The Equipment Criticality Analysis is usually performed at an intermediate level in the hierarchy as described in section 2 of this document. The Equipment Criticality Number will apply to all children of the analysis level, except those children identified for analysis also. Any parent level not analyzed will adopt the Equipment Criticality value of the highest child. This is illustrated in Figure 5.3.9.
Figure 5.3.9 - Equipment Criticality Value - Click to enlarge
Determine which equipment has the greatest potential impact on business goals by calculating Relative Risk.
The Equipment Criticality Assessment uses the concept of Risk to identify which equipment has the greatest potential impact on the business goals of the enterprise. This, in turn, is the equipment most likely to fail and have significant impact when the failure occurs.
The “Relative Risk (RR)” number for the equipment is evaluated by calculating the product of the “Total Consequence Number” and the “Frequency/Probability (F/P) Number”. It is called “relative risk” because it only has meaning relative to the other equipment evaluated by the same method.
Total Consequence (TC) is the summation of the values assigned to each of the individual areas of consequence evaluation, e.g. Safety (S), Environmental (E), Quality (Q), Throughput (T), Customer Service (CS) and Operating Cost (OC).
TC = S + E+ Q + T + CS + OC
RR = TC X F/P
If the user defines different criteria then it follows that the Total Consequence would be the summation of scores applied in each area of consequence evaluation defined by the user.
Communicate the criticality assessment recommendations to all stakeholders.
The results of the Equipment Criticality Assessment should be communicated and understood by everyone affected by the nominated Equipment Reliability Improvement Projects. This
Senior and intermediate managers who sponsor or expect results from the project.
Coaches and team leaders are responsible for the assets that the project addresses.
People assigned to the assets that the project addresses.
Individuals who must commit time to the project or are directly affected by its outcome.
People who are not immediately affected.
Often the last group demonstrates the greatest opposition because they believe that the selected projects are "hogging" the financial and human resources needed to address their priorities.
The goal of this communication is to develop stakeholder understanding why each Equipment Reliability Project is selected, its potential impact on business performance and to define the resource expectations to deliver.
Using the Output of the Equipment Criticality Assessment
Prioritizing Equipment for Reliability Improvement
The relative risk ranking provides a means of identifying which equipment poses the highest potential impact on the organization. The equipment with the highest ‘Relative Risk’ ratings should be initially targeted for the application of some reliability improvement strategy.
The most basic means of prioritizing assets for reliability
improvement is to perform a sort of the assessed equipment by ‘Relative Risk’. In many applications, this method of establishing priority is sufficient for project nomination. The top ten equipment items evaluated using the ‘Relative Risk’ criteria would then be subject to a project selection validation.
However, the priority ranking developed using ‘Relative Risk’ alone, does not consider how difficult it will be to improve the reliability of the critical equipment. Suppose this could only be achieved with a large commitment of human resources, over an extended time and at high cost. In assessing the business case for proceeding with the reliability improvement project, each of these factors plays a role.
An alternate prioritization method assesses the human resource effort for an equipment reliability intervention. Alternatively, the cost of the intervention, of the resulting redesign or equipment replacement can be evaluated. The following sections describe the process used to evaluate priority considering effort/cost.
The human resource
effort required to proceed with the proposed equipment reliability improvement strategy is assessed. For example, the number of meetings to complete a Reliability Centered Maintenance Analysis is estimated. This effort provides an indication of the degree of difficulty that is required to overcome the performance gap.
Plotting Relative Risk/Effort Graph
The ‘Relative Risk’ value is plotted on the vertical axis of a graph and the effort on the horizontal axis of the graph. Intuitively, we want to initially work on projects with high potential impact that can be done quickly and projects with low impact, requiring large effort last.
In order to prioritize the proposed interventions, a diagonal line is drawn from the upper left corner of the risk/effort graph and terminates in the lower right. The slope of this line is calculated by summing all of the ‘Relative Risk’ values for each equipment item evaluated and dividing the ‘Total Relative Risk’ by the ‘Total Effort’ calculated by summing the ‘Effort’ values estimated for each equipment item.
The downward slope of this line from the upper right to the lower left represents a reduction in risk per unit effort. Consider a series of lines, drawn perpendicular to this diagonal completely covering the graph. Adjacent lines represent bands of relative priority.
A number one priority is assigned to the reliability intervention with the highest relative risk intercept. Lower priority is assigned to reliability interventions with successively lower relative risk intercepts.
An alternative to estimating human resource effort is to estimate the cost to proceed with the chosen equipment-reliability improvement strategy or equipment modification/replacement. This is an estimate of the cost required to overcome the performance gap.
Note: The use of this graph is a focusing tool only. The exact value and position on the graph is an indication of relative priority. Individual circumstances could require specific projects to proceed irrespective of their position on the graph.
For example, a piece of equipment whose failure has serious safety implications and a high frequency/probability of failure resulting in a high relative risk number requires a large expenditure of human and/or capital resources to improve its overall reliability. Legislation or a safety ruling may dictate that this project takes precedent over another asset scoring equivalent relative risk and requiring much less effort or cost. Nonetheless, the concept can be used successfully in most situations to develop a defensible position for assigning resources to address equipment reliability issues.
The application of the criticality assessment provides a means of identifying the equipment most likely to impact on business performance by improving reliability. Once potential Equipment Reliability Improvement Projects are nominated, developing a business case to proceed should validate them. The Criticality Assessment provides an indication of what areas of performance are likely to be impacted. In each category affected, which includes any or all of safety, environmental integrity, quality, throughput, customer service and operating cost, the current performance should be established and a performance target set considered achievable as an outcome of the improvement.
The difference between current performance and the desired end state should be quantified either in terms of costs for operational improvements or in terms of reduced incidents or level of risk for safety and/or environmental issues. This gap is important in creating the required tension for change to maintain management commitment throughout the project. Estimate the costs of the Reliability Improvement Intervention and summarize the cost benefit.
Identify what performance measures must be tracked to monitor the impact of the Equipment Reliability Improvements. As soon as capital or human resources are deployed, expectations are created to produce tangible benefits. The development of the business case solidifies what results can be expected from the Equipment Reliability Improvement Project.
However, it is still necessary to demonstrate the improvement. This is effectively done through the use of performance measurement. It is crucial that each of the stated performance benefits be monitored on a routine basis to validate improvement. If the required measurements are not currently collected, the project scope should formalize their creation. This permits the quantification of improvement benefits, sustaining project commitment and the management of long-term change.
The Equipment Criticality Evaluation Tool provides a systematic, consistent approach to assessing equipment criticality and nominating equipment reliability improvements. Rankings are arrived at by a consensus of decision-makers, responsible for project nomination. By design the process can be completed in a short period of time.
The focus is on business results which managers are already accountable for achieving. They are committed to projects which align with these objectives and are perceived as having the highest probability for success.
Finally, the application of systematic processes for focusing resource deployment supports a “due diligence” approach to physical asset management. Projects having the largest potential impact on the corporation weighted towards safety and environmental integrity become the most critical. Projects with the potential to deliver the maximum benefit to the company by mitigating risk are identified to be the subject of Equipment Reliability Improvement Strategies.