In today's oil and gas industry, systems and equipment must routinely perform at levels that were not possible a decade ago and unthinkable 30 years ago. Requirements for increased availability, throughput, product quality, agility and operating effectiveness within a rapidly changing demand environment continue to elevate the tempo and intensity of operations. As organizations are pressured to reduce costs to remain competitive, they must produce the same or improved results with fewer people and often with diminished resources. Increasingly restrictive regulatory constraints are contributing to reduced operating flexibility and operating margins. The need to reduce capital employed is leading to lower levels of stocked spare parts, diminished redundancy and operating flexibility.
The necessity to maintain -- and often increase -- operational effectiveness, revenue and customer satisfaction while simultaneously reducing capital, operating and support costs is the largest challenge facing operating and production facilities in the oil and gas industry. Success demands radical change from earlier culture, processes, management and organizational concepts. Furthermore, organizations must attain unprecedented levels of equipment availability, reliability and maintainability.
Traditionally, equipment maintenance and reliability have been viewed as business costs, largely below the radar of senior corporate and financial executives. Today's climate of heavy profitability pressures has caused production operations to reduce costs through measures such as workforce reductions, deferment of "nonessential" work and outsourcing some services. All these things might gain short-term results, but they are failed strategies and eventually will take a toll on the workforce, the equipment and the bottom line.
In terms of equipment expenditures, analyses of cost data indicate that as much as 60 percent of maintenance costs are unnecessary and preventable. Industry leaders are convinced that reductions of 20-30 percent are reasonably achievable, which for some companies could be in the tens of millions of dollars.
Successful companies are also changing the whole concept of the way they approach maintenance. Best-in-class organizations have expanded their role to managing physical assets -- more than just maintenance. The emphasis has switched from fixing machines and reacting to equipment failures to managing physical assets and increasing equipment reliability to levels unobtainable 10 years ago, unheard of 30 years ago. In essence, managing equipment assets from design to decommission is the role of physical asset management.
The modern organization has tools at its disposal ranging from reliability-centered maintenance (RCM) and preventive maintenance optimization (PMO) to huge multifunctional integrated enterprise resource planning tools (CMMS) such as Maximo or SAP, root-cause failure analysis, maintenance planning and scheduling, and a host of other fully mature management technologies and strategies that lend themselves to achieving best-in-class performance among peers. Optimizing the physical asset management group's contribution is more than just spending more time on the tools. It involves employing techniques that focus on eliminating equipment failures and improving reliability while helping organizations achieve the lowest total cost of ownership. The best organizations view physical asset management as a sophisticated process that requires dedicated professional staff to manage it while continuously seeking ways to improve.
The maintenance organization today is no longer a necessary evil or afterthought but a core part of the business that, if properly deployed, can create a strategic long-term advantage. The impact of good physical asset management goes beyond the operational bottom line and also positively impacts the safety, integrity and reliability of the organization's physical assets. In order to compete in today's economic environment, maintenance must be elevated to a strategic level on par with operations and engineering. Those companies that have achieved this are now the pace setters in industry.
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