Long-Term Planning – Just in Time

Life is full of conundrums and paradoxes that we all must learn to deal with.  I’ve had my fair share, working with numerous Asset Managers for almost four decades.  For example, how many maintainers are totally ignored when assets perform well, yet are hammered when they break down?  Why does the celebration BBQ come after the frantic, breakdown repair instead of during the serenity of reliable operation?  Many senior managers recognise spanner-wielding heroes, but rarely acknowledge the Preventive Maintenance and condition monitoring technicians.  Hell or high water are moved to defer a major investment until next year.  Fast forward 12 months; when additional shut-down time and budget is requested, it’s denied.  How does that work?

As I traverse the 40^th year of my working career, I realise that I’ve indeed learnt a few lessons.  As Richard Farson outlined in his “Management of the Absurd,” things are not always as they seem.  Unconventional wisdom is required at times to navigate the maelstrom of business management. 

Han Solo went off the beaten track in order to complete the Kessel run in 12 parsecs, stopping his load of coaxium from obliterating crew and vessel.  His decision laid a platform for the long-term success of the rebel alliance forces.  I’d like to take a leaf out of Han’s book.  I’d like to advocate for waiting until the 11^th hour to perform long-term planning – Just in Time.  I know this sounds absurd, but please indulge me.

Most conscientious Maintenance Managers have sleepless nights wondering whether the boom is really going to last 25 years.  Has the Chloride ion level in the concrete footing exceeded the CTL?  Are the cracks growing and does De Sitter’s Law of Fives apply in this case?  The full suite of Rockwell PLCs is being rendered “obsolete” in 2020 and no one knows when the incoming HV cables were last checked.  A good manager can digest any one of these issues when they manifest, but what happens when Murphy drops in and the undertaker is called repeatedly before time?  The million dollars saved on maintenance last year is not sitting in any special savings account.  As Fatty Vautin would say it’s “Gooooone!” 

About six years ago several of my clients began investing heavily in LifeCycle Costing projects.  Since then, LCC emerged as a beacon of hope for many of them.  There was a “promise” of a future state that predicted which decisions should be made by when and precisely what each would cost to execute.  Most long-term planning problems would be solved by this new (and expensive) LCC thing.  However, what eventually did materialise for many included a very heavy administrative burden.  The thousands of rows of LCC data seemed to require an iron lung to keep them viable.   Perhaps familiarity breeds contempt, but my lone, dissenting voice did not dissuade many.  The shiny, expensive alternative beckoned – like a flame to moths.  Several years later, I sense that the tide has finally turned.  Perhaps it’s the rotting fish.  The time is right to describe a better, more useful way to manage LCC and the Long-Term Planning process that it may inform.

In their most basic form, LifeCycle Cost models divide major assets into assemblies that are anticipated to last a certain amount of time.  As these assemblies approach their “end of life” a decision must be made – should it be repaired or replaced?  What compounds the decision-making process is that in the mean-time, everything may have changed.  Operators may drive it like they stole it while maintenance may replace all of the components they can access easily while leaving the structure and wiring alone.  Any LCC scope and cost data, developed previously in a back office, has lost much of its value.

Long-Term Planning for major assets, informed by LCC Models must be primarily Just-in-Time; it simply can’t work any other way.  The purpose of the LCC system should be simply to alert the manager that some key repair / replace or end of life decisions should be made in the next 2-5 years.  If its purpose is constrained in this way, it can very simple and inexpensive to establish and maintain.  After all, every project manager knows that the devil is in the detail.  Work packages need to be scoped, planned, resourced and scheduled precisely.  It all begins with a known scope of work which is influenced significantly by the current condition of the asset.  Unless an asset is moth-balled, its condition cannot be predicted precisely many years into the future.

Although it would obviously be useful to peer into the distant future, the most valuable aspects of Long-Term Planning are not concerned with that.  Rather, the ability to identify and perform sufficient feasibility studies, to analysing options effectively and to select the best strategic decisions for execution over the next 2-5 years; that’s where the value is concentrated.  After all, the business environment is always changing and fresh is best.  Strategic decisions made with current objectives and constraints in mind will always deliver maximum Net Present Value for a business.  The best decision for now can rarely, be made more than five years in advance.

Summarising, the key aspects of an effective JIT Long-Term Planning and LCC system include:

1. “Mama bear” sized Assembly data structures within a logical Plant Asset Structure tree.  Too little detail and nothing is revealed; too much and the department is buried in administrivia.
2. Model data with sufficient precision to provide a basis for the “lumpy” portion of the long-term cost forecast, but no more.  If an accountant tells you he wants +/- 10% certainty cost data in years 6-50, tell him he’s dreaming.
3. A software solution that manages the model data so that it remains secure.  If too many people mess with the numbers or there are multiple versions of the truth, the LCC system will lose credibility and die on the vine.
4. Sufficient analysis and presentation tools to perform “what-if” scenarios and present a compelling case for change.
5. Specific roles, a process and set routines to ensure the LCC data is used to inform Feasibility studies, Opportunity Framing workshops, options analysis and project decision-making.

An important point to note is that although the above set of principles is generally the province of Long-Term planners or Engineers, they must not act in isolation.  The assets do not belong to them alone.  Effective Long-Term Planning is a key feature of a mature Asset Management System.  It provides a vital link between Strategic Planning and Tactical response and if designed well, integrates Reliability Engineering, Business Improvement and Management of Change.  Finally, assets exist to provide an agreed level of service to customers.  Operations, Logistics, Reliability, Maintenance and Engineering must all cooperate to deliver this, economically and sustainably.  JIT Long-Term Planning lies at the intersection of business management systems and relies upon the cooperation of key stakeholders to make it work.

Postscript:

All of the following elements contribute in some way to an effective JIT Long-Term Planning system.

• LifeCycle Cost Model development, analysis and presentation;
• Opportunity Framing, Ranging and KT Decision Analysis;
• Project Management (Concept, Fe-Feasibility, Feasibility, Detailed Design, Execution and Completion);
• Business Improvement methodologies (including PDCA, RCA, Six Sigma DMAIC, LEAN, TOC);
• Reliability Engineering processes (Reliability Roadmaps);
• Maintenance Work Management processes;
• Effective ERP Implementation;
• Management of Change (asset and process-centred); and
• Organisational Change Management (people-centred).

JV has considerable experience in assessing, developing and / or deploying all of these management systems and work processes.  Please contact JV to discuss JIT Long-Term Planning or any of these elements further.

PPS: May the 4^th be with you.