Equipment Criticality Analysis.

by Ricky Smith CMRP / Keith Mobley

Excerpts from Rules of Thumb for Maintenance and Reliability Engineers

This article has been prepared to aid in the application of an Equipment Criticality Analysis.
Included in this article are instructions for applying the Equipment Criticality Analysis
methodology to determine which equipment has the greatest potential impact on achieving
business goals.
The scope of this ‘document’ describes:
1. The purpose of the Equipment Criticality review process is.
2. The logistical preparation for the Equipment Criticality Analysis review.
3. The technical basis for the Equipment Criticality review criteria.
4. The steps in conducting the Equipment Criticality review meetings.
5. The results of the Equipment Criticality Analysis review.
6. How to analyze the assessment results.
7. A series of standard reports to be generated in a format suitable for presentation.

The process is used to nominate candidates and select Equipment Reliability Improvement
Projects.

Introduction
The Proactive Asset Reliability Process is shown in Figure 1. It is an integral part of a larger
manufacturing ‘business’ process. The Proactive Asset Reliability Process focuses on the
maintenance of physical asset reliability on the business goals of the company. The potential
contribution of the equipment asset base to these goals is recognized. The largest contributors are
recognized as critical assets and specific performance targets are identified.

Figure 1
The role of the maintenance function, accomplished through the six (6) elements of the
maintenance process, is to maintain the capability of critical equipment to meet its
intended function at targeted performance levels.
This document will describe the structured evaluation methodology used to
‘Identify Critical Equipment’.
 Purpose of Equipment Criticality Analysis

The Equipment Criticality Analysis is used to identify:

1. Which equipment has the most serious potential consequences on business
performance, ‘if it fails’? The resulting Equipment Criticality Number is used to prioritize
resources performing maintenance work.
2. Identify what equipment is most likely to negatively impact business performance
because it both matters a lot when it fails, and it fails too often. The resulting Relative
Risk Number is used to identify candidate assets for reliability improvement.

The definition of critical equipment may vary from organization to organization. In fact, if it is not
formalized there may be several interpretations of equipment criticality within a single organization.
The assumptions used to assess what equipment is critical are not technically based. As a result,
when different individuals are asked to identify their critical equipment, they will likely select
different pieces of equipment. Often, we are told, “all our equipment is critical!” Selections are
based on individual opinions, lacking consensus. The potential for equipment failure having
significant safety, environmental or economic consequences may be overlooked.
A consistent definition for equipment criticality needs to be adopted. The definition used in
the context of this document is:
Critical equipment is that equipment whose failure has the highest

potential impact on the business goals of the company.

The relationship between equipment failure and business performance is an important factor in
deciding where and when resources should be applied to maintain or improve equipment
reliability.

Maintaining reliable equipment performance requires the timely execution of maintenance work to
proactively address causes of equipment failure. Large organizations normally manage a backlog
of maintenance work. This maintenance work is made up of individual tasks that must be carried
out over limited time periods, using limited resources.

The maintenance scheduling function strives to optimize the application of resources to get all the
‘right work done, at the right time’. Effective maintenance scheduling requires an understanding of
how critical the equipment is that the task is applied to, so that a priority can be assigned to each
job. The criticality is a function of the potential consequence that could occur if the job is not
completed within the required timeframe.
Equipment reliability improvement also requires the application of either human or financial
resources. The business case for improvement justifies why the limited resources of the company
should be applied to a project over the many possible alternatives that exist also competing for
usually the same resources. When justifying an improvement project, it is not sufficient to
demonstrate benefit. It is necessary to demonstrate that the relative benefits of a project exceed
the potential benefits of other projects.
Equipment reliability improvement projects benefit the organization by reducing the
consequences of failure and / or reducing the probability that the failure will occur. Equipment
reliability improvement projects must focus on equipment that both matters a lot when it fails and
is failing a lot.
The combination of failure consequence and failure probability is a measure of the risk
posed to the organization by the specified equipment.
Why use the concept of ‘Risk’ to prioritize Equipment Reliability Improvement Projects? Alternate
approaches used to identify which equipment could benefit from some form of reliability
improvement usually use only failure frequency data or failure consequence data. Equipment
failures are analyzed to identify which equipment has the greatest number of failures or to identify
which equipment is causing the most ‘pain’. The most frequent measure of ‘pain’ is economic
impact. Focus is directed to the equipment, which is costing us the most money. ‘Pain’ can also be
related with other consequences such as the number of safety or environmental incidents. The
problem with this approach is that focus is restricted to historical events.

The discipline of Risk Management recognizes that failures with high consequence normally occur
infrequently, while failures with low consequence occur more frequently. This is represented
graphically in the ‘Risk Spectrum’. The consequence of a failure is plotted against the probability of
the failure event. Probability is a measure of the number of events / unit time. The probability of an
event like the nuclear accident at Chernobyl is very low but the consequence is very high.
Consequently, we don’t see a high frequency of accidents with this severity.
Alternately, many industrial organizations routinely experience failures within their plants. These
failures impact business performance but their consequence would be considered orders of
magnitude less than the consequences of a Chernobyl like incident. Most plant failures would fall
to the right side of the ‘Risk Spectrum’ (figure 3)

The Risk
High
Failures with high consequence
have a low probability of

Failures with low consequence

have a high failure probability.
As probability increases
historical data becomes available Most
for events that have occurred
Plant
Low
Low High
Probability of
Figure 3
The pre-requisite to do Pareto Analysis, is to have failure data to analyze. This means that these
failures must have occurred to be recognized.
However, potential failures with very serious consequences will not even be considered because
there is no failure data to associate with them. Therefore, it is necessary to manage events across
the ‘Risk Spectrum’.
Benefits of the Equipment Criticality Review Process
This process takes an integrated approach to setting project priorities. Potential impact of
equipment failure is assessed in each of the following categories: Safety, Environmental Integrity,
Quality, Throughput, Customer Service, and Operating Costs. The scales in each assessment
category ensure that equipment prone to failure resulting in Safety and Environmental
consequences is emphasized.
It also ensures that equipment impacting on the operational objectives of the organization, when
failure occurs, is addressed. Resources are continually being challenged by project assignments
from different sectors of the organization with no unifying evaluation process to decide which
should take priority. In the case of maintenance program development, it is not possible to develop
a separate maintenance strategy for each business driver. What is required is a comprehensive
program that responds to the total needs of the organization. The equipment criticality analysis
provides a prioritized view of composite needs, which then becomes the focus of a suitable
Equipment Reliability Improvement Strategy.
The Equipment Criticality Evaluation Tool provides a systematic, consistent approach to
assessing equipment criticality. The relative risk rating is arrived at by consensus of decision
makers, responsible for project nomination and the process can be completed in a short period of
time.
The focus is on business results which managers are already accountable for achieving. They are
committed to projects which align with these objectives and are perceived as having the highest
probability for success.
Finally, the use of a systematic process for focusing resource deployment supports a “due
diligence” approach to physical asset management from a safety and environmental perspective.
“Projects having the largest potential impact on the corporation, heavily weighted towards
safety and environmental integrity become the most critical”.
Projects with the potential to deliver the maximum benefit to the company by mitigating risk are
identified to be the subject of Equipment Reliability Improvement Strategies.

Preparing for Equipment Criticality Analysis

Equipment Hierarchy Review

Prior to performing an Equipment Criticality Assessment, an Equipment Hierarchy must be
produced. The Equipment Hierarchy needs to account for ‘all’ equipment within the assessment
area boundaries. This means that all maintainable components can be mapped and identified to an
Equipment or Sub- Equipment level. It is possible that at the time Equipment Criticality Analysis is
conducted the Equipment Hierarchy may not be fully developed to the lowest level of detail
desired. However, it is essential that the hierarchy be identified at least to a ‘system level’.

Registering the Equipment Criticality Analysis

All completed Equipment Criticality Analyses should be consistently documented and recorded in
an appropriate database. An analysis title should reflect the highest level in the Equipment
Hierarchy that the analysis will apply to. For example: XYZ Corporation, Port Operations, Sorting
Plant, and Packaging Line Equipment Criticality Analysis. The date when the analysis is conducted
should be recorded. Also identify the review team members and a description of their
titles/positions.
The Equipment Criticality Analysis should be reviewed and revised on an annual basis to reflect
changes in business conditions, improvements in reliability and to identify new priorities for reliability
improvement. Different review team members may be involved in the analysis review. The original
team should be documented as well as the team members for the last revision.

Document a list of equipment to be assessed at the appropriate analysis level.

The level of analysis that the assessment is completed at is important. It is undesirable to evaluate
the criticality of components. It would also be inappropriate to evaluate the criticality at the process
or facility level. The level at which the analysis is done requires that the results of the analysis
apply to all sub-level equipment not identified for analysis. Although somewhat imprecise this
provides a good definition for the first pass. In the evaluation process, it quickly becomes apparent
if the equipment should be further sub-divided into sub-levels.
The two factors used in the risk assessment are the potential consequence of the failure
when it occurs and the probability that the failure will occur. If the level of the analysis is
conducted too high, the resulting estimate of risk associated with the equipment may be
misleading. This is illustrated in the accompanying Airplane example (figure 3). If a risk
assessment is done at the airplane level, the result will be that flying in airplanes is high risk.
What is the correct level in the equipment hierarchy to perform criticality analysis?

Airplane
High Risk
Failure Probability /
Consequence Frequency of
Failures
HIGH HIGH

Figure 3 - Airplane Risk Assessment

However, by simply moving the analysis down to a system level, a much different perspective is
achieved. The Structural Systems of the airplane have a high consequence if they fail but are
extremely reliable, having a low failure rate. The Airplane Propulsion Systems have perhaps a
medium consequence when they fail because of built in redundancy.

Figure 4 – Medium Consequenses

 The failure rate is likely higher than the failure rate for structural systems. The relative risk is therefore
greater. The Comfort Systems of the aircraft (such as seats, lights, entertainment plugs) have failure
consequences much lower and failure rates likely much higher. Again, the overall risk is low. This
result seems more reasonable at the desired level in the hierarchy complete with a definition of parent
relationship and children included in the analysis line item. The facilitator prepares this list in advance
of the analysis review meetings. It can also be revised during the review meetings. During the
analysis, items and levels of detail omitted in the Hierarchy are sometimes identified.
Define the Equipment Criticality Assessment Criteria.
The Equipment Criticality Assessment is conducted by evaluating the potential impact of equipment
failure on key business objectives. We will provide ’default’ assessment criteria but we also recognize
that the client may wish to modify or redefine a different set of criteria for their organization.
In the ‘default’ criteria, company goals are categorized under the themes of Safety, Environmental
Integrity, Product Quality, Throughput, Customer Service, and Total Cost. An evaluation scale for
consequence of failure potential is defined for each theme. If an equipment failure has no impact on
a goal area, a score of zero (0) is assigned. If an equipment failure has an impact on a goal area the
rating is assigned that most closely fits the consequence description.
Safety and Environmental issues have a maximum scale of forty (40). Operational Consequences
independently score a maximum value of ten (10).
Most equipment failures impact operations in several different ways and in the extreme case a
total operating consequence of forty (40) could be achieved.
The ‘default’ criteria are provided in the following table (Table 3).
Safety Environment Quality Throughput Customer Operating Cost
Service
40 = Multiple fatality 40 = Potential for severe 10 = SCRAP cannot 10 = Unable to recoup 10 = loss of customer and/or 10 = Incur increased costs of
environmental damage (see rework or be sold as loss to attain production potential litigation more than $500,000
attached) secondary product quota - must reduce future
order bookings
38 = Fatality 32 = Potential for major 8 = 0ut of 8 = cannot make up lost 8 = Customer experiences 8 = Incur increased costs of more
environmental damage (see specification, with production at facilities - downtime or excessive scrap than $100,000 but less than
attached) rework can be sold as have to purchase outside loss, costs charged back $500,000
second at little or material or service
no profit
34 = disabling injury 28 = Potential for significant 6 = out of spec, with 6 = Lost production can be 6 = Late delivery of majority 6 = Incur increased costs of more
environmental damage (see rework can be sold as recovered within facilities of order quantity or customer than $50,000 but less than
attached) prime but at additional cost (e.g. rejects product as received $100,000
overtime) s i n c e
excess capability readily
available

30 = lost time injury 20 = Minor or no 5 = out of spec, can be 4 = can recover lost 4 = Partial late delivery 4 = Incur increased costs of more
environmental impact (see sold as seconds production through readily than $10,000 but less than
attached) available excess capacity $50,000
but is a significant impact
on buffer inventory levels
putting other operations
at risk of delay in supply

20 = Minor injury such 0 = no accidental release or 4 = out of spec, can 2 = Lost production has no 2 = On time delivery, but 2 = Incur increased costs of less
as contusions & emission (see attached) be reapplied to other significant impact on buffer minor impact on order quality than $10,000
lacerations prime order inventory levels or quantity t h a t
t h e customer is willing to
accept

0 = No injury 2 = Production within 0 = no lost production 0 = Quality, quantity & 0 = no increased operating costs
spec but process out of delivery date as promised to are incurred
control the customer at time of
order placement

Table 3

Against each of the criteria it is possible to have an explanation. A set of qualitative descriptions is
 provided for the Environmental rankings in the next table (Table 4). Similar explanations could be
provided for each of the assessment review areas.

Environmental Consequence Explanation / Example

40 = Potential for Severe Environmental Damage 1. An environmental release causing death, injury, or evacuation
of the surrounding community.
2. Cost of cleanup, damage to property and/or interruption of
production/business in excess of $1,000,000.
3. Major kill of wildlife – generally fish or birds in the local area.
4. Releases large quantities (>500 gallons) of toxic and/or
environmentally persistent materials to the environment external
to company property. (Ammonia, light oil, PCBs, etcetera’s)

32 = Potential for Major Environmental Damage 1. Discharges to storm sewers, sanitary sewers, or directly to water
exceeding environmental regulations.
2. Discharges to atmosphere causing property damage –
particulate fall out, corrosion, etceteras.
3. Discharges to atmosphere exceeding regulations and can cause
health effects – particulate, sulphur dioxide, etceteras.
4. Releases of large quantities of toxic materials to the ground
(>500 gallons).
5. Cost of clean up, damage to property and/or interruption of
production/ business in excess of $100,000.

28 = Potential for Significant Environmental Impact 1. Discharges to storm sewer, sanitary sewer or water exceeding
regulations.
2. Discharges to atmosphere exceeding regulations, e.g. opacity.
3. Operation of process equipment without environmental
equipment event if there is no immediate or short-term impact.
4. Releases to ground.

20 = Minor or No Environmental Impact 1. Accidental releases of process fluids to containment areas or

treatment plant; e.g. tank leaks to containment pad.
2. Use of containment areas for temporary storage.
3. Releases inside buildings, which do not get to the natural
environment.
4. Events that cause upsets to treatment plants but do not
necessarily result in excessive discharges.
5. Operation of a process at production rates higher than
specified in a Certificate of Approval.
6. Operation of a process with feed materials not specified
in a Certificate of Approval; e.g. feeding rubber tires to a coke
plant.

0 = No Accidental Release or Emission 1. Normal process and environmental-control equipment

operation – within operating specifications and in
compliance with regulations and Environmental
Certificates of Approval.
Table 4

Similar assessment criteria are provided for reviewing how likely a failure will occur on the selected
equipment. This assessment is made along with the consequence evaluation for the asset being
reviewed.
It is important to clarify the meaning of failure. The definition of failure used in the Equipment
Criticality Analysis is the inability to perform any function at its required level of performance. As a
result of failure, corrective intervention is required to restore equipment capability.

One way of interpreting how often the equipment fails is to assess how often any form of corrective
maintenance is performed on the equipment. Differentiate corrective maintenance from preventive
maintenance. The frequency or probability of failure number will be used in the calculation of relative
risk to determine how likely the failure of the assessed equipment will impact the business. If an
effective PM program controls failures, the equipment is unlikely to negatively impact business
performance.
The Probability/Frequency of failure is evaluated on a scale ranging from 1 to 10 with 10 representing
the highest failure rate. A description of the default criteria is: provided below (Table 5.). It is possible
for an intermediate value to be selected, e.g. 8.5 signifying that failures are felt to occur between
weekly and monthly.
Frequency/ Probability
(How often failures occur)

10 = Failures occur daily.

09 = Failures occur weekly.
08 = Failures occur monthly.
07 = Failures occur between monthly and yearly.
06 = Failures occur yearly.
05 = Failures occur approximately between yearly and 1 in 5 years.
04 = Failures occur between 1 in 5 and 1 in 10 years.
01 = Failures occur less frequently than 1 in 10 years.
Table 5.Frequency/Probability Failure Rate

♦ Document Assumptions Used in the Analysis.

During the analysis the review group will be required to evaluate failure consequences
based on various assumptions. For example, the impact of equipment failure with operational
downtime will depend on market conditions, inventory levels, capacity, utilization, and etcetera’s.
The assumptions used for evaluating the criteria should be documented. These assumptions
should be documented against the assessment criteria (Table 6).

Table 6 – Equipment Criticality Assumptions

Conducting the Review
Facilitating the Review Meetings
The Equipment Criticality Assessment is designed to achieve consensus among key decision-
makers in an organization. Review team members are selected based on their ability to assess
the consequence of equipment failure on the business, the frequency of individual equipment
failure, and their responsibility for nominating or sponsoring Equipment Reliability Improvement
Projects. The assessment process is designed to minimize the time that the review team must
dedicate to attending the assessment review meetings.
The analysis is conducted by answering a series of structured questions about each equipment line
item. These questions assess both the consequence of equipment failure and the
frequency/probability of failure against the pre-defined assessment criteria. The Total Consequence
evaluation is compiled from the group’s responses to the following questions using the assessment
criteria for severity determination:
1. If the identified equipment fails, could it result in a Safety Consequence? If yes, how serious
would you rate the “potential” consequence?
2. If the identified equipment fails, could it result in an Environmental Consequence?
If yes, how serious would you rate the “potential” consequence?
3. If the identified equipment fails, could it result in a consequence affecting the quality of our
product? If yes, how serious would you rate the “potential” consequence?
4. If the identified equipment fails, could it result in a consequence affecting the throughput
capability of the plant? If yes, how serious would you rate the “potential” consequence?
5. If the identified equipment fails, could it result in a consequence affecting the service provided
to the customer? If yes, how serious would you rate the “potential” consequence?
If the identified equipment fails, could it result in a consequence affecting total operating costs?
This includes the cost of maintenance to restore the equipment to full operational capability. If yes,
how serious would you rate the “potential” consequence?

The ‘frequency or probability of equipment failure assessment’ is made along with the
consequence evaluation for the equipment line item being reviewed. In addition to the series of
consequence questions asked of the review group, they are asked, “How often do failures of the
specified equipment occur?” They choose their response from the pre-defined criteria.
Answers to all these questions should be recorded in the spreadsheet during the review team
meetings.
Recognizing Capital Equipment Upgrade Requirements
In some cases there is a pre-conceived belief that the equipment being assessed in the assessment
needs to be upgraded consuming capital funds. Where physical redesign is the apparent solution it
is useful to capture this data during the Assessment Review. This can be done be placing an asterisk
in front of the equipment line item under assessment.

Section 4
Analyzing the Assessment Results

Calculate Equipment Criticality Number

The criticality of equipment is a function of its impact on the business when it fails, regardless of how
often it fails. Not all failures matter equally. The Equipment Criticality Number assigned to an
equipment level in the hierarchy is influenced by the severity of impact of failure and the
consequence category. Equipment Criticality Numbers are assigned between 1 and 9. An Equipment
Criticality of 9 is the highest and 1 is the lowest criticality.
During the review, the consequence of equipment failure is assessed against key company goal
areas. The default criteria include the potential impact of failure on the Safety and Environmental
Integrity performance of the Enterprise, considered fundamental to the continued operation of the
business. Other key business goal areas such as Product Quality, Throughput, Customer Service,
and Operating Costs are assessed. The user may have redefined the assessment criteria as
previously discussed.
The spreadsheet (Figure 5.3.8) can calculate and assign the Equipment Criticality Number using the
following default logic. (This logic may need to be redefined by the organization if the consequence
evaluation criteria are modified.)
Equipment Criticality Analysis Consequence Rating Equipment Criticality Number
Safety, Environmental or Total Operational 9
Consequence > or = 38
Safety, Environmental or Total Operational 8
Consequence > or = 28 or Any Single Operational
Consequence = 10
Safety, Environmental or Total Operational 7
Consequence > or = 20 or Any Single Operational
Consequence = 8
Safety, Environmental or Total Operational 6
Consequence > or = 16 or Any Single Operational
Consequence = 6
Total Operational Consequence > or = 14 or Any 5
Single Operational Consequence = 5
Total Operational Consequence > or = 10 4
Total Operational Consequence > or = 8 3
Total Operational Consequence > or = 4 2
Total Operational Consequence < 4 1
Table 5.3.8 Equipment Criticality Analysis Consequence Rating Worksheet
Cascade Equipment Criticality Number To Applicable Levels in the Hierarchy
The Equipment Criticality Analysis is usually performed at an intermediate level in the hierarchy as
described in section 2 of this document. The Equipment Criticality Number will apply to all children
of the analysis level, except those children identified for analysis also. Any parent level not analyzed
will adopt the Equipment Criticality value of the highest child. This is illustrated in Figure 5.3.9
For Asset B: Selected Levels of Parent Level Adopts Equipment
Analysis
Criticality Value of Highest Child:
Analysis Level: B1 Hierarchy 9
Level 3 Analysis Level Criticality: 7
Includes: B1.1 Hierarchy Level 4 Child Level Criticality: 7
Parent Level: B Hierarchy Level 2 (default)
B2 Hierarchy Level Parent Criticality (Highest
Analysis Level: B2.1 Hierarchy Analysis Level Criticality: 5
Level 4 Child Level Criticality: 5
IAnalysis
l d Level: HiB2.2 Hierarchy
h L l5
Analysis Level Criticality: 8
Level 4 Child Level Criticality: 8
Includes: B2.2.1 Hierarchy Level 5 (default) (Analyzed below)

Analysis Level: B2.2.2 Hierarchy Level 5 Analysis Level Criticality: 9

.
Figure 5.3.9 Equipment Criticality Value
Determine which equipment has the greatest potential impact on business goals by
calculating Relative Risk.
Risk incorporates the notion of Severity of Consequence when failure occurs and the likelihood
that failure will occur. For example, an individual being struck by lightning has a life-threatening
consequence. The probability of being struck by lightning is low under normal circumstances.
Therefore, the risk of being struck by lightning is low. Most people are not concerned about being
struck by lightning. However, suppose your job involved working from heights where a fall could
result in fatality, again a life-threatening consequence. If the probability of falling were great
(perhaps the work platform is a crane runway), the Risk would also be high. As a result, you would
be compelled to take action to reduce the risk of falling, perhaps by wearing a safety harness.
The Equipment Criticality Assessment uses the concept of Risk to identify which equipment has
the greatest potential impact on the business goals of the enterprise. This, in turn, is the equipment
most likely to fail and have significant impact when the failure occurs. The “Relative Risk (RR)”
number for the equipment is evaluated by calculating the product of the “Total Consequence
Number” and the “Frequency/Probability (F/P) Number”. It is called “relative risk” because it only
has meaning relative to the other equipment evaluated by the same method. Total Consequence
(TC) is the summation of the values assigned to each of the individual areas of consequence
evaluation, e.g. Safety (S), Environmental (E), Quality (Q), Throughput (T), Customer Service (CS)
and Operating Cost (OC).
TC = S + E+ Q + T + CS + OC
RR = TC X F/P
If the user defines different criteria then it follows that the Total Consequence would be the
summation of scores applied in each area of consequence evaluation defined by the user.

Communicate the criticality assessment recommendations to all stakeholders.

The results of the Equipment Criticality Assessment should be communicated and understood
by everyone affected by the nominated Equipment Reliability Improvement Projects. This
includes:
♦ Senior and intermediate managers who sponsor or expect results from the project.
♦ Coaches and team leaders are responsible for the assets that the project addresses.
♦ People assigned to the assets that the project addresses.
♦ Individuals who must commit time to the project or are directly affected by its outcome.
♦ People who are not immediately affected.

Often the last group demonstrates the greatest opposition because they believe that the selected
projects are ‘hogging’ the financial and human resources needed to address their priorities.
The goal of this communication is to develop stakeholder understanding why each Equipment
Reliability Project is selected, its potential impact on business performance and to define the
resource expectations to deliver.

Outputting Results
♦ Printed Reports

The initial output of the Equipment Criticality Analysis should be a report suitable for binding and
presenting. The following list summarizes typical sections to be included in the report.
♦ Title Page
♦ Table of Contents
♦ Introduction
♦ Recommendations
♦ Analysis Description, Review Team, Date
♦ Analysis Assumptions
♦ Equipment Summary Sorted by Relative Risk.
♦ Equipment Summary Sorted by Criticality Number
♦ Detail Assessment Results
♦ Equipment Failure Consequence Evaluation Criteria
♦ Probability Evaluation Criteria
♦ Equipment Criticality Number Conversion Criteria

Using the Output of the Equipment Criticality Assessment

Prioritizing Equipment for Reliability Improvement.
The relative risk ranking provides a means of identifying which equipment poses the highest
potential impact on the organization. The equipment with the highest ‘Relative Risk’ ratings should
be initially targeted for the application of some reliability improvement strategy.

The most basic means of prioritizing assets for reliability improvement is to perform a sort of the
assessed equipment by ‘Relative Risk’. In many applications, this method of establishing priority
is sufficient for project nomination. The top ten equipment items evaluated using the ‘Relative
Risk’ criteria would then be subject to a project selection validation.
However, the priority ranking developed using ‘Relative Risk’ alone, does not consider how difficult
it will be to improve the reliability of the critical equipment. Suppose this could only be achieved
with a large commitment of human resources, over an extended time and at high cost. In
assessing the business case for proceeding with the reliability improvement project, each of these
factors plays a role.
An alternate prioritization method assesses the human resource effort for an equipment reliability
intervention. Alternatively, the cost of the intervention, of the resulting redesign or equipment
replacement can be evaluated. The following sections describe the process used to evaluate priority
considering effort/cost.
This approach would normally be applied to the top 20% of equipment items ranked by ‘relative risk’
to minimize the analysis effort. It is worthwhile estimating effort and cost for those reliability
interventions generally providing the greatest potential impact on the business.
Estimate the human resource effort required for an appropriate Reliability Improvement
Strategy to reduce the risk to a tolerable level.
The human resource effort required to proceed with the proposed equipment reliability
improvement strategy is assessed. For example, the number of meetings to complete a Reliability
Centered Maintenance Analysis is estimated. This effort provides an indication of the degree of
difficulty that is required to overcome the performance gap.
Plotting Relative Risk / Effort Graph.
The Excel spreadsheet provides the ability to enter an estimate of resource effort and the proposed
equipment reliability improvement strategy. Reliability improvement options include the application
of Reliability Centered Maintenance, Predictive Maintenance Needs Assessment, use of the
Reliability Assessment, Equipment Maintenance Program Development, Planning, and Scheduling
Practice interventions.
The ‘Relative Risk’ value is plotted on the vertical axis of a graph and the effort on the horizontal
axis of the graph. Intuitively, we want to initially work on projects with high potential impact that can
be done quickly and projects with low impact, requiring large effort last.
In order to prioritize the proposed interventions, a diagonal line is drawn from the upper left corner
of the risk/effort graph and terminates in the lower right. The slope of this line is calculated by
summing all of the ‘Relative Risk’ values for each equipment item evaluated and dividing the ‘Total
Relative Risk’ by the ‘Total Effort’ calculated by summing the ‘Effort’ values estimated for each
equipment item. The downward slope of this line from the upper right to the lower left represents a
reduction in risk per unit effort. Consider a series of lines, drawn perpendicular to this diagonal
completely covering the graph. Adjacent lines represent bands of relative priority.
Equipment Reliability Improvement Projects addressing assets closest to the upper left corner of
the plot should be addressed first while those projects addressing assets in the lower right of the
plot should come last. Each project can be assigned a specific priority. A sample plot is
represented in Figure 1.
The priority of the proposed reliability intervention is identified mathematically by calculating the y-
axis intercept of a perpendicular line passing through a point with the individual project (relative
risk, effort) co-ordinates. A number 1 priority is assigned to the reliability intervention with the
highest relative risk intercept.
Lower priority is assigned to reliability interventions with successively lower relative risk intercepts.
Estimate the cost for an appropriate Reliability Improvement Strategy or equipment
modification / replacement to reduce the risk to a tolerable level.

An alternative to estimating human resource effort is to estimate the cost to proceed with the chosen
equipment reliability improvement strategy or equipment modification / replacement. This is an
estimate of the cost required to overcome the performance gap.

Figure 5.4.10: Plotting relative risk vs. effort or cost defines reliability intervention priority.
Note: The use of this graph is a focusing tool only. The exact value and position on the graph is an
indication of relative priority. Individual circumstances could require specific projects to proceed
irrespective of their position on the graph. For example, a piece of equipment whose failure has
serious safety implications and a high frequency/probability of failure resulting in a high relative risk
number requires a large expenditure of human and/or capital resources to improve its overall
reliability. Legislation or a safety ruling may dictate that this project takes precedent over another
asset scoring equivalent relative risk and requiring much less effort or cost. None-the-less, the
concept can be used successfully in most situations to develop a defensible position for assigning
resources to address equipment reliability issues.

Identifying Equipment Reliability Improvement Projects.

♦ Nominate candidates for Equipment Reliability Improvement Projects.

The preceding section described several approaches for prioritizing equipment. The next step is to
nominate a series of candidates for equipment reliability improvement projects. The Equipment
Criticality Analysis evaluation process was designed as a ‘focusing tool’. It allows the organization to
quickly understand where significant benefits will likely be achieved by improving equipment
reliability. The methodology is not precise. The top ten percent of the ranked items will almost
assuredly include the equipment where the organization wants to focus its attention. The exact
ordering within the 10% may be imprecise. The next step in using the results of the Equipment
Criticality Analysis is to develop the business case for each of the proposed candidates. The
development of this business case prepares the justification for proceeding with an Equipment
Reliability Improvement Project and validates the order in which the Projects should proceed.
Perform a cost/benefit analysis to validate nominated project(s) by evaluating the current
performance-state against the desired end-state. Quantify the potential benefits and estimate
the costs to proceed.

The application of the criticality assessment provides a means of identifying the equipment most
likely to impact on business performance by improving reliability. Once potential Equipment
Reliability Improvement Projects are nominated, developing a business case to proceed should
validate them. The Criticality Assessment provides an indication of what areas of performance are
likely to be impacted. In each category affected, which includes any or all of Safety, Environmental
Integrity, Quality, Throughput, Customer Service and Operating Cost, the current performance
should be established, and a performance target set considered achievable as an outcome of the
improvement. The difference between current performance and the desired end state should be
quantified either in terms of costs for Operational Improvements or in terms of reduced incidents or
level of risk for Safety and/or Environmental issues. This gap is important in creating the required
tension for change to maintain management commitment throughout the project. Estimate the costs
of the Reliability Improvement Intervention and summarize the cost benefit.

Identify what performance measures must be tracked to monitor the impact of the
Equipment Reliability Improvements.
As soon as capital or human resources are deployed, expectations are created to produce tangible
benefits. The development of the business case solidifies what results can be expected from the
Equipment Reliability Improvement Project.

However, it is still necessary to demonstrate the improvement. This is effectively done through the
use of Performance Measurement. It is crucial that each of the stated performance benefits be
monitored on a routine basis to validate improvement. If the required measurements are not
currently collected, the project scope should formalize their creation. This permits the
quantification of improvement benefits, sustaining project commitment and the management of
long-term change.
Conclusions
The Equipment Criticality Evaluation Tool provides a systematic, consistent approach to assessing
equipment criticality and nominating equipment reliability improvements. Rankings are arrived at by
a consensus of decision-makers,
responsible for project nomination. By design the process can be completed in a short period of
time.
The focus is on business results which managers are already accountable for achieving. They are
committed to projects which align with these objectives and are perceived as having the highest
probability for success.
Finally, the application of systematic processes for focusing resource deployment supports a “due
diligence” approach to physical asset management. Projects having the largest potential impact on
the corporation weighted towards safety and environmental integrity become the most critical.
Projects with the potential to deliver the maximum benefit to the company by mitigating risk are
identified to be the subject of Equipment Reliability Improvement Strategies.
The chapter in "Rules of Thumb for Maintenance and Reliability Engineers" (Authored by
Ricky Smith CMRP and Keith Mobley was developed in conjunction with Ivara Corporation
(Bentley Systems) who provided the information and graphics shown in this article.
==========================================================================
Join me for Maintenance Planning and Scheduling Virtual Workshop
August 21-25 via Zoom
12:00noon - 5:00pm ET
Need more information? Send me an email at: [email protected]