Life Cycle Management Trends Bonus: An Overview
By George Lohnes
Published in the June 2005 issue of Today’s Facility Manager
For many managers, Life Cycle Management (LCM)—the practice used to supervise the ongoing performance and monitor aging of a facility or production process efficiently—is the next step in enlightened facilities and asset management. It establishes a clear relationship between economic performance and quality goals. It can also minimize unforeseen capital expenditures and makes long-term strategic planning more effective.
LCM represents a step beyond predictive maintenance by factoring in the cost and efficiency of each asset at every step of its useful life. In addition, this practice considers replacement and disposal costs as well as peripheral issues that affect the cost/benefit analysis.
This process addresses strategic concerns and can provide critical, timely information to support decisions. It is a continuous process that begins with an integrated assessment of all the factors affecting the operation, maintenance, service life, and ongoing resource requirements for a facility in order to produce a realistic, long-term forecast of investments and activities that will be needed to maintain and operate the asset.
Where Does LCM Apply?
The principles of LCM can be successfully applied to any capital or labor intensive industrial or commercial building asset. The program can be set up for an entire complex (multiple facilities), a facility and all its equipment, or for selected systems or equipment assemblies.
The decision of when to start a LCM program is driven by the need to apply resources and assets effectively in a changing world, to have a reliable vision of the future, and to avoid crisis management situations.
Historically, LCM programs get started when a decision has to be made about a facility’s future: should it continue operating, or should it be replaced? Another trigger for LCM is when determining if the cost of a new capital addition can be recovered during the remaining service life of the facility. The need for more effective control of operating and maintenance costs also causes LCM efforts to be considered.
How To Start An LCM Program
Step 1: Perform Facility and Equipment Condition Assessment. A condition assessment determines the current operating conditions and life expectancies of various assets. It examines replacement costs and projected return on investment, as well as overall asset health. The LCM implementation will be impacted if asset condition is not methodically researched. Also, this examines existing PM and PDM programs and efforts.
Features and conditions that impose significant replacement or refurbishment costs and regulatory or public relations costs should also be specifically noted. It is helpful to benchmark findings to other facilities within the same industry.
The initial condition assessment tests the economic viability of the goals in comparison to other alternatives. The results of the analysis allow management to evaluate the goals, see the potential merit of a LCM program, shape the scope of the program, and identify the resource requirements.
Step 2: Shape the Scope of the Program and Prepare the Program Plan. The elements that have the greatest influence on costs, safety, and reliability merit the most attention. These are the elements that could directly impact the continued use of the facility and force its eventual shutdown or retirement. These are the “critical elements.”
Identify, categorize, and model the critical elements. Consider replacement feasibility, service history, performance impact, regulatory consideration, and the potential benefit of preventive maintenance activities. Produce a ranking of the facility elements in each category. The highly ranked items are the critical elements, which become the focus of the program. The lower ranked elements receive a proportionally reduced level of attention.
The program plan should become a tool to involve all of the organizations that manage, operate, and maintain the facility to make them aware of the goals and objectives. The plan defines the scope, evaluation approaches, and implementation priorities, as well as the responsibilities of the affected organizations, schedules, and resource requirements.
Step 3: Establish Effective Maintenance Requirements and Methods. This step ensures that facility elements are measured or controlled at appropriate intervals based on costs, safety, and reliability and/or indications of degraded performance or failure. A more thorough examination is performed for the critical elements.
The examination process identifies needed enhancements or corrective actions. Typically, these enhancements refocus maintenance activities to emphasize the critical elements; formalize current practices and schedules; and adjust the scope and/or frequency of inspections, surveillance, and testing activities to ensure they will detect and mitigate the contributing mechanisms. Sometimes, the enhancement may involve changes in operation, production, or utilization.
The examination improves understanding of the mechanisms that contribute to degraded conditions through misuse or age-related degradation. It considers the design features, design requirements, materials, and operating and maintenance history. Contributing mechanisms are identified, and their influences on ongoing performance are characterized.
Next, the effectiveness of the current procedures to detect and mitigate these mechanisms is evaluated. Operational experience and manufacturer’s information are investigated. Production/utilization schedules are examined to identify opportunities to perform maintenance activities.
Step 4: Recognize the Peripheral Issues. LCM needs to examine peripheral issues that are non-hardware factors that affect the overall program. These include governmental, environmental, personnel, training, public relations, financial, and social issues that influence asset decisions.
Some of the more significant peripheral issues are:
- Transfer of Institutional Memory: Key personnel develop a valuable knowledge base about the design, operation, and maintenance of a facility. The LCM program should establish methods for capturing and transferring this institutional memory to new personnel.
- Cost/Benefit Issues: Management of regulated and publicly held companies must often justify expenditures; therefore, the LCM program should facilitate periodic cost/benefit evaluations to develop the needed management information.
- Technical Obsolescence: The LCM program must factor into the long-term availability of replacement parts and competent suppliers. This is particularly important when there is a significant dependency on specialized machinery or the performance of electronic components.
- Changes in Regulatory Requirements and Industry Standards: These changes may require a facility to be back-fitted to remain in compliance. Employee safety and handling hazardous materials are typical examples.
Step 5: Prepare a Life Cycle Management Diagram. Optimizing capital and labor costs for a facility, process, or asset requires a reliable tool for forecasting replacement, refurbishment, and maintenance activities. A life cycle management diagram illustrates a timeline for all the activities. It shows recurrence intervals, costs, man hours, and other related data. Other pertinent information, such as the description of the activity, performance schedules, or implementation prerequisites, is maintained in a supporting database.
Using the diagram, peak activity periods can be easily planned. Critical and routine spare parts can be better stocked to meet operational needs without the cost of excess inventory or rush orders.
Step 6: Implementation and Ongoing Monitoring. LCM is an ongoing process that requires the development of an implementation plan and a continuous feedback system. The implementation plan is also a convenient tool to describe the program goals and specific metrics to management to receive the required authorizations. When shifting to implementation:
- Use the evaluation results and life cycle management diagram to formulate appropriate implementation strategies;
- Identify the affected organizations, their responsibilities, and resource requirements;
- Establish an implementation schedule and annual budget;
- Provide training for personnel involved in maintenance, inspection, and other LCM activities;
- Perform the implementation activities. Generate work orders for all processes in accordance with the planned LCM schedule. The LCM program should also interface with facility business systems to form an integrated, enterprise-wide capability;
- Establish ongoing monitoring and feedback methods based on observed trends;
- Conduct routine appraisals and reassessments, and institute required course corrections; and
- Prepare administrative control documents and measures to ensure that facility and maintenance programs adhere to LCM requirements.
Step 7: Cost/Benefit Analysis. Once an LCM program is in place, it is relatively easy to determine the relative cost/benefits of maintaining a particular asset. It is important to recognize when corrective and preventive maintenance activities and ongoing monitoring begin to add to the overall cost of operating a facility, process, or piece of equipment. By conducting periodic cost/benefit appraisals, facility managers can consider the merits of other options such as replacement, addition of new inspection techniques, or the increase (or decrease) of maintenance activities/frequencies.
Benefits For Now And Later
LCM programs provide short-term benefits by avoiding corrective maintenance expenses and unplanned operational failures. Resources are optimized and focused on productivity and operating cost factors. Spare parts inventories are closely managed and purchasing improved. The near-term payback can be more than enough to cover the engineering evaluations and program development implementation costs.
The long-term benefits are both economic and strategic in nature. Disciplined LCM processes quantify service life margins, which increases asset production, capacity, or availability. This maximizes service life, defers replacement costs, and has environmental benefits.
LCM programs also minimize the costs for refurbishing or replacing major structures, systems, and equipment. Since routine and fixed costs are well known, capital costs are likely to be anticipated and evaluated in advance, enabling companies to execute long-term financial and strategic plans.
Intangible benefits can also be important factors. For example, LCM activities promote and contribute to the overall operational excellence of a facility. Motivational benefits improve employee morale, teamwork, and quality awareness. An efficient facility also reduces corporate risk and liability.
LCM may very well be an important discipline for world class competitors. The consequence of inaction can escalate baseline costs worsened by unanticipated maintenance, refurbishment, or replacement costs. For most facilities, an LCM program will pay for itself in a very short time period.
Lohnes is a vice president at UNICCO Service Company. In addition to his marketing responsibilities he is leading the company’s green cleaning initiative. He can be reached at (888) 751-9100 or [email protected].
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