so ASSET Neat tt a Hanna Be UCU] ee eee] CUCU Bam HSN G3 eee dressSECOND EDITION ASSET MANAGEMENT EXCELLENCE Optimizing Equipment Life-Cycle Decisions Edited by John D. Campbell Andrew K. S. Jardine Joel McGlynn @sxc re ek Fans Geop Tee teund ky NW Se 00 beeteeietc) ‘011 by Taylor and Fans Group LLC 2200 oe ar rac Group. an norma busines ‘Noclaito orignal US-Govenment wots printed in th Unie tates of Ameria 0 ee PDE ooevess321 onal tna Book Nurber 7-0-9000 5 Han) hn nd greed sue, oe ls ik one eka a hn Pe ea i aa nits hk eae ants einen tn aco mata ot copra har pew ands ow soe maT 8 7 “This boo contains information obtained om ofthis boskinay be reprinted, reproduc ns veep ude. Copii Lan sof tsknay erie se ig Er fee ee A orig. mcoiming and rear ted Mo pevmeion om the Pals se atria etna ths wink ese tc sr ct the Copy Caran Cee 1. 3 Con pn PT eg agin tht vis ech ‘Deve, Daves, MA O72: 78 ane tate bers ranted photocopy etsy te cer tm fpynent as been ane vreau Nace Prods of crus nnsmabesoemucr ged amass ari cane on an exlanton who inet 008 “Tran of Congres Cataloging tn-Pbliation Dat “Asset management excellence opssnizing eu See nde 3 ri fo NEG eer. published unde tile Mantenance excllencs 20 Teed SSBNTE..|19 0 alee 3 Production managment ese fk anew Rene Sie Foal V Maintenance excellence ons iors oh igmetlife-cce des anda ‘15176962010, oro exer02-de. in the Tylor & Frans Web site at Mpiwwsetalorandrancicom and the CRC Press Web nile at IMupilewnecrepress.com Contents Preface, ‘Acknowledgments xii Biitors xv Contributors. xvii Chapter 1 Asset Management Excellence Don Barry SECTION I Maintenance Management Fundamentals Chapter 2 Asset Classes and the World of Life-Cycle Asset Management... 11 Joel McGlynn and Frank “Chip” Knowlton Chapter 3A Framework for Asset Management 23 ‘Thomas Port, Joseph Ashun, and Thomas J. Callaghan Chapter 4 Measurement in Maintenance Management 49 Edited by Don Barry Original by J. Stevens Chapter § Information Management and Related Technology 89 Don Barry, Brian Helstrom, and Joe Potter Original by B. Stevens Chapter 6 Materials Management Optimization 13 Don Barry and Erie Olson Original by Monique Petit SECTION I Managing Equipment Reliability Chapter 7 Assessing and Managing Risk 161 Siegfried F. Sanders Original by J. Kaderavek and G, Walkervi Contents Chapter 8 Reliability by Design: Relsblity-Centered Maintenance Don Barry Original by James Picknell Chapter 9 Reliability by Operator Total Productive Maintenance ‘Doug Stretton and Patrice Catoir SECTION III Optimizing Maintenance Decisions Chapter 10 Reliability Management and Maintenance Optimization: Basic Statistics and Economics. ‘Andrew K. 8. Jardine (Original by Murray Wiseman Chapter 11 Maintenance Optimization Models Andrew K. Jardine ‘Chapter 12 Optimizing Maintenance and Replacement Decisions ‘Andrew K. S. Jardine Chapter 13 A Maintenance Assessment Case Study Don Barry SECTION IV Achieving Maintenance Excellence Chapter 14. Real Estate, Facilites, and Construction “Andrew Carey and Joe Potter Chapter 15. Information Technology Service Management Life Cycle Brian Helstrom and Ron Green Chapter 16. Information Technology Asset Management Ron Green and Brian Helstrom Chapter 17. Achieving Asset Management Excellence, Don Barry Original by John D. Campbell 1989 a7 251 301 317 351 363 379 Contents Chapter 18 The Fe of Ast Mangement Stun: Concion, Joel McGlynn and Don Fenhagen Appendix A: References, Facts, Figures, and Formulas. ‘Appendix B: RFID Updates, Jordan Olivero, Taylor Teal, and Casey Hidaka Appendix C: PAS 58—; the Industry Emery 1g Standard for Asset Management in Don Barry and leffrey Kurkowski Index. 391 401 447 455 467Preface ‘This is the second edition of the Maintenance Excellence book, which is now taking ‘onthe title of Asset Management Excellence as a result of the ever-changing nature of the business. Inthe time that has passed since the first editin, suffice it to say that shifts have occurred. The original authors and contributors f content provided sound information and principles related to working toward maintenance excellence at that time. For this edition, new authors and contributors have revisited the content and have updated and added information based on changes in thinking and the intro duction of and improvement in technologies since the first editor. Ithas been the opinion of many maintenance and asset management personnel in multiple industries that atthe oot ofthe discipline, “maintenano: is maintenance.” ‘This has been true for many years, from the era of paper-based work-order systems through the evolution to computerized software, the Internet, and wireless technolo- ‘ies. The root principles are the same: personnel with tools (ele:tronie ot manual) address the needs of maintaining assets, The application of root priaciples—as well as, the way enterprises are perceiving maintenance organizations today——is changing. ‘Maintenance and asset management organizations have some of the same pres- sures foday as in the past, such as asset availabilty and reliability and regulatory requirements, Prevalent areas that have driven major transformations ia recent times are globalization and consolidation and technology changes. These elements reflect ‘changes in thinking. They challenge asset management and maintenance profession als to be more efiicient in what they do at various levels. Globalization and consoli- dation have been particularly instrumental in the changes in maintenance standards, approaches, and the use of technology to become more efficient and cost-effective. For example, emerging wireless and radio-frequency identification (RFID) technolo- gies are being heavily leveraged. RFID allows the status of certain components to be “read” without taking apart an assembly to physically inspect the component. Wireless technology allows maintenance personnel to have direct access to infor: mation in the field and to send information from the field. Through RFID, assets ccan provide information about themselves (eg, expiration dates! or even “talk” to other assets with wireless technology. Some industries are using RFID technology to tell maintenance personnel the area in which the assets are physically located. In addition, organizations are using geographic information system (GIS) software nd tools to visually display the location information and spatially enable their asset ‘management and maintenance organizations. Now organizations have the ability to know where their assets are and to understand relationships between how assets have bbehaved over time and how assets relate to the changing world around them. The current edition ofthis book reflects some of these changes, trends and concepts, In recent years, an evolution of many of the tools, technologies, and thought pro- cesses has occurred. Many of these elements have matured and have allowed the ‘deeper maintenance processes to be rethought. For example, there are trends inthe ‘mix of asset and service management principles. There are also trends in adjustingcore solutions to provide strong industry-specfic solutions. Solution providers have Simplemented consolidations to make decisions more focused, Increased regulatory presses have forced many orsaniztions to standardize processes and procedures fo become more efficient and aso to simply stay in business Many organization consolidations have taken place from both geographical and lobal perspectives. Enterprise leaders at all levels have realized that recognia- Jog maintenance contributions to the organization or enterprise can have a. major impact on various aspects of the business. Understanding the areas that need change tr improvement t0 achieve maintenance excellence i challenging at times, if not ‘overwhelming, “The focus on measurement programs, both strategic and operational, is being revisited, developed, or reinvented—in some cases to reflect the changes and chs Tenges that have taken place overtime. Many mature maintenance organizations tn the enterprise and field level are starting t0 recognize how to use measurement programs as valuable “ool to fx larger enterprise problems as well sto work the {day-to-day Tocal operational efficiencies desired inthe fel. "As time has passed, patterns and trends have emerged around the world in asset management, Consolidations have sometimes foreed benchmarking some organ sons and enterprises in order to take advantage of leading practices from other frou or companies to make them the best practices ofthe new and larger entity Comolidations have helped mature the maintenance organizations through the use bf enerprse standards in the areas of data, policies and procedures, software appli- cations, and new technologies. This second edition is a product of change and consolidation. Owing to acquisi- tions, some ofthe leading asset management thought leaders and consultants of IBM's {global business services aset management solutions organization from around the aeerd have contributed, updated, and added to the concepts and principles jn this book. Many have seen and lived the changes in maintenance and asset management pea understand the evolution of change. They have been on the forefront of provid= ing services in order to move organizations and enterprises t0 the next generation ‘of asset management and maintenance excellence. Tt is not necessary to have a large organization or enterprise to use this book properly. Even the smallest maintenance departments can benefit. The information provided is all-encompassing. The authors and contributors recognize tat there are efferent levels of maturity from one group to another. What is needed by one may be well established in another. Its necessary to understand which leading practice principles and concep are the corect ones for one group's needs and to ape them Ports best practices. This edition includes the leading concepts and trends as well as ‘now information on emerging areas and technologies. Tris recognized that maintenance entities in general have various and diverse needs in several key areas. Trends in using frameworks, or models, help organize and prioritize areas of focus, which is one ofthe concepts shared in this book. At the fighest level of identifying needs to achieve maintenance excellence there ae major Uifferences in asset classes and how they are maintained. Additionally, organization maturity and operational principles, as well as lower-level concepts for maintaining fssets through their entice life cyele, should be considered. Preface Te aim ofthis second dition i ition fo provide combination of practical and de inion Te con, esl onsen ely iene entities of varying size for their own benefit or to generate tt ‘personal, group, or academic rigor. ee nena ‘nce aed withthe inoraion conaned heen, «ma . ergsalzation, tram, or indvidnal aa then takes stock ofthe areas thy pequraal? on stock ofthe art they persona tela alge es. Thy et wt ee sett rad map and pres for improvement. They can apy ha hey have learned to evolve into something “new” or move af'mainzamnce excelleare. Ahemseives 10 te next generationAcknowledgments We would like to acknowledge all of the fist edition contributors and, in particular, the frst edition editors, John D. Campbell, who has since passed oa, and Andrew K. S.Jandine. Both have added much tha is still an important part of the core content. ‘Many thanks to our colleagues who are part of IBM Global Services Asset Management Solutions, the largest asset management consulting organization in the world. They have come from varying industries, consulting companies, and loc: tions around the world to add a new and updated view based on the changes thet hhave taken place since the first edition, Their dedication to the discipline of asset ‘management and vision of reaching maintenance excellence have made this second edition possible. Organizing, reviewing, and adding content require effort from various individuals at many different levels, There is a mix of knowledge and personal dedication that can't be accurately measured but that is recognized by all involved with the original book as well as with this edition. We will not name each one, since we feel everyone thas had an equal share in the efforts from reviewing and revising to consulting and adding new content. Each ean be found inthe Contributors section, ‘We would also like to thank our maintenance, engineering, and industry profes- sionals, a well as our business partners, whom many of the editers and contributors learned from, communicated wit, or consulted to discuss or confirm concepts and information in this book, The collaboration and academic discussion validated exist- ing ideas and concepts or have driven new ones, Ttisalso recognized that many leading software providers and suppliers of tech- nologies are an indirect source of input to many of the contributors’ thoughts a input. These types of companies and their personnel consistetly try to improve ‘or develop their products with leading practice, innovation, and easy-to-use func- tionality. Exposure to—and sometimes interaction with—-these companies has provided new ways of thinking and additional thoughts and concepts that have found their way into various content portions in both editions of the book. Finally, we must express our most sincere appreciation to ou clients, who have provided us with the opportunity to understand their needs over ime, It is they who have made sweeping changes by proving us experiences and challenges faced dur- ing start-ups, mergers, acquisitions, and consolidations. They have provided a global environment in which we have been observers of sector and industry changes as well 4s participants and partners in driving new forefronts. They have sometimes taken themselves, and many of us, on cutting-edge journeys that have provided us with experiences that make us subject-matter experts in various fields. Without them and ‘What they have provided, this book and ths latest edition would be nothing more than an academic exercise We would like to extend our gratitude to Don Fenhagen. The Asset Management Excellence book development has been a multi-year process and involved the careful coordination of IBM asset management experts in geographically dispersed regions sii ‘Acknowledgments these IBM asset management of the world. Don has tirelessly collaborated with eral ie ete hat we et the best posible contusions and port Slo of bs pats nasil mans genet. sag eet the IBM asset Mangetent practice and has led co an as ublic and pias sets, Don has bul and leads he IBM Sr esac, which i focised on Spatially Enabling Ast Mamagenet