In order to realise cost savings through maintenance reduction you have to actually reduce the cost of the maintenance you’re executing...
As industries continue to face challenging times there is strong incentive to reduce the cost burden associated with operating and maintaining facilities, assets and equipment. One of the obvious, and hence most commonly adopted ways to do so is to carry out a review of planned operations and maintenance work to be carried out to seek opportunities for rationalisation. Whether through the extension of periods between activities, revising maintenance strategies or the adoption of new technologies to enhance condition assessment or streamline data capture, the cost saving basis for all of these approaches is a reduction in the volume of hours that are to be executed operating and maintaining equipment.
Whilst all of these approaches can result in a reduction in the volume of hours to be executed, their ability to deliver any actual reduction in annual expenditure depends is wholly dependent on a foundational assumption.
In order for this maintenance reduction to be realised organisations have to execute less maintenance in the coming year than they intended to before the revised approach with reduced planned hours was implemented. If they don’t then the promised maintenance savings will never be realised. The vital assumption that has to be true for a reduction in planned maintenance hours to achieve this outcome is that the organisations are able to execute all of the maintenance planned. If the delta between the amount of work they plan to execute and the amount they are actually executing is greater than any reduction in hours planned then there will be no reduction in maintenance expenditure.
To use an over simplified example to explain, if an organisation plans to execute 2,000 hours of maintenance a year, but is only able to execute 1,400 hours in a year, reducing the planned maintenance by 500 hours will not result in any cost saving as the organisation will still execute 1,400 hours of maintenance in the coming year.
HOW TO ACTUALLY REDUCE COSTS
In order to realise any cost saving an organisation must either:
- Reduce the volume of planned maintenance to below the level of hours that can be executed. (Reduce planned hours by greater than 600 hours in the example above)
- Increase the volume of actual hours that can be executed to above that of the hours planned, with no increase in the total cost of execution. This is achieved by increasing work execution efficiency. (Increase the amount of hours executed each year in the above example by more than 600 hours)
- Do both of the above. (Reduce the volume of planned work by 500 hours whilst also increasing the volume of work executed to greater than 1,500 hours with no increase in the total cost for execution)
Every scenario above has to result in one or all of the following:
- A reduction in the cost of procured goods vs that originally budgeted.
- A reduction in the cost of procured services vs that originally budgeted.
- A reduction in maintenance resource vs that originally budgeted.
If it does not there will be no cost saving from any scenario. There will simply be a reduction to the rate in which backlog is generated.