Plant & Vehicle Management MANUAL

Transcription

1 Plant & Vehicle Management MANUAL GOLD SUPPORTERS Institute of Public Works Engineering Australia Limited in association with

2 ABOUT THIS MANUAL Introduction The IPWEA Plant & Vehicle Management Manual provides public works professionals with far more than a general guide to plant and vehicle management - it provides vital information to assist in establishing an efficient and cost effective fleet management program. Fleet assets represent a significant investment for local government and public works agencies. One of the aims of the Institute is to raise the profile of this essential part of the business and to increase awareness of its importance among senior management and elected members. Plant & Vehicle Management has long been the most neglected area of asset management, often overlooked for assets such as roads and buildings. Now, asset management and related business functions hold equal importance. Many leading business operations rely on a well-equipped and properly maintained fleet in order to provide a cost competitive and efficient business service. The role of the fleet manager is now also that of asset and investment manager. The fleet manager must be concerned with returning the best value on the capital investment, not just financially but operationally and socially as environmental considerations are also of importance. Today, effective fleet management goes well beyond simply fixing vehicles when they break down! Issues such as right-sizing the fleet, replacing equipment, knowing when to rent, when to lease or when to purchase demand more attention than they have in the past. Fleet management is now far more complex and has to cover such areas as establishing programs to preserve the value of equipment investments, minimising the incidence of unscheduled repairs, and collecting, analysing, and reporting necessary data so that intelligent asset management decisions can be made. Another important aspect of fleet management is the recognition that the primary service provided to customers is mobility. Organisational mobility is essential for providing public services by moving people, materials and tools to remote job sites. A Fleet Manager s customers costs are not limited to direct expenses for such items as repairs and fuel, but also include the substantial indirect cost of lost employee productivity when vehicles are out of service for maintenance or breakdown. Good plant and vehicle management demands that managers not only understand the mechanics of owning and operating a fleet, but are also able to communicate effectively with management, accountants, bankers and the public at large. Best practice management is a balancing act - high utilisation of plant and vehicles, minimum downtime, and astute buying decisions. This Manual will form the cornerstone of the IPWEA program to raise the profile and knowledge of plant and vehicle management in public works. The program will be known as IPWEA s Plant & Vehicle Management Systems Plus and will incorporate: This Manual Training associated with the manual User forums to promote networking and benchmarking Quarterly newsletters Regular updates to the manual. What s in the Manual The Manual starts off with a Quick Guide and the Top Six Key Performance Indicators to effective plant and vehicle management. The Manual is divided into sixteen modules, encompassing all the significant aspects of plant and vehicle management in a public works environment. Step By Step Approach Most modules are introduced with a flow chart that provides a step by step approach or action summary for quick reference. Numerous case studies are provided, detailing real examples provided by plant and vehicle managers in public works. Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page v

3 ACKNOWLEDGEMENTS This Manual has been developed jointly by the Institute of Public Works Engineering Australia (IPWEA) and Uniqco International Vehicle Management. Main Author - Grant Andrews Director Uniqco International Vehicle Management IPWEA and Uniqco wish to acknowledge the contributions made by organisations and individuals in delivering this Manual to the Public Works Industry. Organisations and individuals providing content used in the Manual Organisations ALS WearCheck 32 Shand Street, Stafford,QLD Tel BP Australia National Office Elizabeth Street, Melbourne, VIC. BP Fuels Technical Helpline Corporate Management Systems Australia 633 Glenferrie Road, Hawthorn, VIC Tel DaimlerChrysler Australia/Pacific Pty Ltd Head Office - Lexia Place, Mulgrave VIC Tel Fleet Safety Solutions 146A Louisa Road, Birchgrove NSW Tel Open Windows Australia Glenferrie Road Hawthorn VIC Tel Thales Telematics Australia Level 1, Bldg 48, Cowper Wharf Road Garden Island, Sydney NSW Tel Western Australian Local Government Association 15 Altona Street West Perth, WA Tel Editor - Ross Moody Immediate Past President and Fellow IPWEA Individuals Ross Moody, Stirling City Council Eddy Albrecht, Stirling City Council Michael Borg, Rockhampton City Council Phil Sochon, Fleet Safety Solutions (Section11) Nick Thomas. ALS Wearcheck Ian Campbell, Hamoa Projects Ian Stubbs, Ergon Energy (formerly of Redlands Shire Council) Steven Colliver, Dubbo Shire Council Peter Godfrey, BAS Consulting Members of the Working Party who provided invaluable peer review of the first draft of the Manual Pat Ahern, Rural City of Swan Hill Eddy Albrecht, Stirling City Council Michael Borg, Rockhampton City Council Chris Champion, IPWEA Peter Godfrey, BAS Consulting Des Hewitt, Sutherland Shire Council Malcolm McKenzie, Monash City Council Doug Meadows, Swan City Council Donald Repacholi, Uniqco (WA) Ian Stubbs, Ergon Energy (Formerly of Redlands Shire Council Industry Supply Stakeholders who provided comment on the second draft of the Manual Australian Associated Equipment Dealers (AAED) Construction & Mining Equipment Industry Group (CMEIG) Tractor and Machinery Association (TMA) Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page vi

4 SYSTEMS PLUS SUBSCRIPTION - A TOTAL PROGRAM The IPWEA Plant & Vehicle Management Manual will provide a long needed reference to best practice for novice and practitioner alike. The Manual is being published as the cornerstone of the Systems Plus subscription service - a total program. IPWEA sees the Manual as a live document and wants to ensure that it continues to develop over time. Ensure that you have the complete Systems Plus subscription package to keep your Manual up-todate. It is as an essential companion to the Manual. The Systems Plus subscription package includes: A hard copy of the IPWEA Plant & Vehicle Management Manual Quarterly Newsletters Ongoing updates for the Manual 20% off Systems Plus training building on the content of the Manual 20% off User Forum attendance to promote networking and benchmarking Password access to the Uniqco International Vehicle Management Services Plus website Note: Once an Organisation has taken out the Systems Plus subscription package above, all members of that organisation benefit from the discounted training rates. This can quickly pay for your subscription. For further information, to upgrade your Manual, or to suggest future updates and improvements to the Manual, contact IPWEA National at national@ipwea.org.au, or telephone Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page viii

5 Quick Guide Q QUICK GUIDE TO PLANT & VEHICLE MANAGEMENT STEP 1 - MEASURING UTILISATION How is utilisation defined? Utilisation is usually measured by hours worked or distance travelled in a nominated timeframe, which for comparison or benchmarking purposes is taken as a calendar year. Why is measuring utilisation important? Without knowing the utilisation, an accurate assessment of the following management issues cannot be made: Is the item needed on a permanent or intermittent basis and should the item be owned or hired as required? What are the servicing requirements per annum? How much fuel and oil will be required per annum? What staff resources are required for servicing and repairs? What will the tyre wear be per annum? When can major maintenance be programmed? If all these fundamental questions can be accurately answered, then managing the plant and vehicle fleet will be a relatively clear and simple process. STEP 2 - ADDRESSING LOW UTILISATION Where low utilisation is found, a business case study must be made to ensure that the low utilisation is either acceptable due to the nature of the business or lack of hire options. If not, that item should be disposed of. The business case for retaining ownership of an item with low utilisation must address the following questions: Is the item essential to the business operation of the end user client? Is there a contractor available to provide a quality service at a competitive cost? Is the item to be dry hired? If so, at what cost? Are our operators sufficiently skilled to provide the service at a competitive price? (Dry hire is plant hired without an operator) STEP 3 - ESTABLISHING INTERNAL HIRE RATES To develop internal hire rates, it is necessary to first establish whole of life costs. The elements of whole of life costs include purchase price, resale value, opportunity costs, fuel, repairs, maintenance, insurance, oil, registration, and admin costs. When establishing whole of life costs, budget items are allocated directly to either operational or capital expenditure. (i) Operational Expenditure Operational costs, both fixed and variable, such as fuel, repairs, maintenance, insurance, oil, registration, and administration are added for each vehicle. The total cost is then divided by the timesheet hours if recovery of the annual operational cost is required. (ii) Capital Expenditure Annual replacement provision is actual depreciation (purchase cost less anticipated residual, divided by the projected years of ownership) plus opportunity cost. The sum of these items is then again divided by the timesheet hours or annualised to identify annual replacement provision. The annual operational costs plus the annual replacement provision divided by the anticipated timesheet hours where applicable allow for an accurate internal hire rate. These hire rates can then be applied to operator timesheet hours or used just as an annual charge Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page ix

6 Key Indicators KEY PERFORMANCE INDICATORS TOP SIX PERFORMANCE MEASURES FOR PLANT & VEHICLE MANAGEMENT The six most critical measurement tools that need to be addressed and regularly analysed to comply with Plant and Vehicle Management Best Practice are: (1) Utilisation (2) Optimum Replacement Points (3) Whole of Life Costs (4) Downtime Costs (5) Maintenance Failure Records (6) Flat Rate Repair Times The issues covered in this section are sometimes not well understood, and even ignored, by some fleet managers. However, if correctly used, these measurement tools will improve the efficiency of the business of plant and vehicle management and can result in significant savings. At the same time, operational business units will benefit from reduced down time and lower repair costs. The provision of plant and vehicle management services within Public Works requires managers to operate substantial and varied fleets of both vehicles and plant. Therefore, the manager will require broad experience, and probably more so than in any other industry. The principles dealt with here can be applied to a broad range of plant and vehicles alike and are not restricted to any particular elements. KPI (1) - UTILISATION Utilisation refers to the annual usage of a particular item of fleet and is generally measured in terms of either kilometres travelled or engine hours. Base utilisation data is the level of utilisation set to generally justify ownership of any item of fleet. In order to gather base utilisation data, a Microsoft Excel or Lotus 123 spreadsheet is required and the following steps are recommended: 1. Record item, plant number, description, purchase date, current odometer or hour meter reading, date of the odometer reading, and last 12 months timesheet hours. 2. Calculate the actual annual utilisation based on Current mileage / (current date - purchase date in days)* Compare the actual utilisation with the recorded timesheet hours to identify any anomalies. 4. Establish the ratio between plant timesheet hours and actual utilisation. The ratio should be constant and can be used for determining changes in activity. For example: where the timesheet hours allocated to a vehicle increase without a corresponding increase in the kilometres of the same vehicle, the operator needs to explain the change in activity. Some internal management structures, particularly business unit structures, make it very difficult to review the activity based timesheet hours. Managers of business units need to develop a suitable cross-reference to review work crew activity along with the vehicle/plant activity. The results of this survey will establish baseline utilisation for each item of fleet against which future performance can be measured. Low utilisation results in high depreciation costs and low productivity. Good fleet management requires high utilisation. Low utilisation needs to be investigated as it may reach the point where it becomes less than economical to own the vehicle or plant item. This decision is very dependent on geographic location, and access to hire plant and fleet. As a guide for most urban councils, the following would be considered low utilisation requiring investigation: Loader - < 700 engine hours Skid steer loader - < 500 engine hours Ride on front deck mower - < 500 engine hours Parks truck - < 10,000km Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page xiii

7 TABLE OF CONTENTS MANUAL MODULES SECTION 1 MANAGING THE FLEET 1.1 Introduction Utilisation Resourcing Decisions Promoting Innovation Policies & Principles Need for Long Term Plans Cost of Downtime Compliance Issues Vehicle Cleanliness Security 1.7 SECTION 4 LIGHT VEHICLES 4.1 Introduction Light Vehicle Market Overview Optimum Replacement Point Impact of Fringe Benefits Tax Developing a Fleet Profile Purchase & Disposal of Light Fleet Fitting Optional Extras Managing Fringe Benefits Tax 4.11 SECTION 2 BUY/HIRE DECISIONS 2.1 The Buy/Hire Decision Checklist Finance Options Whole of Life Costing 2.4 SECTION 3 TENDERING GUIDE 3.1 Introduction Preparing Plant or Vehicle Tender Documentation Tender Assessment 3.5 SECTION 5 HEAVY VEHICLES 5.1 Introduction Truck Configurations Management of the Truck Fleet Benchmark Utilisation (KPI s) Special Application Options Options Affecting Resale Value Tips for Truck Operations 5.7 SECTION 6 EARTHMOVING PLANT 6.1 Introduction Business Case Analysis Plant Classification and Specifications Tips to Use When Purchasing Construction Equipment Resale Values 6.5 SECTION 7 GROUNDS CARE PLANT AND EQUIPMENT 7.1 Introduction Agricultural Tractors Outsourcing Activities Attachments Dedicated Grounds Care Plant Benchmark Utilisation (KPI s) Tips 7.4 SECTION 8 ANCILLARY EQUIPMENT 8.1 Managing Ancillary Equipment Summary 8.3 SECTION 9 MECHANICAL WORKSHOP MANAGEMENT 9.1 Introduction Key Performance Indicators Owning and Operating a Workshop Programmed Maintenance Parts Inventory Tyres Oils Daily Checks Occupational Health and Safety Workshop Staffing Tips 9.9 Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page xix

8 SECTION 10 SERVICE LEVEL AGREEMENTS 10.1 Introduction Contents of an Agreement Benefits of Agreements Basis for Development Agreement Framework Who Should be Responsible? 10.4 SECTION 12 TYRE MANAGEMENT 12.1 Tyre Selection Distinguishing Features of Tyres Application of Radial Tyres Load Rating Index Prolonging Tyre Life Inflation Pressure Rims 12.6 SECTION 11 OCCUPATIONAL HEALTH AND SAFETY 11.1 Introduction Safer Managers Safer Drivers Safer Vehicles Safer Driving Support Systems Moving to Best Practice SECTION 13 OILS AND OIL ANALYSIS 13.1 About Oils Oils and Debris Analysis Spectrometric Oil Analysis Debris Analysis Choosing a Laboratory Effective Condition Monitoring Conclusion 13.6 SECTION 14 FUELS AND THE ENVIRONMENT 14.1 Background Environmental Factors Impacts of Heavy Vehicle Fleets 14.2 SECTION 15 GPS AND FLEET TRACKING 15.1 Introduction Typical Applications Privacy Issues Telematics for Vehicle Tracking and Management 15.4 SECTION 16 FLEET MANAGEMENT SOFTWARE 16.1 Introduction Key Performance Data Stand Alone or Integrated Selection Tips Assessing Vendors Credentials Pitfalls to Avoid 16.4 APPENDICES SECTION 3 TENDERING GUIDE AND EVALUATION PROCESS Appendix 1 - Truck Tender (sample) 17.1 Appendix 2 - Sample Tender Document 17.3 Appendix 3 - Sample Tender Assessment Report SECTION 4 LIGHT VEHICLES INCLUDING FBT MANAGEMENT Appendix 1 - Light Vehicle Analysis Appendix 2 - Vehicle Classifications Appendix 3 - Daily Vehicle Inspection Checklist Appendix 4 - Fringe Benefits Tax - Utilities Appendix 5 - Light Vehicle Notification Form Appendix 6 - Tender For Pre-Selected Light Fleet SECTION 5 HEAVY VEHICLES Appendix 1 - Truck Replacement Notification Form SECTION 6 EARTHMOVING PLANT Appendix 1 - Plant Replacement Notification Form SECTION 9 MECHANICAL WORKSHOP MANAGEMENT Appendix 1 - Daily Inspection Checklist SECTION 10 SERVICE LEVEL AGREEMENTS Appendix 1 - Plant & Vehicle Maintenance Appendix 2 - Supply of Plant & Vehicles Appendix 3 - Management of the Fleet Asset Appendix 4 - Light Vehicles, Trucks, Mobile Plant SECTION 11 OCCUPATIONAL HEALTH AND SAFETY Appendix 1 - Operating Plant & Machinery SECTION 13 OILS AND OIL ANALYSIS Appendix 1 - Standard Oil Analysis Table SECTION 14 FUELS AND ENVIRONMENTAL ISSUES Appendix 1 - Ultra Low Sulphur Diesel Fuel DEFINITIONS REFERENCES Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page xx

9 Section 1 - Managing the Fleet SECTION 1 1 MANAGING THE FLEET AN OVERVIEW 1.1 Introduction Why is it necessary to proactively manage the mechanical plant and vehicle fleet? Apart from ensuring value for money is achieved from procurement and operational performance, actively managing the plant and vehicle fleet is essential in delivering efficient works and services in local government and public works agencies. Managing the mechanical plant and vehicle fleet like any other resource requires accurate, reliable, timely, relevant and quantifiable information. Such data is required to set charge out rates, undertake needs analysis and buy / hire assessments, develop maintenance programs and set service and works programs and budgets. Next to employment costs, the plant and vehicle fleet rates a close second in determining total service and works costs. It is an organisational expenditure that requires competent and constant management. Procurement and management can be based on outdated policies that no longer reflect market conditions and are restricted by capital and maintenance budgets that bear no relevance to operational needs or conditions. Replacement schedules can be inadequately resourced and reserves can be seen as easy targets and a source for balancing otherwise unachievable budgets, or for delivering on previous commitments; or promises for works and services. Policy and decision makers may see the plant and vehicle fleet as status symbols for the relevant manager. This perception can be changed through detailed analysis of plant and fleet needs and operations together with a total life cycle value for money approach to assessing plant and fleet requirements. Understanding the operational business unit s constraints and requirements is an essential part of good fleet management. Applying systematic analysis to the procurement, management and maintenance of the plant and vehicle fleet will provide a foundation to maximise the return on investment. Utilisation is the key to the procurement and management of the plant and vehicle fleet. Under, low, or poor utilisation raises questions of ownership versus hire and operational Case Study The motivation for a Melbourne metropolitan council to develop a business case approach for fleet management came about after the council significantly reduced the plant replacement capital budget requested by the Fleet Operations Department. The initial request was perceived to be well in excess of the level of funding the Council was prepared to allocate without more supporting information. The age and useful life argument was deemed insufficient. In response, fleet management, with some external assistance, proposed to undertake a best value analysis for assessing each item of plant/vehicle/equipment and the options for renewal or purchase. A business case would be prepared that considered the financial benefits of the purchase and would be subject to prioritisation as an investment like other items of capital expenditure. In addition, information would be provided on the history of the item, for example cost and reliability. The business case would also consider options to replace/purchase such as lease, hire and process change. Financial analysis included use of Net Present Value (NPV) and Internal Rate of Return (IRR) for assessing the viability and ranking of options. A priority matrix was developed with criteria and weighting based on operational effectiveness, financial, staff and community benefits. The total score allowed a ranking of projects and a cut-off line to be drawn if funding was less than that required. Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 1.1

10 Section 2 - Buy/Hire Decisions SECTION 2 BUY/HIRE DECISIONS, FINANCING AND WHOLE OF LIFE COSTS 2 Step by Step Approach Section 2: Best Management Practice - Buy/Hire Decisions, Financing, Whole of Life Costs Evaluate the potential utilisation of the new item based on historical records of external dry hire or term contract services. Calculate optimum replacement point and whole of life costs to establish annual costs. Address the key issues relating to the Buy or Hire option. In-house Contractor Can current utilisation be increased - review field operations? Are operators sufficiently skilled to operate the machinery and meet OH&S requirements? Will the unit be serviced in house or will it be subject to contract maintenance? Is there a contractor available? What are the on and off site charges? Does the contractor understand occupational health and safety issues? Does the contractor carry product and public liability insurance? How will the purchase be funded? Will the unit be available for dry hire? How critical is availability? Have operator training costs been identified? What will it cost to manage the contract? Are the skills available in-house to manage the contract? Is the contractor s machinery capable of undertaking the work? Is the contractor fully trained to operate the machinery? Does their company have a Quality Management System in place? Is the contractor financially sound? Which option provides best value? Buy or Hire? Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 2.1

11 Section 3 - Tendering Guide and Evaluation Process Table 3.4: Best Value Model for Tender Assessment - Example only for preferred tender offer that complies with all of the compliance requirements against the weighted criteria. The simplest scale to use for weightings is a grade of 1-5 with 5 being excellent, 4 good, 3 satisfactory, 2 fair and 1 not satisfactory. To be fair to all Tenderers, the final assessment should show where each offer is placed based on the consolidated assessment of the evaluation team. The evaluation team should include staff with expertise in each of the criteria and all assessments should be averaged to provide a consensus of opinion. For example, there may be two operational staff considering the operational issues. The weightings of each operator should be averaged (if they are different) and considered along with all other weighting assessments. An example Best Value model that includes all of the tender assessment criteria and weightings is shown in Table 3.4. This would be assessed for each tender and a summary table prepared. An Example of a full tender assessment report is contained in Section 3 Appendix 3. The document is provided as an example only and not as a recommended proforma. Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 3.8

12 Section 7 - Grounds Care Plant and Equipment 4x2 or 4x4 Heavy duty tractor beach cleaning, finished mowing, verge mowing, slashing hrs Where utilisation is less than the minimum, there will be a requirement to review the operational demand for ownership. Because most dedicated grounds care plant is primarily designed for fine turf work, the adjustment of decks and cutting heights is critical to ensure reasonable life from blades and rollers. In order to improve operational time in the field where a mower has high utilisation >600 engine hours a year, it is recommended that an additional cutting deck is held in stock. This will enable operators to change decks to enable deck repairs while still having an operational machine. 7.7 Tips Ensure that a preventative maintenance program is in place, highlighting where failures occur. Failure analysis can provide excellent feedback to program managers on issues such as incorrect blade adjustment and the need for operator training. High maintenance costs can indicate problems in the application of the item of plant. Always review timesheet data in correlation with actual engine hours of the plant. Low engine hours and high timesheet hours need to be investigated. Specifications for this type of equipment can be found in documents provided by the Tractor Machinery Association (tractor spec), and Outdoor Power Equipment Association. Tractor Machinery Association 3/21 Vale Street, North Melbourne, Victoria 3051, Australia Tel: Fax: TractorMachinery@access.net.au 7.6 Benchmark Utilisation (KPI s) The engine hours run by tractors and ride on mowers annually provides a benchmark indicator for management to assess the plant for possible operational or business case reviews. The following indicators provide a basis for initial assessment of the operational needs of tractors of varying capacity. 4x2 small tractor up to 35kw 4x2 or 4x4 medium tractor hrs hrs Increase the operational utilisation of tractors and mowers by ensuring spare attachments are available during times when the attachments require maintenance. Front deck mowers can be most effective if they have three decks shared between two mowers. There can be a tendency to over capitalising plant requirements for Parks because of the seasonal nature of activities, which are demand driven. An analysis of all activities undertaken will highlight those activities which are highly seasonal. Providing core resourcing below peak requirements to meet stable off peak workloads will allow activities to be resourced through contractors in peak periods, and will provide for greater flexibility in managing all activities. Using benchmark productivity levels adjusted for local conditions will provide a base from which further analysis can proceed. Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 7.4

13 Section 9 - Mechanical Workshop Management Figure 9.1 Lack of operator attention or experience. By categorising and recording the cost of failures, action can be instigated to improve maintenance, training, or simply introduce additional procedures to reduce the impact on operational productivity Flat Rate Repair Times Flat rate repair times refer to an adopted industry standard for the expected repair time for a given maintenance task. The term is applied by the repair industry to every task undertaken in the repair and maintenance of plant and vehicles. Refer example in Figure Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 9.3

14 Section 10 - Service Level Agreements The level and scope of the service to be provided The standard in terms of quality, quantity and timeliness of the service A clear agreement on the price or internal charge associated with the provision of the service Procedures for paying (or accounting for) the internal charges How the service is to be monitored and the performance measures for the service Agreement on dealing with any disputes Benefits of Service Level Agreements Service level agreements should not be too complex and the preparation and process must not outweigh the benefits. The SLA should cover the specific area of work required and be as simple as possible. The benefits of SLA s are they: Focus on agreed service specifications Enable the internal Business Units to get the exact level and standard of service required Create a partnership between provider Business Unit and purchaser Business Unit Enable the provider Business Unit and purchaser Business Unit to be clear on what is required to achieve the desired outcomes Increase the accountability of service providers Make the best use of resources Improve customer service and service delivery Basis for Development of Service Level Agreements Downtime is a significant factor influencing productivity, costs and availability of plant and vehicles. Downtime needs to be recognised by the maintenance service provider as a significant cost and constraint in delivering efficient and effective public works and services. The SLA approach to managing the servicing, maintenance and repairs to plant and vehicles provides a degree of certainty not otherwise available when establishing service delivery costs and programming service delivery. When Service Level Agreements are in place, the agreement: Plant downtime can severely impact productivity of operational work crews Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 10.2

15 Section 13 - Oils and Oil Analysis 13.2 Equipment Condition Monitoring through Oil and Debris Analysis Why Analyse Oil? The analysis of lubricating oil from a wide variety of mechanical equipment for preventative maintenance purposes is a well-established practice in developed countries. Depending on the capital cost of the equipment, substantial savings can be made through the use of oil analysis by reducing unscheduled downtime and extending equipment life and oil drain intervals. With increasing costs of replacement machinery and decreasing profit margins, maintenance departments have to make equipment last longer with increasing budgetary constraints. Testing the oil in such equipment can answer the key questions: What is the condition of the equipment? What is the condition of the oil? Regular analysis of oil from engines, gearboxes, hydraulic systems, compressors, and other machinery allows a wear pattern to be established for each piece of equipment. Similar to a blood test, the analysis can identify an abnormal condition and pinpoint the most likely cause. This is possible due to the fact that wear particles are normally small enough to be carried around in the oil. By monitoring these wear levels and contaminants at regular intervals, relevant changes in wear patterns can be determined at an early stage. This can provide the alert to enable remedial action. The main purpose of a lubricant is to reduce friction, thereby reducing heat and minimising Plant & Vehicle Management MANUAL - Version 1.0, 2004 Page 13.2