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Equipment Executive: How to Make Work Orders Work

It is time to think seriously about work orders, define the essentials of a good system, and then make sure that it works for us rather than against us.

September 01, 2011

When asked, “Do you use work orders?”, equipment managers respond in frustration and talk about systems that are “too complicated,” “unnecessary,” or “just paperwork.” It is time to think seriously about work orders, define the essentials of a good system, and then make sure that it works for us rather than against us.

The first thing to do is to make a clear and important distinction between a dealer work-order system and a contractor work-order system. Dealer work orders focus on what was done in response to a customer request and justify the amount charged. They are the basis for an invoice and must be complete and accurate when it comes to the cost of parts, labor and consumables used to do the work.

Contractor work orders are entirely different. They do not form the basis for a commercial transaction, and except in a few rare instances, there is no “customer” to bill.

Many equipment managers cut their teeth in a dealer environment and have a dealer mentality toward work orders. They believe it is all about costing and about knowing exactly how much was spent on every nut, bolt, screw and washer needed to repair a water pump. The situation is made worse by the fact that many software programs are set up on the basis that work orders do little more than generate a customer invoice and that they are an essential and required step in the process of determining equipment costs.

The difference between dealer work orders and contractor work orders is critically important. Contractor systems must help manage resources and processes, build equipment history files, and provide information needed to run the business as a whole. Unit cost or cost per work order is important, but it is not the reason why you set up and maintain a work order system.

Let’s look at three ways in which a competent contractor work-order system can help to lower cost and improve performance.

Plan to succeed

A focus on the planning and management aspects of a work-order system ensures that skilled, expensive and scarce mechanical labor works on defined tasks according to set priorities. Setting up or “opening” a competent, well defined work order is the first step. Without it, efficiency and effectiveness go out the window, and priorities are set by the needs of the moment. Good work orders are the starting point for orderly, effective and efficient work and for collecting the information needed to measure success. They must be clear with regard to the following five areas:

• The machine and the component to be worked on. At a crushing plant this could be the primary crusher and the apron feeder. Avoid too much detail, but be clear so that you can build an easily searched and summarized machine-history database.

• The reason for the work. Is it a preventive maintenance action, a repair caused by normal wear and tear, a premature failure, the result of abuse or accidental damage? Again, minimize detail but provide required information.

• The reason for issuing the work order. Planned or preventive work orders are issued according to a fixed schedule, oil analysis results, condition-assessment information, or field input. Repair or emergency work orders are issued because the machine is down and requires repair. A knowledge of these reasons for issuing a work order is important when it comes to measuring how successful organizations are at preventing breakdowns and delivering a high-reliability fleet.

• The work to be performed. Competent work orders must describe the work to be performed in sufficient detail to assign budgets and resources and properly sequence the work. Preventive maintenance work orders will include a detailed serial-number-specific check list and information on all the required filters and consumables.

• The start date and labor hour budget. Work orders on a predetermined schedule should give the scheduled start date; planned work orders should give a “no later than” date; breakdown work orders should give the reported down date and time. All work orders must provide a labor hour budget. Schedules and budgets are an essential part of the process and provide critical information needed for performance measurement.

Manage the process

Issuing or opening a work order with the detail needed to plan and categorize the work is the first step. Priorities can be set and the work can be undertaken in an orderly way. Four pieces of information are needed to manage day-to-day progress of the work.

• Work order status. All open work orders start with their status set as “Pending.” This is changed to “In progress” once a technician is assigned, and the status is kept current by moving it to “On hold” when appropriate or “Complete” as soon as the machine is able to resume work. The status will be changed to “Closed” once all costs are available and posted. This, however, has nothing to do with when the work is complete and the machine can be put to work.

• Actual time spent. From a labor-management and costing point of view, work orders and time cards are similar. One looks at the work done and time spent in a given day or week; the other looks at the work done and time spent on a particular machine or task. The two documents, however they are set up or combined, feed into the payroll and work-order system to provide the necessary information.

• Actual work done. A clear and concise description is important and is probably the most detailed history information available.

• Action taken to prevent recurrence. All premature failure, abuse and accidental damage work orders must clearly record the action taken to prevent a recurrence of the problem. This can be as simple as “Spoke to the operator,” but it must be there to reduce the frequency with which recurring problems occur.

We all know that what gets measured gets managed. Classifying work orders by reason makes it possible to measure how much work is done to prevent breakdown and how much work is done in reactive repair situations. Classifying work orders by reason for issuing or writing them makes it possible to determine the cost of abuse and isolate the cost of accidental damage. Changing work order status in near-real time makes it possible to measure how much scheduled work was done on schedule and how long machines are down. Establishing budgets and comparing these with actuals makes it possible to measure efficiency and productivity. None of this has anything to do with the cost of nuts, bolts screws and washers. It has everything to do with managing people, processes and performance and with building good machine-history files.

Know equipment cost

Unlike dealer work orders, costs come last. Although important at a unit and work order level, they should not drive the process nor prevent the system from providing the baselines needed to plan and the information needed to manage and measure the process.

Not all equipment operating costs flow through the work-order system, and therefore the cost-coding system must be identical to that used in the normal accounts payable and payroll systems. Payroll costs will lag a little and accounts payable costs can lag a lot; therefore transactions can and should be posted to work orders as and when they occur. Completed work orders must be closed in a timely manner to prevent unexpected late costs from being inappropriately coded to open work orders.

Contractor work orders do three critically important things. They enable you to plan, prioritize and manage scarce and expensive resources. They enable you to measure the effectiveness and the efficiency of operations. They form the basis of equipment history and unit cost. Anything as important as this cannot be misunderstood, cannot be undervalued, and cannot succeed without care and attention.

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