Page 61 - Root Cause Failure Analysis

52 Root Cause Failure Analysis

Nevertheless, try to be as accurate in the labor estimate as possible. Solicit the advice
of plant engineers, maintenance personnel, and vendors. These individuals can pro-
vide valuable assistance in this phase of the evaluation.

In addition, do not forget hidden costs. Replacing or modifying an existing machine
or system involves labor costs for the internal engineering and procurement activities.
While these levels of effort are determined by the complexity of the activity, they can
be substantial.

Benefits Analysis

The benefits analysis involves defining the benefits derived from implementing specific
corrective actions. When doing a benefits analysis, however, the tendency is to overes-
timate the significance of the benefits of a modification or change in a critical process
system. In RCFA, the objective is to quantify the actual improvement that will be
derived from the recommended corrective action to ensure that the potential benefits
are real and significant. Benefits generally can be quantified as improvements in pro-
cess-related costs, which result in reductions in cost per unit, increased revenue gener-
ation due to higher capacity, and cost avoidance of chronic high maintenance costs.

Improvement in Process-Related Costs
The format of the benefits analysis should mirror the cost categories (e.g., material
and labor costs) so that a comparison can be made. If the recommended corrective
action is valid, there should be a measurable improvement in process-related costs.

Reduction in Unit Cost
One potential benefit is a reduction in the total production and maintenance costs per
unit (Le.. pound or ton). For example, when a machine with a history of chronic reli-
ability problems is replaced, normally a measurable increase in production capacity
will occur. In some cases, this improvement may occur simply because the capacity of
the replacement machine is greater than the one replaced. Regardless of the reason,
the increase in capacity should reduce the total cost per unit produced simply because
greater volume is produced.
The benefits analysis should establish a reasonable level of improvement in this cost
category. The simplest method is to define the rated capacity of the production system
under investigation. For most production systems, the percentage of operating capac-
ity expected to be used can be found in the business plan.

The cost analysis should have quantified the losses (i.e., higher cost per unit pro-
duced) without corrective action. The benefits analysis should quantify the gain (Le..
reduction in cost per unit produced) to be achieved after correction. The mathematics
are relatively simple. If the system was operating at a level equal to 60 percent
capacity before correction and 90 percent afterward, the differential of 30 percent