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JJ616 MAINTENANCE MANAGEMENT

CHAPTER 1 : MAINTENANCE ORGANIZATION

MAINTENANCE
ORGANIZATION

Prepared by: LIANA FAIRUZ BINTI ZAKARIA 1


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JJ616 MAINTENANCE MANAGEMENT
CHAPTER 1 : MAINTENANCE ORGANIZATION

COURSE LEARNING OUTCOME (CLO)

1. Analyze the concepts of maintenance organization


and strategies to solve related problems.
2. Apply the principles of maintenance strategies and
elaborate on the significance of a system approach
to maintenance.
3. Organize maintenance management plan and
schedule that integrates the whole management
processes and procedures by group in actual
workplace.

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IMAGINE…

 MAS flight Boeing 737 left KLIA at 2:00 pm


 All two engines, hydraulic systems working
 2:22 pm explosion shook plane
 Number 2 engine torn apart, 2 separate hydraulic
lines ceased to work
 In spite of maintenance work, engine still failed
 Imagine having no maintenance system

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JJ616 MAINTENANCE MANAGEMENT
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QUESTION???

 Why do we need maintenance?

 What are the costs of doing maintenance?

 What are the costs of not doing maintenance?

 What are the benefits of maintenance?

 How can maintenance increase profitability of


company?
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JJ616 MAINTENANCE MANAGEMENT
CHAPTER 1 : MAINTENANCE ORGANIZATION

DEFINITION

MAINTENANCE
 Maintenance is a set of organized activities that are
carried out in order to keep an item in its best operational
condition with minimum cost required.
 Activities required or undertaken to conserve as nearly,
and as long, as possible the original condition of an asset
or resource while compensating for normal wear and tear.
 Actions necessary for retaining or restoring a piece of
equipment, machine, or system to the specified operable
condition to achieve its maximum useful life. It includes
corrective maintenance and preventive maintenance.
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JJ616 MAINTENANCE MANAGEMENT
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DEFINITION

ORGANIZATION
 A means for making people productive in working
together and arranging resources (people, materials,
technology, etc).
 A social unit of people that is structured and
managed to meet a need or to pursue collective
goals. All organizations have a management structure
that determines relationships between the different
activities and the members, and subdivides and assigns
roles, responsibilities, and authority to carry out different
tasks. Organizations are open systems--they affect and
are affected by their environment.
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JJ616 MAINTENANCE MANAGEMENT
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DEFINITION

MANAGEMENT
 The organization and coordination of the activities in
order to achieve defined objectives. Management is often
included as a factor of production along with‚ machines,
materials, and money.
 Management consists of the interlocking functions of
creating corporate policy and organizing, planning,
controlling, and implementing an organization's
resources in order to achieve the objectives of that policy.

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JJ616 MAINTENANCE MANAGEMENT
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MAINTENANCE IN SERVICE INDUSTRY

Area of industry that requires of maintenance


management :
 Hospital
 Restaurants
 Transport companies
 Banks
 Hotels and resorts
 Shopping malls / retail
 Gas station
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MAINTENANCE IN MANUFACTURING COMPANIES

Area of industry that requires of maintenance


management :
 Electronic
 Automotive
 Petrochemicals
 Refinery
 Furniture
 Ceramics
 Food and beverages
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JJ616 MAINTENANCE MANAGEMENT
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OBJECTIVE OF MAINTENANCE MANAGEMENT

The main objectives of having maintenance management


are to make sure a business doesn't stop producing, and if it
does, to rectify the situation in the safest and most expedient
way possible.
In addition, improperly maintained equipment can lead to
safety hazards, employee abuse and misuse of machines
that will lead to increased overhead costs and potential
liability.
Costs of new equipment must be budgeted. Maintenance
factors are part of the calculations done to consider return on
investment when comparing costs and risks.

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OBJECTIVE OF MAINTENANCE MANAGEMENT

Maximizing production or increasing facilities availability at


the lowest cost and at the highest quality and safety
standards.
Reducing breakdowns and emergency shutdowns.
Optimizing resources utilization.
Reducing downtime.
Improving spares stock control.
Optimize the use of available funds, personnel, facilities,
and equipment through effective maintenance
management methods.

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JJ616 MAINTENANCE MANAGEMENT
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OBJECTIVE OF MAINTENANCE MANAGEMENT

Provide accurate data for maintenance and construction


program decision making.
Systematically identify maintenance needs or deficiencies
and capital improvement needs at all field stations.
Enable preparation of service maintenance and
construction budget requests using systematic,
standardized procedures.
Monitor and document corrective actions, project
expenditures, and accomplishments.
Keeping assets and equipment in good condition, well
configured and safe to perform their intended functions.

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OBJECTIVE OF MAINTENANCE MANAGEMENT

Perform all maintenance activities including preventive,


predictive; corrective, overhauls, design modification and
emergency maintenance in an efficient and effective
manner.
Conserve and control the use of spare parts and material.
Commission new plants and plant expansions; and
Operate utilities and conserve energy.

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BENEFITS OF MAINTENANCE MANAGEMENT

Manages Control
One of the most significant advantages of maintenance
management is the management of control. Maintenance
can be planned and serves a pre-active instead of a reactive
(be put to action after an event has come to pass).

Management control ensures timely schedules, well-defined


job descriptions and the availability of standby equipment in
times of disaster.

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BENEFITS OF MAINTENANCE MANAGEMENT

Reduces Overtime
Maintenance management reduces and even eliminates
overtime by reducing the chance of surprises. It ensures all
loose ends are tied and enough contingency planning is
done to manage operations in case of undesirable
circumstances and situations.

Management defines tasks and allocates resources


effectively, ensuring that all objectives are met in a timely
and orderly fashion.

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JJ616 MAINTENANCE MANAGEMENT
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BENEFITS OF MAINTENANCE MANAGEMENT

Improves Quality
Effective maintenance management improves output and
ensures quality. It gives a small amount of leeway to
tolerances but within well established control limits.
Employee productivity improves, improving the overall
productivity of individual and collective processes. Investing
in maintenance management pays off for a company by
increasing its revenues.
Increasing productivity such as quality product with maximum
quantity will be producing with the lowest cost.

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BENEFITS OF MAINTENANCE MANAGEMENT

Ensures Better Support & Service


A well established and documented maintenance
management system provides ample support to production
managers, equipment operators, and other personnel and
users.
An effective maintenance management program needs to be
made public (and/or published) for the benefit of everyone
involved. End users can benefit from a better level of support
provided by maintenance management. It allows for reliable,
on time, and quality service.

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BENEFITS OF MAINTENANCE MANAGEMENT

Allows Easy Error Spotting


Since maintenance management details the goals and
objectives of departments and employees, it make it easier
for managers to spot errors and deviations from established
and desired outcomes.

Reduces Resource Waste


Maintenance management ensures that labor, materials and
equipment are well utilized, which reduces waste of allocated
resources. Utility costs are lowered and the production of
hazardous waste material is decreased with managed effort.

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JJ616 MAINTENANCE MANAGEMENT
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BENEFITS OF MAINTENANCE MANAGEMENT

Improves Safety
Maintenance management promotes safety and health. It
ensures everyone involved knows safety procedures in case
of a minor or major disaster.
A well-implemented management program examines the risk
of potential hazards and finds ways of addressing them
before they pose a risk. Regular housekeeping programs
promote fire prevention and safety measures.

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JJ616 MAINTENANCE MANAGEMENT
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BASIC TYPES OF MAINTENANCE ORGANIZATION


Centralized Maintenance
All crafts and related maintenance functions report to a central
maintenance manager.
Best suited for small to medium size organizations.
Under this type of organization, the responsibilities and
accountability of work must be properly specified for production
as well as maintenance personnel to successfully meet the
project goals. If this is not taken care of, one department may
blame other for any shortfall.

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

The advantages of centralization are:


(i) Provides more flexibility and improves utilization of
resources such highly skilled crafts and special
equipment and therefore results in more efficiency;
(ii) Allows more efficient line supervision;
(iii) Allows more effective on the job training;
(iv) Permits the purchasing of modern equipment.
(v) Allows economies of scale;
(vi) Enables in-depth skill development; and
(vii) Enables departments (i.e., a maintenance department)
to accomplish their functional goals (not the overall
organizational goals).
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TYPES OF MAINTENANCE ORGANIZATION


However it has the following disadvantages:-
(i) Less utilization of crafts since more time is required for
getting to and from jobs;
(ii) Supervision of crafts becomes more difficult and as such
less maintenance control is achieved;
(iii) Less specialization on complex hardware is achieved
since different persons work on the same hardware; and
(iv) More costs of transportation are incurred due to
remoteness of some of the maintenance work.
(v) It has slow response time to environmental changes;
may cause delays in decision making and hence longer
response time;
(vi) Leads to poor horizontal coordination among
departments and involves a restricted view of
organizational goals.
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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

Centralized Maintenance

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

Decentralized Maintenance
All crafts and maintenance craft support staff report to
operations or specific area maintenance.
The maintenance organization works under the direct control of
a chief engineer in-charge of production.
This tends to reduce the flexibility of the maintenance system as
a whole. The range of skills available becomes reduced and
manpower utilization is usually less efficient than in a
centralized maintenance.
A decentralized structure would probably experience a lower
utilization than centralized one but would be able to respond
quickly to breakdowns and would achieve higher plant
availability.

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TYPES OF MAINTENANCE ORGANIZATION

Decentralized Maintenance
The strengths of this structure are :
 it allows the organization to achieve adaptability and
coordination in production units and efficiency in a centralized
overhaul group
 facilitates effective coordination both within and between
maintenance and other departments.
 Speedy decisions due to better line of communication under
single control.
 Maintenance and production people understand each other’s
problems better because of their common goals.
 Interchangeability of workforce, even at the managerial level, is
also possible.
 Better training at the workers’ level can be arranged.
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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

The weaknesses of this structure are that it has potential for


excessive administrative overheads and may lead to conflict
between departments.

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

Decentralized Maintenance

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

Matrix Structure Maintenance


A form of a hybrid structure. Crafts are allocated in some
proportion to production units or area maintenance and to a
central maintenance function that supports the whole plant.
The hybrid structure organizes maintenance in areas and
whatever exceeds the capacity of each area is challenged to a
centralized unit

The strengths are:


 it allows the organization to achieve coordination necessary to
meet dual demands from the environment and flexible sharing of
human resources.

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TYPES OF MAINTENANCE ORGANIZATION

Matrix Structure Maintenance


The weaknesses are:
 it causes maintenance employees to experience dual authority
which can be frustrating and confusing;
 it is time consuming and requires frequent meetings and conflict
resolution sessions.
To remedy the weaknesses of this structure a management with
good interpersonal skills and extensive training is required.

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE ORGANIZATION

Matrix Structure Maintenance

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JJ616 MAINTENANCE MANAGEMENT
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ROLES IN MAINTENANCE MANAGEMENT ORGANIZATION

A maintenance organization and its position in the


plant/whole organization is heavily impacted by the following
elements or factors:
• Type of business ( whether it is high tech, labor intensive,
production or service )
• Objectives ( may include profit maximization, increasing
market share and other social objectives )
• Size and structure of the organization
• Culture of the organization
• Range of responsibility assigned to maintenance.

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JJ616 MAINTENANCE MANAGEMENT
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ROLES IN MAINTENANCE MANAGEMENT ORGANIZATION

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JJ616 MAINTENANCE MANAGEMENT
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TYPES OF ROLES/RESPONSIBILITIES

It is still possible to group activities and responsibilities into


two general classifications:
(1) primary functions that demand daily work by the
maintenance function and
(2) secondary ones assigned to the function for reasons of
expediency, know-how, or precedent.

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TYPES OF ROLES/RESPONSIBILITIES

Primary Function
Maintenance of Existing Plant Equipment
Responsibility here is simply to make necessary repairs to
production machinery quickly and economically and to
anticipate these repairs and employ preventive maintenance
where possible to prevent them. For this, a staff of skilled
engineers, planners, and technicians who are capable of
performing the work must be trained, motivated, and
constantly retained to assure that adequate skills are
available to perform effective maintenance.

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TYPES OF ROLES/RESPONSIBILITIES

Primary Function
Maintenance of Existing Plant Buildings and Grounds
The repairs to buildings and to the external property of any
plant—roads, railroad tracks, in-plant sewer systems, and
water supply facilities—are among the duties generally
assigned to the maintenance engineering group. Additional
aspects of buildings and grounds maintenance may be
included in this area of responsibility.

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TYPES OF ROLES/RESPONSIBILITIES

Primary Function
Equipment Inspection and Lubrication
Traditionally, all equipment inspections and lubrication has
been assigned to the maintenance organization or function.
While inspections that require special tools or partial
disassembly of equipment must be retained within the
maintenance function, the use of trained operators or
production personnel in this critical task will provide more
effective use of plant personnel. The same is true of
lubrication. Because of their proximity to the production
systems, operators are ideally suited for routine lubrication
tasks.

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TYPES OF ROLES/RESPONSIBILITIES

Primary Function
Utilities Generation and Distribution
In any plant generating its own electricity and providing its
own process steam, the powerhouse assumes the functions
of a small public utilities company and may justify an
operating department of its own.

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TYPES OF ROLES/RESPONSIBILITIES

Primary Function
Alterations and New Installations
Three factors generally determine to what extent this area involves
the maintenance department: plant size, multi plant company size,
company policy.
In a small plant of a one-plant company, this type of work may be
handled by outside contractors. But its administration and that of
the maintenance force should be under the same management.
In a small plant within a multi plant company, the majority of new
installations and major alterations may be performed by a
company-wide central engineering department.
In a large plant a separate organization should handle the major
portion of this work.
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TYPES OF ROLES/RESPONSIBILITIES

Secondary Function
Storekeeping
In most plants it is essential to differentiate between
mechanical stores and general stores. The administration of
mechanical stores normally falls within the maintenance
engineering group`s area because of the close relationship
of this activity with other maintenance operations.

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TYPES OF ROLES/RESPONSIBILITIES

Secondary Function
Plant Protection
This category usually includes two distinct subgroups: guards
or watchmen; fire control squads. Incorporation of these
functions with maintenance engineering is generally common
practice. The inclusion of the fire-control group is important
since its members are almost always drawn from the craft
elements.

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TYPES OF ROLES/RESPONSIBILITIES

Secondary Function
Waste Disposal
This function and that of yard maintenance are usually
combined as specific assignments of the maintenance
department.

Salvage
If a large part of plant activity concerns off grade products, a
special salvage unit should be set up. But if salvage involves
mechanical equipment, such as scrap lumber, paper,
containers, and so on, it should be assigned to maintenance.

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TYPES OF ROLES/RESPONSIBILITIES

Secondary Function
Insurance Administration
This category includes claims, process equipment and
pressure-vessel inspection, liaison with underwriters’
representatives, and the handling of insurance
recommendations. These functions are normally included
with maintenance since it is here that most of the information
will originate.

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COST OF MAINTENANCE

Maintenance cost can be a significant factor in an


organization’s profitability. Hence, maintenance department
should treat the matters that make a profit on the industry by
take into account the cost of maintenance.
It is important to reduce the maintenance expenses to
increase a profit by avoiding unnecessary expenditure.
Among the factors associated with the maintenance
expenditure are:-
Spare parts
Maintenance labor (i.e., operator expertise and
experience)
Down time (production loss)
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COST OF MAINTENANCE

Overhead
Consumables
Hand tools, power tools and equipment
Idle equipment or personnel due to equipment breakdown
Missed delivery dates of equipment (including out of
stock)
Transportation due to remoteness of some of the
maintenance work
Asset condition (i.e., age, type, and condition)
Losses due to inefficient operations of machines
Capital requirement for replacement of machines
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JJ616 MAINTENANCE MANAGEMENT
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WHO WILL DO MAINTENANCE?

 In-house
 Out-source

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DECISION TO OUT-SOURCE

 Lack of expertise
 Too hazardous
 No experience
 Bound by contract
 Top management policy
 When it is cheaper than recruiting your own staff and
accessible at a short notice of time

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NEED TO CONSIDER

Customer service
Loss of production
Loss of customer goodwill, reputation
Machine life
Availability of spare parts and expertise
Safety to the user / customer
Environmental problem (pollutant discharge etc.)

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SOURCE OF MAINTENANCE COST

Criteria that can be employed to select sources for


maintenance capacity:-
(i) Availability and dependability of the source on a long term
basis;
(ii) Capability of the source to achieve the objectives set for
maintenance by the organization and its ability to carry
out the maintenance tasks;
(iii) Short term and long term costs;
(iv) Organizational secrecy in some cases may be subjected
to leakage;
(v) Long term impact on maintenance personnel expertise;
(vi) Special agreement by manufacturer or regulatory bodies
that set certain specifications for maintenance and
environmental emissions.
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TYPES OF MAINTENANCE COST

Relationship between quantity of maintenance and various costs 50


JJ616 MAINTENANCE MANAGEMENT
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TYPES OF MAINTENANCE COST

(a) Direct cost


Direct costs are those costs required to keep equipment
operable. These include periodic inspection and preventive
maintenance, servicing costs, repair costs and overhaul
costs.

(b) Standby cost


The total cost of operating and maintaining standby
equipment needed to be put in operation when primary
facilities are either undergoing a maintenance activity or are
inoperable for some reason.

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TYPES OF MAINTENANCE COST

(c) Lost production cost


Costs due to lost production because primary equipment is
down and no standby equipment is available.

(d) Degradation cost


Those costs occurring in deterioration in the life span of
equipment resulting from inadequate and/or inferior
maintenance.

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COST ANALYSIS METHOD

♣ Life cycle cost is the sum of all costs incurred during the
life time of an item, that is, the total of procurement and
ownership costs.
♣ Due to reasons including market pressure, life cycle
costing is now often used in the procurement of expensive
systems or equipment.
♣ Life cycle cost analyses involve evaluating the total cost of
a product or system over its entire life span.
♣ Life cycle cost will consider the cost of developing or
acquiring the asset, the cost of running, operating and
maintaining, and the cost of disposal.

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COST ANALYSIS METHOD

♣ The aim of life cycle costing is to know the total cost of


equipment accruing over its whole life period, which may
include all the costs starting from the specification cost.
♣ It is also observed that reduction in one cost possibly will
increase the other cost.
♣ Therefore the quality of the product is the major
importance.

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COST ANALYSIS METHOD

The data to be input into a life cycle cost model include :


♪ the purchase price of the product
♪ mean time between failures (MTBF)
♪ mean time to repair (MTTR)
♪ average material cost of a failure
♪ labor cost per preventive maintenance action
♪ labor cost per corrective maintenance action
♪ installation costs
♪ training costs
♪ the warranty coverage period cost of carrying spares in
inventory
♪ shipment forecasts over the course of the product's useful
life
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COST ANALYSIS METHOD

When applying the life cycle cost analysis, several major


advantages can be achieved:-
(a) It may result in selection of equipment that has lower
operating and maintenance costs resulting in reduced
cost of ownership;
(b) The money saved can be used for some other works;
(c) It is an excellent tool for comparing the cost of competing
projects, controlling program costs, selecting among
competing contractors, making decisions associated with
equipment replacement, reducing total cost, and
conducting planning and budgeting.

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COST ANALYSIS METHOD

Disadvantages of cost analysis method :


i) It is time consuming and expensive
ii) Collecting the data needed for analysis can be a
trying task
iii) The data available is sometimes of doubtful
accuracy

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COST ANALYSIS METHOD

Total Cost

Preventive
maintenance
cost
Maintenance cost (RM)

Breakdown
maintenanc
cost
Optimum Maintenance 58

Commitment
JJ616 MAINTENANCE MANAGEMENT
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COST ANALYSIS METHOD

Cost

Breakdown Cost

Maintenance
Commitment 59
JJ616 MAINTENANCE MANAGEMENT
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COST ANALYSIS METHOD

Cost

PM Cost

Breakdown Cost

Maintenance
Commitment 60
JJ616 MAINTENANCE MANAGEMENT
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COST ANALYSIS METHOD

Cost
Total Maintenance Cost

PM Cost

Breakdown Cost

Maintenance
Commitment 61
JJ616 MAINTENANCE MANAGEMENT
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COST ANALYSIS METHOD

Cost
Total Maintenance Cost

PM Cost

Breakdown Cost

Optimal Maintenance
Commitment 62
EXAMPLE

The record of computer breakdown for


Company PCK for the past 20 months is
shown below.

# of breakdown # of months breakdown occurs


0 4
1 8
2 6
3 2
Total 20 months

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 Each time computer breakdown – estimated
loss is RM300
 Contract preventive maintenance by
company DK – RM200 per month
 Should PCK contract out preventive
maintenance to DK?

64
SOLUTION

Step 1
 Calculate expected number of breakdown
(based on past records) if the company
continue without service contract.
Step 2
 Compute expected breakdown cost per
month with no preventive maintenance
contract
Step 3
 Compute the cost of preventive maintenance
65
SOLUTION

Step 4
 Compare the two options and select the one
which cost less

66
SOLUTION

# of breakdown Frequency

0 4/20 = 0.2
1 8/20 = 0.4
2 6/20 = 0.3
3 2/20 = 0.1

Step 1
Expected # of breakdowns = [(# of breakdown) x (frequency)]
= (0)(0.2)+(1)(0.4)+(2)(0.3)+(3)(0.1)
= 1.3 breakdown per month 67
SOLUTION

Step 2
Expected breakdown cost = (expected # of breakdown) x
(cost per breakdown)
= (1.3) x (300)
= RM390 per month

68
SOLUTION

Step 3 Calculate Preventive Maintenance Cost


= cost of expected breakdown + cost of service contract
= (1 breakdown per month x 300) + RM200 per month
= RM500 per month
Step 4 Compare
Less expensive to suffer breakdown without service contract.
Breakdown = RM390
Service contract = RM500
Therefore, continue present policy which is the breakdown maintenance
because its less expensive.

69
EXERCISE

The record of computer breakdown for


Company PCK for the past 20 months is
shown below.

# of breakdown # of months breakdown occurs


0 2
1 4
2 8
3 6
Total 20 months

70
JJ616 MAINTENANCE MANAGEMENT
CHAPTER 1 : MAINTENANCE ORGANIZATION

END OF THIS SECTION

NEXT LESSON:
CHAPTER 2 :
MAINTENANCE STRATEGIES

71

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