Restructured Facilities Maintenance Processes Lower Costs, Increase Staff Efficiency
A pilot project at the University of Michigan demonstrated the significant performance improvements to be achieved by revamping logistics and staffing for maintaining campus facilities.
By Richard Robben and Tom Moriarty
In 2009, the University of Michigan (UM) faced significant reductions on the facilities maintenance front. Despite plans to grow the physical plant, the facilities maintenance budget was to be cut by 10 percent over four years. An initial assessment indicated opportunities to improve our facilities maintenance through restructuring. Using in-house process improvement teams to review data analysis, plant operations personnel established several objectives around planning and scheduling work, aligning the workforce, and streamlining asset management.
In 2010, UM selected a management consulting firm (Alidade MER) that specialized in maintenance and reliability engineering, to help implement the identified objectives. (The article “Restructuring Adds Facilities Maintenance Efficiencies,” which appears in the April issue of Business Officer, includes highlights from our experience that are covered in greater depth here.)
The consulting firm supported the university's executive leadership in restructuring a segment of the campus as a pilot area to implement and exercise the new processes and organizational structure. We allocated three months for training in change management, designing work management processes, communicating with customers, training supervisors and workforce personnel, and completing logistics to open the pilot region office. An additional three months were devoted to implementing the new work management processes and making adjustments.
By moving the workforce closer to the work, planning and scheduling workforce activities, and providing supervisors and managers with performance measures, UM has achieved notable performance improvements.
Compelling Reasons to Restructure
With operating budget cuts looming, UM still intended to grow the physical plant. Plans included two major additions: a 2.1 million-square-foot pharmaceutical research and drug manufacturing facility and a 1.3 million-square-foot hospital for women and children. Several factors motivated us to consider significant operational changes, including:
- A workforce of which a significant portion would become eligible for retirement within the next five years—taking their knowledge and experience with them.
- Rising total cost per hour for maintenance—a 13.3 percent increase between 2006 and 2009, due in part to an increase in corrective maintenance (CM); preventive maintenance (PM) was getting more emphasis while we accelerated to an optimal PM/CM ratio.
- Resource expenditures (labor hours, materials, contractor costs) that were not consistently allocated to specific assets. Annual work orders essentially established non-discrete buckets in which we recorded labor and material resources.
- Work that was not planned or scheduled using a consistent method across work groups. Maintenance supervisors used a highly inefficient system centered on individual workers being empowered to plan and schedule work, acquire parts and tools, and decide the means and methods of work completion.
The plant operations department—which was awarded the APPA Award of Excellence in 2006—had a sophisticated computerized maintenance management system (CMMS). After exploring CMMS data for opportunities to create efficiencies, process improvement teams established five objectives: (1) deliberate planning of work, (2) better scheduling of work, (3) aligning workforce location with work location, (4) identifying the most qualified worker for the particular assignment, and (5) establishing methods and means for asset management.
UM had several elements working in its favor prior to restructuring:
- Support from executive leadership.
- Available resources for the project.
- A motivated plant operations leadership team and workforce.
- Guidance from an experienced business management consulting team with expertise in establishing control and stability of work management practices.
We formed an executive sponsor team (EST), chaired by the university's executive vice president and chief financial officer. UM resources for the project included a project manager, a work process design team, a change management team, and support functions. Alidade MER staffed the project with experienced certified maintenance and reliability professionals.
In-house Teams Tackle Change
After we contracted with Alidade MER in April 2010, the EST developed a charter and a project guiding team, known as the operating steering committee (OSC). The charter defined the guiding team's responsibilities, the available resources, the timeline, and any constraints the team had in performing its duties. Working under the OSC, subproject teams were responsible for work process design and change management activities. These teams included managers, supervisors, trades and maintenance mechanics, call center representatives, and customer representatives.
Alidade MER provided the teams with project team training and subject matter expert training. Project team training included instructions on flow charting; responsibility, accountability, support, and information tables; and process guide drafting. The subject matter expert training included sessions on various elements of work management and change management (e.g., work requests, prioritization, planning, scheduling, and work coordination). Alidade MER team members then facilitated the sessions and provided coaching to develop the work management processes. A key part of our strategic plan was to restructure our large number of independent shops into four regional locations with one group of centralized trade shops.
We selected the North Campus Region (NCR) for the pilot area, which included approximately 4 million square feet of mixed-use facilities. Criteria for the pilot area included being large enough to sufficiently test the processes while allowing us to determine project effectiveness relatively quickly. Prior to restructuring, there were 41 FTE labor-years that were expended on the buildings in the NCR. Based on anticipated efficiencies of moving some trades (formerly in central shops) closer to the work, and efficiencies in establishing control and stability of the work management system, we expected to achieve significant labor savings. Therefore, the NCR started with 32 FTEs. This equates to a workforce labor reduction of 21.9 percent, or 9 FTEs.
Restructuring created a need for 11 supervisory and support positions: one region manager, three asset supervisors, two planners, two schedulers, a kitter, and two administrative support staff. Two of these were new hires; the rest were reassigned from existing overhead positions.
We developed performance measures, behavior measures, and financial measures, and put tracking systems into effect. A CMMS coding glitch surfaced that involved data fields being used for multiple purposes, which didn't allow for categorizing activities. Fortunately, the team found ways to use the existing software to establish control and stability of the work management processes.
Pushing the Pilot Forward
We planned to go live with the pilot implementation in mid-July 2010. During the first stage, it was critical to exercise the process as designed—with strict compliance and discipline—to familiarize everyone with the changes and identify areas for improvement. After the first six weeks of the pilot, the project team eased some of the rigidity of early process discipline. New ideas surfaced and the team worked collaboratively to develop queries and reports from our knowledge management system, improve job aids, and adjust responsibilities.
The NCR leadership and workforce understandably had difficulty adjusting to the major culture shift from near complete autonomy to a highly structured management of work activities. The EST executive leadership held town hall meetings to open a dialogue about the restructuring. Concurrently, the facilities management leadership sought customer feedback. We created improvement teams that came together in facilitated sessions to address issues raised by the workforce. The resulting innovative solutions led to increased acceptance and greater coordination and effectiveness.
Pilot Area Performance
To judge the new system's performance, UM developed process, behavior, and financial measures.
Process measures. These measures indicate process compliance. For example, of the 32 available FTEs, approximately 95 percent of the work hours are available for scheduling (the other time may be due to vacations, illnesses, and so on). Discrete data on how many hours are available and how many are actually assigned to scheduled tasking provide a basis for analyzing schedule compliance and, ultimately, for understanding work output.
Behavior measures. These calculations identify critical aspects of the ways process activities are carried out, and are a means to manage accountability and responsibility. For example, we reviewed five critical items (asset tag number, time charged, work order notes, status, and work code) from a 10 percent sample of the closed work orders of a particular week. Measuring the percentage of sampled work orders that were correctly completed with all five data elements illustrates how well the workforce is filling out required information on work orders. This is a critical issue that supports transferring knowledge from the retirement-eligible workforce to a knowledge management system.
Financial and resource allocation measures. Financial measures indicate the bottom-line effects of system changes, providing important perspective. During the pilot period, monthly data were compared with historic information from similar time periods. Between mid-September and mid-October, the measures in the figure were reported for the North Campus Region.
Other measures that indicate UM is on the right track include the following:
- Overtime has remained at very low levels, indicating that there is no increase in emergency or urgent work.
- Grievances and absenteeism have not increased, suggesting that on balance the workforce is adjusting to the new business model.
- Customer and employee surveys indicate that the process is mature enough to support restructuring other regions of the campus.
- FTE efficiencies were used to staff the new North Campus Research Center and the Children's and Women's Hospital.
At the end of the scheduled three-month pilot implementation, the effort was deemed a resounding success and we began development of the second and follow-on regions. Today two regions are up and functioning with a third in development. Half of the central shops have also transitioned. The restructured organization and related processes are exceeding initial expectations in all areas. By moving the workforce closer to the work, planning and scheduling workforce activities, and providing supervisors and managers with performance measures, the University of Michigan has realized notable performance improvements over more traditional maintenance methods, including:
- Reduced by nearly 15 percent the number of FTEs required to perform the workload.
- Increased the preventive maintenance hours by 84 percent (with 19 percent of labor hours increasing to 35 percent of total labor hours devoted to PM).
- Allocated to discrete assets nearly 100 percent of all work, allowing for more control over capital renewal decisions.
- Ninety percent of all work is scheduled on a daily basis.
- Approximately 43 percent of the maintenance organization is now transitioned, with total annual savings at $1,038,000.
UM is continuing to implement this program in the facilities department and will extend it further into utility operations as well.