TT Talk - Don’t delay planned maintenance
- Date: 11/10/2012
- Source: TT Talk 165
Experience evidences that maintenance performed too infrequently leads to loss, resulting in unplanned down-time. Indeed, the cost of unexpected failure and repair can be up to six times that of planned preventative maintenance.
Costs saved by delaying routine servicing are short-term savings that are likely, eventually, to incur financial loss as the following case study highlights:
Having lost business and revenue, the maintenance department at a terminal was told to cut its budget by 20%. This helped cost management, but, rather than being a temporary measure, the cost reduction was continued for over six months.
Due to planned maintenance jobs being deferred and repetitive tasks and inspection frequencies being extended, the number of equipment breakdowns increased dramatically. This severely reduced ship loading rates and more business was lost. This became a vicious circle – increasing breakdowns reduced the operational availability of equipment, which further restricted access to other equipment for repair and maintenance.
In the end, the only way to bring the equipment back to acceptable availability levels was to engage numerous contractors and additional staff for nearly a year to address the maintenance backlog. The actual maintenance budget for that year was 200% above the norm.
With the added impact of lost business, the total cost to the terminal was enormous. This could all have been avoided if senior management had a better understanding of the need and importance of maintenance.
As a result of this kind of case, we published ‘The Importance of Maintenance – a handbook for non-engineers’ earlier this year, in association with ICHCA International and the Port Equipment Manufacturers Association (PEMA).
The handbook aims to be accessible to key management decision-makers in businesses involved in cargo handling, helping improve control of their assets in straightforward and cost-effective ways. Asset management is crucial to any business, and maintenance – the servicing and monitoring – of fixed infrastructure and mobile equipment is an integral and important part that maximises an asset’s useful lifetime and minimises its cost, whilst also enhancing its safety.
A key driver in the development of the handbook was that maintenance issues are a recurrent contributor to costly insurance claims. Poor maintenance should clearly be a prime concern to those aiming for the optimum performance of their assets. Analysis by TT Club has shown that, in the port and terminal industry, issues resulting from the application of inadequate or incorrect maintenance procedures cause about 25% of the cost of equipment damage and related claims, amounting to more than USD225 million. Furthermore, claims from other causes, such as Acts of God are frequently exacerbated by poor maintenance.
The guidance highlights the need to balance the requirements of the operations and engineering/maintenance departments. While the engineering department is usually responsible for asset life cycle management, the operations department seldom has any significant involvement. Facilities need to overcome inevitable cultural departmental differences and to implement an integrated maintenance policy and strategy.
The handbook brings together the practical experience of those in engineering, maintenance and the operation of ports and terminals, with the TT Club’s claims and loss prevention expertise. The TT Club has also deliberately consulted widely with manufacturers and safety experts. The result is a cogent argument that from the strategy/policy level through to the detail of the maintenance plan, effective maintenance is the key to protecting and improving profitability.
‘The Importance of Maintenance – a handbook for non-engineers” is available both in printed form and as a pdf. It is free to Members of the TT Club, PEMA and ICHCA International, and can be purchased by non-members at £36.00.