Maintenance Forecasting and Capacity Planning

These are two important functions for the design of an effective maintenance system.
Maintenance forecasting – comprises the estimation and prediction of the maintenance load.
 Maintenance load – drives the whole maintenance system and it consists of two
major categories.
First category – is scheduled and planned maintenance which is
composed of:
a. Routine and preventive maintenance
b. Scheduled overhauls that involve closure or plant shutdown
c. Corrective maintenance
d. Scheduled overhaul, repair or building of equipment
Second category – is emergency or breakdown maintenance load.

Forecasting Preliminaries

Forecasting Techniques can be classified as:

a. Qualitative – based on the expert or engineering, experience and judgment.
b. Quantitative – based on mathematical models that derive from the historical data
estimates for future trends.
Forecasting model is judged by the following criteria:
a. Accuracy
b. Simplicity of calculation, data needed for the model and storage requirements
c. Flexibility
Important considerations in the selection of the forecasting approach are:
a. The purpose of the forecast
b. The time horizon for the forecast
c. The availability of the data for the particular approach
 Cycle of the Forecasting Process

Identify characteristics/
Item to be forecasted.

Define forecasting horizon.

Is
No historical data Yes
available?
Use qualitative Use quantitative
forecasting. forecasting.

Use historical data and

graphical techniques to
hypothesize statistical
models that appear to fit
the data.

Test and validate forecasting

Estimate model
models and select the most
parameters.
appropriate one.

Generate Forecasts.

Monitor and control the

forecasting process.
Qualitative Forecasting Techniques

Qualitative techniques rely heavily on expertise and are quite costly and time consuming. They
are ideal for situations where little historical data and much managerial judgement are
required. Using input from the sales force as the basis of the forecast for a new region or a new
product is an example of a supply chain application of a qualitative forecast technique.
However, qualitative methods are generally not appropriate for supply chain forecasting
because of the time required to generate the detailed SKU forecasts necessary. Qualitative
forecasts are developed by using surveys, panels, and consensus meetings.

In the absence of data, the analyst must rely on the estimates of experts and their judgement.
The role of the analyst in qualitative forecasting is to systematically extract information from
the expert by using structured questionnaires or interviews. The analyst should help the expert
of management to quantify their knowledge. Techniques such as cause-and-effect diagrams
and the Delphi method can be helpful in identifying the relationship among the variables. The
analyst should identify which variables influence the forecast and the impact of each one.

After identifying the variables and their impacts, the next step is to reach an agreement on the
magnitude of the variables. Best case, expected case, and worst case scenarios are usually used
to estimate the magnitude of the variables. An interactive approach can be used to present
arguments to the expert, such as why his/her estimate differs from the average estimate and
the expert may be asked to revise his/her estimate until a reasonable consensus is reached.
When no further reduction in variation about the consensus is possible the result is used as a
forecast.

Overview of Qualitative Techniques

1. Jury of Executive Opinion: Under this method, the opinions of a group of high-level
experts or managers, often in combination with statistical models, are pooled to arrive
at a group estimate of demand.
2. Delphi Method: There are three different types of participants in the Delphi method:
decision makers, staff personnel, and respondents. Decision makers usually consist of a
group of 5 to 10 experts who will be making the actual forecast. Staff personnel assist
decision makers by preparing, distributing, collecting, and summarizing a series of
questionnaires and survey results. The respondents are a group of people, often located
 in different places, whose judgments are valued. This group provides inputs to the
decision makers before the forecast is made.
3. Sales Force Composite: In this approach, each salesperson estimates what sales will be
in his or her region. These forecasts are then reviewed to ensure that they are realistic.
Then they are combined at the district and national levels to reach an overall forecast.
4. Consumer Market Survey: This method solicits input from customers or potential
customers regarding future furcating plans. It can help not only in preparing a forecast
but also in improving product design and planning for new products. The consumer
market survey and sales force composite methods can, however, suffer from overly
optimistic forecasts that arise from customer input.

Contract Maintenance

Contract Maintenance

 One-time or periodic maintenance performed by a third party under a contract

 Is more effective during peak periods in most working environments when finite
projects or tasks can be estimated and outsourced as a work package.
-

Work Package – specify the numbers and types of workers needed and contain any required
instructions

Contract Maintenance Pros and Cons

With few exceptions, most mills I visit ask me what I think of contract, or outsourcing, of
maintenance. In this article I would like to elaborate on what kind of maintenance should or
should not be contracted out and the reasons for choosing either option.

Variability in workload. The better you manage the workload of your own resources, the less
need you will have for outsourcing maintenance. In weekly and daily maintenance activities,
your workload should not vary much if you have disciplined priorities and a good preventive
maintenance system in place. Even areas such as maintenance workshops and scaffolding
services should experience very few urgent requests, which justifies keeping only a minimum
crew, if any at all, for such services in-house.
Large variations in workload will lead to poor utilization of resources and overstaffing. This
often leads to discussions about outsourcing maintenance. However, outsourcing maintenance
resources will not change anything. The contractor must provide a better system for people to
work in. Otherwise, they will not be more effective than your existing system. If this is the case,
you must ask yourself why you cannot improve the system yourself when the contractor can.

The answer may be that you have tried many times without sustainable success. Your
organization might be in gridlock because of politics, ingrained union practices, and so on. A
situation like this can lead to an “act of desperation.” In other words, your organization has lost
its power and ability to improve as fast as a contractor can (or at least promises to), so this
becomes the reason why your maintenance is outsourced.

Temporary scheduled increase in workload.

During scheduled shutdowns and major outages, it is natural that you contract out work. It can
be very cost-effective to not only contract the resources for executing the work, but to also
have them plan and schedule major outages. However, periodic shutdowns—for example,
every five to seven weeks—of a paper machine can, most probably, be managed better by your
own shutdown planners.

Core business philosophy. Contract maintenance suppliers often argue, as a selling point, that
maintenance is not a core business. Well, if you are a pulp and paper mill, or any other
manufacturing plant, I would like to challenge that statement.

Why would maintenance not be a core business, while operations and manufacturing are
considered core businesses? In fact, I believe that one of the best ways of approaching
outsourcing is to have a manufacturing contract that is not limited to maintenance alone.

In looking at maintenance contracts alone, you should look upon “equipment reliability tasks”
as a core business. You can always question if it makes good business sense to have your own
carpenters, painters, people for scaffolding, masons, tinsmiths, and blacksmiths. Having the
resources a phone call away and no invoice to explain will lead to more use of these resources
than is needed. I sometimes wonder how many unnecessary paint jobs—and bookshelves,
tables, and other carpentry work—have been done just because the resources were available
and the requestor of the work did not need to pay the full cost of it.

Equipment reliability is the result of maintenance work, and it includes such essential elements
as maintenance prevention, including lubrication, filtration, alignment, cleaning, and operating
practices. It also includes preventive maintenance activities such as vibration analysis, basic
inspections, and so forth. I believe all equipment reliability activities should be performed with
in-house resources, unless you outsourcing all maintenance on an equipment reliability
performance and cost basis.
Lack of skills. If your organization does not frequently use certain special skills, it is necessary to
contract for these skills. Even if you train your own people in specialty skills, they cannot
maintain them because they do not use them frequently enough.

The present and the future shortage of skilled craftspeople, especially in the U.S. pulp and
paper industry, might be one of the best sales arguments for maintenance contract suppliers—
if they have these resources to offer. Also, it is not unheard for unions to hold back their own
members from receiving training. This fact has never made sense to me, since it should be in
their interest to support training of members so that they are competitive with contractors.

Over the 30 years I have been in this business, I have been frequently asked about whether to
contract maintenance or not. I would hear these questions more frequently when less capital
work was available and supplier companies began seeking work other than capital project work.

In the last two years, the push for maintenance work among suppliers has been strong. Only
the future will show how many will remain in this business long term. In this column, I would
like to continue to elaborate on what kind of maintenance you should or should not contract
out and the reasons why, as well as the characteristics of a good maintenance contract.

Incentives and Goals. If you consider outsourcing maintenance, I advise you to set up a
contract that includes an incentive for the contractor to continuously perform better.

Service. If your contract is based on buying service alone, there is no real incentive for the
contractor to perform better. The more hours they sell, the more money they make, and they
can sell more hours if your maintenance needs are reactive. Only the fear of losing the contract
will motivate the contractor to perform better.

Reliability. If your contract is based on delivering results, you can create a win-win situation for
yourself and the contractor. In most mills, results should be in the following order of priority
after safety and environmental issues:

1. Reliability of equipment.
2. Cost of delivering reliability.

If there is an incentive for a contractor to deliver reliability, it naturally follows an incentive to

prevent maintenance and to perform preventive maintenance, plan maintenance, schedule
maintenance, and so forth. In summary, they need a disciplined process in place and a good
system to support it.

In selecting a contractor, I suggest that you not only look at their rates, but that you spend the
most time evaluating their maintenance philosophy (if they have one), what reliability and
maintenance process they will implement, and how they will measure results. Go into detail on
the basics of how they would decide whether to prevent—or not prevent—component failures,
how planning will be done, how scheduling will be done, which key performance indicators will
be used, continuous training of their people, and so forth. This is important, because you must
remember that the only thing a contractor can do differently than you is that they can
implement a more efficient work system. They can often do this quickly, or at least they can
promise to do it quickly. Seldom will a contractor bring in a crew with superior skills to your
own.

Long-term Contracts. A maintenance contract should be long term—no less than five years and
preferably longer than that. There are many reasons for this. Two of them are included in what
Dr. Deming called the seven deadly diseases common to U.S. management. They are “Lack of
constancy of purpose” and “Mobility of top management.” My observation is that one
phenomenon leads to the other. New managers are called in for fast and, unfortunately, often
temporary results. They often change the organization, perhaps only because they want to
bring in their buddies, make some cut backs, and then move on to another place before the
long-term effects are noticed. The front line of the organization, where the actual actions of
new directives have to take place, sees this as a constant change of direction. They start talking
about the program of the month and, consequently, they do not change anything and the
results of management efforts will be absent.

If this goes on for some time, no sustainable results will be achieved. In this situation, I think a
long-term maintenance contract offers a possible solution. The contract has to be founded on
the right principles and work processes, because, when these are not changed for a long period
of time, your contractor can help eliminate the “lack-of-constancy-of-purpose phenomenon.”
With good leadership, the work processes and your results should continuously improve. It
could be done without a contractor, but not in a system where a new mill manager or
maintenance manager means a new program.

Healthy Competition. Almost without exception, maintenance departments have never had
true competition. They have monopoly on most work in the mill. A contractor should be seen as
a competitor to your own organization. As long as you are competitive, outsourcing of
maintenance is not a valid alternative.

Note: all information with regards to the Contract Maintenance Pros and Cons are gathered in
http://www.feedforward.com.au/hr_outsourcing.htm
 Western Mindanao State University
College of Engineering and Technology
Department of Industrial and Management Engineering
Normal Road, Baliwasan, Zamboanga City

Engineering Equipment and Maintenance

(IME 153)

Maintenance Forecasting and Capacity Planning

(Written Report)

Submitted to:

Eng’r. Evelyn N. Angeles

Submitted by:

Absin, Kristine Joy T.

Diaz, Nelvie J.
Micubo, Garry S.J.

BS IME 5
7/07/2010