The entropy model indicated that maintenance is required to address degradation of the technology system factor. Who is responsible for this maintenance? The channel suggests that resourcing decisions are primarily management prerogative. The levels of human, physical and financial capital allocated to maintenance are determined at the upper- and middle-management levels. It is therefore, middle-management’s responsibility to ensure that sufficient resources are made available for maintenance to reduce risk as far as practicable and to provide a workplace where employees are not exposed to technological hazards.
The purpose of maintenance is to operate equipment as close to the optimal output and safety level over the life of the product as possible.
This reduces risk and also maximizes the return on the investment in plant and equipment. As such, the technology should not only pay for itself by contributing to the production of outputs, but also start to give benefits beyond its initial cost. Without getting into the complexities of cost–benefit analysis, a day-to-day example is the purchase of a new or nearly new vehicle. When the owner operates the car in a manner that minimizes degradation and maintains it regularly, after a number of years, the owner continues to get satisfactory use (utility) from the vehicle, even though its market value may have depreciated considerably. For example, the vehicle may only be saleable for $2000, but because it is still reliable and safe, its worth to the owner is close to the cost of a nearly new vehicle – $20 000 – because this is what it would cost the owner to replace it. The longer the owner can keep using the vehicle and it continues to be safe, efficient and cost-effective to run, the more benefit is derived from it. The initial or fixed cost of the vehicle is spread over a longer life.
In accounting terms, firms write off the fixed cost of capital purchases through depreciation over a predetermined number of years.27 When it
112 Productive Safety Management
optimizes the life of its technology through planned maintenance, it reaches a point where the benefits nullify the initial cost of purchase, and returns continue to be attained until the costs of maintenance outweigh the productive benefit of the equipment. Accordingly, optimum use is made of limited resources.
What issues does management have to consider when making resourcing decisions for the maintenance of technology? The first is that resource allocation has to be aligned with the company’s goals so that sufficient resources are committed to make these goals achievable. The options available in relation to these decisions, however, are not the same from firm to firm. Companies face varying constraints and therefore, their objectives will also be different. The mining industry can be used as an example. In some multinational mining companies that are very well resourced and have large-scale operations, the purpose of maintenance is to ensure high levels of output and safety in the short term. These firms may change their technologies regularly to pursue economies of scale.
Large firms have the resource availability to regularly purchase bigger trucks, shovels and other plant which allow more output to be produced.
The implications are that by having state-of-the-art equipment, they potentially have lower levels of inherent risk and less exposure to entropic risk as a result of their technologies.
Whilst most of the major mining contracting companies have high quality, well-maintained equipment and thereby are able to sustain the performance standards required by principal firms, smaller scale operators can struggle. As a consequence of less financial resource availability these firms are often forced to get a much longer life from their technologies thus increasing their exposure to entropic risk. In addition, pursuing economies of scale may not apply because their client market often requires them to operate small- to medium-sized mines. One of the purposes of maintenance, therefore, is to extend the operational productivity of their existing equipment. Such companies may also need to be more proactive to manage higher residual risks and to counter the degradation of aging technologies.
Regardless of the level of resources available to the firm, it is important that it evaluate the effectiveness of resourcing decisions to determine whether goals were achieved, whether sufficient capital was allocated and how these decisions can be improved. Consequently, the firm has to establish measurement criteria to compare actual outcomes against desired outcomes. For example, to measure the effectiveness of maintenance budgets there are a number of issues to be considered. The first is whether there were any equipment failures that resulted in damage or injury. If a number of such incidents occurs it may indicate that insufficient maintenance is being carried out or that the levels of technological risk are unacceptable. Secondly, the firm will also need to compare the level of output produced by the technology against targets, for instance, the volume of ore crushed at the ore processing plant. If the level of output is well below expected, lack of or poor maintenance practices, such as rework, may be a contributing factor.
A further matter to be measured is equipment availability. Planned maintenance reduces availability because it requires the plant to be removed
Technology 113 from the production line. This is a reduction in operating time that is necessary to upkeep the equipment in a safe and efficient condition. On the other hand, reactive maintenance results in unplanned and disruptive reductions in availability and is considered to be undesirable. If, for instance, the firm experiences an increase in breakdown maintenance, this may indicate that insufficient resources have been allocated to preventative maintenance. Breakdowns warn that entropic risk has reached a counter-productive level and that more resources need to be allocated to strategic maintenance. Rework also affects equipment availability, because it means that the plant has to be returned to the maintenance workshop for further repairs. Managers should consider rework to be very serious for two reasons. The first is that it is costly. The second is that it is indicative of poor quality workmanship. The entropy model suggests that when technologies are not being maintained effectively, degradation is not prevented, and therefore, the level of entropic risk tends to rise. There are thus, two costs incurred by poor maintenance, which are the costs of rework and the hidden costs of uncontrolled degradation.
Strategic and budgetary decisions concerning maintenance practices have a direct impact on organizational achievement and can be evaluated using tangible measures, such as the number of incidents caused by equipment failure and the costs of these failures. Resourcing decisions can also have a less obvious impact on the firm’s performance because of their effect on the organizational culture. Employees evaluate the level of company commitment to safety according to the resources allocated to OHS management, as well as other considerations, such as the quality and consistency of operational decision-making. In the example given previously where the maintenance crew requested the supply of two-way radios for work in the open-pit mine and management rejected the proposal, employees considered this to be indicative of a lack of commitment to safety. Management, therefore, has to be aware that resourcing decisions can reinforce or erode common goals and values.
The firm has to make decisions firstly about the amount of financial resources allocated to the maintenance of equipment and secondly, how this work will be carried out. This includes whether to have these duties undertaken internally by company employees or outsourced to contractors.
The impact of contracting out technological maintenance has led to considerable debate in Australia and other western countries in recent years. The airline industry is an example. Unions claimed that the spate of incidents, in 2000 and 2001, in a major airline company were partly attributable to outsourcing.28 Incidents included:
September 2: The engine of a 747 jet scraped along a Perth runway while it was landing in gusty winds.
September 23: QF1 careered off the runway at Bangkok airport, causing $100 million worth of damage to the aircraft.
November 2: Fumes entered the cockpit of a 767 Sydney–
Melbourne flight.
November 14: An emergency exit chute inflated inside a jet flying from Brisbane to Auckland.
December 23: A jet carrying 70 people circled Canberra for almost an hour because of a wing flap malfunction.
114 Productive Safety Management
December 26: An engine part fell from a 747 flight from Brisbane to Japan.
January 21: A flight on its way to Cairns turned back after smoke was detected in the cabin.28
The now defunct Ansett Airlines (an Australian domestic airline) also experienced problems in the area of maintenance prior to its demise in late 2001. The Civil Aviation Safety Authority intervened and Ansett was required to put forward a plan for the upgrade of its maintenance practices.
This included a total overhaul of the maintenance division involving a review of staff, improved training, better management of spare parts, a review of tooling and the introduction of a tool management system.
Significantly, the plan included introducing stronger maintenance planning to properly control and direct such work. The company intended to bring additional resources from Boeing for specific aircraft repair planning issues.29 These maintenance deficiencies have since been found to be symptomatic of broader management problems which preceded Ansett’s collapse.
Maintenance resourcing decisions are important not only in terms of dollars committed, but also how maintenance is carried out. The issue is not so much about whether the work is done internally or outsourced, but about accountability, the level of control, quality and the impact on the organizational culture. An article on dozer safety in open-cut mining operations indicates that in addition to applying maintenance strategies to manage technological risks, maintenance has to be considered as a strategy for keeping up the standard of all systems to the required level.30 It therefore must extend to the management of risks that occur at the interface between technology and other system factors. This includes ensuring adherence to safe operating procedures, the monitoring and maintenance of physical environment changes that have an impact on the operation of technologies, and the maintenance of operators’ workplace-specific knowledge. The article states that firms should make provisions for:
Adequate lighting of working areas should be provided at night. It is not sufficient to rely on equipment running lights.
Fixed lighting or trailer-mounted lighting plant should be maintained at working locations.
Appropriate planned maintenance and fault repair, coupled with immediate, management-supported and mandated equipment shutdown in cases where problems cannot be fixed immediately.
Familiarisation of crews with pit geography and layout. This is particularly important where long distance commute systems of work are in place and crews may need to be updated on changes to their workplaces during their time off site . . . Operating practices established at the mine for bulldozers must be adhered to and regularly monitored. The practices and procedures will be determined by the mine management in consultation with the equipment supplier and the plant operators . . .
Technology 115 Strict enforcement of the wearing of seatbelts by all operators of and passengers in mobile plant, at all times when the equipment is operating.30
The article indicates that a comprehensive technological risk management strategy involves on-going preventative maintenance and before risks become unacceptable, corrective action must be taken. The entropy model indicates that these interventions are needed to counter the tendency of technology and other system factors to degrade. The final point to be considered in making resourcing decisions of this type is that preventative maintenance is good business. The entropy model illustrates that as technology degrades it becomes less productive and less safe. In this era of slower economic growth, better equipment utilization is becoming increasingly important.31 It is a significant factor affecting the firm’s sustainability. Company goals should therefore include shifting technologies towards zero breakdowns that, as far as practicable, requires the elimination of reactive maintenance due to degradation. Reductions in total machine availability should, thus, be attributable to only two factors. These are firstly, planned maintenance and secondly, breakdowns due to unforeseen hazards or events after all practical efforts have been made to evaluate and eliminate potential risks.
A number of companies have experienced the benefits of effective risk management on the ‘bottom line’. When Woodside Offshore Petroleum implemented strict controls on the management of its contractors one of its findings was that sound planning in OHS management reduced the frequency of unplanned events. The division’s general manager indicated that unplanned events, whether they caused danger or not, detract from the efficiency of the business. By planning to eliminate these deviations, the operations also eliminated incidents that reduced organizational effectiveness.32 Preventative maintenance therefore helps firms account for unplanned occurrences such as equipment breakdowns that detract from productivity. These practices take into consideration the hidden costs of risks and factor these into resourcing decisions related to technological maintenance.
As stated earlier, the channel indicates that resourcing decisions are the prerogative of management and therefore, final responsibility for maintenance rests with them. It is at senior company levels that budgets for planned maintenance, equipment replacements and training are determined. It is also at these levels that the criteria for maintenance scheduling are authorized. For example, will the equipment be services every 5000 or 10 000 operating hours? At what stage of wear and tear will components be replaced? These are management decisions that have a direct impact on the safety and output performance of technology.
Nonmanagement employees also have a major influence on the condition of this system factor. Their competencies and attitudes affect the quality of maintenance and operation of equipment. There is therefore a strong case for behavioral management linked to these technological maintenance practices, as discussed further in Chapter 6 and Part 3 of this book.
116 Productive Safety Management
Summary
This chapter has described how technology introduces both residual and entropic risks into the workplace. These risks can be managed using the four-fold strategy proposed by the entropy model. Practical measures include, firstly, the careful selection of technologies in the planning stage to minimize residual risk and the tendency of equipment to degrade.
Secondly, at the operational stage, the firm has to implement corrective action and preventative maintenance strategies to address wear and tear.
In addition, training is required to prevent the suboptimal interaction of technology and the operator. It was shown that technology introduces many additional risks when there is a poor fit with the workplace and with the worker. In the following chapter, the risks associated with the physical environment will be discussed. This chapter has particular significance for hazardous industries, such as mining, oil and gas, and construction in which the residual risks associated with the physical environment are high.
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