance Management Framework will not replace
the current daily, weekly and monthly reporting system, but is intended to provide a focused and
interpretive view of the underlying data to manage performance. However, in the process of
developing the dashboard, departments will have the opportunity to review their regular
reporting. This is an opportunity to review the information required from corporate in the
Functional Audit to make sure it is readily available for the audit team. It is also an opportunity
to consolidate new KPI’s required for reliability engineering.

4.5 Upgrade to Enterprise Resource Planning (ERP) System

HVC is considering a replacement of its ERP system, which would include the
Computerized Maintenance Management System (CMMS) module. HVC’s existing ERP system
is a version of JD Edwards that is approximately 20 years old. From a maintenance perspective,
the system’s chief drawbacks are the lack of a work-scheduling module, that it is not user
friendly, and that it is moving towards a lack of support due to age of the system. Modern
systems allow easier filtering and sorting of information and have enhanced reporting capability.
They are also more efficient, which reduces time spent using the system. They allow attachment
of files, and importing and exporting to and from other software. The lack of a work scheduling
and tracking module is a significant drawback to the existing ERP system. This results in
reliance on spreadsheets which results in inefficiencies, data integrity issues, and poor collection
of history.

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5: Recommendations and Implementation for 2011 & 2012
This chapter is split four sections. The first describes the next progression of what was
started in the MEP. The second describes HVC’s reliability program goals and direction for the
next two years. The third describes recommendations for implementation of an ERP upgrade.
The fourth section presents a timeline for the changes and describes some change management
challenges.

5.1 Progression of Maintenance Enhancement Program

The MEP was an accelerated period of change to work management processes, but
change is continuous and much of what was introduced in the MEP can be expanded into other
areas as new employees are integrated. Much of what was begun in the MEP will build into the
fledgling reliability program in Mine Maintenance.

5.1.1 Integrating New Employees

The MEP identified a need for three additional full time resources for scheduling and
execution of work. In addition, three vacancies were opened due to retirements. These six
positions were all filled late in the MEP or will be filled shortly following the completion of the
project. Training these people in their new responsibilities will be a focus in the 2nd quarter of
2011.

5.1.2 Expanding the Program

At the conclusion of the MEP, 62% of Mine Maintenance employees have been directly
impacted. These crews are guided by a daily loaded weekly schedule, their performance is
monitored using KPI’s, they are beginning to see improvements in job preparation, and they have
resources in place for reliability improvements. These areas were targeted because they involve
large crews, directly affect the availability of production equipment, and consume high cost repair
parts and materials. A further 11% of employees occupy fixed positions. That is to say they
perform a similar function each day and there is no requirement to plan or schedule their work.
The remaining 27% of employees represent an opportunity for further installation of some or all

44
of the improvements made in MEP. The figure below illustrates that breakdown, differentiating
between areas installed, fixed positions (no opportunity) and areas of further opportunity.

Figure 15: Breakdown of Employees Impacted by the MEP in Mine Maintenance (Source: Author)

The table below shows a further breakdown of the areas identified as a future
opportunity, and notes whether there are opportunities in Short Interval Management, Materials
Management, Reliability and Scheduling.

Table 5: Summary of Future Opportunities (Source: Author)

45
 No. Short Materials Reliability Scheduling
Employees Interval Management Opportunity Opportunities
Management
Weld Shop 24 Yes Some Some Yes
Light Vehicle
Shop 15 Yes Yes Some Yes
Washbay 4 Yes No No Yes
Component Shop 3 Yes Yes Some Yes
Tire Shop 6 Yes No No Yes
Building Mtce 4 Yes Yes No Yes

5.1.2.1 Weld Shop

Approximately a third of the weld shop’s work is included in the daily and weekly
schedules of the major equipment fleets. The rest of the scheduling and the majority of the
planning of the weld shop work is handled directly by the weld shop supervisor. The shop would
benefit from a more formalized scheduling process. The weld shop supervisor actively and
regularly manages his crew during the shift, however, there is some opportunity for greater
transparency in expectations between supervisor and crew (Short Interval Management). There is
little in the way of parts procurement in the weld shop, but there is potential to improve the
planning of materials. Reliability opportunities will be exploited in the process of reviewing
opportunities with the major fleets.

5.1.2.2 Light Vehicle Shop

Similar to the weld shop supervisor, the light vehicle shop supervisor has regular contact
with his crews, but there is opportunity for a more visible communication of daily assignments.
Materials Management is a large concern in the Light Vehicle Shop, and opportunities include
rationalizing inventory, improvement of parts lists, and better management of bought-in parts.
The light vehicle shop has a weekly schedule, with PM’s assigned to each day, but the schedule is
not loaded with manpower requirements, nor is it practical to do so. Unlike the major equipment
fleets, a predictive or elaborate preventative maintenance program is not justified. There is
potential for some basic reliability improvements in the light vehicles shop, beginning with a
focus on buying the right equipment for each application, and providing feedback on operation of
the equipment. There is also potential to review maintenance intervals and to revise maintenance
strategies for specific units with recurring failures.

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5.1.2.3 Tire Shop, Component Shop, Building Maintenance & Wash Bay

These areas are each provided with a weekly schedule of work, but not a daily loaded
schedule. Further work is identified by their supervisor and managed on a daily basis. More
formalized Short Interval Management is required to ensure that priority work is done in a timely
manner. A review of PM’s in Building Maintenance would be of value. Wash bay opportunities
include standardizing wash procedures and improving equipment and technology.

5.2 Expanding the Reliability Program

This section will describe the key initiatives of HVC’s reliability program and highlight
the interaction with the MEP at HVC. “Management should view unscheduled shutdowns as
potential failures of the equipment management system rather than just as failures of the
equipment...What distinguishes the successful site from the less successful one is the organization
that is in place and how it deals with problems when they arise.” (Caterpillar, 2005: 4) The MEP
has focused on building closed loop processes for identifying, resolving and verifying solutions to
problems. The work management processes established in the MEP will enable reliability
processes. For example, effective PMs are the first step to reliable operation of equipment.

An effective reliability program over a number of years is the key to decreasing

unscheduled work, yet only about 10% of all companies perform any failure analysis on their
breakdowns. (Wireman, 2004: x) Without such a program, we can expect a ‘glass ceiling’ on
fleet reliability, availability and levels of unscheduled work. Accordingly, a reliability focus is
the logical progression to the work begun in the MEP. The following areas of focus have been
identified for the next two years. (THVCP, 2011)

5.2.1 Equipment Criticality

Identifying critical equipment is one of the basic building blocks of the Maintenance
Pyramid. This will be further developed into identifying critical components. Each component is
ranked with a risk probability number which is the product of the consequence of a failure, the
probability of a failure and the probability of detection of a failure. ‘Bad Actors’ (chronic
failures) will be identified for critical equipment first, and Reliability Centered Maintenance
(RCM) and Root Cause Failure Analysis (RCFA) efforts will be focused on critical equipment
and components.

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5.2.2 Revision of Reliability KPI’s

HVC has tracked reliability for the last ten years. The metric currently used is a measure
of interuptions to the daily schedule, but the metric is not well understood, and not used in a
systematic way. Mean Time Between Shutdowns (MTBS) is the average operating time between
machine stoppages. It is the single most important measure of equipment maintenance
management performance (Caterpillar, 2005: 11). Mean Time To Repair (MTTR) is the average
duration of downtime events. (Caterpillar, 2005: 15). These metrics are accepted in industry and
easily benchmarked. They are most useful when trended monthly, and used in tandem.

5.2.3 RCM (Reliability Centered Maintenance) & RCFA (Root Cause Failure Analysis)

An RCM is a session that typically lasts several days and is used to develop a complete
maintenance strategy for critical equipment, components or systems. A cross-functional team is
assembled, which analyzes failure modes of components and develops a complete maintenance
strategy. An RCFA is used to determine the root causes of a failure and to develop and
implement recommendations to mitigate or prevent the failure in the future. During the MEP,
employees were trained to expose the root cause of all events. An RCFA is more formal, and
typically involves cross functional teams and spans several days. One RCM and one RCFA are
targeted for each quarter over the next two years.

5.2.4 Lubrication Program

Lubricants are the life blood of a machine. Effective management of lubricants will have
a significant effect on reliability. It also affects maintenance costs by increasing component life.
Over the next two years, there will be a focus on contamination control, with the goal of
improving scores on 3rd party lube audits. There will also be a focus on training, and improving
procedures and handling.

5.2.5 PM Rationalization

Preventative Maintenance routines are key to equipment reliability. PM Rationalization

is a method to improve the efficiency of PM execution in order to increase equipment availability.
It involves analyzing existing PM activities to identify redundancies and inefficiencies for
elimination, compiling best-practice methods from the personnel most knowledgeable about the
work, and ensuring accurate detail on required tasks, parts, and support equipment. The process

48
of PM rationalization was begun during the MEP, and will be extended to a minimum of eight
PM’s in 2011.

5.2.6 Condition Based Maintenance (CBM)

CBM is the regular monitoring of equipment in order to identify a developing failure.

Examples include oil analysis, vibration analysis, thermography and running checks. Planning
and scheduling of work is a major focus of the MEP, but is only possible if the need for the work
can be predicted. Scheduling work to happen at a fixed interval rather than condition can result in
unplanned failures or the costly early replacement of components. CBM has the potential to
dramatically improve the scheduling of work without replacing parts before they are truly worn
out.

5.2.7 5S Program

5S is a way for work teams to arrange work areas in the best manner to optimize
performance, safety and cleanliness. The 5S’s are as follows:

• Sort – Organization – What is needed, what is not

• Simplify – Orderliness – Find a place for everything

• Sweep – Cleanliness – Clean it and keep it clean

• Standardize – Maintain and monitor the first three S’s

• Sustain – Exercise self-discipline – Stick to the rules

Workplace organization affects safety, productivity and morale. These improvements will be a
very visible change at all levels in the organization.

5.2.8 Reliability Management Operating System

The reliability group has regular meetings with defined agendas and action logs similar to
general maintenance group. Maintenance meetings will provide inputs for the reliability
meetings, such as identification of Bad Actors and PM’s that need review. The takeaway from
the figure below is that there is a structured system of meetings and reporting that will ensure the
group stays on course.

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Figure 16: Reliability Management Operating System (Source: HVC Reliability Team)

5.3 Upgrade to ERP System

HVC is a relatively high-level user of its existing system. A new system will enable a
higher level of functionality, but it will take time and resources to achieve that functionality.
‘Many companies have to make big bets because they haven’t sent out sufficient numbers of
“search parties.”’ (Beinhocker, 1999: 54) A large number of IT projects fail, most end up behind
schedule and over budget, and MIS systems rarely deliver a strategic advantage unless they
enable a different and better way of doing business.

Overall, replacement of the system will not provide a significant competitive advantage,
and will not radically change maintenance processes at HVC. A modern ERP does have the
potential to reduce administrative work in the planning, scheduling and tracking areas, and
eventually an upgrade will be required due to system obsolescence. HVC should tread
cautiously, leveraging the experience of its sister mines and the knowledge of their IT staff and
waiting for them to optimize the installation of their new system.

This paper recommends that a resource be hired for the HVC site or assigned to the site
from corporate IT. This person could be an IT professional with ERP experience who could
spend several months in the maintenance group learning to understand maintenance. He or she

50
could also be an engineer currently working in a planning or reliability function in maintenance
who has very strong computer skills. In either case, this employee should be thoroughly versed in
Teck Coal’s AX system and be thoroughly exposed to HVC’s maintenance groups prior to taking
a lead role in implementing the ERP upgrade.

5.4 Implementing the Change

This section will provide a high-level timeline for the 2011 and 2012 plan, and describe
some of the change management challenges with the plan.

5.4.1 Timeline

The table below is a proposed timeline for the recommendations described in this chapter.

Table 6: Timeline for 2011 and 2012 (Source: Author)

2011 2012
May

May
Nov
Dec

Nov
Dec
Aug
Sep

Aug
Sep
Feb
Mar
Jun

Jan

Jun
Oct

Oct
Apr

Apr
Jul

Jul
Task
ERP Replacement
Hire and Integrate ERP
Resource
Design and Development
Implementation
Reliability
5S Implementation
Contamination Control
upgrades
RCFA, RCM, PM
Rationalizations
Relief Planning and Supervision
Expanding on the MEP
Training new Employees
Consolidating Learning
Expansion to Other Areas
Functional Audits

It will take a minimum of 6 months to expose a new ERP resource to existing

maintenance systems. An extensive design and development period is recommended prior to
installation.

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 The 5S implementation is the most visible reliability effort, and Contamination Control
provides the highest payback. Accordingly, these two areas of focus are recommended as
priorities through the end of 2011. Since our reliability professionals are relatively new to the
organization, it is recommended that they gain knowledge, acceptance and respect by filling a
short-term need for relief planning and supervision in mid 2011. Since our reliability
professionals are relatively new in their role, we will need to invest heavily in training and expose
them to reliability professionals at other sites.

Training new employees will be a focus in 2011 Q2. Once trained, new employees will
further optimize their jobs and both new and existing employees will be ready to take on the
challenge of making improvements in the welding shop, gas shop, tire shop, wash bay and
component shop starting in the fall of 2012.

The first Functional Audit is currently scheduled for January 2012.

5.4.2 Managing Recommended Change

Many of the changes recommended for 2011 and 2012 are understood because they have
been introduced in the MEP. The role of reliability is also increasingly understood, but there is a
low level of understanding of the pending ERP upgrade. The table below is a summary of
Kotter’s eight change steps, and identifies the challenges that will be faced in this timeframe.

52
Table 7: Change Management Steps for 2011 & 2012 (Source: Author)

Step Comments

Establishing a Sense of Urgency These objectives will be included in objective setting with
BSWP. As a result, they will be formally reviewed twice
per year. Achievement of objectives in BSWP will form
the basis of annual bonus calculations.

Forming a Powerful Guiding All levels of management can see objectives and confirm
Coalition that they are aligned. Reliability efforts are championed
at a high level in the organization. They will be included
in annual Functional Audits.

Creating a Vision While the reliability vision has been developed, the vision
for the progression of the MEP and for the ERP upgrade
will need to be focused and communicated.

Communicating the Vision Communication of the reliability vision to senior staff is

complete. Annual crew presentations are an effective way
of broadly disseminating the vision, and in particular, 5S
efforts are very visible to all levels.

Empowering Others to Act on the The department organizational structure has been
Vision modified to provide the reliability team considerable
freedom to carry out their goals.

Planning for and Creating Short The reliability vision has been effectively broken down
Term Wins into measureable and discreet goals. Similarly, the
progression of the MEP can be reduced to discreet
objectives. The ERP upgrade, however, is a relatively
unknown commodity.

Consolidating Improvements and An effective maintenance and reliability management

Producing Still More Change operating system is the key to having a
Plan/Do/Check/Act loop to ensure steady progress
towards goals.

Institutionalizing New Approaches We are building a culture of high achievement.

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6: Conclusion
The MEP has produced gains in the planning, scheduling and execution of work. This
has been achieved by building process and systems, clarifying roles and responsibilities, and
training and hiring to build planning and scheduling capacity. The most significant learnings
from the MEP are that initiatives must be adequately resourced, that there is potential to learn
from other sites, that communication of vision to all levels in the organization is important, and
that success is often dependent on involvement with complementary departments.

In the next two years the focus will be on expanding work management processes begun
during the MEP, on reliability engineering and on the implementation of a new ERP system. Our
experiences in the MEP have taught us to consider resourcing before starting any new
implementation. The reliability team has been adequately staffed and this paper proposes to
invest in their development through training, through exposure to other sites and through planning
and supervision experience. Resourcing of the ERP installation is identified as a gap in this
paper. This paper proposes to fill that gap by hiring a IT resource or a maintenance person with
strong IT skills. Regardless, that person should be exposed to maintenance people and systems at
HVC and to the ERP installation at Teck Coal prior to beginning the installation at HVC. This
paper also proposes metrics to be tracked, audited and shared between sites for reliability (MTBS,
MTTR, % Scheduled Downtime), labour productivity (Maintenance Ratio), and equipment
maintenance costs (Cost Per Hour, component rebuild cost per hour). These metrics should be
common between mine sites and shared between sites running similar fleets.

54
Appendices

55
Appendix A – Functional Audit
The document contained in this appendix was issued by Teck Corporate to the mine sites
in December, 2010.

Audit & Operational Review and Business Improvement Groups

TECK RESOURCES LIMITED

MAINTENANCE FUNCTIONAL AUDIT

SCOPING DOCUMENT

56
 Date: December 22, 2010

CONTENTS

1. PROJECT PERSPECTIVE & SCOPE

2. PROJECT APPROACH & INFORMATION REQUIREMENTS

57
PROJECT PERSPECTIVE

This project is a part of the Five Year Audit Plan for 2007 - 2011 approved by the Audit
Committee of the Board of Directors and by senior management and is being conducted
jointly with the Business Improvement Group.

Maintenance is included in the five year audit plan as it:

Represents approximately 20% of each site’s operating costs with an annual spend
of more $700 million (excluding Antamina) or nearly $4 billion over 5 years.

Employs more than 2,500 employees worldwide.

Directly impacts the availability of production equipment.

Maintenance self assessments completed in 2008 and 2009, and past internal audits,
indicated several areas requiring improvement and periodic audits to measure
performance and identify additional opportunities are an essential part of the
continuous improvement process and of Teck’s Maintenance and Reliability Initiative.

58
PROJECT SCOPE

Taking into account the Teck Maintenance and Reliability Initiative that commenced
January 2010, the audit will review, benchmark and evaluate the policies, practices,
processes and key controls that support the Company’s Maintenance function; and, look
at opportunities for business simplification and further process improvements where
applicable.

The project scope includes (not exhaustive):

Maintenance & Reliability Initiative: project status, implementation, achievements,

and pending items.

Organization: roles and responsibilities, training, coaching, and sharing of

information.

Maintenance System(s): performance, support, training, functionality, module

integration with other systems, reports and controls.

Maintenance Planning: maintenance programs (preventive, predictive, emergency,

shutdowns, etc.), short-term and long-term planning, scheduling, backlog control,
work order process, coordination with Operations and Supply Management
departments.

Maintenance Execution: preventive maintenance compliance, overview of

supervision and control of labour and overtime, non-maintenance work (construction,
projects, etc.) and safety performance.

Maintenance Facilities: overview of facilities for maintenance activities, parts and

supplies.

Maintenance Contractors: tendering, selection, contractor management, and

contract administration and compliance.

Maintenance Data & Statistics: performance indicators, status of major jobs, and
repair history.

The project will commence with a request for information (see next page) and the timing
of site visits will be agreed with the operations.

The project will start in April 2011 with target completion by the second quarter of 2012.

The project will be led by Graham Harris and Shehzad Bharmal. The Team Lead will be
Richard Au supported by Audit & OR members and potential seconded staff. Liaison
with stakeholder departments will be sought.

59
PROJECT INFORMATION REQUIREMENTS

To commence the project, soft copies (where possible) of the following information
requirements are requested from the respective operations.

i. Organization chart for Maintenance Departments (mine, plant, other, etc.)

ii. Latest month-end Maintenance report(s) including backlog reports
iii. Key Performance Indicators (3 year trend, if available)
iv. Equipment list or basic fleet information
v. Annual maintenance costs by department (mine, plant, etc.) and by type (labour,
parts, contractors, etc.) for the last 3 years
vi. Maintenance & Reliability Steering Committee presentation and agreed actions, by
site
vii. Most recent Improvement (“MPI”) Action Log
viii. Progress log for addressing identified “Bad Actors”
ix. List of maintenance contractors with greater than $1 million annual spend
x. List of reliability or maintenance engineering projects
xi. Maintenance & Reliability Initiative team organization chart
xii. Initiative reports and updates to Business Unit heads

60
Appendix B - Maintenance Mission and Vision

Doing the Right Thing – Every Time.

We will lead our industry in having the right equipment available, at the right time,
and at the right cost.

The key areas of focus in “Doing the Right Thing - Every Time” include:

Maintenance and Operations taking joint responsibility for equipment and
working together to get things done

Using best practices in the core maintenance functions with a focus on planning
and scheduling identified work

Applying Reliability tools and techniques using proven systems such as
Reliability Centered Maintenance (RCM), Root Cause Failure Analysis (RCFA),
Condition Based Maintenance (CBM) as well as setting critical standards for
maintenance and operations

Sharing knowledge and learn from others to drive improvement including using
knowledge and resources from outside the mining industry

“The equipment arrives when it should. It is clean. We are not looking for parts.
We return it to Operations when we said we would.”

– Jeff Etue, Reliability Engineer, Elkview Operations

Benefits of “Doing The Right Thing - Every Time”

These practices have proven successful for other organizations. Companies which
use Reliability Tools and Techniques and where Teamwork, Communication, and
Core Maintenance Functions are working well, report the following benefits:

Stress goes down

Productivity goes up

People have higher job satisfaction

Systems function better

Equipment availability and reliability is improved

The Operation runs smoother and safer

61
Sources of Maintenance Inefficiencies and Frustrations:

Parts not available or incorrect
incorrect; difficulty finding
inding the right parts

Unanticipated work steps and skill requirements

Support requirements not coordinated

Unanticipated safety concerns

Equipment not available / turned away by operations

Equipment not prepared and work permits not available

Required tools
ools not available
available;; required manpower not available

Poor work
ork coordination between trades

Job stops and starts due to emergencies and break
break-ins

Poor coordination
oordination with other site activities

Planned and scheduled work is safer, more efficient, and more effective.
e Re-
aligning maintenance resources and activities to focus on these activities will
greatly improve maintenance effectiveness
effectiveness.

Critical First Steps to Improving Maintenance Execution:

Dedicate resources to work planning and preparation

Set clear
ar standards for work preparation and only schedule work that is
prepared accordingly

Prioritize work to ensure non
non-emergency
emergency work can be prepared and
coordinated prior to execution

Dedicate resources to develop integrated maintenance schedules with
operations
ions and other site functions

Measure schedule attainment and include operations in reviewing and
addressing causes of variability and break
break-ins

Identify and address “bad actor” equipment driving emergency/break-in
emergency/break
work

Identify critical equipment to aid iin
n work prioritization and focus reliability
efforts

Assign and dedicate reliability resources to optimize predictive and
preventative maintenance routines

62
Appendix C – Key Performance Indicator Trends
PM Schedule Attainment – The weekly percentage of scheduled Preventive Maintenance hours
that were completed.

Field Mechanical PM Schedule Attainment

%

100 100 100 100 100

88 93 90 100 100 88
100 84 82 83 86
90
80 69 68
70 60 57
60
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual
%

Haul Trucks & Support Equipment PM Attainment

97 100 100 100 98 97
100 88 91 89 89 90 91
78 83 81
90 75
80
70 54
60 42
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual
%

Mine Electrical PM Schedule Attainment

100 88 90
90 76 77 81
69 73 72 73
80 65
70 60 58
60 46 46
50 35
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

63
Schedule Loading – The weekly percentage of the available resource hours (manpower) that were
scheduled.

Field Mechanical & Welding

%

Schedule Loading
110 107
96 102 96 97 102
110 91 93 95
100 82 88 86 91 88 89
90 77 81
80 67
70
60
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

HD Shop Schedule Loading

%

95 96
100 95 89 86
90 78 80 75 81 84
75
80 69 64 68
63 61
70 57 57
60
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

Mine Electrical Weekly Schedule Loading

%

93 96 97 98 93 93 98
88 92 88 91
100 81 86 84
90
80 64
70
60
50
40
30
20
10
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Plan Actual

64
Schedule Attainment – The percentage of the weekly scheduled work that was completed in the
week.
Unscheduled Work – The percentage of total hours worked that was spent on unscheduled work
in the week.
Field Mechanical & Welding
%

Schedule Attainment and Unscheduled Work

110 93
100 83 84 82 81 77 88 77 83 80
90 65 71 62 69 65 61 70
80 62
70 45
60
50
40 64
30
20 44
10 32 29 32 34 34 28 29 30
0 18 19 17 25 25 20 15
11 10
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Schedule Attainment Plan Schedule Attainment Actual
Unscheduled Plan Unscheduled Actual

HD Shop Schedule Attainment

%

and Unscheduled Work

93 95 91 89
100 83 84 87
90 72 74 80 77 74 68 73
80 63 60 67
70
60
50 63
40 20 53
30 45 43 44 44 43
20
29 34 35 40 39 32 32 31 31
10 22 25
0
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Schedule Attainment Plan Schedule Attainment Actual
Unscheduled Plan Unscheduled Actual

Mine Electrical Schedule Attainment

%

and Unscheduled Work

100 80 79
90 71 70 74 72 70
67
80
70 57 60 64 65 54 63 62
60
50
40
30 41 42 41 40 37
20 34 33 32 34 28
10 30 26 21 23
0 16
Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Schedule Attainment Plan Schedule Attainment Actual
Unscheduled Plan Unscheduled Actual

65
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