computing the true risk/reward ratio for deferred maintenance & decision trees based on...
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Computing the True Computing the True Risk/Reward Ratio for Risk/Reward Ratio for Deferred MaintenanceDeferred Maintenance
&&Decision Trees Based on Decision Trees Based on Exponential Bifurcations Exponential Bifurcations
in the Maintenance in the Maintenance ProcessProcess
The Geaslin The Geaslin GroupGroup
David Tod Geaslin, PrincipalDavid Tod Geaslin, PrincipalHouston Phone: (832) 524-Houston Phone: (832) 524-
82148214Web Page: Web Page: www.geaslin.comwww.geaslin.com
E-Mail: E-Mail: [email protected]@geaslin.com
Florida State Florida State UniversityUniversityTom Shewan, Director of MaintenanceTom Shewan, Director of MaintenancePhone: (850) 645-6466Phone: (850) 645-6466Web Page: Web Page: www.fsu.edu E-Mail:E-Mail: [email protected]@admin.fsu.edu
Copyright David Geaslin 2008
Program FocusProgram Focus
• This discussion is about discovering This discussion is about discovering the the total cost total cost of a breakdown event of a breakdown event to the to the whole organizationwhole organization
• And use those costs to prove they And use those costs to prove they are are predictably exponentialpredictably exponential
• Then derive the Then derive the True Risk/Reward True Risk/Reward Ratio for Deferred MaintenanceRatio for Deferred Maintenance
• Use those tools to get money, Use those tools to get money, manpower, and downtime to manpower, and downtime to conduct maintenance conduct maintenance
15 Times 15 Times Longer DowntimeLonger Downtime 15 : 115 : 1
60 : 160 : 1
15 : 115 : 1
MeasurableMeasurableCostsCosts
ExecutiveExecutiveOpinionOpinion
Computing Computing the True the True Risk/Reward Risk/Reward Ratio for Ratio for Deferring Deferring MaintenanceMaintenance
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Risk/Reward WorksheetsRisk/Reward Worksheets
• Each should Each should have:have:– An example worksheet An example worksheet
– A blank worksheetA blank worksheet
• Use as a Note Use as a Note SheetSheet– Think of a really stinky Think of a really stinky
breakdown event breakdown event
– Jot down costs as you Jot down costs as you think of them think of them
• At the end…At the end…– Compute your Compute your
Risk/Reward Ratio for Risk/Reward Ratio for Deferring Maintenance.Deferring Maintenance.
Copyright David Geaslin 2008
Proof of Exponential Proof of Exponential Cost ProgressionsCost Progressions
Click Here
Copyright David Geaslin 2008
But when you get all the numbers in another But when you get all the numbers in another very interesting set of numbers present very interesting set of numbers present themselves. themselves.
Proof of exponential escalation of costs if Proof of exponential escalation of costs if OTF.OTF.
Risk/Reward WorksheetsRisk/Reward Worksheets
• Look at your Look at your worksheet…worksheet…
• I will lead you I will lead you through filling in through filling in the blanks…the blanks…
Copyright David Geaslin 2008
The curve is the same…The curve is the same…
Copyright David Geaslin 2008
Brake BlockBrake Block Refinery ExplosionRefinery Explosion
The curve is the same…The curve is the same…
Copyright David Geaslin 2008
Utility Trailer BearingUtility Trailer Bearing Roof RepairRoof Repair
The curve is the same…The curve is the same…
Copyright David Geaslin 2008
Running ToiletRunning Toilet• The The True True
Risk/Reward Risk/Reward Ratio for Deferred Ratio for Deferred Maintenance Maintenance will will vary by process.vary by process.
• But, the But, the Inverse-Inverse-Square Rule for Square Rule for Deferred Deferred Maintenance Maintenance will will be a constant.be a constant.
Early Detection & Early Early Detection & Early InterventionIntervention
• This philosophy will produce the This philosophy will produce the lowest maintenance cost per lowest maintenance cost per unit of production.unit of production.
• All other options will produce a All other options will produce a higher cost.higher cost.
• Use these two tools to get the Use these two tools to get the downtime and resources downtime and resources necessary for Early Intervention.necessary for Early Intervention.
Copyright David Geaslin 2008
Bifurcation ACTIONBifurcation ACTION
• Make the Right Choice – EVERY Make the Right Choice – EVERY TIME!TIME!– Recapture the 40 to 60:1 expenses INCURRED by Recapture the 40 to 60:1 expenses INCURRED by
TAKING THE WRONG FORK and plow the money back TAKING THE WRONG FORK and plow the money back into more and better EARLY DETECTION into more and better EARLY DETECTION
– Recapture the 15:1 in MAINTENANCE MAN/HOURS Recapture the 15:1 in MAINTENANCE MAN/HOURS INCURRED by TAKING THE WRONG FORK and plow INCURRED by TAKING THE WRONG FORK and plow those efforts back into EARLY INTERVENTIONthose efforts back into EARLY INTERVENTION
• If you make the right REPAIR/DEFER If you make the right REPAIR/DEFER decisions, you can create a SELF-decisions, you can create a SELF-FINANCING SOLUTION to improve FINANCING SOLUTION to improve the QUALITY and QUANTITY of the QUALITY and QUANTITY of maintenance.maintenance.
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Self-Financing Self-Financing ImprovementImprovement
Once you decide to Once you decide to institute a program institute a program of early detection of early detection and intervention, and intervention, something wonderful something wonderful begins to happen…begins to happen…
I teach how to make I teach how to make this happen.this happen.
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Self-Financing Self-Financing ProgressionProgression
BudgetCrisisPoint!
15:1 to
60:1
It is not It is not WHATWHAT you spend, but you spend, but WHENWHEN you spend it! you spend it!I teach how to create this transition without additional cash investment.I teach how to create this transition without additional cash investment.
Positive Cash FlowPositive Cash FlowRecaptured – Maint Recaptured – Maint Man/HrsMan/Hrs
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Self-Financing Self-Financing ProgressionProgression
BudgetCrisisPoint!
15:1 to
60:1
Positive Cash FlowPositive Cash FlowRecaptured – Maint Recaptured – Maint Man/HrsMan/Hrs
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There is enough recoverable energy in this area There is enough recoverable energy in this area to initiate change without a cash injection.to initiate change without a cash injection.
DiscussionDiscussion
• Put your numbers in the form and Put your numbers in the form and total them…total them…
• Divide the Early Intervention cost into Divide the Early Intervention cost into Total Breakdown Cost (TR/R Ratio)Total Breakdown Cost (TR/R Ratio)
• Take the SQRT of the Total Breakdown Take the SQRT of the Total Breakdown Cost several times. (Inverse-Square Cost several times. (Inverse-Square Rule)Rule)
• See what do you get!See what do you get!
•Questions?Questions?1/26/2014