6 upclose + £6 Million for ScottishPower =by David Campbell & Derek Hastings

ScottishPower, an international company serving gas and electricity customers in the United Kingdom and United States, is known for its aggressive application of business improvement tools to enhance efficiency, reliability, profitability and cus- tomer satisfaction. This innovative approach was recently applied to the management of its power generation assets. The result is a ground-breaking blend of two respected business improvement strategies: Six Sigma and Reliability Centered Maintenance (RCM2) producing a cost savings of £6 Million ($11.3 Million).

Six Sigma Stalled Without Valid Data

Six Sigma is a rigorous methodology that uses statistical analysis to measure and improve manufacturing and service-related processes through five procedural steps: define, measure, analyze, improve, and control (DMAIC). The objective is to increase profitability by improving performance and reducing variability.

Since 2001, ScottishPower has successfully implemented Six Sigma to its Energy Retail + business by drawing data from an environment of frequently reoccurring transactions, allowing statistical analysis, and the delivery of a textbook DMAIC process.

However, the same could not be said for ScottishPower’s asset-intensive Energy Wholesale business where assets do not fail often enough to produce data which is statistically significant. At the heart of the Energy Wholesale business is 6,400 MW of complex generation assets ranging from state of the art combined cycle gas turbines to seventy-year-old hydro schemes, advanced control software and brand new wind farms as well as thirty five year old fired power stations. In this environment, it was possible to “Define” the business problem and validate the business opportunity, but without the appropriate statistical data, there seemed to be little opportunity to get to the six sigma “Control” phase within a time scale acceptable to the business.

www.uptimemagazine.com ”It was a good news/bad news situation,” ness consequences of failure. said Paul Parry, Business Transformation Start with Define Manager, with the Energy Wholesale Busi- End with Control Based on prior experience, the Business ness Improvement Team. ”If our generat- Improvement team was convinced that RCM2 Use the right analysis tool ing facilities had been experiencing failures could produce the robust analysis required to at the statistically relevant rate, we’d have complete the DMAIC cycle. In collaboration The right analysis tool in this case is RCM2, been out of business. Yet, at the same time, with Hugh Colman of Aladon, the originators an established process used to determine without the appropriate asset performance of RCM2, the Six Sigma process was success- what needs to be done to keep physical data we couldn’t use Six Sigma to measure fully redefined. Using this new approach the assets, systems and processes continuously analyze and improve. Rather than give up required asset information could be gathered doing what the business wants them to do. on Six Sigma we had to reconsider what Six from, and validated by, the supervisors, op- RCM2 looks at safety, environment, output, Sigma meant to us.” erators and maintenance professionals - even throughput, speed, range, and carrying ca- when there was no formal historical data pacity. By gathering detailed system informa- available. This proved to be a significant de- RCM2 and Six Sigma Combine to Drive tion, it identifies the ways in which a system parture from traditional Six Sigma thinking. Improvements in an Asset-Intensive can fail to meet business goals and pinpoints Environment the events which are reasonably likely to RCM2 and Six Sigma’s strengths compliment cause the failure. Finally, RCM2 identifies each other very well but it must be noted This resulted in an approach which is now an appropriate actions to manage each failure that they also share many common values. established mantra within Energy Wholesale: mode in terms of both its technical and busi- Both methodologies focus on defining busi- ness goals up front and both use cross-func- tional review groups of users and maintainers What is Six Sigma? to supply performance information and apply And how does it apply to reliability? the process. The resulting approach provides an effective solution to an asset-intensive environment. By Ricky Smith, CMRP of these tools include, Lean, Visual Factory, Statistical Analysis and the DMAIC Process Six Sigma is a methodology to manage (define, measure, analyze, improve, and Applying the RCM2/Six Sigma Solution process variations that cause defects and control). The value of Six Sigma is to pro- to systematically work towards manag- vide not only a process to reduce defects, A pilot project was conducted on the oil ing variation in order to eliminate those and reduce cost, but to increase sharehold- burners at one of ScottishPower’s coal fired defects. Defects are defined as unaccept- er value both tactically and strategically. power stations, Cockenzie, located near able deviation from the mean or target. In Edinburgh. The required information was asset reliability these defects are known The objective of Six Sigma is to provide gathered from a cross section of station as equipment failures. The objective of Six performance breakthrough. In most at- operators, maintainers and engineers. This Sigma is to deliver high performance, reli- tempts to improve reliability, a company process that required only four three-hour ability, and value to the end customer. will implement a strategy which minimizes sessions, which was significantly less time risk and thus minimizes the outcome. than any previous ‘Analyze’ phase. From this The process was pioneered by Bill Smith Using the Six Sigma methodology perfor- work the group was able to develop an asset and Dr. Mikel Harry of Motorola in 1986 mance breakthrough is the objective and, management program focused on improved and was originally defined as a metric for when applied in an asset reliability initia- availability and reliability. The pilot project measuring defects and improving quality, tive, it minimizes risk while maximizing the lasted three months and delivered significant and a methodology to reduce defect levels outcome which results in “optimal reliabil- financial benefits. below 3.4 Defects Per (one) Million Oppor- ity at optimal cost”. tunities (DPMO), or put another way, a Bolstered by this success, the new approach methodology of controlling a process was applied across a range of generation as- to the point of ± six sigma (standard sets including: deviations) from a centerline. Six Six Sigma • Hagshaw Hill wind farm Sigma has now grown beyond defect Intervention control in all segments of total busi- • Ash Disposal Facilities at Cockenzie ness world to include asset reliability. Performance • Refurbished Generation Machines at The Six Sigma methodology uses Cruachan Pumped Storage Scheme many tools which may be applied to asset reliability in its toolbox. A few Time from 99.91% in January 2000 to 94.66% in April 2005. This reduction in reliability, and its potential impact on business results, justi- fied further work to establish a resolution to PA fan failures. Availability was established as an ideal measure of project success.

A key element of the ‘Measure’ step is a clear definition of what is to be measured (current and achievable states) as well as its boundar- ies. RCM2 provided the ideal tool to achieve this: the operating context. The operat- ing context includes a basic history of the plant, the historical, current and projected operating profiles of the station as well as a detailed description of the equipment or system to be analyzed.

In addition, during the ‘Measure’ phase on- line condition monitoring data was reviewed to define and quantify the improvement Fig. 1 - Longannet Power Station - One of the largest coal-fired opportunity. As seen in Figure 2, the PA fan’s power stations in Europe. It has four 600 megawatt (MW) units. bearing gradually deteriorated over a 9 to 10 month period and eventually failed in April Measure 2004. When the bearing reached this point A Practical Application of RCM2/Six it was too late to avoid incurring downtime Sigma Combined Historically the plant did not measure and costs. track individual asset reliability, which is an Primary Air Fans at Longannet Power essential success metric of any asset perfor- Figure 3 demonstrates the benefits achiev- Station mance improvement program. During the able using the P-F interval as described by “Measure” phase of the project, availability RCM2. Had Potential failure (P) and Failed Longannet Power Station is one of Europe’s was selected (downtime in relation to gener- state (F) been properly defined, vibration largest coal fired stations. The loss of a ated output) as a representative measure analysis data would have been used to con- primary air (PA) fan represents a 300 MW loss of reliability. This was a departure from firm that the PA fan bearing was failing prior or 12.5 % of the station’s total output. In the the traditional, because at the start of the to a scheduled outage and corrective action UK’s deregulated electricity market a loss project, in 2004, the importance of reliability would have been undertaken during the Fall of this magnitude is extremely significant and availability was not obvi- and costly. A Six Sigma/RCM2 analysis was ous to all involved. Yet, its performed on the PA fan system to define a importance became evident proactive maintenance program and optimize once station availability was the performance of this critical asset. The defined in financial terms. For steps included: example, a reduction in avail- ability from 99.8% in February Define 2003 to 98.11% in March 2004 represents a loss of revenue The ‘Define’ phase focuses on validating the of £1M. problem, nominating a project leader, defin- ing the project scope and assembling the With the importance of avail- Six Sigma/RCM2 review team. The research ability now clearly under- demonstrated clearly that the PA fan issue stood, research established was a real problem and not simply someone’s that PA fan availability had de- “pet project”. teriorated over time, dropping Figure 2 - Vibration amplitude plot for PA fan 2A PA Fan 2A Vibration

August 17, October 6, November 25, January 14, by the project fan availability ensures performance remains May 9, 2003 June 28, 2003 2003 2003 2003 2004 March 4, 2004 April 23, 2004 June 12, 2004 team as well as at a level acceptable to the business. 0 maintenance and

2 operations staff Results: The New Maintenance Strategy to ensure the 4 proper level of The Six Sigma/RCM2 analysis conducted on Outage ------scrutiny and se- the primary air fans resulted in a new proac- 6 cure buy-in from tive maintenance program that defines the mm/sec rms those who will right maintenance work at the right time. An 8 implement and example of this new program is the PA fan use the program. 10 bearing recommendations: Potential Benefit The recommenda- £90K 12 tions were then Recommendation #1: Vibration and tem- E F OR & DowDowntimeEPOR ntime consolidated into perature monitoring of PA fan bearings. a report for se- Figure 3 - P-F Vibration View of the Primary Air Fan nior management In developing vibration and temperature in- approval. dicators for the bearings, severity levels were defined such that an impending bearing fail- scheduled outage of 2003. This would have Control ure provides early warning sufficient to allow eliminated the resulting unplanned outage for a planned and scheduled intervention. and saved the organization £90,000 in lost Senior management approved the final proj- This predictive approach has proven very ef- revenue. ect report and the recommendations were fective in preventing an unscheduled outage implemented using strong change manage- and is well received by the station staff. Analyze ment techniques from the Six-Sigma tool kit. Asset performance improvements were sus- The recommendation included an increase in During the ‘Analyze’ phase, the informa- tained by applying the rigor of the Six Sigma internal vibration monitoring capabilities and tion gathering phase of RCM2 is executed “Control” phase. The ongoing tracking of PA the associated training program. Today, sev- and Functions, Functional Failures, Failure Modes and Failure Effects are identified. At this stage, it is critical that those involved understand the RCM2 process as RCM2 relies on knowledge and experience rather than statistical data as with the DMAIC process. The review team in question had over 100 man-years of experience with these PA fans.

Improve

During the “Improve” phase of the DMAIC cycle, solutions are identified to eliminate the root causes of failures. The project team used the RCM2 decision diagram to develop sustainable solutions aimed at preventing failures which could have a significant busi- ness impact, be it safety, environmental, operational or non operational.

In total 50 maintenance recommendations were identified. They encompass: proce- dures, investigations, modifications, speci- fications, actions, routine tasks and train- ing. The recommendations were reviewed Figure 4 - Turbine Hall at , a 440MW reversible pumped- storage Power Station. Primary Air Fan Vibration Levels Primary Air Fan Temperature Levels Trip Level - Operations to 12 Trip Level - RED stop fan immediately. ≥99 Operations to stop 11 RED Action Level - Operations to begin taking mills fan immediately. 10 AMBER out of service and preparing to stop fan.

9 Alarm Level - Operations to perform verification check Action Level - Operations to begin YELLOW 85-98 AMBER taking mills out of service and 8 via hand held equipment. Engineers to verify as soon as possible. Prepare to reduce unit load at short notice. preparing to stop fan. 7 BLUE Extended Operating Range - Engineers to perform additional moni- Alarm Level - Operations to perform verification check 6 toring - Fan bearings to be inspected at earliest opportunity. 65-84 YELLOW via hand held equipment. Engineers to verify as soon as possible. Prepare to reduce unit load at short notice. 5 4 <64 Expected Operating Range - no additional monitoring required. 3 GREEN Expected Operating Range - no additional monitoring required. GREEN 2 1

Figure 5 - Primary Air Fan Vibration and Temperature Limits eral employees are conducting vibration and the correct instructions are given and ensur- To validate the improvement effort and temperature monitoring activities every day. ing that up to date information is available. prove a return on investment, the Business Transformation team employs the services The charts in Figure 5 illustrate the new, The PA fan bearing recommendations out- of a qualified management accountant. “It’s more graphical approach that has been lined above clarify the work that is required important that our improvement projects adopted as well as the severity levels and ac- to ensure the bearing operates at optimal are treated with the same rigor as any other tions to be taken. The computerized control performance. All of the recommendations company investment,” explains Paul Parry. desks have had their software updated to resulting from the bearing analysis are “The financial benefits from our Six Sigma reflect these new levels and now the opera- captured in ScottishPower’s Computerized projects are published in the company results tors, maintenance and engineering staff all Maintenance Management System, ensuring and undergo independent verification.” work to the one set of values. This approach that these critical tasks are not overlooked. offers a common basis for decisions. Benefits To-Date from the RCM2/Six The Six Sigma/RCM2 PA fan analysis set the Sigma Initiative Recommendation #2: Develop an alignment benchmark for fan reliability at Longannet. procedure for the PA fans that lists target ScottishPower Engineers are starting to use Considerable business benefits have been alignment values. Final alignment values pro- this approach across the organization for derived from the improvement initiative. vided by 3rd party staff are to be witnessed both old and new installations. Highlights include: by Engineering/Maintenance. Implementing and Sustaining an RCM2/ • The financial return from the initiative Recommendation #3: Specify bearing grease Six Sigma Initiative has grown from £150k in its first year type and quantity. to over £6m cumulative benefits in its ScottishPower understands that sustainable third year. Recommendation #4: Ensure that suitable improvements are key to its long-term corpo- • Numerous soft benefits including spares and grease are available. rate wide strategy. To sustain improvements signifcant safety and environmental resulting from the Six Sigma/RCM2 initiative, improvements. Recommendation #5: Replace the PA fan considerable effort must be applied when • Recommendations free up manpower bearing sets every 4 to 5 years. embedding the change. This is where the resource to attend to other critical Business Transformation team relies on the activities. Given the increasing pressures to control rigor of the Six Sigma methodology, specifi- • Knowledge sharing has been a significant costs and reduce budgets, power stations no cally the ‘Improve’ and ‘Control’ phases of feature of this deployment; at least once longer have the same number of staff at their the DMAIC model. Through vigorous project in every project someone has said, “I disposal that they once had. As a result, tracking and monitoring of “critical to qual- never knew that.” outsourcing is common as well as assigning ity” (CTQ) metrics agreed upon by the project • Staff members enjoy Six Sigma and RCM2 maintenance work to an internal team who sponsors and key process owners, the busi- and feel engaged with the change. They are not normally responsible for this work. In ness aims to make permanent improvements like the inclusiveness of the process as both instances, there are ‘work control’ im- within its asset base. well as being part of the solution. plications, e.g. record keeping, ensuring that Solution Greater Than the Sum of Its David Campbell is a Charted Mechani- Parts cal Engineer, having graduated in 1986 with an Honours Degree in Mechanical Six Sigma and RCM2 work well together in Engineering, achieving an MBA in 2005. an asset-intensive environment as they are Various maintenance and operations meticulous processes created to develop posts followed at hydro, pumped stor- solutions that specifically meet established age and thermal power stations with business goals. Both also focus on identify- ScottishPower. David moved into the ing and correcting the root cause of ob- Business Improvement Team in 2003 stacles and highlighting concrete, achievable and is now a Six Sigma Master Black solutions. Belt and RCM2 Practitioner.

ScottishPower continues to reap the finan- Derek Hastings is a Chartered Mechan- cial, safety and environmental benefits of its ical Engineer. He joined ScottishPower new business improvement practices and in 2004 as a Six Sigma Black Belt and has successfully completed over a dozen Six RCM2 Facilitator and is currently one Sigma/RCM2 implementations. There are ten of the senior engineers at Longannet more currently in progress. The program is Power Station. Previous to this Derek targeted to deliver in excess of £10 Million has worked in various engineering ($18.8 Million) by the end of FY 06/07. and project roles within underground railway systems, hydro power station refurbishment and engineering and pump design. Figure 6 - Hagshaw Hill Windfarm, part of ScottishPower’s expanding portfolio of windfarms.