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Selling Reliability? ROI and ROC

IMC Presentation (35:44)

by Victor Rioli

I’ve been stressing for years that if you want to secure funding for a reliability program, you must be able to fluently speak in finance. Terrence O’Hanlon, CEO of Reliabilityweb.com and Publisher of Uptime Magazine, said it well; “Reliability leaders need to speak fluent CapEx finance, risk management and consequence economics. They also need to have the distinctions between expansion Capex and maintenance Capex and maintenance budget, PLUS have the engineering technical review (FMEA, RCM, MTA, etc.) and risk analysis to support the MRO recommendations.

If you want MONEY from assets, you need to be able to speak its language.” Maintenance is viewed as a major part of the cost stack by most in financial leadership, a necessary evil in the cost of doing business that no one gets excited about until OP suffers from poor reliability. Then throw money at it because of the clear justification to improve OP or margin, and after OP improves, slash the maintenance cost stack to show off brilliant financial acumen. An expensive management circle that keeps repeating itself until an effective reliability and asset management program is implemented to manage it, eliminating the lows and highs of reliability performance and OP by maintaining high averages for both, maximizing best return for the stockholders.

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