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Using Work Order Management System Software to Determine Asset Cost

Ruth Hughes, CMRP, CDG Founder & CEO

Use Asset Cost to Focus Reliability Efforts

Work Order Management System Software

Without work order management system software, organizations are left to use paper, spreadsheets, custom databases, one’s memory, or other methods which make calculating Asset Cost difficult if not next to impossible.

Since all work order management system software is NOT created equally, this article assumes the following about work order management system software:

1.     It’s powerful, yet easy to use.

2.     It’s been properly implemented, processes have been properly defined, users have been properly trained (on the processes inside and outside of the software), and it is properly supported.

3.     Reports are easy to generate, email, customize, and automate.

What is Asset Cost?

Asset Cost is defined as an asset's total maintenance cost (parts, materials, labor, and services) over time.

Parts & Materials

  • When a part is checked out or a material is added to a work order, the asset gets charged.
  • When a part is checked out to an asset, the asset gets charged.
  • When a part is received from a purchase order to a work order or to an asset, the asset gets charged.

Labor & Services

  • When (internal or outside contract) labor or a service is charged to a work order, the asset gets charged.

Focus

When Asset Costs are tracked, reports can be generated to let you know where to focus attention. For example, run a report to identify the top 5 or 10 assets with the highest Asset Cost. Or, set up an alert to receive immediate notification once an Asset’s Cost hits 50%, 75%, 80%, or 100% of its budget.

Once high-cost assets have been identified, do the following to minimize Asset Cost and increase asset reliability:

Analyze...

Perform...

  • Failure Modes & Effects Analysis (FMEA):* Assesses failure modes and causes, and determines their effect on reliability, safety, quality, and operational cost.
  • Root Cause Failure Analysis (RCFA):* Identifies the underlying issue of a failure and ensures that the correct action is taken to eliminate or minimize the impact of that failure.
  • PM Optimization: Ensures that the correct tasks are performed (at the correct frequency) or if another strategy should be taken to maximize asset reliability (predictive techniques or run to failure).
  • Spare Parts Inventory Optimization: Analyzes historical data for parts usage (via an MTBF analysis) and verifies whether the correct critical spares are being stocked (in the right quantities) to ensure quick recovery from unscheduled downtime events.

*The following are typical FMEA and RCFA results and are used to minimize Asset Cost and increase asset reliability:

  • Engineering Design Changes
  • Operational Changes
  • Predictive Maintenance (PdM) Tasks
  • Preventive Maintenance (PM) Tasks
  • Startup Tasks
  • Total Productive Maintenance (TPM) Tasks

Continuous Improvement

Asset Cost also provides continuous improvement support by validating improvement (when costs decrease or remain constant) and present windows of opportunity (when costs increase).

An indicator of when to replace an asset is when Asset Cost creates an attractive return on investment (ROI) while justifying replacement cost. However, according to Nyman and Mountjoy (2022), “More and better-directed reliability efforts may well yield full design capacity, making additional capital investment unnecessary” (p. xxvii). Many times, it is more expensive to fix the same problem repeatedly (which increases Asset Cost) instead of analyzing the problem to minimize or eliminate it. Before replacing an asset based on asset and replacement costs, verify that the fixes haven’t sabotaged the asset’s opportunity for increased reliability.

If you seek work order management system software or if your current system lacks the features listed in this article, contact us today to learn about MVP CMMS. Or, contact us today to start (or accelerate) your Maintenance, Operations, & Reliability Excellence! (MORE!) journey with the help of our reliability engineering team led by Bill Mountjoy himself!

Nyman, Don and Bill Mountjoy. Maintenance & Operational Reliability, (South Norwalk: Industrial Press, 2022).

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