Assessing the ‘Size of the Prize’ — Developing Business Cases for Maintenance Improvement Projects P Knights 1 , F Jullian 2 and L Jofre 3 ABSTRACT Many maintenance managers find it difficult to justify investments in maintenance improvement initiatives. In part, this is due to a tendency by mine managers to regard maintenance purely as a cost centre, and not as a process able to influence productive capacity and profit. It is also hindered by a lack of alignment between commonly used maintenance performance measures and key business drivers, and the lack of formal business training amongst maintenance professionals. With this in mind, a model to assist maintenance managers in evaluating the benefits of maintenance improvement projects was recently formulated. The model considers four cost saving dimensions. These are: 1. reduction in the cost of unplanned repairs and maintenance, 2. increased or accelerated production, 3. spares inventory reduction, and 4. reduction in over-investment in physical assets and operating costs. This paper discusses the application of this model and a number of numerical examples are given to justify investments in maintenance improvement projects having varying objectives. INTRODUCTION Maintenance and repairs costs are a large component of production costs in the mining industry. In 2001, a benchmarking study of six open pit Chilean copper mines, collectively responsible for 58 per cent of Chilean copper production, found that, on average, maintenance accounted for 44 per cent of mining costs (Knights and Oyanader, 2005), and between 15 per cent and 25 per cent of milling costs (depending on whether primary crushers, water supply systems and tailings dams are included in mill maintenance costs) (Knights and Oyanader, 2004). Not surprisingly, maintenance is often regarded as a cost centre with maintenance managers constantly working under the threat of reduced budgets. Arguments put to senior management for additional maintenance resources often fall on deaf ears, principally because it is very difficult to quantify the expected benefits resulting from investment in maintenance improvement initiatives. This can be frustrating to maintenance managers, many of whom may perceive a bias towards investing in operational improvement initiatives at the expense of maintenance. Why does this happen? One reason concerns the difficulty in estimating the downtime costs of a piece of equipment in a productive system. If a shovel breaks down whilst excavating waste, will the Australian Mining Technology Conference 27 - 28 September 2005 151 1. Principal Research Fellow, The University of Queensland and Acting Program Leader Smart Mining Systems, CRCMining, Brisbane Qld 4072. Principal Consultant, Reliability Technologies Ltda, Santiago, Chile. 2. Engineering Trainee, Operational Services, Minera Escondida Ltda, Antofagasta, Chile. 3. Maintenance Improvement Manager, Minera Escondida Ltda, Antofagasta, Chile.