All Member Open Forum

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment. 

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC
------------------------------

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

OK, I see.

My suggestion is that you answer top management "Whatever the number is, it will always be too much for you guys"  :)  Just kidding. .......But, it may be true. 

But, it is an interesting question. 

In my experience the waste often lies in not executing "the basics" to their potential.  Mainly improving execution of Preventive Maintenance and work management  (supporting processes such as materials management, correct technical data may influence as well).  But, it may not be true for you,  I don't know your plant.  

Looking at it the way you suggest would be interesting, but I think it will be a lot of work to get you the answer.  Doing it that way you will research the end result, the cost... of course you may be able to dig backwards and get to the answer as to why the cost is there.  Somehow you need to find the sources to "what drives the cost", the spending itself will not give you that answer.  So in your example with the generator, you will need to find the causes as to why the plant spend $X, once you find the failures, you need to find the technical root cause, but also the human cause and the systematic causes.  Good if you can do it, but it will take a lot of time.... A lot!

If you instead assessed your "work systems" (most likely cause), you will get to the causes quicker, I think.  You won't have to research every failure, you can assess the work process and see that..... for example, lubrication is done poorly.  If it is, you KNOW that poor lubrication practices will cause a lot of premature failures.  This is just an example, perhaps your lub program is great.  But, it is very easy to assess.  Check how lub is handled stored and applied.  

Best of luck, feel free to connect if you would like to discuss.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC
------------------------------

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

So nice and informative replay, Torbjorn! It`s highly appreciated!

What you are suggesting sounds applying RCM and PMO. Which is going to catch the RCA after all.

Again, it's my honor to get in touch again.

Regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 02-01-2022 08:35 AM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

OK, I see.

My suggestion is that you answer top management "Whatever the number is, it will always be too much for you guys"  :)  Just kidding. .......But, it may be true.

But, it is an interesting question.

In my experience the waste often lies in not executing "the basics" to their potential.  Mainly improving execution of Preventive Maintenance and work management  (supporting processes such as materials management, correct technical data may influence as well).  But, it may not be true for you,  I don't know your plant.

Looking at it the way you suggest would be interesting, but I think it will be a lot of work to get you the answer.  Doing it that way you will research the end result, the cost... of course you may be able to dig backwards and get to the answer as to why the cost is there.  Somehow you need to find the sources to "what drives the cost", the spending itself will not give you that answer.  So in your example with the generator, you will need to find the causes as to why the plant spend $X, once you find the failures, you need to find the technical root cause, but also the human cause and the systematic causes.  Good if you can do it, but it will take a lot of time.... A lot!

If you instead assessed your "work systems" (most likely cause), you will get to the causes quicker, I think.  You won't have to research every failure, you can assess the work process and see that..... for example, lubrication is done poorly.  If it is, you KNOW that poor lubrication practices will cause a lot of premature failures.  This is just an example, perhaps your lub program is great.  But, it is very easy to assess.  Check how lub is handled stored and applied.

Best of luck, feel free to connect if you would like to discuss.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

I beileve the Metric is Annual Maintenance Cost per RAV so that answers some of the questions above. SMRP provides a document that explains the calculation and usage of each metric.  I don't think this is a useful metric given the range indicated in determining the "budget".  It's very broad and 2 % could easily be undermaintaing on some assets and 9% could be overmaintaining.  I think to answer the question about "the proper amount of maintenance" you have to return to risks (probabilities x consequences) and failure modes, then determine how much your oganization VALUES to spend to mitigate those risks.

------------------------------
Joe Petersen
Consultant Trainer
GE Digital
Knoxville TN
------------------------------

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

I like your replay, Joe!

Now I am thinking of 2Mega Watt Steam Turbine, which could cost the company $1.0M. I believe that management could accept spending 25% to keep the asset running, and therefore, keep generating electricity! While, the beacon light of the same turbine could cost the company $5.0, and management could accept RTF strategy!!

Thanks Joe for coming though my post.

Regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 02-01-2022 10:05 AM
From: Joe Petersen
Subject: RAV Calculation for Existing Asset

I beileve the Metric is Annual Maintenance Cost per RAV so that answers some of the questions above. SMRP provides a document that explains the calculation and usage of each metric.  I don't think this is a useful metric given the range indicated in determining the "budget".  It's very broad and 2 % could easily be undermaintaing on some assets and 9% could be overmaintaining.  I think to answer the question about "the proper amount of maintenance" you have to return to risks (probabilities x consequences) and failure modes, then determine how much your oganization VALUES to spend to mitigate those risks.

------------------------------
Joe Petersen
Consultant Trainer
GE Digital
Knoxville TN

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

I believe what you need is a plan to align business outcomes, value, and reliability/maintenance.  That is, what are the business outcomes you are trying to achieve and then what needs to be done to achieve them?  MC/RAV is an outcome of many other things and there are clear benchmarks to help you understand your spending.  For example, how much of your work is reactive (break fix)?  How much of your work is executed in a planned manner?  What is your estimate of the utilization (aka wrench time) of the workforce?  How many of your failures are repeat failures?  Answering these basic questions will verify the MC/RAV metric.   My suggestion is that you focus on the basics and the results will follow.  But if you want to spend less and increase availability you have to have a robust reliability plan.

------------------------------
Paul Casto
Buchanan VA
------------------------------

Original Message:
Sent: 02-01-2022 01:49 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

I like your replay, Joe!

Now I am thinking of 2Mega Watt Steam Turbine, which could cost the company $1.0M. I believe that management could accept spending 25% to keep the asset running, and therefore, keep generating electricity! While, the beacon light of the same turbine could cost the company $5.0, and management could accept RTF strategy!!

Thanks Joe for coming though my post.

Regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 02-01-2022 10:05 AM
From: Joe Petersen
Subject: RAV Calculation for Existing Asset

I beileve the Metric is Annual Maintenance Cost per RAV so that answers some of the questions above. SMRP provides a document that explains the calculation and usage of each metric.  I don't think this is a useful metric given the range indicated in determining the "budget".  It's very broad and 2 % could easily be undermaintaing on some assets and 9% could be overmaintaining.  I think to answer the question about "the proper amount of maintenance" you have to return to risks (probabilities x consequences) and failure modes, then determine how much your oganization VALUES to spend to mitigate those risks.

------------------------------
Joe Petersen
Consultant Trainer
GE Digital
Knoxville TN

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Well noted, Paul!

What you highlighted is typically matching the other arguments from the above profession’s. Looking to the big picture is the only and only one way to figure-out your expenditures, and therefore, plan it better!

Regards,

---------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
---------------------------------



Original Message:
Sent: 02-02-2022
From: Paul Casto
Subject: RE: RAV Calculation for Existing Asset

I believe what you need is a plan to align business outcomes, value, and reliability/maintenance.  That is, what are the business outcomes you are trying to achieve and then what needs to be done to achieve them?  MC/RAV is an outcome of many other things and there are clear benchmarks to help you understand your spending.  For example, how much of your work is reactive (break fix)?  How much of your work is executed in a planned manner?  What is your estimate of the utilization (aka wrench time) of the workforce?  How many of your failures are repeat failures?  Answering these basic questions will verify the MC/RAV metric.   My suggestion is that you focus on the basics and the results will follow.  But if you want to spend less and increase availability you have to have a robust reliability plan.

------------------------------
Paul Casto
Buchanan VA
------------------------------

Original Message:
Sent: 02-01-2022 01:49 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

I like your replay, Joe!

Now I am thinking of 2Mega Watt Steam Turbine, which could cost the company $1.0M. I believe that management could accept spending 25% to keep the asset running, and therefore, keep generating electricity! While, the beacon light of the same turbine could cost the company $5.0, and management could accept RTF strategy!!

Thanks Joe for coming though my post.

Regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 02-01-2022 10:05 AM
From: Joe Petersen
Subject: RAV Calculation for Existing Asset

I beileve the Metric is Annual Maintenance Cost per RAV so that answers some of the questions above. SMRP provides a document that explains the calculation and usage of each metric.  I don't think this is a useful metric given the range indicated in determining the "budget".  It's very broad and 2 % could easily be undermaintaing on some assets and 9% could be overmaintaining.  I think to answer the question about "the proper amount of maintenance" you have to return to risks (probabilities x consequences) and failure modes, then determine how much your oganization VALUES to spend to mitigate those risks.

------------------------------
Joe Petersen
Consultant Trainer
GE Digital
Knoxville TN

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Totally agree Joe.  I have not found this metric to be useful at all for setting or checking a budget.  I guess it could be a high level sanity check for budget but the real answer is in what many have already replied.

The 2-9% range is too large and maybe that is due to inclusion of so many different industry business models?  9% seems way too high for almost any industry.  My experience in the paper industry is in the 2-3% range.

But as Torbjorn said, whatever is presented is always too much and you can always cut another 3-5% out year after year. 

I asked a manager once after it was obvious to me we had cut too much out, at what point do we go too far?  How do we know that and what do we do?  Where does the automatic 3-5% cut year over year stop?  Is it until something catastrophically fails and a lawsuit results?  It is a serious question.  Look at so many of the large fatal disasters in industrial history.  A large % of them were a result of cutting necessary maintenance.

------------------------------
Randy Riddell, CMRP, PSAP, CLS
Reliability Manager
Essity
Cherokee AL
------------------------------

Original Message:
Sent: 02-01-2022 10:05 AM
From: Joe Petersen
Subject: RAV Calculation for Existing Asset

I beileve the Metric is Annual Maintenance Cost per RAV so that answers some of the questions above. SMRP provides a document that explains the calculation and usage of each metric.  I don't think this is a useful metric given the range indicated in determining the "budget".  It's very broad and 2 % could easily be undermaintaing on some assets and 9% could be overmaintaining.  I think to answer the question about "the proper amount of maintenance" you have to return to risks (probabilities x consequences) and failure modes, then determine how much your oganization VALUES to spend to mitigate those risks.

------------------------------
Joe Petersen
Consultant Trainer
GE Digital
Knoxville TN

Original Message:
Sent: 01-31-2022 02:32 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

100% agree with you, Torbjorn!

What I am trying to do is to design a formula tells us how we far in our MC! In other words, I would like to answer the controversial question related to "why you spend too much in Maintenance OPEX?!" As a technical team, we used to receive such questions from the business OR the finance people.

I hope you got my points.

regards,

Samih

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager

Original Message:
Sent: 01-31-2022 02:09 PM
From: Torbjorn Idhammar
Subject: RAV Calculation for Existing Asset

Samhi,

I don't feel the MC vs. RAV should be used as a budgeting tool for each equipment.

I see the MC/ RAV as an outcome of everything we do and that it is an average for all equipment in the plant. Why I say that is that if you have a breakdown, or failure of the equipment, you have to fix it, a maintenance job can't be avoided (unless you don't need the equipment and then you should take it away anyways).  Also if there is a required PM, I don't think you would stop doing it because you meet a certain number.

------------------------------
Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Hi All,

I'm new to the group and busy with CMRP exam preparations. The Total Maintenance cost as percentage of RAV give you an idea of how your maintenance and reliability systems preforms, and companies use this percentage usually to benchmark their systems with top class companies. I did some research and found that if the ratio between TMC and RAV is between 1 and 2.5 % which indicates that your maintenance and reliability systems are top class, 2.5 – 4 % shows your system is pro-active, around 4.5 % must flag warnings and around 8% shows you are actually doing reactive maintenance. Let's say your TMC/RAV = 8% then you can use this 8% as a basis for one year's budget, not for a 5-year budget. So, the best will be to set up a strategic maintenance plan and set KPI's in place to reduce the TMC/RAV ratio over 5 years from 8 – 3 %. Let's assume you did some changes to your maintenance and reliability systems/equipment, and you notice that your TMC/RAV ration came down from 8 to 6%. Now, this is the time when you can reduce your maintenance budget for the following year.  The point I want to make is, that you cannot reduce your maintenance budget unless you improve your maintenance and reliability systems.

Regards,

James  

------------------------------
James Prinsloo
Utility/Project Manager
Western Cape
------------------------------

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Indeed, James!
Improve the availability and sustain the reliability are the only ways to reduce the TMC.

So, what I bought that we can not estimate OR budget the equipment`s maintenance in advanced using the RAV KPI! TMC as a percent of RAV is an only way to determine where are you stand in terms of Maintenance Quality. Which is emphasizing what Joe and Torbjorn mentioned above!

Eventually, we are speaking the same language, and this is one of the main goals of SMRP!

Regards,

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 02-01-2022 09:55 AM
From: James Prinsloo
Subject: RAV Calculation for Existing Asset

Hi All,

I'm new to the group and busy with CMRP exam preparations. The Total Maintenance cost as percentage of RAV give you an idea of how your maintenance and reliability systems preforms, and companies use this percentage usually to benchmark their systems with top class companies. I did some research and found that if the ratio between TMC and RAV is between 1 and 2.5 % which indicates that your maintenance and reliability systems are top class, 2.5 – 4 % shows your system is pro-active, around 4.5 % must flag warnings and around 8% shows you are actually doing reactive maintenance. Let's say your TMC/RAV = 8% then you can use this 8% as a basis for one year's budget, not for a 5-year budget. So, the best will be to set up a strategic maintenance plan and set KPI's in place to reduce the TMC/RAV ratio over 5 years from 8 – 3 %. Let's assume you did some changes to your maintenance and reliability systems/equipment, and you notice that your TMC/RAV ration came down from 8 to 6%. Now, this is the time when you can reduce your maintenance budget for the following year.  The point I want to make is, that you cannot reduce your maintenance budget unless you improve your maintenance and reliability systems.

Regards,

James  

------------------------------
James Prinsloo
Utility/Project Manager
Western Cape

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Samih, As mentioned by others, I would avoid using a metric like this for setting budgets. Instead, I see it more as a benchmark at a plant level, just be very careful with it as the target percentage varies hugely by industry. For example, in large capital intensive plants like an LNG plant the target range should be much lower than the 2% quoted.

------------------------------
Erik Hupje
http://www.roadtoreliability.com
https://www.linkedin.com/in/erikhupje/
------------------------------

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Noted with thanks, Erik.

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 02-07-2022 06:13 PM
From: Erik Hupje
Subject: RAV Calculation for Existing Asset

Samih, As mentioned by others, I would avoid using a metric like this for setting budgets. Instead, I see it more as a benchmark at a plant level, just be very careful with it as the target percentage varies hugely by industry. For example, in large capital intensive plants like an LNG plant the target range should be much lower than the 2% quoted.

------------------------------
Erik Hupje
http://www.roadtoreliability.com
https://www.linkedin.com/in/erikhupje/

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Hi, Samih --

I think you're making a very common mistake, which is trying to plan and budget using lagging indicators as a guide.

I'll give two simple examples to illustrate the fallacy of comparing TMC/RAV ratios among unlike assets:

1.  Flanged manual ball valves:
I can buy a 1/2-inch carbon steel valve for less than $200.  A 6-inch stainless steel valve costs more than $1,500.  Both require a pair of gaskets and a new packing every three-to-five years.  Gaskets and packings will be slightly more expensive for the 6-inch valve, but the maintenance labor cost is exactly the same.

2.  Automotive equipment:
In the United States, government regulations require that all fork lifts be inspected every shift.  If the inspection takes 20 minutes, and the operation is continuous (3 shifts), then that's 365 hours per year maintenance, not including the actual PMs such as fluids, tires, belts, hoses, etc.  For a car or truck costing roughly the same as the forklift, only the manufacturer's recommended maintenance (fluids, tires, belts, hoses, etc.) is required (to protect the warranty).

As you can see, maintenance cost is not correlated with replacement asset value in any meaningful way unless you are comparing them between very similar assets.

I sincerely hope this helps.

------------------------------
Daniel K Corman, CMRP
Houston, Texas, USA
------------------------------

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

100% agree with you, Daniel!
Such lagging metrics should be only for assessing where are you standing in terms of Maintenance Quality.
Thanks again for your valuable thoughts.

Regards,

------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------

Original Message:
Sent: 02-08-2022 01:14 PM
From: Daniel Corman
Subject: RAV Calculation for Existing Asset

Hi, Samih --

I think you're making a very common mistake, which is trying to plan and budget using lagging indicators as a guide.

I'll give two simple examples to illustrate the fallacy of comparing TMC/RAV ratios among unlike assets:

1.  Flanged manual ball valves:
I can buy a 1/2-inch carbon steel valve for less than $200.  A 6-inch stainless steel valve costs more than $1,500.  Both require a pair of gaskets and a new packing every three-to-five years.  Gaskets and packings will be slightly more expensive for the 6-inch valve, but the maintenance labor cost is exactly the same.

2.  Automotive equipment:
In the United States, government regulations require that all fork lifts be inspected every shift.  If the inspection takes 20 minutes, and the operation is continuous (3 shifts), then that's 365 hours per year maintenance, not including the actual PMs such as fluids, tires, belts, hoses, etc.  For a car or truck costing roughly the same as the forklift, only the manufacturer's recommended maintenance (fluids, tires, belts, hoses, etc.) is required (to protect the warranty).

As you can see, maintenance cost is not correlated with replacement asset value in any meaningful way unless you are comparing them between very similar assets.

I sincerely hope this helps.

------------------------------
Daniel K Corman, CMRP
Houston, Texas, USA

Original Message:
Sent: 01-31-2022 01:53 PM
From: Samih Abdalazeez
Subject: RAV Calculation for Existing Asset

Referring to the Best Practice Benchmark, Maintenance Cost as a Replacement Asset Value (RAV) percent should be between 2-9%! Now the question is, what is the most proper approach to calculate the same? Shall we identify the maintenance cost limit in the first place of the asset`s installation? Or we shall keep spending on maintenance until reaching the 2-9% limit and then stop?

For instance, let us suppose that we have Supply and install one power generator by $1,000. The first approach says that I shall secure only $90 for the maintenance for the coming 5 Years (Asset Life Cycle - ALC)! The second approach says that, we shall keep spending on the required maintenance until reaching the $90 (whenever we reach).

What do you think about the above two approached? What is the right one?


------------------------------
Samih Abdalazeez
CMRP

Assistance Maintenance Manager
------------------------------