A Plan for Breaking out of Budget Jail
by Torbjörn Idhammar
I wrote this column for those who want to improve equipment reliability but feel as if they are stuck in "budget jail". Assuming your fiscal year starts January 1, November and December is the time to plan your jailbreak!
Most of you understand what I mean by budget jail. In fact, you are probably in the process of trying to pick the lock. For those who don't know what I mean, I've listed some signs of what a budget jail look likes:
The maintenance budget isn't built from scratch (zero-based budgeting) each year to consider all major expenses for the coming year.
The maintenance budget is, more or less, an arbitrary number (often last year's budget less X percent) that must be reduced each year regardless of equipment condition.
Top management has little understanding for equipment overhaul and major maintenance cycles. Many cycles aren't annual or more frequent. The cycles for equipment repair and overhaul are often two, five or 10 years. This can create performance spikes.
You never break the budget for planned investments, but the budget is often broken due to so-called unforeseen equipment repairs. The plant culture seems to indicate that equipment breakdowns are a valid excuse for breaking the budget, but investments are not.
If an investment creates a significant profit for the company in the long term but it breaks the budget for the current year, the investment will be denied.
Do you recognize your plant in the points above? If so, I can tell you that it shouldn't be that way, and that we must convince top management how to improve reliability. Continuing to preach the reliability gospel is good. But, is there something we can do to break out before we get the whole company sold on reliability? I think so.
If you are in budget jail and have tried to get out by preaching reliability to the people above you but have made little headway, I have a plan. It will test your belief in that a focus on reliability works. Please note that if you are well on your journey into reliability excellence, this plan will not be as useful to you, but it may still work in focused areas.
The idea is simple but requires courage. There is a budget allotted to your plant and/or area for the year. The plan is to break the maintenance budget (assuming it is needed) in the first quarter but regain the lost money with better reliability by the end of the year. You must be the judge in how much you can break the budget in the first quarter and still sit in your chair!
In November/December, you will start performing detailed equipment inspections of your plant and/or area with your best maintenance people using basic inspection tools - flashlights, infrared temperature guns, stroboscopes, vibration pens and industrial stethoscopes.
If you can, create a team of the best operator and maintenance technician you can find for the inspection rounds. Have the inspectors report back in a meeting where both operations and maintenance management are present. This action alone has merits.
The found problems need to become work requests and prioritized. Work closely with operations to establish a meaningful priority system. The total cost of the potential breakdown must be considered, not just the maintenance cost. The key parameters to consider are the same as with any maintenance job:
Failure developing period: How long will the equipment last before breaking down?
Consequence of potential breakdown (safety, environmental, lost production, damages, repairs, etc.).
Risk that the breakdown actually will happen.
Along with the inspections, try to stop all break-in work that isn't an emergency. A maintenance department can free up 10 to 30 percent of its resources by stopping these honey-do jobs.
Start doing detailed inspections in late 2007. Prioritize the problems found and fix them even though you may have to break the budget early in the year. Work with operations and maintenance to get rid of non-critical break-in work to free up resources and/or save money on overtime and contract work. If you prioritize the repairs correctly early in the year, you will reduce maintenance cost through better reliability later in the year.