Maintenance Engineering -- Performance Measurement and Management

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The measurement and subsequent management of organizational performance is necessary to determine whether goals and objectives are being met. Numerous books have been written detailing performance management, benchmarking, competitive analysis, or a multitude of other names. The purpose of this section is to provide an introductory overview of performance measurement and management. The first section will focus on measurement, and the next section will focus on management practices.


The purpose of measuring performance is to help predict future action and performance based on historical data. Measuring performance helps identify areas that need management attention. On the other hand, measuring performance also highlights successful areas and accomplishments. Both are necessary to get a picture of how the organization is performing. Knowing the direction or trend in which the organization is headed is the first step in setting or correcting performance.

Developing raw data into useful information requires a skill set. Measurements must be reviewed on a regular basis to provide insight into the organization. Use of measurements can vary from one organization to another. The following pages provide an overview of using performance measurement.


To properly position the use of performance measurement, some general philosophical guidelines need to be developed. The following is intended to correctly position how performance measurement and management should be viewed.

_ You can't measure everything.

_ Performance management is like a gauge to equipment; it tells operating condition.

_ Manage what you measure.

_ Turn data into information, then into action.

_ Indicators must tie into a ''strategic business plan'' and have purpose.

The best organizations have most, if not all, of the following essential practices in place: (1) performance measurement/management system developed; (2) Key Performance Indicators (KPIs) driven by business initiatives and linked to strategic direction; (3) focus on internal trending measured and continuous improvement managed.

_ Downplay only external comparison. External benchmarking data collected, analyzed, and ''shared.'' ''Core'' critical success factors identified and measured/managed. ''At a glance'' performance designed systems and procedures.

_ For both equipment and manufacturing processes.

_ Posted and visible ''on the fly.'' Accessible, user-friendly format, responsive to requests.

_ Regular performance information review and updates, at least quarterly.

_ Multiple recognition and reward systems designed and functioning.

Simple to ''digest'' performance information.

_ Must be in chart or graph form.

_ With explanation and reveals trending measurement. What is ''measured'' gets ''managed.''


Every maintenance organization should have a reporting system, regardless of size or whether or not a computerized program supports the organization.

Feedback from these systems provides assistance to the organization in deter mining whether its goals or objectives are being met, if it’s satisfying customer needs, and if it’s operating efficiently and economically. Last but not least, feedback helps to identify design and quality improvements. The following are examples of reports.

Broad Indicators

This group includes the ratio of maintenance costs to sales ratio of maintenance costs to value of assets maintenance expenditures by cost centers.

Work Load Indicators

This group includes current backlog, total backlog ratio of preventive maintenance to total maintenance, ratio of daily maintenance to total maintenance, ratio of work performed under blanket work orders (or charge numbers) to total maintenance, ratio of capital work to total maintenance, ratio of shutdown work to total maintenance, ratio of area maintenance to total maintenance, and ratio of craft equipment backlog.

Planning Indicators

This group includes jobs completed versus jobs planned, jobs completed versus jobs scheduled, estimated versus actual (effort-hours and cost) ratio of planned to unplanned jobs, ratio of emergency jobs to total jobs, and ratio of downtime to available ''run-time.'' Productivity Indicators

This group includes percentage of wasted time, maintenance labor costs versus maintenance material cost, and maintenance cost per unit of production.

Cost Indicators

This group includes work class or type percentages, actual maintenance cost as compared with budgeted costs, and percentage of maintenance administration cost to total maintenance cost.

These reports will be developed from information provided by all maintenance personnel. This is why it’s so important to develop an efficient feedback system.

The work order system is probably the most important feedback system in maintenance.

Equipment Efficiency

For a process industry, we recommend the following elements to be included in the analysis of equipment efficiency:

1. The percent of availability or uptime:




Most plants or facilities use only A and Q, but it’s important to also include speed losses in the analysis of overall equipment efficiency.


Depending on the product you are manufacturing, the value of a 1% increase in OEE in a 420,000-ton-per-year plant corresponds to an increase in revenue of $2.1 million to $6.2 million per year. This corresponds to an increase in operating profits or contributions to cover fixed costs of $800,000 to $3.1 million per 1% increase in OEE, or an average per-minute capacity of 400,000 tons per year of $12.1 million to $38.1 million per section 14.

The investment to achieve these savings is relatively small. We believe that most improvements can be accomplished by doing better with what you already have, and the key phrases are planning of operations and maintenance and implementation of continuous improvement processes.

Improvement efforts in maintenance performance alone can often affect more than half of the improvement potential, and increased integration between operations and maintenance improvement efforts will give you the full effect of your improvement efforts.

Maintenance efforts to increase OEE will almost always result in savings in maintenance costs in the range of 5-40%. Our experience data show that investments required to improve maintenance performance are in the range of 0.5-5% of the maintenance budget during the duration of an improvement project.

As a whole, maintenance improvement projects have a potential to pay back 5-15 times investments annually.


During the past 10 years we have analyzed performance and developed productivity improvement plans for approximately 140 different paper machines and a large number of pulp mills including wood yards, bleacheries, recovery boilers, and power boilers, mainly in the United States, Canada, and Scandinavia. These analyses have been an in-depth focus on maintenance procedures and their impact on equipment efficiency and the productivity of mills.

In addition to these analyses of pulp and paper mills, improvement plans have been developed and implemented in more than 200 companies before 1985. To summarize, the following findings were based on a vast database and much experience.

Don’t expect to learn anything new from this; with some additions, the bottom line is that planned maintenance is a key success factor and that planned maintenance cannot be achieved unless you have condition monitoring practices implemented to feed your planning procedures, which we refer to as condition based maintenance (CBM).

The PQV/M Factor indicates how much Prime Quality Volume is being produced per $2,000 invested in maintenance. This is a Results Oriented Maintenance productivity indicator. The PQV/M Factor is the inverted value of maintenance cost per ton.

Equipment Efficiency is based only on % Uptime _ % Rejects and does not include speed losses.

Poor performers only plan and schedule 10% of their work. An increase in planned and scheduled work improves equipment efficiency from a poor performance of 76% to 96%, an improvement of 20%. Concurrent with this, the PQV/M Factor increases from 18 to 44 Prime Quality Volume produced per $1,000 invested in maintenance. In summary, planned maintenance increases productivity and decreases costs for maintenance.

Concurrent with the increase in planned maintenance and OEE, the maintenance cost is gradually decreasing by 33%.

Other findings are that planned maintenance increases the technical life of the equipment. At 10% planned maintenance, the average life of electric motors is in the range of 3 to 7 years; pumps are 1 to 5 years, and bearings are 5 to 9 years.

Excellent performers have two to three times longer technical life of their equipment.

Common for excellent performers is that they all were supported by well-organized professional maintenance resources.

Most of the investment is intended to help people to do better with what they already have.


The prime goal of a maintenance operation is to provide equipment efficiency. The secondary goal is to deliver equipment efficiency as cost-effectively as possible.

Unfortunately, it’s common to see that most mills have turned this goal upside down and thus focus too much attention on cutting the maintenance cost. We all know that we can easily do this for a short period of time, but we have to pay back later.

The measurement goal for a maintenance organization should be:

PQV=M FACTOR long term maintenance effectiveness measure

Prime Quality Volume _ X $1000 = PQV=M Maintenance Cost Maintenance Efficiency Percent Unplanned -- Percent Waiting Time U/W Factor Maintenance Jobs -- Related to Unplanned Jobs

The U/W Factor is suggested to be used as the day-to-day measurement of maintenance effectiveness. The factor should be recorded every day and followed up and compared with targets each week. An unplanned maintenance job is defined as a job that has to be started the same day it’s initiated. An unplanned job always includes waiting time.

A brief explanation of the U/W factor follows.

Planned Work- Work orders written ahead of time for which someone has:

1. Estimated the necessary steps, skills, and manpower required to do the job

2. For each step, identified all stock materials (by stock number) and non-stock materials required, and ordered the non-stock items

3. Tracked material availability and analyzed personnel needs (by skill levels) and availability, as well as opportunity and availability of production equipment and special tools

4. Scheduled the job (at least one day ahead of time) based upon #3 and coordinated with production plans

5. Executed the job, without interruption, when scheduled Unplanned Work-Work required to be done the same day as ordered and which might interrupt the daily schedule of work as outlined in ''unplanned work.'' Waiting (or Wasted) Time-Nonproductive time associated with unplanned work including:

1. Finding the personnel to do the work

2. The time it takes for the personnel to stop the job they are on and go to the unplanned job

3. Diagnosing the failure

4. Gathering the correct materials and tools to perform the job

5. Waiting on materials that are not on site

6. Coordinating people to work overtime (if necessary)


1. Percent Emergency Effort-hours (Period) Effort-hours spent on emergency work orders (period) _ 100 Total direct maintenance hours (period)

2. Percent Emergency and AD Unscheduled Effort hours (period) Effort hours spent on unscheduled work orders (period) _ 100 = % Total direct maintenance effort hours (period)

3. Breakdown Equipment Time (period) Percent downtime caused by breakdown (period) _ 100 = N Total downtime (period)

4. Percent Breakdown Repair Hours (period) Total effort hours on breakdown repairs (period) _ 100 = % Total maintenance effort-hours (direct) (period)

5. Dollar Value of Breakdown Repairs (period) Cost breakdown repairs _ 100 = !/0 Total direct cost of maintenance

6. Percent Equipment Availability (period) Equipment run time _ 100 = !/0 Equipment run time and downtime

7. Percent Breakdowns Caused by Low Quality Breakdowns caused by low quality maintenance _ 100 = !/0 Total number of breakdowns

8. Dollar Value of Low Quality Maintenance Breakdowns Direct main cost and lost production cost _ 100 % Total number of breakdowns

9. Maintenance Dollar Percentage Mill Guide Investment Total maintenance cost _ 100 = % Plant investment book

10. Percent Labor Costs to Material Costs Total maintenance labor cost _ 100 = Total maintenance material cost 11. Percent Clerical Manpower Costs of Total Maintenance Cost Total clerical cost _ 100 = % Total maintenance cost 12. Percent Supervision Cost of Total Maintenance Costs Total cost of supervision _ 100 = Total maintenance cost 13. Maintenance Cost Percentage of Total Manufacturing Cost--Cost of maintenance _ 100 Manufacturing cost 14. Maintenance Cost Percentage of Sales Total maintenance cost _ 100 Dollar value of sales 15. Cost of Maintenance Hour Total cost of maintenance _ 100 = % Total effort hours worked 16. Breakdown Cost Component (period) Total breakdown cost _ 100 = % Total production cost 17. Percent Efficiency Total effort hours estimated for jobs _ 100 = % Total effort hours spent on same job 18. Percent Overtime Total overtime hours worked _ 100 .0/0 Total hours worked 19. Percent Work Orders Planned and Scheduled Daily Work order planned and scheduled _ 100 = % Total work orders executed 20. Percent Scheduled Hours vs. Hours Worked as Scheduled Hours worked as scheduled _ 100 % Total hours scheduled 21. Percent Scheduled Hours vs. Total Hours Worked Hours scheduled _ 100 % Total hours worked 22. Percent Work Order Executed As Scheduled Work orders executed as scheduled _ 100 = % Total work orders scheduled 23. Compliance with Estimated Cost Jobs executed at or within 15% of estimated cost _ 100 = % Total estimated jobs executed 24. Ratio Maintenance Planners Total hourly personnel _ 100 = % Total maintenance planners 25. Percent Estimated Coverage Number of planned work orders _ 100 % Number of work orders completed 26. Percent Activity Level of Maintenance Craftsmen Direct time working on work orders _ 100 % Work orders released for work 27. Work Order Turnover Percentage Number of work orders completed during period _ 100 % Number of work orders awaiting release 28. Current Crew Backlog (Weeks) Effort-hours ready to release = weeks One crew week (effort hours) 29. Total Backlog by Crew (Weeks) Total effort-hours ready to work = weeks One crew week expressed in effort hours 30. P.M. Coverage Percentage A. Effort hours spent on P.M. work orders (period) B. Total effort hours worked (period) C. P.M. inspections incomplete (period) D. P.M. inspections scheduled (period) E. Repair jobs resulting from inspection (period) F. P.M. inspections completed


No two organizations have the exact same performance indicators. This is because situations are different. Most organizations attempt to or think that they need to track 50 or more indicators. This is a waste of time and effort. The focus should be on quality, not quantity.

To assist organizations in this transformation process, EDCON Inc. has pre pared a recommended list of performance management indicators. These indicators should form ''the core'' of the performance measurement and management system.

This core group is supported by other indicators that are tracked in support of the core group. The supporting group might be tracked for several months, then replaced by another indicator. However, the core group of indicators always (or almost always) remains the same. The following is a recommended list of core group indicators.

Competitive indicators focus more on industry and ''macro'' internal measurement. Productive measures focus on maintenance and quality production. Operational indicators focus more on equipment. The combination of all three indicators will provide an excellent ''snapshot'' of organizational performance.

_ Competitive

_ Sales / revenue / production (prime quality) volume comparison

_ Prime quality production output per manufacturing expenses

-Measured in output (i.e., tons, widgets, lbs, bbl.)

_ Prime quality production output per $ 1,000 invested in maintenance

_ Productive

_ Prime quality production output per total labor hours worked

-Can divide labor hours out by maintenance-production-total

_ Maintenance budget management

_ Work order priority distribution percentages

_ Backlog aging (30_60_90_90+) ''maintenance accounts payable''

_ Backlog hours by area and craft

_ Operational

_ Availability (uptime) _ Production (operating rate or speed)

_ Quality = OEE-Overall Equipment Effectiveness

''Big 5'' equipment management analysis

''Equipment of the month'' focus


The ''second key'' of developing an effective performance measurement system is performance management. A best practice approach is ''to manage what you measure.'' The following is an overview of the management aspects of performance management. Several key performance measures will be reviewed and the management implications discussed.


Backlog is a performance indicator that gives insight into the ability of the maintenance organization to manage and control work. It can also be used, with other indicators, to gain insight into staffing needs, training requirements, and outside contractor assistance.

Backlog level should be managed and controlled around a range of 2 to 8 weeks of work per craftsperson. This can also be tracked in hours per crafts person. Backlog is designed to ''feed'' planned work into the scheduling machine.

If backlog levels are too low, efficient planning, parts ordering and inventory management, and scheduling of the work force will never approach world-class levels. On the other hand, if backlog levels remain low and the emergency work level is low (i.e., 2%), the planning function might need to scope and plan more jobs or the work force could be too large or overstaffed.

If the backlog exceeds the 6- or 8-week level, high-priority work may not be performed on time. This might be due, in part, to poor scheduling, low response level by maintenance, lack of an objective work order priority system, or too little staff. Temporary increases in overtime or the use of outside contractors may be a short-term fix. If backlog levels trend consistently high, an increase in staffing levels may be necessary.

A ''best practice'' recommendation is to have backlog listed by area and craft.

Examples are attached.

Preventive maintenance, project, and construction backlog should be tracked on a separate chart. Backlog might be tracked by ''total'' backlog that would include the above classifications. It’s recommended that another set of reports be developed that would track the backlog by each individual classification. This will provide greater insight into the operations of the organization.

Backlog Age

Backlog age (30_60_90+ day report) is a measurement of the number of work orders in the backlog sorted out by the age or length of time these jobs have ''waited'' until they were completed.

Backlog age is best characterized to show the raw or actual number of work orders. The following example shows this method.


The goal should be that no critical or routine plannable jobs should be on the backlog for over 90 days. These jobs have already gone through the entire work order process of write-up, approval, planning, parts ordered, and awaiting scheduling. This is a joint effort between operations and maintenance to manage their work. The reader is encouraged to refer back to the backlog management and operational asset management sections in this text for additional information.

Schedule Compliance

Schedule compliance uses the daily and weekly schedule that was developed in the scheduling section and in the operational assets management section.

Schedule compliance simply quantifies the question ''Did we accomplish what we wanted to?'' World-class schedule compliance is 95%. Ideally, schedule compliance would be 100%. In a real application, where ''things'' happen, schedule compliance of 90% is certainly a realistic goal. If scheduled work is constantly bumped (schedule creep) by emergency work or ''emotional priorities,'' then the maintenance and operations daily/weekly schedule is just a ''paper exercise.'' The reader is encouraged to review the sections on daily/weekly schedule use and operational asset management.

Analyzing Trends

After reaching a planned/scheduled execution of over 90% of all maintenance hours, work on more long-term strategies by analyzing the following trends:

_ Backlog hours

_ Overtime hours

_ Contractors' hours

Assuming that a maintenance organization is planning, scheduling, and executing not less than 90% of all maintenance accordingly and backlog, overtime, and contractors' hours are all up, then you need to add people.

If your planning and scheduling level is more than 90% and all of the above trends go down, your strategy should not be to reduce the number of people but to switch your focus to continuous improvement. This strategy is important; if you don’t clearly document it, convey it to your organization, and show long term commitment, you won’t gain support from your people. Instead, you will notice resistance or a lack of support. These ideas have been mentioned previously.

Work Order Priority Analysis

Work order priority analysis measures the distribution of work entering the work management system based on priority. This measure indicates several things, but one of the more valuable indications of the overall ''health'' of the maintenance management system is, E.g., the goals should be fewer emergency and critical work orders and more routine or plannable and scheduling jobs.

Stores and Material Management

As previously mentioned, stores plays a vitally important role in the overall maintenance management process. Several key indicators of the most important stores-related indicators are:

_ Inventory accuracy

_ Stock-outs (active inventory)

_ Service level (active inventory)

_ Hot shot/expedite

_ Percent of all deliveries

_ Dollar value

_ Inventory issue frequency E.g., stock-out percentage is the fraction of occurrences in which the storeroom cannot fill a requisition list for parts or materials because it’s out of stock.

Stock-outs should fall in the range of 0-2%.

Another recommended stores performance indicator is turnover. Turnover is the calculation of the average throughout the storeroom (expressed in months).

Turnover = [Total Value of the Storeroom / Total Value Withdrawn in a Year] x 12 months=year

If turnover is high, it’s an indication that the stores value is inflated. If it’s low, excessive stock-outs may be the result. The formula is best for broad categories of the stores inventory, as different categories will reflect different turnover rates.

Common categories for storeroom inventory are:

_ Recommended

_ Turnover

_ Category

Insurance items, one-of-a-kind spare equipment; large assemblies; spare parts, for pumps, gear boxes, etc.; hardware, such as nuts and bolts; supplies, house keeping materials, etc. Little or no turnover every 2 years, every year, every 6 months, every 1 to 3 months.

The turnover rate should fall within the range of 6-12 months.

In addition to tracking inventory by turnover, another effective indicator is tracking inventory by issue frequency. This indicator will highlight inventory based on frequency of use or issue. The goal is to increase the amount of issue inventory and decrease the levels of slow, stale, and no activity. Typical performance indicator ranges are listed below.

_ Classify inventory by issue frequency

_ Active usage last 12 months 70%

_ Slow, no usage last 13 months 15%

_ Stale, no usage last 13-24 months 10%

_ No activity no usage last > 25 months 5% It’s recommended that action be taken to address why inventory is ''on the shelf '' yet hasn't been issued.


_ Capital, opportunity or borrowing costs 10-15%

_ Cost of operating warehouse space, property tax

_ Energy cost, insurance

_ Cost of space occupancy, rent, and depreciation

_ Cost of inventory shrinkage, obsolescence, damage, theft, and contamination 5-10%

_ Inventory tax 1-2%

_ Management costs, labor, computer support, and administration 5-10%

_ Total of inventory carrying costs per year 30-40% Shutdown and Project Management Guidelines

Suggested performance indicators include:

a. Schedule performance On time

b. Budget performance

+=_ 5% of allocated shutdown budget

c. Equipment ''out of service'' downtime Reduced 5% to 25% versus previous shutdown projects Big impact on pre-scheduling and performing smaller activities throughout the year

Performance Management Reporting

It’s highly recommended that the maintenance organization develop a weekly report. This report must be reviewed on a regular basis. Weekly is suggested, and a ''best practice'' is to have an open-door review policy.

The other suggested forum for review of maintenance management performance information is at the weekly operational asset management meeting.

This is an ideal forum for integrating performance management information into the operational fabric of the organization.

The examples provided illustrate how different organizations developed different unique methods for reporting organizational performance indicators.

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