2.

MAINTENANCE PLANNING AND SCHEDULING

Maintenance Planning and scheduling of work orders is the hub of a well-functioning maintenance
organization. In order for maintenance planning and scheduling to work many other systems need
to work well. Most importantly equipment inspections through preventive maintenance, technical
database such as bill of materials, work order history, and standard job plans. Maintenance spare
part stores have to function well, see Figure 2-1.

Figure 2-1: The various arms involved in Maintenance Planning and Scheduling

2.1 Planned Maintenance

Planned maintenance is not a specific type of maintenance, but the application of maintenance
handled in a specific manner. It is the comprehensive planning of the maintenance function.
Planned maintenance is thus work organised and carried out with forethought, control and
records. It includes the whole range of maintenance and can apply to any strategy i.e preventive,
condition-based, and corrective provided that:
a. The maintenance policy has been considered carefully,
b. The application of the policy is planned in advance,
c. The work is controlled and directed to conform to pre-arranged plan, and
d. Historical and statistical results are compiled and maintained to assess the results and to
provide a guide for future policy.
The ultimate purpose of industry is to produce the goods at the most economical cost. The
maintenance plan must be organised to achieve this objective. It must consider the overall situation
and consider not only the maintenance and production functions but also the economics. Initially,
each department will have its pre-conceived idea on what constitutes the best maintenance plan.

1
But when the objective is define and the problem studied on a combined basis, it is possible to
develop a unified maintenance plan that will give the best overall results.
Where a policy of planned replacement is practised, the planning is mainly of a financial nature –
ensuring money is available for the purchase of new equipment, balancing depreciation costs
against tax allowances, negotiating the sale, or trade-in, of old equipment at the most favourable
price. But by the far, the greater part of planned maintenance is concerned with the organisation
of the engineering aspect of maintenance and its relationship to production.
This maintenance may be affected in different ways; when the facility is running, when it has
stopped, before it breaks down, after it breaks down, it can be planned or it can be done as and
when the need arises, without any prior planning.
2.1.1 Fundamentals of Planned Maintenance
The fundamental basis of any planned maintenance system is deciding in advance:
1. The individual items of plant and equipment to be maintained,
2. The form, method and details of how each item is to be maintained,
3. The tools, replacement, spares, tradesmen and time that will be required to carry out this
maintenance,
4. The frequency at which these maintenance operations must be carried out,
5. The method of administering the system,
6. The method of analysing the results.
In order to express these basic essentials in a way that will form the structure of a practical system,
there must be;
1. A schedule of all the plant and equipment to be maintained,
2. A complete schedule of all the individual tasks that must be carried out on each item of
plant,
3. A program of event indicating when each task must be carried out,
4. A method of ensuring that the work listed in the programme is carried out,
5. A method of recording the results and assessing the effectiveness of the programme.
Even the simplest of planned maintenance schemes must be controlled, and certain facts need to
be readily available to the person in control if this is to be effective. As the human memory cannot
retain more than a very limited amount of information with any guarantee of accuracy, and as
scribbling of notes on odd scraps of paper, which are often lost, is equally unreliable, a more
organised system of documentation is essential.
There are many basic documentation systems available that have been designed specifically for
the control and support of the planned maintenance schemes. These are all capable of being tailored
to suit the individual requirements of any company or organisation. Frequently, these basic systems
are elaborated to provide information on costs, man hour, repair time, materials and replacements
used or any other relevant data that are considered helpful. But any system that is installed should
be easy to operate, involve the maintenance staff in the minimum of paper handling and recording
but must be capable of indicating clearly:
• What is to be maintained?
• How it is to be maintained?
• When it is to be maintained?

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 • Effectiveness of the maintenance activities.

2.1.2 Benefits of Planned Maintenance

The initial organisation and subsequent operation of any planned maintenance system will involve
time, money and usually a considerable amount of hard work. For a company to justify this
investment there must be substantial benefits. Therefore, any company considering the
introduction of planned maintenance will of necessity want to know
• Can it be successfully applied to our particular case?
• What benefits will result?
Planned maintenance can be successfully applied to all types of industry but its ultimate effects
and benefits will differ. They depend upon the industry, the local conditions, the depth and scope,
and form of application.
Planned maintenance is not the fundamental solution for every maintenance problem. It will not
compensate for poor workmanship, lack of tools, bad design or mal-operation of machinery by the
personnel, nor will it convert worn out obsolete equipment into modern, high efficient units.
However, the mere fact that maintenance is being considered and controlled in a systematic,
constructive manner must lead to some positive benefits which are the direct result of this planning.
The essence of company planning is the optimisation of its resources – labour, money, materials
and machinery. Planned maintenance can contribute to this objective as follows:
a) Improved budgetary control – realistic budget can be formulated and subsequently
controlled,
b) Improved stock control of spares – realistic quantities of spare parts are stocked and
ordered,
c) Provision of information upon which management can make realistic forecasts and
decisions,
d) Focusing attention on frequently occurring jobs and types of defects, and the type,
frequency and cost of individual repairs.

To provide these extra facilities, additional documentation and tabulation, over and above that
normally required for basic planning, will be necessary. The nature if this paper work will depend
upon individual circumstances and the benefits in view. Although the practical benefits may be
readily recognised, the financial advantages may be less obvious, and also difficult to assess until
the scheme has been running for some time.
Initially, the maintenance costs may rise as extra work is involved to catch up with the backlog, to
overcome the ravages of past neglect and to bring the equipment to the required operational
standard. When this initial work is completed and the scheme is functioning normally, the costs
will fall but there is no guarantee that they will fall below those prior to the commencement of the
scheme. The true measure is reflected only in the ultimate overall cost of the product.

Even this ultimate cost may require careful scrutiny and adjustment as various factors affecting
production costs – higher level of production, new machines, increased labour and materials costs
and modifications in product design and specification – may have occurred in the meantime.
2.2 Scheduling

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Maintenance scheduling is the process by which jobs are matched with resources and sequenced
to be executed at certain points in time. A reliable schedule must take into consideration of the
following:
1. A job priority ranking that reflects the urgency and the criticality of the job
2. Whether all the materials needed for the work order are in the plant (if not, the work order
should not be scheduled)pri
3. The production master schedule and close coordination with operation
4. Realistic estimates and what is likely to happen rather than what the scheduler desires
5. Flexibility in the schedule (the scheduler must realise that flexibility is needed, especially
in maintenance; the schedule is often revised and updated)
The maintenance can be prepared at three levels, depending on the horizon of the schedule:
1. The long-range master schedule, covering a period of three months to 1 year,
2. The weekly schedule covering one week, and
3. The daily schedule covering the work to be completed each day
The long-range schedule is based on existing work orders, including blanket work orders,
backlogs, preventive maintenance and anticipated emergency maintenance. It should balance long-
term demand for maintenance work with available resources. Based on long-term schedule,
requirements for spare parts and materials could be identified and ordered in advance. The long-
range schedule is usually subject to revisions and updating to reflect changes in plans and realised
maintenance work.
The weekly maintenance schedule is generated from the long-range schedule and takes into
account current operations schedules and economic considerations. The weekly schedule should
allow for about 10% to 15% of the workforce to be available for emergency work. The planner
should provide the schedule for the current week and the following one, taking into consideration
the available backlog. The work orders that are scheduled for the current week are sequenced based
on priority. Critical path analysis and integer programming are techniques that can be used to
generate a schedule. In most small- and medium-sized companies, scheduling is performed based
on heuristic (a commonsense rule (or set of rules) intended to increase the probability of solving
some problem) rules and experiences.
The daily schedule is generated from the weekly schedule and is usually prepared a day before.
This schedule is usually interrupted to perform emergency maintenance. The established priorities
are used to schedule the jobs. In some organisations, the schedule is handed to the area supervisors,
who assign the work according to the established priorities.
2.2.1 Elements of Sound Scheduling
Planning the maintenance work is a prerequisite for sound scheduling. In all types of maintenance
work, the following are necessary requirement for effective scheduling:
1. Written work orders that are derived from a well-conceived planning process. The work
orders should explain precisely the work to be done, the methods to be followed, the crafts
needed, spare parts needed and priority.
2. Time standards that are based on work measurement techniques
3. Information about craft availability for each shift
4. Stocks of spare parts and information on restocking

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 5. Information on the availability of special equipment and tools necessary for maintenance
work
6. Access to the plant production schedule and knowledge about when facilities will be
available for service without interrupting the production schedule
7. Well-defined priorities for the maintenance work. These priorities must be developed
through close coordination between maintenance and production
8. Information about jobs that are already scheduled and are behind schedule (backlog)
The scheduling procedure should include the following steps as outlined
1. Sort backlog work order by crafts
2. Arrange orders by priority
3. Compile a list of complete and carryover jobs
4. Consider job duration, location, travel distance, and possibility of combining jobs in the
same area
5. Schedule multi-craft jobs to start at the beginning of every shift
6. Issue a daily schedule (except for project and construction work)
7. Authorise a supervisor to make work assignments (perform dispatching)
These elements provide the scheduler with the requirements and the procedures for developing a
maintenance schedule.

For large jobs or maintenance projects, especially shutdown maintenance jobs, the scheduler can
use available quantitative techniques for generating the schedule and balancing manpower
requirements. These techniques include the critical path method (CPM), program evaluation and
review technique, integer programming and stochastic programming.

2.2.2 Maintenance Job Priority System

The maintenance job priority system has a tremendous impact on maintenance scheduling.
Priorities are established to ensure that the most critical work is scheduled first. The development
of a priority system should be well coordinated with operations staffs, who commonly assign a
higher priority to maintenance work than warranted. This tendency puts stress on maintenance
resources and might lead to less than optimal utilisation of resources. Also, the priority system
should be dynamic and must be updated periodically to reflect changes in operations or
maintenance strategies. Priority systems typically include three to ten levels of priority. Most
organisations adapt four- or three-level priorities. Table 2-1 provides a classification of the priority
levels and candidate jobs to be included in each class.
Table 2-1: Priorities of Maintenance Work

Priority Time Frame Work Should Type of work

Code Name Start
1. Emergency Work should start Work that has an immediate effect on
immediately safety, environment, quality, or will
shut down the operation

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 2 Urgent Work should start within 24 Work that is likely to have an impact
hours on safety, environment, quality or will
shut down the operation
3 Normal Work should start within 48 Work that is likely to impact
hours production within a week
4 Schedule As scheduled Preventive maintenance and routine;
all programmed work
5 Postponable Work should start when Work does not have an immediate
resources are available or at impact on safety, health, environment
shutdown or production operations

2.2.3 Scheduling Techniques

The ultimate objectives of scheduling is to construct a time chart showing the start and finish time
for each job (activity), the interdependencies among jobs, and the critical jobs that require special
attention and effective monitoring.
In the past, the scheduling of jobs in a project was based on heuristic techniques and the first known
scheduling tool was the Gantt Chart developed by Henry Gantt during World War II. This is a
bar chart that specifies the start and finish time for each activity on a horizontal time scale. Its
principal disadvantage is that it does not show interdependencies among different jobs. The Gantt
chart can be modified to show interdependencies by noting milestones on each job timeline. The
milestones indicated the key time periods in the duration of each job. Obvious milestones for any
job are the starting time for the job and the required completion point. Other important milestones
are significant points within a job, such as the point at which the start of the other jobs is possible.
Project planning and scheduling techniques have evolved over time and two analytical techniques
are widely used for planning and scheduling. These are the critical path method (CPM) and the
project evaluation and review technique (PERT).

2.2.4 Work Order System

Although a solid preventive maintenance program can dramatically increase equipment

operational availability, it cannot prevent all equipment breakdowns. Therefore, a work order
system is a necessary part of the maintenance program.
The work order system or cycle begins with the work request. The work request contains an
identification number; a description; a labour estimate; important dates; and originator
information. The work order is generated from the information that appears in the work request.
The work order is the most important document in the work order system. The function of the
work order system is to maximize effectiveness.

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A sample of a work order is shown in Figure 2-2. In addition to data taken from the work request,
the work order must show the approval signature of the person approving the order. A typical daily
schedule sheet is shown in Figure 2-3. A typical weekly schedule is shown in Figure 2-4.
Scheduling of work is done on a priority basis. Occasionally, it is necessary to generate an
emergency work order, Figure 2-5

Figure 2-2: Sample Work Order Form

7
Figure 2-3: Typical Schedule Sheet

8
Figure 2-4: Sample Mechanical Area Work Schedule

9
 Figure 2-5: Typical Emergency Repair Order

Approximately 90% to 95% of available manpower is scheduled, leaving 5% to 10% for

emergencies. Computerized maintenance management programs will assist in generating sample
work order formats. Totally integrated maintenance management (TIMM) is such a program.
2.3: Budgeting
The budgeting process is viewed as a painful, difficult, and meaningless exercise that does not
seem to produce obvious benefits. But if indeed that were the case, then why do organizations go
through the arduous process on a regular basis? In this section, we shall learn more about the
budgeting process by first determining why an organization goes through the budgeting process,
second, determining the importance of the maintenance organization in that process, and finally
offering a few suggestions on how to make the maintenance budget easier to complete and more
meaningful for those that use it.
2.3.1: Why does an organization budget?
Every organization, whether it’s small or large, governmental, for-profit, or corporate faces one
basic issue. Stated simply each organization has a limited amount of resources to accomplish its
stated goals and objectives. Each organisation has to work with this limited amount of funding
available, to meet its stated objectives. Funding in this case might include income from operations,
funding from owners, or funding from loans and other forms of debt. Additionally the
management of the organization has the obligation to plan, organize, control and direct the use of
the limited resources in an efficient manner. And this is where budgeting comes in.
Budgeting is a useful tool for planning, controlling, and directing one of the most important and
vital resources of an organization, its cash. Cash management is critical to every organization and
10
without the proper attention can quickly make a healthy organization unhealthy. Cash is the
lifeblood of an organisation and its management is thus critical. If an organization does not pay
its bills, then other organizations will no longer deal with it and the end for the organization arrives
quickly.
A budget is an estimate of or a view into an uncertain future showing the peaks and valleys of
cash flow. A budget can also serve as a benchmark for evaluating actual or historical
performance. A budget can show when an organization might want to consider obtaining cash
from sources other than the normal operations. A budget can alert an organization as to when a
plan is failing and changes are required. A budget can show who is responsible for generating
cash and who consumes cash. A budget can show when cash may be available to make the
purchases of assets. A budget, if done properly can become one of the most important tools for
management. Every organization must budget whether it goes through a formal or an informal
process.
2.3.2: How does the maintenance organization fit into the budgeting process?
According to an annual survey by the Helicopter Association International on the Operating
Performance indicates for aviation operations, it indicates that organizations spend up to 40 to 45
percent of the total expenditures on maintenance related items. While the percentages may vary,
similar sources of information for other types of operations such as airlines and corporate flight
departments indicate that maintenance expenditures are also significant.

Since maintenance expenditures are significant, then it is important that they receive a lot of
attention during the budgeting process from those that put the budget together. An oversight or
miscalculation in an area that consumes as much of the total budget as does maintenance could
have a devastating effect on an organization. Since the, so to speak, is focused on the maintenance
budget, then adequate preparation should be made so as to prepare an accurate budget for the
organisation.

2.3.3: Items to consider when preparing the maintenance budget.

In preparing a maintenance budget, some items are often overlooked and below is a summary of
these items that could help you submit a more meaningful budget for your organization.
1. Ask for key information – When you are in the budgeting process the exchange of
information should be both ways. Ideally, executive management should convey to you
key assumptions upon which they want you to base your budget. For example will the
organization change the fleet size, will they be opening a new location, or will the
maintenance role change? In practice, too frequently, the announcement is made that
budgets are due and that’s the extent of the flow of information in your direction. If that’s
the case and you know that you will be held responsible for the budget that you submit,
then go to key members of the executive team and learn what you can that may help as you
prepare your budget.
2. Document your assumptions - A budget is an attempt to predict or estimate the future,
which of course is filled with uncertainty. Therefore, what you submit as a budget
represents your best estimate as to what you think will occur during the period of
interest. When you predict or estimate you make assumptions. What level of activity
(flight/production hours) is the budget based upon? Did you include an estimated parts

11
 price increase? How about a labour rate or benefit increase? These are just a few of the
many assumptions that you would probably make during the building of the budget. And
if you’re like me remembering something for more than a month is a real
challenge. Record your assumptions somewhere, on paper or in the computer. You may
be required to submit some of the more significant ones with the budget but take the time
to also record the less significant ones for your own files.
Documenting your assumptions is important. They can help you answer questions at a
later time that refer to the basis of the numbers in your budget. If conditions change and
you are forced to revisit your budget, you will have a resource that will refresh your
memory about the original budget. Assumptions should not hurt you. Remember they
represent your best estimate about an uncertain future.

3. Explain the nature of maintenance costs – As I’ve already established, maintenance costs
are a significant portion of the budget. Maintenance costs can occur in significant amounts
(engine overhauls) and at unpredictable times (unscheduled removals). Both are difficult
traits to grasp for the person in executive management that has to manage the cash flow of
an organization. Normally this person is in accounting or finance and is typically
conservative. This means the person doesn’t like big surprises, which is
understandable. Which would you rather manage a cash flow that is unpredictable and has
peaks and valleys or one that is constant and predictable? Of course it would be the
latter. (Explains somewhat why guaranteed maintenance programs have become more
popular.)
You can help that person who is unfamiliar with the behaviour of maintenance costs by
taking the time to explain the nature of these costs. Remember, often their point of
reference is auto maintenance. You may not be able to change the behaviour or the amount
of the maintenance costs but a better understanding may help the person manage the cash
flow of your organization more efficiently.

4. Sell your budget – Frequently maintenance folks go to great lengths to build their
budgets. They’ve taken all of the right steps, put together the package of information, and
then submitted it. And that’s it. And in many cases that’s the only chance the maintenance
department has to convince others of the legitimacy of the submitted budget. However if
you have the opportunity, visit with the person that you have submitted the budget to. Try
to learn if that person is the type who automatically cuts everything by a certain
percentage. Remember, if the person changes the budget it’s better to know that fact ahead
of time rather than later when the situation may be more difficult or you are caught by
surprise. Let them know about you and the process that you went through to build the
budget. Learn more about how the budget is used so in the future you can create a more
useful budget.
That’s not all there is to know about budgeting but hopefully you have a better understanding about
its importance within the organization and how important maintenance is to the process. Although
frequently viewed as a meaningless exercise, budgeting’s true purpose is vital to your
organization’s long-term health.

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2.4 Human Resource Planning
2.4.1 Maintenance Organisation Chart
A maintenance organisation chart (organ-gram) which can be used as a discussion base for
different types and sizes of factory signifies an approach in terms of the necessary functions which
must be assured. For that purpose, it should be understood that a function on the chart can be
carried out by one or several people, or conversely one person can assume several functions. It
also depends on the size. For small and medium-scale enterprises, the compilation of an organ-
gram can be taken in successive stages:
a) The first step a simple organisation chart for a small factory showing the basic functions
indispensable for an efficient maintenance operation,
b) The second stage concerns a bigger factory with one single production area and working 8
hours a day,
c) The third stage is for a new factory with several production areas and working on a
continuous basis (24 hours a day),
d) Finally, the fourth stage concerns the evolution of the proceeding organisation chart
towards alternatives depending on various particularities of plants.
In a maintenance department, five groups of function should be present in order to cover all the
tasks required

a) A function of reflection: methods, job preparation, planning,

b) An execution function,
c) A control function,
d) A logistic function: workshops, laboratories, garages, stores,
e) An evaluation and management function.
Regarding the maintenance trades, the organisation chart should be established in such a way that
the trades are separated as much as possible (mechanics in a mechanical section, the same for
electricians, etc).

Job descriptions should be defined accordingly. In medium and large-size factories, this result in
one (or several) team(s) working a normal day and carrying out tasks exclusively. As to the team(s)
in shifts, they should take care of breakdowns and minor repairs. The latter case is only relevant
when the factory is working around the clock. For a factory which works only eight hours a day,
the above teams in shifts will do the normal timetable, but will still be in charge of corrective
maintenance exclusively.
Logistics support should be centralised: central workshop, spare parts, store, planning office, etc.
Independent decentralisation in the production areas should be avoided especially for small plants.
For bigger plants, the setting-up of communication links between each of the above services in the
main production area could be helpful, particularly for the planning office. Nevertheless, workshop
in this case should only be equipped with basic equipment, as it would not be efficient to have a
double set of equipment from the central workshop located in the production area.

2.4.2 Principles of Maintenance Organisation

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 The most efficient organisation is not the one that is perfect from the design point of view, but the
one that is applied correctly. This normally means a simple organisation at the initial stage. Clear,
concise explanations of the various mechanisms and information routings are necessary for the
personnel to fully understand the interdependencies. After the introductory period, the chosen
organisation is adapted step by step so that it may be improved and completed. The fundamental
principles for the organisation of maintenance are:

1. Decide on the structure of the maintenance department. If possible, centralise all

maintenance activity in one department under one head,
2. Place the maintenance department high on the factory organisation chart,
3. Make sure that maintenance is not headed hierarchically by production. Ensure that
both are on the same level,
4. Assign fully qualified personnel to the maintenance department,
5. Allocate sufficient financial resources,
6. Devise an organisation which suits the particular needs of each factory and allow it to
evolve accordingly,
7. Avoid trying to set up a perfect organisation from the start. Find flexible structures and
ensure that the personnel understand the system thoroughly before final
implementation,
8. Avoid useless paperwork but fill in carefully any form necessary to ensure an efficient
flow of information.

2.4.3 Position of the maintenance department in the organisation structure of the plant

The hierarchical position which should be assigned to the maintenance department is illustrated in
Figure 2-6, the general organisation chart.

Factory
Management

Production Maintenance Administration Commercial R&D

Figure 2-6: Position of the maintenance department on the plant organisation structure

As the objective the production and maintenance department is the same, i.e production at
minimum cost under good quality and safety conditions, it is indispensable that both departments
are placed on the same hierarchical level in order to allow interrelations, based on an equivalent
decision-making power.
The role of maintenance during acquisition of new equipment or plant extensions is of utmost
importance. During preparation of a project or contract negotiations, the purchaser must not only
be represented by production or commercial people, but also by maintenance, whose opinion must
be a deciding factor.

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The centralisation of maintenance has a number of advantages. The most important are:
1. Keeping the board of directors advised by means of one source of information,
2. Efficient use of personnel and sound job preparation,
3. Avoidance of non-respect of procedure due to personnel turnover, by means of written
procedures and a central storage of information,
4. Better supervision and optimisation of maintenance costs through a clear separation
between “clients” and “suppliers”,
5. Better use of specialists, machines-tools and specific tools,
6. Optimisation and better follow-up of sub-contracted work,
7. The possibility of reducing down time for yearly overhauls and major repairs through
the concentration of all available resources,
8. The improvement of quality and efficiency of maintenance work through the
centralisation of experience gained in repair and trouble shooting for the whole plant,
9. An easier setting-up of adequate technical specifications for the purchase of new
equipment, taking into account better maintainability and measures to ensure proper
maintenance (such as technical documentation, training, spare parts, etc)
2.4.4 Maintenance Personnel Training
What is meant by “training programs” for maintenance employees? These are the instructional
programs that will enable employees to acquire the knowledge and skills necessary to perform
planned, preventive, and predictive maintenance tasks.
Training programs are important because they help the employee better accomplish his or her job
with quality and efficiency. Training should not be thought of as remedial learning to correct some
deficiency in a worker’s skills, nor should it be considered a process that ends when the worker
reaches a certain predetermined level of knowledge or skill. The most productive, satisfied workers
tend to be those who continually grow with their jobs, developing new talents over time, and
training can be a part of that continual growth. Managers can create an atmosphere in which
employees will want to learn and grow.
The companies that recognize the need for ongoing training stand a better chance of surviving and
prospering. Those that don’t run the risk of technological obsolescence, decreased productivity,
and increased costs. Training of maintenance employees should represent a significant part of the
maintenance department’s activity and should be included in planning for plant or equipment
upgrades.
The continuous training of maintenance workers is a necessity in a quality maintenance
organization. In fact, a new worker’s training needs should be assessed when the worker is invited
to join the maintenance department. During the hiring process, management may administer
aptitude tests to determine whether the candidate has the capability to do the job he or she is
seeking, psychological tests to determine a candidate’s temperament, and interviews to gage the
candidate’s level of commitment to the job. Obviously, the candidate who is hired will perform
fairly well on all these tests, but the tests should reveal areas in which training will benefit the new
employee.

Ideally, after all tests and interviews are completed, an individual training program (ITP) should
be developed for the new employee. Here, an attempt is made to match the skills of the employee
against specific job assignments. Job task analysis is a significant help in the identification of skills

15
needed to perform a specific job. Job assignments and position descriptions will change with time,
and the constant updating of the ITP is essential to the career growth of each maintenance
employee. It is suggested that this information be reviewed with the employee every year.
Training skilled support is key to best practices. One issue receiving a considerable amount of
concern by production operation and maintenance managers is improving and maintaining the skill
set needed by the support staff to maintain equipment and systems. Manufacturers have established
training programs to keep their support staff current on emerging technologies. However, there is
a growing concern that as the complexity of automation systems steadily increases, the availability
of qualified technicians will diminish. Training support staff is essential as companies upgrade
automation systems and equipment, but the very training that is required makes them vulnerable
to staff attrition.

In terms of asset management, some companies consider maintenance and support of their
operations as a core competency. This implies more internal training and limiting outsourcing
maintenance to very complex systems and equipment. A best practice approach would be to foster
a lifetime career attitude through a continuous training program. Training involves two main
forms:

1. Multi-Disciplined: Operations and maintenance managers are finding that it is

becoming necessary to train their staff to be multi-disciplined with regard to the
equipment and technologies. Where a maintenance technician was once an expert in a
single system or piece of equipment, he or she must now be able to service and support
a much more diversified range. This is accomplished by internal training where
technicians are required to teach specific skills to other staff members, and similarly
must learn skills of their team members.
2. Continuous Training: The majority of operations managers plan to sustain or even
decrease current staffing levels based on pressures to reduce cost. At the same time,
there is no reduction in equipment and production systems to be supported. They will
meet these added demands by “stretching” the support staff, with current support staff
required to maintain equipment and systems beyond the present scope. Maintenance
managers realize the need for continuous training to meet the maintenance needs of
production operations. However, the need for increased training budgets conflicts with
the overall operations budgets being slashed across most manufacturing operations.
To summarize, training is job- or task-specific. Education may include some training skills but is
not meant to help an employee accomplish specific tasks. Also, education may not eliminate the
employee’s need for task-specific training.

2.4.4.1 Methods

The methods used for training maintenance workers are varied and diversified, but the two main
categories are the traditional lecture/demonstration and practical “hands-on,”.

In the lecture/demonstration method information is presented in a typical classroom setting.

Students listen and then respond to the information presented. This method is fast, allows a high
density of material in a short period of time, but is relatively inefficient in terms of new information

16
or skills learned and retained. If this method is compared to that of the interactive video, a much
higher retention rate can be seen in the latter.

Hands-on training may be conducted in a variety of settings. The science laboratory may have
been the first attempt at hands-on instruction. It must be stated that to develop a hands-on
classroom/laboratory is a very expensive undertaking. In addition to equipment costs, the ratio of
students to instructors must be low, allowing lots of individual help from the instructor. Some
skills are best taught in the laboratory or plant process center. Although the cost of hands-on
training is high, it is still the preferred method for skills training. In apprentice training the
laboratory exercises are generally followed up by field training with more senior mechanics or
technicians.

2.4.4.2 Training Schedules

What is the best way to schedule training? This is a much-debated question. Some union contracts
demand a certain number of hours of training each month. A more practical approach is to schedule
training as needed, with the amount of time not fixed but flexible. The trainee should take enough
time to master the new skill to the appropriate level of competence.
Certainly not all training can be delivered this way. Some must be much more structured. For
example, training might be needed on a new piece of process equipment, with this training to be
supplied by the equipment vendor. The vendor decides on a specific day for two sessions of four
hours each to be delivered on the plant site. The maintenance department proceeds to schedule two
groups in four hour blocks. Training costs are paid to the vendor in accordance with the contracted
prices for the training.
This is an example of training that is expedient and easy to schedule, but is it cost effective in
terms of what is learned by each of the maintenance workers who attended the training? An
alternate approach to meeting the training needs would be to select three lead mechanics to meet
with the vendor. In this approach, after orientation to and discussion of the new piece of equipment,
the lead mechanics work on the unit in the plant and perform the required maintenance under the
supervision of the vendor. Each of the three mechanics performs the operation to the satisfaction
of the vendor and the customer. At a later time each of the three leaders forms groups of three
mechanics to perform the skill training required. This activity is rotated until all the mechanics are
able to perform the required skill to the satisfaction of the customer. This might be a more effective
way to schedule training and meet the needs of the customer and to motivate the employees.

2.4.4.3 Training Evaluation

Evaluating a training course after it has been given is time-consuming and can be tedious, but it is
very important. The lack of evaluation of a training experience can be frustrating to management
and to trainees. Frequently, the numbers of hours employees spend in training are noted and
checked off, but that should not be the extent of the evaluation. It is important to determine how
well the objectives of the training have been achieved. Otherwise, no one may know whether an
important skill has been learned correctly until the skill has to be applied, and by then it may be
too late.

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One simple test is to have immediate supervisors review skill competence by observing a
demonstration by the employees who have just received training. Cumulative training evaluation
reports can be helpful to management at annual evaluations of employees.
Instructors also should be made accountable in the evaluation process. Employees should have an
opportunity to make criticisms or suggestions regarding the quality of the course and the skill of
the instructor, and to give this feedback on a confidential basis if they prefer.

2.4.4.4 Training Costs

Training can be the best investment the maintenance department makes. If proper training leads to
maximum safety and efficiency and minimum down time, training costs are a real bargain. For
formal education leading to a degree, many companies offer tuition assistance programs whereby
a worker is reimbursed for part or all tuition costs. Remember, however, that educational programs
are generally not job/task specific.
2.5 Maintenance Outsourcing

2.5.1 To outsource or not outsource - strategic decision making

Conventional wisdom regarding the outsourcing decision states that you should outsource your
"non-core" business activities. The difficulty with this approach, however, is that it provides no
guidance for deciding which activities are "non-core". Ultimately, in many organizations adopting
this approach, the discussion about what is "core" and what is "non-core" ends up being highly
subjective, and in the end, one person’s opinion ends up prevailing over another’s.
A better approach, and the one that Price Waterhouse Coopers typically adopts in advising clients
about the outsourcing decision is to look at the decision in terms of a two-by-two matrix, as in
Figure 2-7.

Figure 2-7: Two-by-two matrix for making an outsourcing decision

In this diagram, we consider the outsourcing decision along two dimensions. The first, Strategic-
Non Strategic, considers how important the activity proposed for outsourcing is to the organization
in achieving long term strategic competitive advantage in its chosen marketplace. In terms of
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maintenance, this will clearly vary from organization to organization, depending on the industry
that it competes in, and its chosen strategy for competing in that industry. For example, for a
contract mining organization, where competitive advantage in the industry is largely driven by
being the lowest cost producer (and in which maintenance and asset ownership costs typically
equate to 55-60% of total costs), maintenance clearly is of strategic competitive importance to the
firm. Outsourcing maintenance in this environment would, in effect, be handing over control of
this potential source of competitive advantage to an external party. On the other hand, maintenance
to a hospital may be of less strategic importance, and therefore could, potentially be a candidate
for outsourcing.

The second dimension, Competitive-Non Competitive, relates to how competitively the function
being considered for outsourcing is currently being performed compared to the external
competitive marketplace. This relates primarily to the cost of the service, but could also be
extended to include service elements such as response time. Putting the two elements together
gives four possible outcomes.
1. Those functions that are of Strategic importance to the firm, and which are currently being
performed competitively require no further action - the status quo should be retained.
2. Those functions that are of Strategic importance to the firm, but which are not currently
being performed competitively with the external marketplace should not (in the long run)
be outsourced. Instead, a better long-term option is to re-engineer them to ensure that they
are performed at a competitive cost. It is possible that, as an interim measure to speed the
transition process, a tactical decision is made to outsource the function in the short term,
but as stated previously, in the long term the function, as a source of potential competitive
advantage, should be retained in-house.
3. Those functions that are not of Strategic importance to the firm, and which are not currently
being performed competitively with the external marketplace should be outsourced. There
is little value in investing in improving this function.
4. The final combination, those functions that are not of Strategic importance to the firm, but
which are being performed competitively with the external marketplace is more interesting.
A number of options exist for this function, including
o selling the function as a going concern,
o extending the function to provide services to external customers,
o outsourcing the function, or
o raise the profile of the function to turn it into a source of strategic competitive
advantage.
The preferred option depends largely on the function being considered. Does a competitive
outsourcing market exist?
A second consideration for outsourcing, that is related to the above model, is to decide whether a
competitive market for the outsourced services actually exists. In particular, when dealing with
highly specialized maintenance services (such as specialized turbine maintenance) or maintenance
occurring in remote areas (such as at remote mine sites), once an outsourced maintenance service
provider has been selected, this may create large barriers to entry for other potential maintenance
service providers wishing to enter into this market. While these barriers may be overcome, by
adopting an appropriate outsourcing strategy (such as letting work to two or more contractors,
rather than to one exclusively), awareness of this possible outcome prior to establishing the

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outsourcing strategy is vital if the outsourcing organization is not to find itself "locked in" to a sole
provider.
2.5.2 How much maintenance to outsource
An important consideration in making the maintenance outsourcing decision is what aspects of
maintenance to outsource. If we consider the maintenance management process as consisting of
six major steps, as shown below, then a number of options exist.

Figure 2-8: A World Class Maintenance Management System

In the first instance, organizations may choose simply to outsource the work execution step, while
retaining the remaining steps in-house. This is often done on a limited basis, for example, when
employing contractors to supplement an in-house work force during times of high workload,
during major shutdowns, for example. This is the minimalist approach to outsourcing.
An alternative approach is to outsource all of the above activities with the exception of the analysis
and work identification steps. In this approach, the contractor is permitted to plan and schedule his
own work, and decide how and when work is to be done, but the outsourcing organization retains
control over what is to be done.
A third approach is to outsource all of the above steps, thus giving control over the development
of equipment maintenance strategies (ie Preventive and Predictive Maintenance programs) to the
contractor. In this instance, the contract must be structured around the achievement of desired
outcomes in terms of equipment performance, with the contractor being given latitude to achieve
this to the best of his ability.
There are advantages and disadvantages to each approach, and the most appropriate approach will
depend on the client’s particular situation. Looking at how maintenance fits into the wider asset
management strategy of an organization (as illustrated in Figure 2-9) also raises interesting
challenges.

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Figure 2-9: Asset management strategy of an organization
For example, one challenge that needs to be met is how the maintenance contractors will interface
with the production operators, and the relative responsibilities and duties of each party. Many
organizations today are adopting Total Productive Maintenance principles, which encourage
Production operators to take a higher level of responsibility for equipment performance, and also
encourage them to perform many minor maintenance tasks. There is also a growing realization
that the manner in which equipment is operated can have a huge bearing on maintenance costs and
the maintenance activities required to be performed if equipment performance targets are to be
met. A high level of teamwork between the Maintenance contractors and the Production operators
is, therefore, vital to the successful completion of the contract. This leads to the view that an
alternative, and possibly better, approach to the outsourcing of maintenance is to include plant
operation in the scope of the contract. Hence the letting of Operations and Maintenance contracts,
particularly in the Power Generation industry.
Finally, taking things one step further again, there is also a growing realization that maintenance
is limited in achieving higher equipment performance by the fundamental design of the equipment
being maintained. The best that maintenance can achieve is the inherent reliability and
performance of the equipment that is built in by design. There is, therefore, a school of thought
that says that the best way to overcome this limitation, in an outsourcing environment, is to also
give the contractor responsibility for the design of the equipment. This can be done either by giving
him responsibility for ongoing equipment modifications, or by giving him responsibility for the
initial design of the equipment, as in a BOOM (Build, Own, Operate and Maintain) contract, which
is gaining favour in many infrastructure projects.
2.5.3 Establishing an appropriate tendering process
The tendering process for a major outsourcing contract is likely to be different to the contracting
process for major capital works in a few key aspects. Of particular importance will be the explicit
consideration of risk at various key points in the contracting process, and the identification of
appropriate strategies for managing those risks. These could take the form of either shaping or
hedging actions. Shaping actions are those actions undertaken to minimize the likelihood of the
risk factor occurring. Hedging actions are those actions undertaken to minimize the impact of the
risk factor, should it occur. In addition, the evaluation criteria for the selection of an appropriate
maintenance contractor are likely to be quite different from those for a major capital project. It is
likely that significant work will be required to develop appropriate criteria, and to ensure that
sufficient information is obtained from tenderers to be able to make an informed decision.

2.5.4 Establishing an appropriate specification of requirements

The specification of requirement during the tendering process will need to be carefully considered.
In particular, for those contracts involving large-scale outsourcing of most maintenance functions,
there will be a requirement to ensure that the requirements specification is outcome-based, rather
than input-based. In other words, the specification will need to detail what is to be achieved from
the contract, not how it is to be achieved, or what inputs will be required for its achievement. In
Price Waterhouse Coopers' experience, ensuring that all the required outcomes are specified is a
major undertaking. Agreeing how the achievement of all of these outcomes will be measured is

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also, potentially, a huge undertaking. For example, in one recent outsourcing contract, a desired
outcome was the achievement of long-term plant integrity. Deciding how to measure that was a
difficult process.
2.5.5 Establishing an appropriate contract payment structure
There are a number of alternative contract payment structures. These include:
1. Fixed or Firm price
2. Variable Price
3. Price ceiling incentive
4. Cost plus incentive fee
5. Cost plus award fee
6. Cost plus fixed fee
7. Cost Plus Margin
Each of these price structures represents a different level of risk sharing between the contractor
and the outsourcing organization, and a number of considerations will need to be made in
determining the most appropriate payment structure. These include:
• The extent to which objective assessment of contract performance is possible
• The ease with which realistic targets can be set for contractor performance
• The administrative effort involved with each payment option
The degree of certainty with which the desired contract outcomes can be specified. Transition
arrangement may be put in place to gradually transfer the payment structure from one method to
another over time, as a greater degree of certainty over the requirements of the contract, and more
accurate knowledge of target levels of performance is established.
2.5.6 Establishing an appropriate contract administration process and structure
Before the contract is let, the client will need to have decided on the appropriate contract
administration process, and the roles and responsibilities of his own staff in managing the contract.
S/He will also need to establish the structures, processes and equip his people with the skills to
perform the required duties. Many potentially successful outsourcing contracts fail, simply because
the client did not manage those contracts effectively.
2.5.7 Establishing an appropriate structure for the contract document
In experience, most standard contracts in place at most organizations are not appropriate for large
outsourcing contracts. Many Standard Terms and Conditions are inappropriate for large, long-term
service-related contracts - particularly those that are of a partnering or gain-sharing nature. It has
been found that it is best to combine Special Conditions of Contract with revised Standard
Conditions of Contract to develop a new contract structure that is appropriate for the particular
contract being let.

2.5.8 Managing the transition to the outsourced arrangement

There are many issues to be addressed by the outsourcing organization in the transition to the new
arrangements. Among these are matters such as:
• Staff - which will be retained by the organization, which will be employed by the
contractor, which will be let go?
• Drawings - who has responsibility for ensuring that drawings are kept up to date, who will
be the custodian of site drawings?

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 • Computer systems - will the contractor have access to the client’s Computerized
Maintenance Management system? Will they maintain their own computerized
Maintenance records? Who is responsible for ensuring that all data in the Computerized
Maintenance Management systems are accurate?
• Materials Management - will the contractor provide his own materials, or will the client
provide these?
• Workshop facilities and tools - who owns and maintains these?
2.5.9 Agreeing contract termination arrangements
Another critical issue that needs to be addressed before the contract is let is how the situation will
be managed if the decision is made to terminate the existing contract. In particular, agreement
needs to be reached regarding the duties and obligations of the outgoing contractor in handing over
to the incoming contractor (or the client organization, should they decide to bring maintenance
back in-house).

2.5.10 Conclusion
While these are some of the major considerations for organizations considering outsourcing
maintenance, there are many others that are not covered in this course. Needless to say, the decision
to outsource any major function, such as maintenance, is not one that should be taken lightly, and
careful consideration of all major issues is vital, if the transition to contracted maintenance is to be
smooth and satisfactory to both parties.

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