1. MAINTENANCE OF COMPLEX EQUIPMENT: ISSUES AND CHALLENGES Professor Pra Murthy The University of Queensland Brisbane, Australia

2. NEED FOR EQUIPMENT Businesses use a variety of equipment to produce output and services Equipment unreliable – failure due to failure of one or more components Most equipment are complex systems (a truck has more than 15,000 components, an aircraft has 4.5 million components)

3. CONSEQUENCE OF FAILURE Failure of equipment results in reduction in availability This in turn results in loss of revenue –Aircraft (747): 1 million dollars per day Other indirect costs: Delays to production, Loss of good will, Dissatisfied customers etc

4. EQUIPMENT FAILURE Equipment failures depend on inherent reliability which is determined by the decisions made during design and manufacture Equipment degrade with age and usage The rate of degradation depends on usage intensity, operating environment, and maintenance actions

5. RELIABILITY THEORY Reliability theory deals with the study of equipment degradation and failures It includes Reliability Science, Reliability Engineering, Reliability Management and Reliability Mathematics Maintenance is also part of reliability theory – needed for coping with unreliability

6. MAINTENANCE Maintenance are actions (or activities) needed to (i) control equipment degradation and failures and (ii) to restore a failed equipment to operational state. The former is termed Preventive Maintenance (PM) and the latter as Corrective Maintenance (CM)

7. APPROACHES TO MAINTENANCE Changed significantly over the last fifty years. Pre 1950: Maintenance was regarded simply as an unavoidable cost Post 1950: Scientific approach to maintenance (mainly OR models - dealing with operational and economic issues)

8. APPROACHES TO MAINTENANCE Post 1970: Maintenance management - Integral to business performance - Part of strategic management - More integrated and pro-active approach - Many approaches (e.g., TPM, RCM, Tero-technology, ILS) have evolved

9. IMPACT OF TECHNOLOGY Systems are getting more complex Maintenance requires specialist skills and equipment It is not often not economical for businesses to carry out in-house maintenance. Out-sourcing of maintenance is an option

10. IMPLICATIONS Maintenance needs to be managed from an overall business viewpoint Several options 1. Own and maintain equipment 2. Own but out-source maintenance (Service contract) 3.Lease of equipment (Lease contract)

11. Strategic Maintenance Management

12. STRATEGIC MAINTENANCE

13. CHALLENGE Need to model the different elements (technical, commercial, operational) Need to understand the underlying degradation processes involved (Reliability science) Adequate data to build and validate models

14. CASE: DRAGLINE

16. Cost: 100 million dollars Moving surface dirt to expose coal in open cut mining Runs 24 hours per day and 365 days per year Revenue loss of 1 million dollar for every day out of action

17. CASE: DRAGLINE Commercial considerations dictate an increase in output Idea: Increase bucket size (100 tons to 140?) Greater load on components Implications for reliability and maintenance

18. LOAD DEGRADATION MAINTENANCE AVAILABILITY FAILURE DUTY CYCLE YIELD

19. MODELLING Modelling system in terms of its major components [Decomposition] Modelling degradation of each component Modelling effect of bucket load on component and system performance Involves reliability science, engineering and mathematics

20. SYSTEM DECOMPOSITION Hierarchy: Systems, sub-systems, assemblies, sub-assemblies and so on down to part and material level Complexity versus tractability Data available determines the appropriate level to model -- Need adequate data for model building

21. The dragline was decomposed into 7 major systems Some of them were further sub- divided resulting in 25 components Decision influenced by the data available for modelling SYSTEM DECOMPOSITION

23. MODELLING Component Failures System Failures Effect of Load on Failures Maintenance Actions Availability Yield

24. PREVENTIVE MAINTENANCE Three 8-hour shifts per day Minor PM: 8 hour duration after 20 shifts of operation (once every 3 weeks) Major PM: Shutdown PM (6 weeks) every 5 years. Cost 50 million dollars and system as good as new after a shutdown PM

25. Time (usage clock)  Failure Rate r(x)  Minor Failures Shutdown PM Cycle

26. Reliability  1 0.95 T1T1 T0T0 P.M. Interval (T) Bucket load V 1 Bucket load V 0

27. COMPONENT FAILURES Black box approach Weibull Distribution –Two parameter Weibull distribution –Scale (  ) and shape (  ) parameters Effect of bucket load (Accelerated Life) –No effect on shape parameter –Scale parameter is affected

28. EFFECT OF LOAD V 0 - Base dragline load (bucket + rigging + dirt) V - Dragline load Linking failure distribution to load (ATF Model)

29. FAILURE DATA Taken from FMMS maintenance database From end of Major (shutdown) PM in March/April 1996 to operations till July 1998 Estimation of parameters using maximum likelihood method and least squares method

30. DRAG GENERATOR

31. YIELD vs BUCKET LOAD

32. SENSITIVITY STUDY (  )

33. CONCLUSIONS Study revealed increase in output yield with increase in bucket size Maximum yield corresponds to v  1.3 (dragline load = 182 tonnes or payload of 116 tonnes) as opposed to current payload of 74 tonnes Shutdown interval will need to be reduced from 43680 usage hours (5 years) to 25000 usage hours (3 years)

34. CASE: RAIL TRACK Increase in traffic (goods and passenger) How to cope? Several options -- More frequent operations; More wagons; Greater axle load; Faster speeds etc Implications: More load on the track and faster degradation What should be the optimal strategy?

35. CASE: RAIL TRACK Need to integrate operation (commercial decision) with maintenance (technical decision) Increase load? Short term gain but long term loss! Upgrade track? Costly Design better rolling stock?

36. OTHER CASES Networks: Water pipe, Gas pipe, Oil pipe, Road Power plant: Overload to meet increased demand Manufacturing: Higher production rate to meet increased demand

37. Out-Sourcing of Maintenance

38. IMPORTANT FEATURES Two different parties - Agent (providing the maintenance service) - Customer (owner of the system and recipient of the maintenance service) Different objectives or goals Decision problems for both parties

39. OUT-SOURCING

40. GAME THEORETIC APPROACH Agent offers several options (A 1, A 2,..A k ) The customer chooses the optimal option The parameters (decision variables) of each option to be selected optimally by the service agent The service agent needs to take into account the optimal response of customer

41. SERVICE AGENT PERSPECTIVE Structure (terms and pricing of contract) Effect of equipment age, usage intensity and operating environment Customers differing in their attitude to risk Owner not operating as per contract Dispute resolution

42. OWNER PERSPECTIVE Choosing the best option Uncertainty about service agent’s capability Service agent not executing tasks as per contract Dispute resolution

43. OUT-SOURCING Can be viewed as a Principal-Agent problem Owner (Principal) and Maintenance service provider (Agent) Raises several new issues (see next slide) Scope for lot of new research

44. PRINCIPAL-AGENT PROBLEM

45. Maintenance of Leased Equipment

46. REASONS FOR LEASING The rapid technological changes makes equipment obsolete in a short period. Also the cost of owning and maintaining an equipment is increasing due to increased sophistication with each new generation. Hence, leasing is a better option.

47. TERMINOLOGY Lessor: Owns and leases the equipment Lessee: Leases the equipment for a specified period (L) Equipment: Unreliable and prone to failure over the lease period Contract: Which defines the conditions for lease

48. MAIN ELEMENTS LESSEE LESSOR EQUIPMENT CONTRACT

49. AN IMPORTANT FEATURE The advantage of leasing is that the lessor provides the maintenance. As such, the equipment (a physical item) is bundled with maintenance (a service) and offered as a package to the lessee. This raises several new issues for both the lessor and the lessee.

50. LEASE CONTRACT There are three main issues in a lease contract. Issue 1: This deals with the contract terms and conditions -- the period of the lease, the performance requirements that the leased equipment should meet and the actions and the obligations of each party (lessor and lessee).

51. LEASE CONTRACT Issue 2: This deals with the economic aspect of leasing. These include the amount that the lessee must pay the lessor (or also called the price) for the lease on equipment and the terms of payment. Issue 3: Drafting of the contract

52. PENALTIES 1.Penalty if repair is not completed within a specified time period 2.Penalty if failures occur frequently 3.Customer not operating the equipment as per the contract (higher load, harsher environment)

53. ISSUES Drafting of the contract (terms and price) Optimal monitoring to ensure lessee is operating the equipment as per contract Optimal maintenance which takes into account the penalties

54. Thank you Any Questions?