May 5 2022

How to Perform Criticality Analysis to

Prioritize Asset Maintenance

If your business uses assets to deliver a product or service, your

dependence on these assets introduces risk. Therefore, you implement
expensive maintenance programs to offset that risk. 

But how do you gauge the effectiveness of your maintenance spend? Are
you maintaining the correct assets at the right frequency, and how much
are you spending unnecessarily?

In this comprehensive guide, we’ll introduce you to a risk assessment and

management method that answers those questions – criticality analysis. 

What is criticality analysis?

Criticality analysis (CA) is a structured and systematic method of assessing
the risk asset failures pose to a business. The method is used to rank the
criticality of assets relative to each other. This supports the implementation
of targeted plant maintenance strategies proportional to the failure’s
impact. 

The structured process removes considerable subjectivity while optimizing

maintenance spending. It helps improve asset availability and reliability,
plant safety, and equipment uptime.
What is the purpose of completing an asset
criticality assessment? 
Criticality analysis is not just another maintenance tool for the engineering
and maintenance department to save money. It’s a strategic business
process requiring involvement and input from a broad range of company
departments if it is to deliver company-wide benefits.
The outputs from a criticality analysis can be used for:

 Inventory optimization: Identifying optimum spares holdings for

critical equipment.
 Capital allocation: Identifying CAPEX investment for critical
equipment upgrades or process redundancy needs while eliminating
unnecessary spending.
 Safety improvements: Reducing critical failures and eliminating
unnecessary maintenance interventions and downtime.
 Maintenance program optimization: Assists priority rankings for
planned maintenance tasks and work order requests. Assists with
applying risk mitigation strategies such as condition or trend
monitoring.
 Resource optimization: By better understanding asset criticality,
maintenance resources are used more effectively.

Sub-optimal approaches to assessing equipment

criticality 
Different methods exist for applying criticality rankings to assets. However,
many lack procedural rigor and miss the mark when it comes to improving
maintenance outcomes. 

We will still go through some of them so you get the idea what is out there.
You might also apply them as a band-aid until you have enough resources
to conduct a fully fledged equipment criticality analysis.

The Pareto principle (a.k.a. the 80/20 rule)

This method is subjective and involves the maintenance manager ranking

all assets by their perceived criticality, then focusing most maintenance
efforts on the top 20% of the list. While some asset failure rates improve,
others will deteriorate due to a lack of attention, forcing the maintenance
team into reactive mode.

Forced ranking

Like the Pareto method, forced ranking assumes a clear hierarchy of asset
criticality, which is not the reality. With scheduled maintenance efforts
applied from the top, assets that are towards the bottom-half of the list will
receive little to no attention, depending on the maintenance team’s
workload. 
This method is wildly unpredictable, preventing informed and systematic
changes to improve asset availability and measure effectiveness.

Maintenance frequency allocation

The frequency allocation method increases or decreases scheduled

maintenance interventions based on asset criticality. However, effective
and efficient maintenance is not linked to how often a piece of equipment is
looked at, but rather having the right tasks acquitted at a predetermined
time. 

Frequency allocation often allows less critical assets to run late on

scheduled checks or has them canceled altogether due to time pressures.

Over-maintaining

In this scenario, businesses assume that every asset is equally important.

Based on the flawed principle that if a little oil is good for something, more
must be better, the business gives all the assets equal attention. 

Apart from being extremely expensive and time-consuming, there is a sting

in the tail. When an asset fails, as one surely will, management will look at
the size of the maintenance budget and assume the maintenance
department is incompetent. 

The fact a business is spending a lot of money on maintenance does not

mean the maintenance adds value.  

How do you do asset criticality analysis?

We will use the criticality analysis developed by the US military in the mid-
20th century and utilized in their original failure mode effects and criticality
analysis (FMECA) method. The intent behind the military’s development of
this method was to predict failure and avert it rather than fix it after it had
occurred. 

This method of criticality analysis allows a choice between two metrics, one
quantitative and the other qualitative.

The quantitative approach: Calculating Risk Priority Number (RPN)

The quantitative approach relies on having severity rates, component

failure rates, and a detection metric, all of which are put into an equation to
compute a risk priority number, as follows:
The following tables show the severity and probability categories used
by Air Force Space Command for carrying out criticality analysis on space
vehicles.
While the US military used complicated formulae to calculate failure rates
and probability, you can still use this method semi-quantitatively by
assigning your own broad scale for the criteria, such as the
following example.
Detection categories can be similarly broad, as the following table shows.
Severity categories may focus on health and safety, client satisfaction,
environmental, or financial impacts, and some comprehensive tables
including all criteria as shown below. The selection of the severity category
will be based on the highest impact identified.
Once you have the numbers from each table, you can compute the RPN for
the asset and rank the risk category.
Creating a spreadsheet showing the relative rankings between the RPN of
each asset highlights the equipment requiring more sophisticated
maintenance strategies to avert failure.

Criticality analysis template example

Qualitative approach to asset criticality assessment

The qualitative approach ignores the detection metric and uses only

severity and likelihood rates to compute risk. This method is widely used,
as many consider the detection requirements too confusing and difficult to
apply. The equation follows the same format as previously.

Criticality = S x P, where S is the severity of the effect of the failure and P is

the probability. 

Given the greater simplicity of this method, once the severity and
probability ratings have been assigned, a simple matrix can be used with
severity on the horizontal axis and probability on the vertical axis. The
intersection of the two ratings will show criticality.
In most businesses, green and yellow do not require action. Threshold risks
shown by the light orange must be constantly monitored or mitigated. Dark
orange and red risks must have actions applied to reduce them to the
threshold or below. 
The matrix you devise will differ with metrics pertinent to your business
size. That being said, the principle remains the same irrespective of
your industry.

How to conduct criticality analysis

The criticality analysis process is essentially a decision-making tool that
can be used for managing failure events. As such, it can be split into seven
distinct steps you should follow to ensure the assessment is performed
correctly and with enough rigor. 

1. Assemble a cross-functional team

The value in a criticality analysis comes from the diverse inputs of those in
the organization impacted by equipment failure. Using only maintenance or
engineering personnel to carry out the analysis can skew the data-
gathering process and provide sub-optimal results.

Ensure that operations, procurement, safety, maintenance, and

engineering personnel form the team’s core. Additional members might
include people from finance and logistics.

2. Agree on the equipment criticality assessment matrix

A common area of contention is the risk assessment matrix. Team

members often have disagreements on the applied severity ratings,
wording, inclusions, and exclusions. 

Begin by proposing draft categories and risk matrices, and allow discussion
on the contents. Once everyone has voiced an opinion and suitable
modifications have been made, you’ll achieve greater ownership of the
process by the team, and ensure consistency when ranking risk.

3. Identify items to be assessed

The criticality analysis process can be quite involved and time-consuming,

so keep the number of assets to be analyzed manageable. Aim for the
most critical assets when assessing failure risks. Suggestions for the
number of assessment items range from 10% to no more than 20% of your
total assets. 

4. Set the context for each asset

Given the analysis team comprises diverse skill sets, it’s important to clarify
the function of each asset, the quantity in use, asset prioritization, and any
redundancies that may exist for the item. 

An asset that forms a single point of failure with severe financial impacts
will have a different criticality or RPN number than if operations can
continue using a backup asset or alternative production methods. 

5. Collect the necessary data

Identify asset failure modes, the impact of each failure, and the likely rate of
occurrence. If you are using the RPN process (the quantitative approach),
assign detection rates as well.

6. Perform risk evaluation

Using the risk tables, compute a criticality number for the qualitative
analysis or an RPN number for the quantitative analyses. This process can
take some time, as each team member will have differing views on how a
failure impacts their department and the severity to be applied. High
risk can have different meanings for different personnel.

Remember that criticality will be based on the most severe outcome. An in-
depth effects analysis is the first step in the methodology, leading to an
asset criticality ranking for each asset.

7. Aggregate asset criticality

By aggregating the criticality rating from all assets, you gain insight into
where and how you might best allocate resources for optimum effect. While
criticality analysis does not consider consequential or multiple failures, risk
aggregation might inform contingencies suitable to offset several identified
potential failure impacts.

Optimizing maintenance using criticality outcomes

The outcome of a criticality analysis can be used to inform various
strategies. These may include equipment design, modification to
processes, equipment guarding, Capex for new equipment, or other
positive actions to reduce failure severity. 

However, when we specifically wish to optimize our asset management and

maintenance, one of the key areas for improvement is the maintenance,
inventory, and procurement strategies we employ. There are five
maintenance strategies common to most facilities: 

 Run-to-failure maintenance
 Preventive maintenance
 Condition-based maintenance
 Predictive maintenance
 Prescriptive maintenance

For those who were intrigued by the graphic above, check our
detailed comparison of the maintenance strategies here. 
With insight into the failure impacts of an individual asset, we can consider
whether the current maintenance regime is providing effective and efficient
mitigation of equipment failure. 

Example #1: Low criticality asset

An example might be an asset deemed low in criticality due to multiple

redundancies. In this case, carrying out condition-based maintenance
might be overkill, expending maintenance resources unnecessarily. 

You might choose to downgrade the asset maintenance strategy to

preventative maintenance, carrying out only lubrication and cleaning tasks.
You may also choose to be completely reactive in your maintenance, fixing
the asset only once it has failed. The final decision will depend on the value
of the asset and its repair or replacement costs.

Example #2: High criticality asset

Conversely, you might have identified a slurry pump with multiple

redundancies, yet a catastrophic failure would result in severe
environmental impacts and regulatory penalties. With such impacts
affecting a business’s operating license, averting such failure must be a
high priority. 

You may choose to install sensors and utilize predictive or prescriptive

maintenance techniques to ensure an early warning of deterioration,
allowing for a timely maintenance intervention. This example might also
necessitate a change in your spares inventory to ensure adequate
components or complete units are on hand for rapid rectification.

Developing mitigation strategies

As an extension of the criticality analysis process, you could choose to

develop a mitigation matrix. This matrix suggests a range of strategies and
tactical interventions to be considered for each criticality ranking, as shown
in the image below.
While not prescriptive, the matrix provides an aide-memoire to guide
engineers, maintenance planners, and maintenance managers on suitable
risk mitigation options while offering other considerations, such as inventory
or procurement issues. 

Improving criticality assessment with a CMMS

A criticality analysis has three key stages: 

1. Data gathering
2. Asset ranking
3. Strategy implementation and monitoring 

A computerized maintenance management system (CMMS) provides

support through all three stages. 

The CMMS provides objective historical maintenance and in-service

performance during data gathering activities, informing the initial asset
selection for analysis. The criticality analysis team can then base their
assessments on empirical data rather than anecdotes and memory.

Once a strategy is identified, the CMMS will manage the task scheduling,
resources, and spares necessary to implement the risk mitigation. It will
update inventory counts and capture expenditure. 

Last but not least, CMMS simplifies financial and operational reviews which
are carried out to validate whether the chosen mitigation strategy provided
the efficiency and effectiveness gains (by comparing current and past asset
performance and maintenance costs).

Let’s summarize
Correctly performing criticality assessment requires diverse organizational
inputs and the ability to follow a structured and systematic approach. The
rigor used to identify risk, rank it, and implement risk mitigation strategies
removes a large degree of subjectivity from the analysis. It prevents
isolated actions or the implementation of tactics unsupported by data.

While the process is comprehensive and time-consuming, the benefits are

hard to dismiss: a more targeted maintenance program, optimized
maintenance spending, reduced operational risk, and improved asset
longevity and availability.
That’s it from us – may your equipment live long and prosper! If you have
any questions about criticality analysis, visit the comment section below.
For anything else related to Limble CMMS, you can contact us here.