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Computing the True Risk/Reward Ratio for Deferred Maintenance & Decision Trees Based on Exponential Bifurcations in the Maintenance Process The Geaslin.

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Presentation on theme: "Computing the True Risk/Reward Ratio for Deferred Maintenance & Decision Trees Based on Exponential Bifurcations in the Maintenance Process The Geaslin."— Presentation transcript:

1 Computing the True Risk/Reward Ratio for Deferred Maintenance & Decision Trees Based on Exponential Bifurcations in the Maintenance Process The Geaslin Group David Tod Geaslin, Principal Houston Phone: (832) Web Page: Florida State University Tom Shewan, Director of Maintenance Phone: (850) Web Page:

2 Copyright David Geaslin 2008 Program Focus This discussion is about discovering the total cost of a breakdown event to the whole organizationThis discussion is about discovering the total cost of a breakdown event to the whole organization And use those costs to prove they are predictably exponentialAnd use those costs to prove they are predictably exponential Then derive the True Risk/Reward Ratio for Deferred MaintenanceThen derive the True Risk/Reward Ratio for Deferred Maintenance Use those tools to get money, manpower, and downtime to conduct maintenanceUse those tools to get money, manpower, and downtime to conduct maintenance

3 15 Times Longer Downtime 15 : 1 60 : 1 15 : 1 Measurable Costs Executive Opinion Computing the True Risk/Reward Ratio for Deferring Maintenance 1/26/2014

4 Risk/Reward Worksheets Each should have:Each should have: –An example worksheet –A blank worksheet Use as a Note SheetUse as a Note Sheet –Think of a really stinky breakdown event –Jot down costs as you think of them At the end…At the end… –Compute your Risk/Reward Ratio for Deferring Maintenance. Copyright David Geaslin 2008

5 Proof of Exponential Cost Progressions Click Here Click Here Copyright David Geaslin 2008 But when you get all the numbers in another very interesting set of numbers present themselves. Proof of exponential escalation of costs if OTF.

6 Risk/Reward Worksheets Look at your worksheet…Look at your worksheet… I will lead you through filling in the blanks…I will lead you through filling in the blanks… Copyright David Geaslin 2008

7 The curve is the same… Copyright David Geaslin 2008 Brake Block Refinery Explosion

8 The curve is the same… Copyright David Geaslin 2008 Utility Trailer Bearing Roof Repair

9 The curve is the same… Copyright David Geaslin 2008 Running Toilet The True Risk/Reward Ratio for Deferred Maintenance will vary by process.The True Risk/Reward Ratio for Deferred Maintenance will vary by process. But, the Inverse- Square Rule for Deferred Maintenance will be a constant.But, the Inverse- Square Rule for Deferred Maintenance will be a constant.

10 Early Detection & Early Intervention This philosophy will produce the lowest maintenance cost per unit of production.This philosophy will produce the lowest maintenance cost per unit of production. All other options will produce a higher cost.All other options will produce a higher cost. Use these two tools to get the downtime and resources necessary for Early Intervention.Use these two tools to get the downtime and resources necessary for Early Intervention. Copyright David Geaslin 2008

11 Bifurcation ACTION Make the Right Choice – EVERY TIME!Make the Right Choice – EVERY TIME! –Recapture the 40 to 60:1 expenses INCURRED by TAKING THE WRONG FORK and plow the money back into more and better EARLY DETECTION –Recapture the 15:1 in MAINTENANCE MAN/HOURS INCURRED by TAKING THE WRONG FORK and plow those efforts back into EARLY INTERVENTION If you make the right REPAIR/DEFER decisions, you can create a SELF- FINANCING SOLUTION to improve the QUALITY and QUANTITY of maintenance.If you make the right REPAIR/DEFER decisions, you can create a SELF- FINANCING SOLUTION to improve the QUALITY and QUANTITY of maintenance. 1/26/2014

12 Self-Financing Improvement Once you decide to institute a program of early detection and intervention, something wonderful begins to happen… I teach how to make this happen. 1/26/2014

13 Self-Financing Progression Budget Crisis Point! 15:1 to 60:1 It is not WHAT you spend, but WHEN you spend it! I teach how to create this transition without additional cash investment. Positive Cash Flow Recaptured – Maint Man/Hrs 1/26/2014

14 Self-Financing Progression Budget Crisis Point! 15:1 to 60:1 Positive Cash Flow Recaptured – Maint Man/Hrs 1/26/2014 There is enough recoverable energy in this area to initiate change without a cash injection.

15 Discussion Put your numbers in the form and total them…Put your numbers in the form and total them… Divide the Early Intervention cost into Total Breakdown Cost (TR/R Ratio)Divide the Early Intervention cost into Total Breakdown Cost (TR/R Ratio) Take the SQRT of the Total Breakdown Cost several times. (Inverse-Square Rule)Take the SQRT of the Total Breakdown Cost several times. (Inverse-Square Rule) See what do you get!See what do you get! Questions?Questions? 1/26/2014


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