Eric Alingcastre, ARMS Reliability Engineers
Reliability Engineer, Brisbane, Australia

SummaryRisk management is defined as the systematic process of identifying, analysing, treating and monitoring risks associated with any activity, function or process in a way that will enable an organisation to minimise losses and maximise its opportunity. From an asset management point view, this process shares the exact same core principle to Reliability Centred Maintenance (RCM).

The objective of any effective maintenance strategy, developed using RCM, is to maximise the effectiveness of an asset while minimising the effects and/or the likelihood of failure. One cannot effectively apply the risk management methodology to manage assets without also using RCM methodology, in some form. From an asset management context, RCM is risk management.

Introduction

Since the birth of Reliability Centered Maintenance (RCM) in the late 1960’s, maintenance engineers and maintenance practitioners have embraced and appreciated the logic and soundness if its principles. The industry has refined its process and developed sophisticated tools to enable RCM to become more effective, efficient, robust and easier to use.

However, a number of RCM programs to date still end unsuccessfully or never achieve its full potential. The main reason for the failure of most RCM programs is attributed to the lack of management support to the program.

RCM is a concept that even most maintenance practitioners struggle to succinctly define. This is because most definitions include a detailed description of the entire methodology, making the definition convoluted, wordy and plain confusing, especially for people that are not from a maintenance background. Until the core concept of RCM is able to be effectively communicated to all the business stakeholders, in particular to managers, RCM programs will always struggle to receive the support that it needs from management to be fully successful.

On the other hand, Risk Management programs has enjoyed better success and acceptance throughout the industry and are generally more widely embraced and supported by the managers. Its principles are applied across various sections the business, from financial management, business development, business legal management, etc.

The objective of this paper is to demonstrate how the concept of RCM can be better explained by drawing comparison to Risk Management. It will also discuss how RCM fits into Risk Management programs as well as demonstrate the parallel between the two concepts and their established processes.

Risk Management

AS4360 defines Risk Management as the systematic process of identifying, analysing, treating and monitoring risks associated with any activity, function or process in a way that will enable an organisation to minimise losses and maximise its opportunity. This definition acknowledges that risk involves both upside and downside potentials. Risk management is a management philosophy that is directed towards the effective management of potential opportunities and adverse effects.

The Risk Management principle is applied across all facets of the business, from financial management, quality assurance, legal, OHS & Environmental management, asset management, etc.

Risk Management programs in businesses are typically well supported by management because they can clearly see the benefits and value of such program.

Asset Management

Asset Management, in general, is one of the most resource intensive part of industrial-type business, both in terms of cost and labour. In most cases, businesses of this type invest multi-million dollars into the acquisition of capital building, fixed plant equipment and mobile equipment. This huge investment normally only represents the tip of an iceberg in terms of its total required asset investment. The main bulk of the cost is normally spent in maintaining the equipment so that it can continually perform its intended function throughout its design life and sometimes beyond.

It is therefore understandable that there is a tremendous pressure on the asset managers to optimise the return on investment for these assets. Businesses are able to justify these huge investments, as it is through these assets or equipment where businesses are able to find and take advantage of opportunities for profit and further growth. However, these very same assets or equipment that provide them with great opportunities also have the potential to expose businesses to hefty revenue losses and other undesirable outcomes such us bad media publicity, lawsuits, environmental catastrophe, personal injuries and even single to multiple fatalities when or if they fail. The application of risk management into asset management is therefore crucial in guiding industrial businesses in balancing between profit optimisation and unacceptable risk exposure.

Reliability Centred Maintenance

The history of Reliability Centred Maintenance, or RCM, is well documented and is well known to most maintenance practitioners. Most maintenance practitioners are also well aware of the RCM methodology for developing maintenance plans, although there is in existence a handful of different versions that have very slightly different standard processes. However, the exact definition of RCM is still in contention within the maintenance community. Because of this elusive straight forward definition of RCM, most attempts to explain the RCM concept to people that do not have maintenance background are often very wordy, convoluted and confusing.

According to Plant Maintenance – 2001 Maintenance Task Selection Survey Result(3), the most important factor in RCM and PM Optimisation program success is management commitment. It is then fair to say that most RCM and PM Optimisation programs fail because of lack of commitment from management. This is in contrast to most risk management programs, which are normally relatively successful, well embraced throughout the business and are typically well supported by management.

In most cases, only a handful of people in the business management level come from a maintenance background. Most of them, understandably, wouldn’t normally have a full appreciation of the concept of RCM. Because of the trouble that most maintenance people have in defining RCM themselves, let alone trying to explain it to non-maintenance people, it will always be an uphill battle to get management to commit and support RCM programs. For RCM programs to be successful, they need to be supported by management. For management to support it, they need to understand it, embrace it, and commit to it, as they commit to business risk management programs.

RCM as Risk Management

So how can RCM be better explained to people with no maintenance background? RCM can be simply defined as “the application of risk management principles into asset management” or even more simply, “RCM is risk management when it is applied to managing assets”. This is not the officially accepted definition of RCM by the inner sanctum of the maintenance community. However by drawing parallel to a concept that non-maintenance people accept and understand, it will bridge the gap between the two concepts and hopefully demystify RCM.

Risk Management, or more specifically, Risk Analyses, as most people would know, is the evaluation of ones exposure to the outcome of an event. Such evaluation is based on the likelihood and the consequence of such event occurring. By evaluating the risks associated with an event, a list of tasks can be generated to eliminate or minimise the likely undesired consequences.

RCM is mainly used in industry to develop a list of maintenance task or maintenance strategy. The maintenance tasks developed using RCM are based on the reliability of a system, equipment or component and the effects of the failure. From this, it can be clearly seen that there is a direct parallel between Risk Management and RCM. RCM, just like Risk Management, is the development of maintenance strategy, much like the Risk Assessment Task List, by evaluating the Reliability, or in Risk Management Term: ‘Likelihood’ of failure, and the Failure Effects, or once again, using Risk Management Terminology: ‘Consequence’.
The only difference between these two concepts is the detail involved in systematically following the accepted RCM Methodology in determining the likelihood and consequence of failure. Although there are some minor differences in the accepted RCM Methodologies, basically they all involve the same seven basic steps (2).

The 7-Steps of RCM Process:

1. Identify the equipment / system to be analysed;
2. Determine its functions;
3. Determine what constitutes a failure of those functions;
4. Identify the failure modes that cause those functional failures (these are the actual physical failure of the equipment or component);
5. Identify the impact or effects of those failures’ occurrence;
6. Use RCM logic to select appropriate maintenance tactics; and
7. Document the final maintenance program and refine it as more data becomes available from operating experience.

5.1 Likelihood and Reliability
Because Asset Management principally deals with equipment or component failure, the reliability or likelihood of failure is best established by using statistical analysis. Using statistical analysis, the expected failure behaviour of an equipment or component is modelled using one or more distribution plots over time, such us Weibull Plot, Log-Normal Plot, Exponential Plot, etc. This process can be fairly involved and complex. However, from the ‘big picture’ view of Risk Management, this exercise is simply the determination of the ‘Likelihood’ component of risk.

5.2 Consequence and Effects
The assignment of failure effects in an RCM process is based on the overall impact of the failure to the business. It is therefore not hard to see the parallel between this process and the allocation of consequence to a risk analysis process.

If an effective business that has a corporate risk management program decide to roll it out to the management of its assets by applying RCM, then it is worthwhile to consider deriving the RCM Effects Table from the business corporate risk matrix. This will ensure that the maintenance strategy or, to use a better term, the asset management strategy developed using the RCM analysis is in line with the business objectives and risk thresholds.
Table i below shows a simplified sample of a corporate safety risk assessment table.

Table i - Simplified example of Risk Assessment tables

Table ii - Risk Matrix

Table iii shows the effects table that can then be derived from the above matrix for use in RCM analysis.

Table iii - RCM Effects Table

Applying the effects table above to an RCM analysis, any failure with a safety criticality of greater than 1 can be said to expose the business to unacceptable risk or beyond its risk threshold.

• The process is systematic, thorough and auditable,
• The rationale behind each maintenance task can be easily traced back to the desired functions of the equipment,
• By following a commonly used methodology, the entire process and the results can be benchmarked against other RCM studies,
• Standard powerful RCM softwares can be used so that models can be rapidly built and various ‘what-if’ scenarios can be evaluated.

6. SUMMARY
By explaining the vague and elusive concept of RCM in terms of the commonly accepted concept of Risk Management will hopefully lead to more successful RCM programs. With management having a better understanding of its core concept, they will be able to recognise that it is an integral part of effectively managing the business’ asset. RCM Programs can then be made to fit within the business-wide Risk Management program rather than a renegade program exclusive and only understood by technical and maintenance personnel.

Both Risk Management and RCM share the same basic core principles. Both generate plans and strategies to effectively manage the business’ exposure to risk by assessing the likelihood of the event occurring and the likely consequence of the event. Risk Management with a higher level and adaptable methodology is applicable to the entire business operation, whilst RCM with its more strict methodology is exclusively applicable to asset management.

7. REFERENCES
1. AS4360:1999 – Risk Management
2. John D. Campbell, editor; Jim V. Picknell, author; The Reliability Handbook, From Downtime to Uptime – in no time, Is RCM the right tool for you? Determining your reliability needs. (2004).
3. Plant Maintenance – 2001 Maintenance Task Selection Survey Result