To Manage is to Measure
By Bill de Decker
April 1998
Ever wonder why sports teams compile so many statistics about their players, plays, special teams, etc.? Well, it's simple. These measurements are an easy way for the manager to figure out what works, what doesn't, and what it takes to win games. Without such measurements, managing a sports team would be much more difficult.
Managing a maintenance organization is no different. The more you measure the performance of the operation, the more you'll know about managing it effectively. For example:
One medium-sized helicopter operator collected all maintenance costs for their six helicopters in one account. Thus they knew, to the penny, that maintenance costs for the three preceding years had been $1,056,813.27 (3 years ago), $1,298,561.89 (2 years ago) and $1,453,997.03 (last year), but they had no details showing costs by aircraft and major system. As a consequence, there was no way to know what had caused the increase of just under $400,000, which had also caused a loss last year. Nor could they determine what they could do about it.
Another company, with several bases, realized their engine maintenance and overhaul costs were in line with industry averages at all but one base. At that base, additional training and different procedures quickly reduced the costs nearer to the average. These savings amounted to about $40 per flight hour. Without the detailed cost data collected by engine and base, the company would never have realized these savings.
The maintenance manager for one corporate operator got called on the carpet when the president of the company and an important client experienced a maintenance delay. Fortunately, the maintenance manager had kept detailed records on delays and was able to show that in 1712 departures over four years, 239 delays were due to passengers arriving late, 15 were weather delays, and only 7 were due to maintenance problems. As a result, the maintenance manager got a letter of appreciation from the president, and the executives got a letter about showing up on time for scheduled flights!
As these examples show, detailed records and resulting measurements are indispensable to determining the impact of the maintenance organization on the bottom line. It also shows the professionalism of the organization, which brings up the questions of what data a professional maintenance organization should collect, and how it should organize the data collection effort.
Probably the most important tool for organizing, collecting, and analyzing this data is a budget that shows by aircraft and by major system the projected expenses for the coming year, based on the projected flight hours for each aircraft. The advantage of such a budget is that it leads to a schedule of major maintenance actions and the associated costs and down times. It also allows a review of full and part-time staff needed to meet next year's maintenance requirements, and it provides an opportunity to contact the major vendors to get quotes, get on their schedule boards and negotiate the best terms. In addition, it provides senior management with an overview of when each aircraft will be down for maintenance, what the major expenses will be for the year, when they will be incurred, the overall impact on cash flow, and the effect on the bottom line. Lastly, and perhaps most importantly, it provides a yardstick against which to measure actual performance.
What should you do if senior management doesn't require a detailed maintenance budget? That's simple. Prepare one anyway and give only the summary to senior management. That way, senior management has what they want, and you have what you need to manage the department.
The next step is to set up a system for collecting the actual cost data so you can compare them with the budget yardstick on a regular basis. In a lot of organizations this is hard to do because the accounting department is not set up to provide costs to the level of detail needed. If that is the case, the best thing to do is to set up a good work order system, collect all invoices, and at the end of each week enter the resulting data in a spreadsheet program. This type of program will allow the addition and review of costs by aircraft and system whenever desired.
One question you must address at this point is how detailed to make the cost collection for the systems. Ideally, costs should be collected by ATA system. If that is not possible, set up about six or seven individual major systems, such as "engines," "avionics," "electrical," "hydraulic," "pressurization," and "cabin/exterior appearance," that are the most expensive or time-consuming on the aircraft and lump all other costs under "airframe." This helps focus attention on the systems that are responsible for 80 or 90 percent of the maintenance expenses. Similar data should be collected on maintenance man-hours expended for each aircraft and each system.
The other group of data that you should collect is statistics on the operations. As a minimum, these include flight delays caused by maintenance, down days caused by scheduled and unscheduled maintenance, maintenance man-hours per flight hour and premature removals, and repair or replacement of major components.
So what do you do with all this information? Take the data collected and compare it to the budget, industry databases, last year's actual performance, etc. on a monthly basis and determine whether the plan is working or whether it needs modifying. Analyze it and figure out what is better than expected and what is not. If something is better than expected, try to figure out why and see how it can be applied elsewhere. If something is not as good as expected or is trending the wrong way, again try to figure out why and make the required corrections while the problem (hopefully) is still small.
The key to success is to decide to collect the data, set up procedures to make sure it all gets collected, and then take the time to analyze it. It may sound like a lot of work, but you will get a wealth of information that will increase the availability of your aircraft, decrease the cost of maintenance, and make you a better manager.
