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Lean Management Basics

Preventive Maintenance Approach
Part 4 of 4

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Maintenance Management Accounting

Maintenance management, to be truly effective, should be very cost conscious. Benchmarking performance by mea­suring increased percentages of preventive versus repair activities, decreased mean time to repair, increased equip­ment reliability and reduced inventory levels is strength­ened by incorporating the element of cost savings or cost containment achieved as well.

To be meaningful, the cost of providing maintenance ser­vices should reflect an accurate picture of maintenance costs by associating these costs with specific "cost entities" such as pieces of equipment, groups of equipment, facilities or areas within facilities. Measuring these costs can be further refined in a work order history for the entities by category showing a breakdown of labor, materials, over­head and subcontract costs by period and by year.

Utilizing job lists, BOMs and an efficient work order process provides the basis for realizing an activity based costing approach whereby specific "cost drivers" identified as types of maintenance work can be clearly identified. This approach represents a more meaningful and accurate representation of the sources of maintenance costs than applying an annual percentage rate as an indirect labor cost distribution. Thus the work order cycle becomes the centerpiece for capturing a comparison of planned to actual costs for labor.materials, tools and special equipment based on planned information in the BOM and task list and actual information compiled as work progresses.

This cost perspective is an important element in determin­ing future preventive/ predictive expenditure levels and assessing the distribution of resources to meet equipment reliability requirements.

Integrated Information System

Central to effective maintenance management is the abil­ity to develop realistic maintenance budgets, determine the appropriate mix of preventive, predictive and repair work for equipment, determine stock levels of critical, non-critical and consumable spares and assess craft require­ment by maintenance job categories. An integrated infor­mation system capable of providing timely and accurate data on equipment costs, resource utilization, and material consumption as well as performance and analysis informa­tion is necessary to support this type of decision making.

The application of the tools and techniques discussed here requires a computerized information system which pro­vides on-line, real-time interactive information. The sys­tem should be accessible to users of all levels. Maintenance crews should be able to access equipment history informa­tion, parts availability and work order information; main­tenance managers should be able to access timely, accurate plans and schedules, budgets and performance reports.

• Integrated database
• Multi-level BOMs
• Job or Task Lists
• Document Management
• Simulation techniques

Features and functions a fully integrated and interactive system should have include:

• Back order tracking
• Work order tracking
• Time-phased material planning
• Time-phased usage tracking
• Job cost reporting— time, labor and materi­als
• Parts availability checking • Performance reporting
• Parts reservation capability • Equipment history

Ideally, the maintenance system should be integrated with plant inventory systems, production planning and control, condition monitoring devices, financial requirements, and payroll and technical data bases. The system should provide for reporting capabilities on different levels includ­ing individual equipment, individual spare parts, assem­blies, machines, labor, materials and individual and group performance.


Developing a strategy for maintenance management which emphasizes prevention rather than reaction can lead to continuous improvement in maintenance. Employing good management techniques like planning and scheduling the categories of the workload with emphasis on prevention rather than reaction makes the workload manageable. Using equipment BOMs to drive material requirements and job lists to drive labor requirements through the planning process eliminates the symptoms of poor perfor­mance evidenced in excessive inventory levels and underutilization of labor. And using these tools to drive effective cost information provides management with the information needed to determine capital investment re­quirements, annual maintenance budgets and manpower levels and lays the foundation for future plans.


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