Maintenance

Organization
Junaidah Binti Ramli
Mechanical Engineering Department
PTSB

Introduction:

It is necessary to keep materials, tools

and equipment in good condition in
order to achieve desired result.
If the working equipments are in good
running condition, the products obtained
will be of required quality and the
process will be reliable.
Therefore it is necessary to maintain the
plant.

Maintenance management
definition

Some defines maintenance as:

A combination of all technical and
administrative actions, including supervision
actions, intended to retain an item in, or restore
it to, a state in which it can perform a required
function

Others defines it as:

A set of organised activities that are carried out
in order to keep an item in its best operational
condition with minimum cost acquired.

Maintenance management
objectives

maximize production capacity through high utilization of

facility
maximize performance of production equipment efficiently
and regularly
maximize the useful life of equipments
increase reliability of the operating systems
increase functional reliability of production facilities
achieve product quality and customer satisfaction through
adjusted and serviced equipment
minimize production loss from failures
minimize cost of production
minimize frequency and severity of interruptions
prevent breakdown or failures
enhance the safety of manpower
keep equipment safe and prevent safety hazards

Maintenance management
organization
Organizing is the process of arranging resources
(people, materials, technology etc.) together to achieve
the organizations strategies and goals. The way in
which the various parts of an organization are formally
arranged is referred to as the organization structure.
The structure of the maintenance organization depends
upon both the size and the product of the enterprise.
Any structure must allocate tasks through a division of
labor and facilitate the coordination of the performance
results.
Nevertheless, we have to admit that there is no one
best structure that meets the needs of all
circumstances.

Maintenance management
organization

In designing the maintenance organization

there are important determinants that must
be considered. The determinants include:
1. capacity of maintenance,
determines the required resources for maintenance
including the required crafts, administration,
equipment, tools and space to execute the
maintenance load efficiently.

2. centralization vs decentralization,

Maintenance management
organization
3. in-house maintenance vs outsourcing.
At this level management considers the sources for building the
maintenance capacity.
The following are criteria that can be employed to select among
sources for maintenance capacity:
Availability and dependability of the source on a long term basis;
Capability of the source to achieve the objectives set for
maintenance by the organization and its ability to carry out the
maintenance tasks;
Short term and long term costs;
Organizational secrecy in some cases may be subjected to
leakage;
Long term impact on maintenance personnel expertise; and
Special agreement by manufacturer or regulatory bodies that set
certain
specifications for maintenance and environmental emissions.

Maintenance management
organization

Examples of maintenance tasks which could be

outsourced are:
Work for which the skill of specialists is required on a routine
basis and which is readily available in the market on a
competitive basis, e.g.,:
Installation and periodic inspection and repair of automatic fire
sprinkler systems;
Inspection and repair of air conditioning systems;
Inspection and repair of heating systems; and
Inspection and repair of main frame computers etc.

When it is cheaper than recruiting your own staff and accessible

at a short notice of time.

Basic Types of Organizational

Models

Centralized maintenance.
All crafts and related maintenance functions report to a central
maintenance manager as depicted in Figure 1.2. Here, work assigned to
the various craftsmen throughout the entire plant is channeled through
the same head of maintenance.
The strengths of this structure are:
allows economies of scale;
enables in-depth skill development; and
enables departments (i.e., a maintenance department) to accomplish their
functional goals (not the overall organizational goals).

This structure is best suited for small to medium size organizations.

The weaknesses of this structure are:

it has slow response time to environmental changes;

may cause delays in decision
making and hence longer response time;
leads to poor horizontal coordination among departments;
involves a restricted view of organizational goals.

Basic Types of Organizational

Models

Decentralized maintenance
All crafts and maintenance craft support staff report to operations or
area maintenance as described in Figure 1.3.
Separate maintenance group is assigned to either a specific area or
some unit such as a department.
Major reason to applying decentralized maintenance are the reduced
travel exists between production and maintenance workers when
working together in the same generalized area.
The strengths of this structure are that:
Supervision is usually closer and workmen become more familiar with
complex sophisticated facilities in view of the same specialists being
reassigned to service the same equipment.
it facilitates effective coordination both within and between maintenance and
other departments.

The weaknesses of this structure are that:

it has potential for excessive administrative overheads;
may lead to conflict between departments.

Top
management

Production 1

Maintenance

Production 2

Maintenance

Production 2

Maintenance

Test your comprehension!

What kind of maintenance organization is this?

Basic Types of Organizational

Models

Matrix structure, a form of a hybrid structure.

Crafts are allocated in some proportion to production units or area
maintenance and to a central maintenance function that supports
the whole plant or organization as depicted in Figure 1.4.
Used in large and / or very large plants.
The strengths of this matrix structure are:
it allows the organization to achieve coordination necessary to meet
dual demands from the environment and flexible sharing of human
resources.

The weaknesses of this structure are:

it causes maintenance employees to experience dual authority which
can be frustrating and confusing;
it is time consuming and requires frequent meetings and conflict
resolution sessions.

To remedy the weaknesses of this structure a management with

good interpersonal skills and extensive training is required.

Examples

In a continuous process industry (i.e. oil refinery, cellulose work,

steel works etc.) it is of vital importance to keep stoppages at a
minimum. Production units require capital and are complicated
and thus call for first-class maintenance. In such companies, the
above rule would result in the head of maintenance activities
being placed at top level under the local manager or the
production manager.

In the shoe factory, electronics industry etc., maintenance is of

less economic significance. A machine stoppage does not have
an essential influence on production and the machinery units are
uncomplicated, reliable and require very little maintenance.
In such company, maintenance does not have a key function. In
accordance with the above rule, maintenance should be place on
the fourth or fifth level.

Responsibility in maintenance
management organization

Maintenance of Existing Plant Equipment.

This activity represents the physical reason for the
existence of the maintenance group. Responsibility
here is simply to make necessary repairs to
production machinery quickly and economically and
to anticipate these repairs and employ preventive
maintenance where possible to prevent them.
For this, a staff of skilled craftsmen capable of
performing the work must be trained, motivated, and
constantly retained to assure that adequate
maintenance skills are available to perform effective
maintenance. In addition, adequate records for
proper distribution of expense must be kept.

Responsibility in maintenance
management organization

Maintenance of Existing Plant Buildings and

Grounds.
The repairs to buildings and to the external property of any plant (e.g.
roads, railroad tracks, in-plant sewer systems, and water supply
facilities) are among the duties generally assigned to the maintenance
engineering group. Additional aspects of buildings and grounds
maintenance may be included in this area of responsibility.
In plants where many of the buildings are dispersed, the care and
maintenance of this large amount of land may warrant a special
organization.
Repairs and minor alterations to buildings (e.g. roofing, painting, glass
replacement) or the unique craft skills required to service electrical or
plumbing systems or the like are most logically the purview of
maintenance engineering personnel. Road repairs and the maintenance
of tracks and switches, fences, or outlying structures may also be so
assigned.
It is important to isolate cost records for general cleanup from routine
maintenance and repair so that management will have a true picture of
the true expense required to maintain the plant and its equipment.

Responsibility in maintenance
management organization

Equipment Inspection and Lubrication.

Traditionally, all equipment inspections and lubrication have
been assigned to the maintenance organization. While
inspections that require special tools or partial disassembly of
equipment must be retained within the maintenance
organization, the use of trained operators or production
personnel in this critical task will provide more effective use of
plant personnel.
The same is true of lubrication. Because of their proximity to the
production systems, operators are ideally suited for routine
lubrication tasks.

Responsibility in maintenance
management organization

Utilities Generation and Distribution.

In any plant generating its own electricity and providing its own
process steam, the powerhouse assumes the functions of a
small public utilities company and may justify an operating
department of its own.
However, this activity logically falls within the realm of
maintenance engineering. It can be administered either as a
separate function or as part of some other function, depending
on managements requirements.

Responsibility in maintenance
management organization

Alterations and New Installations.

Three factors generally determine to what extent this area
involves the maintenance department:
In a small plant of a one-plant company, this type of work
may be handled by outside contractors. But its administration
and that of the maintenance force should be under the same
management.
In a small plant within a multiplant company, the majority of
new installations and major alterations may be performed by
a companywide central engineering department.
In a large plant a separate organization should handle the
major portion of this work.

Responsibility in maintenance
management organization

Storekeeping.
In most plants it is essential to differentiate between
mechanical stores and general stores. The administration of
mechanical stores normally falls within the maintenance
engineering groups area because of the close relationship

of this activity with other maintenance operations.

Plant Protection.
This category usually includes two distinct subgroups: guards or
watchmen; fire-control squads. Incorporation of these

functions with maintenance engineering is generally

common practice. The inclusion of the fire-control group
is important since its members are almost always drawn
from the craft elements.

Responsibility in maintenance
management organization

Waste Disposal.
This function and that of yard maintenance are usually
combined as specific assignments of the maintenance
department.

Salvage.
If a large part of plant activity concerns offgrade products, a
special salvage unit should be set up. But if salvage involves
mechanical equipment, scrap lumber, paper, containers, etc., it
should be assigned to maintenance.

Responsibility in maintenance
management organization

Insurance Administration.
This category includes claims, process equipment and pressurevessel inspection, liaison with underwriters representatives,
and the handling of insurance recommendations. These
functions are normally included with maintenance since it is
here that most of the
information will originate.

Other Services.
The maintenance engineering department often seems to be a
catchall for many other odd activities that no other single
department can or wants to handle. Whatever responsibilities
are assigned to the maintenance engineering department, it is
important that they be clearly defined and that the limits of
authority and responsibility be established and agreed upon by
all concerned.

Maintenance cost
Because of breakdowns, both the machinery
as well as the manpower are left idle, per
force.
This results in production, delay in
schedules and emergency repairs.
The downtime costs generally exceed the
preventive maintenance costs of inspection,
service and scheduled repairs.

Source of maintenance
cost
Downtime cost due to equipment
breakdown
Cost of spares and other material used for
repairs
Cost of maintenance labor and overheads of
maintenance department
Losses due to inefficient operations of
machines
Capital requirement for replacement of
machines.

Maintenance cost

In general, the maintenance cost consists of the following

categories:
Direct maintenance cost (costs of labor material, spares,
material, and equipment);
Operation shutdown cost due to failure;
Cost of quality due to product being out of specification, as a
result of machines incapability;
Redundancy cost due to equipment backups;
Equipment deterioration cost due to lack of proper
maintenance; and
Cost of over maintaining.

Maintenance cost

Almost all information about cost is available on the worker order.

A summary of maintenance costs by work category must be
issued monthly. This is utilized to control maintenance costs and
develop costs of manufactured products.
The areas where cost reduction programs can be launched to
reduce maintenance cost are:
Considering the use of alternative spare parts and materials;
Modifying inspection procedures; and
Revising maintenance policies and procedures, particularly making
adjustments in size of crew and methods.

Types of maintenance cost

FIXED COST
VARIABLE COST

OVERHEAD COST

LIFE CYCLE COST

FIXED

COST

A cost that remains constant, regardless of any

change in a company's activity.
A good example is a lease payment. If you are
leasing a building at $2,000 per month, then you
will pay that amount each month, no matter
howwell orhow poorlythe business is doing.
Others e.g.:
Buying machine
Buying equipment
Installing telephone

Types of maintenance cost

VARIABLE

COST

A cost that changes in proportion to a change in

a company's activity or business.
A good example of variable cost is the fuel for
an airlines company. This cost changes with the
number of flights and how long the trips are.
Others e.g.:
buying raw material
workers salary
payment of water and electricity
buying spare part

Types of maintenance cost

OVERHEAD COST
In business, overhead, overhead cost or overhead
expense refers to an ongoing expense of operating a
business.
The term overhead is usually used to group expenses
that are necessary to the continued functioning of the
business but that do not directly generate profits.
Overhead expenses are all costs on the income
statement except for direct labor and direct materials.
Overhead expenses include accounting, advertising,
depreciation, indirect labor, insurance, interest, legal
fees, supplies, taxes, telephone, travel and utilities.

Types of maintenance cost

LIFE

CYCLE COST

A life cycle cost analysis calculates the cost of a system or product over its
entire life span.
The analysis of a typical system could include costs for:
planning,
research and development,
production,
operation,
maintenance,
disposal or salvage.
This cost analysis depends on values calculated from other reliability analyses
like failure rate, cost of spares, repair times, and component costs.
Sometimes called a "cradle-to-grave analysis".
A life cycle cost analysis is important for cost accounting purposes. In deciding
to produce a product or service, a timetable of life cycle costs helps show what
costs need to be allocated to a product so that an organization can recover its
costs. If all costs can not be recovered, it would not be wise to produce the
product or service

ELEMENTS OF COST

ELEMENT OF COSTS IS DIVIDED INTO:

1) MATERIAL

2) LABOUR

3) EXPENSES

ELEMENTS OF COST

ELEMENTS OF COST

DIRECT COST
Expenditure that involves direct in a production.
A cost that can be directly traced to producing specific goods or
services.
For example, the cost of meat in a hamburger can be attributed
directly to the cost of manufacturing that product. Other costs,
such as depreciation or administrative expenses, are more difficult
to assign to a specific product, and so are not considered direct
costs.

INDIRECT COST
Expenditure that involves indirect in a production.
Manufacturing cost that cannot be easily seen in the product.
Electricity, hazard insurance on the factory building, and real
estate taxes are indirect costs.
The cost not directly attributable to the manufacturing of a
product. opposite of direct cost.

ELEMENTS OF COST

DIRECT MATERIAL COST

Expenditure towards raw material which involves direct in

production.
All the material that becomes an integral part of the finished
product.
Examples :

Cotton to produce clothes.

Steel for producing the component of cars.
Charcoal to produce activated carbon
Wood to make furniture

INDIRECT

MATERIAL COST

Expenditure towards raw material which involves indirect in

production. Examples:

Cutting oil
Coolant

ELEMENTS OF COST

DIRECT LABOUR COST

Expenditure towards labor which involves direct in production.

Labors which involves from the beginning of the raw material
process until the finish goods.
Work directly involved in making the product.
EXAMPLES OF DIRECT LABOR COSTS ARE:
The wages of assembly workers on an assembly line
The wages of a machine tool operator in a machine shop.

INDIRECT LABOR COST

Expenditure towards labor which involves indirect in production.

Example :

Office clerk
Manager
Supervisor

ELEMENT COST

DIRECT EXPENSES COST :

Expenditure towards expenses that involves direct in
production.
Example:

Tool Bit
Jig & Fixture

INDIRECT EXPENSES COST

Expenditure towards expenses that involves indirect in
production.
Example:

Advertisement
Office Management

EXERCISE

TYPES OF COST
CHIEF CLERK SALARY
TYPISTS SALARY

RM/MONTH
1,100.00
800.00

ENGINEERS SALARY

2,000.00

OPERATORS SALARY

700.00

SUPERVISORS SALARY

1,400.00

BUYING EQUIPMENT

18,000.00

RAW MATERIAL

8,000.00

SUB CONTRACT

9,000.00

OFFICE EQUIPMENT
CALCULATE:
(I) Indirect Labor Cost
(II) Direct Cost
(III) Indirect Cost

750.00

EXERCISE
Question 1:

State 4 (FOUR) fixed cost and 3 (THREE) variable cost

which involves when you have a car which is bought
through a bank loan.
Question 2 :

Briefly state the direct and indirect material, labor and

expenses which involves in producing GEAR components.
(i)
(ii)
(iii)
(iv)
(v)
(vi)

Direct Raw Material

Indirect Raw Material
Direct Labor
Indirect Labor
Direct Expenses
Indirect Expenses

The End