Back to Services

PIP’s Maintenance Cost Reduction Work

Maintenance costs are often one of the highest cost elements within a business - certainly in the non-service industries. Using our proven and tested approach, PIP frequently helps its clients to deliver a 15%+ reduction in maintenance costs while holding maintenance availability flat and often improving it.

Our approach covers:

1. Discretionary spending: applying our behavioural approach (SPIN)
2. Necessary expenditures: using root cause analysis
3. Pricing: through strategic sourcing
4. Wiring: from effective systems, processes, and accountabilities

1. Non-essential usage (discretionary)

These are the levers where the change required is relatively straightforward from an analytic point of view and the levers can be impacted largely by getting people to behave (and manage) differently. We call these ‘discretionary’ because few widgets need to change and major capital does not have to be spent – we just need the behaviours of employees, contractors, supervisors and managers to change so they and their people ‘spend money like it’s their own’. Maintenance examples include:

• Contractor numbers and spending
• Consumables spending
• Hire equipment usage and spending
• Crane usage and spending
• Compliance to planned maintenance schedules
• Absenteeism and overtime levels
• Consumable usage (i.e. PPE, small fittings)

We apply PIP’s SPIN methodology to drive changes in behaviour on discretionary usage cost elements. At its simplest, the SPIN approach trains each person in the organization to take individual accountability for their measurable portion of a KPI (absenteeism percent on my crew, monthly consumables spend for my department etc.). Each layer of the business has a role to play in improving the chosen KPI. This approach is outlined in detail in our article on SPIN so please contact us if you would like to understand more about this approach.

Below are some examples where significant results were obtained through actions that targeted discretionary spend.

2. Necessary usage (root cause analysis)

Root cause analysis is applied to determine the value drivers of a spend and the technical limit in terms of what usage is required. Ideas are then systematically generated to reduce usage or “change the game”. They are then proactively managed through a disciplined ideas pipeline process to not only deliver results, but lock them in and make them sustainable.

Below are some examples where significant results were obtained through actions that targeted necessary expenditure.

3. Price (strategic sourcing)

Improving procurement and driving down the prices of supplies is typically a high value lever to pull – particularly because a significant amount of maintenance spend is negotiated on remote sites where the level of strategic sourcing expertise is low and the choice of suppliers often appears to be limited or non-existent.

Below are two examples where price reductions were achieved. In addition, usage rates and wiring levers were identified and improved for business results.

A more detailed discussion of various approaches and best practices to pull the price lever can be found in our article on Strategic sourcing ‘It’s time to buy’. Please ask us if you would like a copy of it.

4. Systems / processes (wiring).

An organisation’s ‘wiring’ is the systems, processes, accountabilities, skills, staff, habits and norms in a business. The combination of these factors determines how people in the business, and the business as a whole, behave and therefore how the business is likely to perform.

To change the way a business performs (in this case, by driving down maintenance costs) it is necessary to change the wiring of the business.If the wiring is left unchanged, then ‘more of the same’ performance is likely to result from the business in the future. The following performance areas are important factors of wiring associated with maintenance cost reduction efforts:

1. Cost Reports. Accurate and timely cost reports linked to clear accountabilities help focus people on their cost KPI’s. In maintenance a monthly cost report in arrears is of no use for reducing discretionary spend. To influence supervisor behaviours you need to develop a weekly commitments report which is reporting spend at the time it is committed to (when you can do something about it) rather than weeks after the purchase has occurred. This is covered in our article on cost wiring.
2. Contractor Management. Here we work on zero-based budgets, better utilisation of own staff and improved tool time of own and contractor maintainers, tighter contractor authorisation, access controls and onsite management. These topics are covered in our articles on contractor management and improving maintenance productivity - please contact us if these are of interest.
3. Continuous improvement pipeline. Systematic approaches like Root Cause Analysis and ‘5 Whys’ for the shop floor, prioritisation, ideas pipeline and proactive management of the ideas pipeline help to drive improvement through the maintenance areas. This is combined with active coaching in improvement tools and techniques throughout the site.

Below are two examples where wiring was worked on as part of a campaign to reduce maintenance spend and improve business results.

The application of PIP’s four cost reduction levers to maintenance is a powerful tool to get back on track with costs, while reducing downtime and improving equipment availability.

Back to top