Case Studies in Maintenance and Reliability: A Wealth of Best Practices. V. Narayan

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      •Getting material

      •Getting permits

      •Queries and reports

      A mix of classroom training (maximum 6 participants) plus guided self-learning

      •Training (rather than practice) should not be programmed for more than three hours a day

      •Put a training system (simulator) filled with relevant data on site for users to practice on

      •Training sessions to be “just in time” and no more than three weeks before hands-on opportunity

      •Concentrate on core users at first

      •Don’t just explain how to use the computer system. Explain in simple language the cultural and work practice changes to be expected.

      6-A.7 Lessons

      1.The traditional approach to systems development seems to be a recipe for failure and produces systems bringing little business benefit.

      2.The unconventional use of prototyping produced effective systems quickly.

      3.The result was cheap, simple, quickly implemented systems which were dynamic, living, and relevant.

Chapter 7

       Evaluate Contractors’ Unit Rates

       A cynic is a man who knows the price of everything and the value of nothing.

       Oscar Wilde

      Author: Mahen Das

       Location:2.2.1 Liquified Natural Gas Plant

      7.1 Background

      In my capacity as an internal maintenance and reliability consultant, I visited this LNG plant to review their performance. Contracting efficiency and value for money obtained was one of the items reviewed. The company was a fairly mature operation and had a number of contract companies for maintenance work. These contractors had been established during the construction of the facility and had grown with it.

      The company had set up norms for the effort required to carry out various types of maintenance work. These included man-hours required for or cost of:

      •Manual excavation of 1 m³ of earth

      •Thermal insulation of 1 m of 4” pipe at ground level

      •Building tubular scaffolding from ground level, per m3

      •Inserting a 4” 150# spade

      •Grit blasting per m² of steel surface at ground level

      •Painting per m² of steel surface at ground level

      There was a tiered quantity-discount scheme in place for all types of work. They also had agreed rates per man-hour for different trades, including

      •Pipe-fitters

      •Welders

      •Scaffolders

      •Grit-blasters/Painters/Insulators

      The unit-work rates had been established some years earlier. These had never been reviewed. The man-hour rates had also been established some years ago and regularly increased, based on inflation. For the past two years, however, the contractors had voluntarily foregone inflation correction, claiming that inflation would be neutralized by improved productivity of their workers. The management was pleased with this position.

      7.2 Evaluating the System

      Using call-off contracts, supervisors could easily farm out most of the day-to-day maintenance work with selected contractors. On completion, they could measure the executed work in the specified units. The contractor would submit an invoice based on the approved rates.

      Together with an engineer from the company, I followed a maintenance job from initiation to completion. The job was to pull a spade from a 4” 150# line containing product after it had been prepared and made safe for maintenance work. The job was executed by a contractor. The work permit was obtained, the necessary precautions were taken, and the job was completed efficiently by the two contractor’s fitters assigned, without any incident or hold-up.

      From the moment the contractor’s fitters were involved up to the time they went away, it took a little less than one hour. At this time, I was not familiar with the agreed rates, but on the basis of my observation, I expected that the contractor would invoice the company for 2 man-hours of work. When the actual invoice arrived, prepared strictly in accordance with the agreed norms, it was for 8 man-hours. The schedule of rates indeed specified an effort of 8 man-hours for removing a 4” 150# spade from a line at ground level, and for remaking the joint. The company’s engineer who accompanied me was more embarrassed than shocked. His embarrassment was caused by the fact that such gross discrepancies had not been discovered earlier. They had simply been accepting the norms which had been agreed between them and the contractors.

      7.3 Reviewing the Existing Norms

      After this observation, the maintenance and engineering manager of the company agreed to carry out a review of the existing norms immediately. He then realized that there was no one in his organization who was sufficiently confident to make time estimates of maintenance activities. This explains why no one had thought of reviewing the norms until now. I suggested a two-man team be formed to work under my guidance. One would be an experienced supervisor and the other the engineer who accompanied me earlier. They soon realized how simple estimating was if one used real-life experience and common sense. I guided them for the first few items, after which the two of them carried on, on their own.

      The review revealed that all items of work were grossly over-estimated; some, such as the de-spading work we had observed, were over by a factor of 4! No wonder that the contractors had “voluntarily” given up the inflation correction for the past two years.

      7.4 Corrective Actions

      When the contractors were confronted with this, it was not difficult to get them to accept that the existing norms were indeed grossly over-estimated and should be reviewed. They agreed to reduce the existing norms by 25% across the board with immediate effect, while the review got under way.

      A joint company/contractor team was set up to formally review and agree revised norms on an urgent basis.

      7.5 Benchmarking and Results

      On return to my base, I initiated an intra-group benchmarking exercise. The purpose was to compare the norms for unit maintenance activities which were agreed between other associate companies and their contractors. A number of companies welcomed this and agreed to participate. Data gathering and processing took some time and effort. Once accomplished, however, this proved to be very useful. The product was regularly used during subsequent performance reviews. Many companies realized for the first time how far their norms deviated from that of their peers. Although some deviations could be explained by special local conditions, these benchmarks provided a basis for constructive discussion between contractor and company.

      Some of the results, together with the question which generated that unit rate, are illustrated in Figures 7.1 to 7.7. Locations are marked AAA, BBB, etc., to protect their identity.

      Excavation

      Carry out excavation activities to expose an underground pipeline—to inspect the protective coating system, check for corrosion, and take wall thickness measurements. The soil surface is not covered by pavement or any other cover; the excavated soil can be put along the trench (the soil is not contaminated so the excavated soil in total can be put back). The total amount of soil to be excavated and backfilled is approximately 30 cubic meters. See results in Figure 7.1.