If you hear the word STSM Act , you think more cost. You are Wrong!

The value chain perspective of the changes to the act  offer broader insight into the goals and implications.

The essence of the changes can be summarized as: more efficient planning and adequate provision. That’s it.

Value streams:

  • Improved planning leads to more efficiency & effectiveness which drive cost efficiency thus delivering lower marginal cost —-New requirement: Long term maintenance plan(LTMP).
  • A plan is only as good as your ability to execute the plan. An asset maintenance program requires timeous and adequate financial provision.  – New requirement: Minimum fund reserves & contributions.
  • Prevention strategies , compared to re-active strategies reduce  costs  by up to 50%
    • Statistics:
      • Prevention = reactive cost less 20 – 30%
      • Predictive = preventative less 12 – 20%

LTMP EffectLet’s look at the core effect of a LTMP on traditional reactive maintenance approach (actual case)

  • Planned activities migrate from re-active repairs to prevention .
  • Re-active focus on failures/ repairs.
  • Reduced cost levels: Total maintenance cost curve decline by 32%
  • Reduced cost volatility

 

The bottom line:

By implementing a LTMP can resources be focused on prevention, which is a lower cost platform that also reduce probability and frequency of failures. Less failures equals less costs,  reduced failure frequency equals less degradation thus longer life expectancy.

Thus will the STSM act through a LTMP simplify and improve  financial management , minimize cost of ownership and maximize value.

 

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