Table Of Contentइंटरनेट मानक
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Mazdoor Kisan Shakti Sangathan Jawaharlal Nehru
“The Right to Information, The Right to Live” “Step Out From the Old to the New”
IS 15363-1 (2003): Guide to Terotechnology, Part 1:
Introduction to Terotechnology [MSD 4: Management and
Productivity]
“!ान $ एक न’ भारत का +नम-ण”
Satyanarayan Gangaram Pitroda
““IInnvveenntt aa NNeeww IInnddiiaa UUssiinngg KKnnoowwlleeddggee””
“!ान एक ऐसा खजाना > जो कभी च0राया नहB जा सकता हहहहै””ै”
Bhartṛhari—Nītiśatakam
“Knowledge is such a treasure which cannot be stolen”
IS 15363 (Part 1) :2003
ml&RmkaG#dhmmfl
Indian Standard
GUIDE TO TEROTECHNOLOGY
PART 1 INTRODUCTION TO TEROTECHNOLOGY
Ics 03.100.01
0 BIS 2003
BUREAU OF INDIAN STANDARDS
MANAK BHAVAN, 9 BAHADUR SHAH ZAFAR MARG
NEW DEL HI 110002
July 2003 Price Group 7
I“OI{I:WORD
‘1’his Indian Standard ([’art 1) was adopted by the BL]retIUof’indian Standards, after the draft finalized by the
hlanagcmcn( and l’roductivity Sectional Co~lln~ittee had been approved by the Management and Systems Division
~’ouncil.
Itlan>’organization it is necessary to identify and then choose between the investment options open to it and to
lnahc LIccisions on how best to invest the capital available. Once adecision has been made to make an investment
)n $omc form of physical asset or project, then the application of tcrotechnolo:y should assist in the object of
~c[[ill~ [he [?cstVa[Llefor money from that investment and thujuSStify it.
I“cr(ltecllnology is a combination of management, financial, engineering, building and other practices applied to
ph}sical wsets inpusuit of economic lifecycle costs. Itisconcerned with the specification and design for reliability
a)ldtll:ii]lt:litl:ibility of physical assets such asplant, machinery, equipment, buildings and structures. The application
()]’tcrotechnology also takes into account the processes of installation, commissioning, operation, maintenance,
]nodification and replacement. Decisions are influenced by feedback of information on design, performance and
CO$(S.throughout the life cycle of’s project. 1[applies equally to both assets and products because the product of
one organization often becomes the asset of another. Even ifthe product isasimple consumer item its design and
cus[onlcr appeal will beneht from terotechnology and this will reflect inimproved mark& security for the producer.
‘1’cI-[)tccl)I]cJl[>gwyas developed in the context of larger organizations, with the objective of making them more
eficicnt and competitive. Throughout this standard the applicability to a larger organization is used as a basis as
this \vill represent the more complex situations. However the objective of maximizing value for money spent and
the principles involved in achieving this, are equally applicable to small organizations. Small organizations face
problems as nlLIchas those faced by the larger; more complex organizations. Their problems maybe simpler but
the principles of problem solving remain the same. The small organization can therefore benefit from this guidance
by selecting those parts of the decision-making process that can help them.
‘1’llisstandard sets out in detail all the activities that should be carried out to ensure that the organization, which
uses terotechnology, could compete successfully and, at the same time, achieve consumer satisfaction.
‘1his standard is largely based on BS 3843 (Part 1) :1992 ‘Guide to terotechnology (the economic management of
assc[s) :Part 1Introduction to tero[echnology ’.
in addition to this pw-t,this standard has the following two parts which are referred in the text:
Part 2:2003 Introduction to the techniques and applications
Part 3 Guide to the available techniques (Um’erpreparatiw)
‘1
IS 15363 (Part 1) :2003
Indian Standard
GUIDE TO TEROTECI-INOLOGY
PART 1 INTRODUCTION TO TEROTECHNOLOGY
SECTION 1 GENERAL 4.1.3 There is a close interrelationship between a
supplier’s product and the user’s asset. Acompatibility
1 SCOPE
ofapproach should therefore befeasible and practicable.
This standard (Part 1)gives a general introduction to
4.1.4 An organization often acts both as auser and as
the concepts ofterotechnology. This standard describes
asupplier. Itacts as auser inrespect to itsacquisitions
how the principles and use ofterotechnology can assist
ofassets with which itproduces itsown output products,
the decision making processes, the benefits which can
In supplying these products, which might be either
be obtained from its adoption and the overall resources
further assets, materials or a service, to its customers
required for efficient implementation.
the organization is clearly acting as a supplier. It is
2 REFERENCE essential that the organization gives till consideration
to the acquisition and management of its own assets,
The standard contains provision which, through
using terotechnological principles. ]t is equally
reference in this text, constitutes, provision of this
important that itgives due consideration to itsproducts
standard. At the time of publication, the edition
and how these will best satisfy the terotechnological
indicated was valid. All standards are subject torevision
needs and aspirations of its customers. This is valid
and parties to agreements based on this standard are
even when the customers forthe products are the general
encouraged to investigate the possibility of applying
public or individual members of it. In such cases the
the most recent edition ofthe standard indicated below:
organization should make every effort to ascertain the
IS No, Title terotechnological needs of its customers by market
research and(or any other appropriate means and then
9990:1998 Glossary ofterms interotechnology to meet these needs as far as possible.
(fht revision)
4.2 Lowest Asset Costs Over Life Cycle
3 DEFINITIONS
4.2.1 Terotechnology is applied to the assessment of
For the purposes of this standard the definitions given the total costs involved with the asset over its full life
in IS 9990 shall apply: cycle up toand including itsdisposal. This will include
the cost of financing as well as the initial capital costs
SECTION 2 CONCEPT OF TEROT E CHNOLOGY and subsequent revenue or running costs. These will
be related to a defined level of performance and the
4 OBJECTIVES OF TEROTECHNOLOGY
expected life cycle. This latter may be determined by
the perceived market for the product rather than the
4.1 Primary Objective
practicable life of the asset itself.
4.1.1 Terotechnology is aimed at achieving the best
4.3 Approach to Objectives
possible value for money for a user from the
procurement and subsequent employment ofaphysical
4.3.1 In most cases the life cycle cost assessment will
asset. This may range from a complex building or
be influenced by the relationship between the producer
engineering plant to a domestic appliance.
of the product and the customer who acquires it. The
Terotechnology can be applied with advantage by
customer or client, who orders a product specifically
organizations of any complexity or even individuals.
designed to satisfy his particular requirements will
usually have aclose liaison with designer and producer.
4.1.2 A user would employ the principles of
He will therefore have a direct interest in the cost of
terotechnology inthe selection of the asset and then in
ownership of the asset he will be acquiring and
the subsequent management of it. A supplier, on the
consequently in the life cycle costing implications of
other hand, applies the principles in the design,
the different solutions which may satisfy his
manufacture and support for his product. This can
requirements. However, even a bespoke product may
achieve improved customer satisfaction generally. It
incorporate sub-assemblies, equipment or articles which
may also act as a valuable incentive to potential
are standard items and from which choices may be
customer, especially if they, as prospective users, are
made.
selecting their assets on the basis of terotechnology
principles.
4.3.2 On the other hand the manufacturer of a
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IS 15363 (Part l) :2003
mass-produced item may have no direct personal a) Selection and provision of permanent (that is,
involvement with the eventual purchaser. In order to not consumable) physical resources used in the
establish the best market for his product he may production of goods and services;
therefore have to rely on techniques such as market
b) Caring for those resources effectively and
research to identify the life cycle costs and reliability
efficiently;
which will ensure satisfactory value for money. There
c) Coordinating them to help achieve overall
will also be variations between those two extremes.
minimum costs over their life cycle; and
4.3.3 Nevertheless, inall cases there should be aneed
d) Feeding back information to improve them.
to identify the options which may be available in the
procurement of the asset so that the most economic 5.1.2 The successful application of terotechnolo.gy
solution may be chosen which best fits the user’s depends upon ability to-balance factors which a~e
requirement. This solution will largely depend on a uniquely important for aparticular situation. Rrequires
price/cost equation or a cost benefit analysis. an understanding of management and accounting
sciences and a general knowledge of engineering
4.3.4 The full terotechnology cycle begins at the
associated with the technological expertize appropriate
investment appraisal stage and ends with the disposal
to a particular industry.
of the asset, but the application of terotechnology can
be made at any stage inthe life of aphysical asset and 5.1.3 In more specific terms, the application of
continue for some or all of the remaining life cycle terotechnology brings together the whole or parts of a
periods until disposal or replacement. number of techniques and disciplines. The blend and
depth required of each will depend on the particular
4.3.5 Maximum benefit will beobtained from applying
circumstances inwhich terotechnology isbeing applied.
the complete principles of terotechnology. However,
These techniques and disciplines include the following:
many aspects of terotechnology are already being very
a) Investment appraisal;
successful ly practiced by many organizations under
different names. The following list, which is not b) Operational research;
exhaustive, may help managers to identify those parts c) Replacement analysis;
ofterotechnology with which they are already familiar:
d) Marketing;
a) Asset management (including physical asset
e) Purchasing;
management);
b) Resource management; 8 Accounting;
c) Life cycle costing; i%)Design for reliability and maintainability;
h) Preparation of specifications;
d) Cost of ownership;
e) Total commitment for life; j) Installation;
f) Womb to tomb costing; k) Commissioning;
!3) Cradle to grave management; m) Maintenance procedures and technology;
h) Design for life costing; n) Information systems;
j) Life long care; P) Programming; and
k) Costs-in-use; and q) Technical communications.
m) Through life costing.
5.1.4 The life cycle and performance of a total asset
4.3.6. Terotechnology is concerned with helping to will be affected by the “individual life cycles and
optimize life cycle costs. In acase where the life cycle performance of its constituent parts.
isshort, the trade-off between initial and upkeep costs
5.2 Participation of the Whole Organization
might point towards buying an asset with the lowest
purchase price. This approach would obviously be 5.2.1 Itwill be seen from the outline of the scope of
undesirable where there was the possibility ofretaining, terotechnology given in 4.1 that it is essential that the
for example, a plant for a longer period than originally whole of an organization is involved.
intended. Such a policy would almost certainly result
inunreliability and high unkeep costs, but the opposite 5.2.2 Terotechnology isessentially amulti-disciplinary
does not necessarily follow. contribution to optimizing life cycle costs and the
experience and skills of a number of specialists are
5 PRINCIPLES OF TEROTECHNOLOGY required for its implementation. The basic principles
of terotechnology can be applied within an enterprize
5.1 Scope of Terotechnology
without changing organizational structures (except
5.1.1 Terotechnology isessentially concerned with the where these are defective in themselves) and there is
following: no need to create a new breed of specialist (a
2
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IS 15363 (Part 1) :2003
terotechnologist). Save in exceptional circumstances, decisions are made on the basis of achieving the best
the range of skills and breadth of knowledge and balance of cost and performance for the organization
experience necessary for its full implementation is as a whole.
unlikely to be acquired by any one individual.
5.5 Collection and Analysis of Data
5.2.3 Although terotechnology can be easily
5.5.1 To action the optimization objectives described
understood and applied by line management, engineers,
in 4.2 to 4.4, it will be clear that each individual
accountants and others, in their daily working lives,
department will require suitable quantitative data from
the subject can be applied successfully atcompany level
all other interacting departments. These data need tu
onIy with the active participation and understanding
bethose required for the department to optimize itsown
of senior management.
decisions inthe overall interest of the organization as a
5.3 Interprofessional Cooperation whole.
5.3.1 The application of terotechnology demands that 5.5.2 It is essential that there are communication
allthose involved have abroad recognition oftheir own channels between departments (see 4.3). It shou Id be
contribution together with that of their colleagues in emphasized that part of the communications through
other disciplines and its success is dependent upon these channels needs to be the data needed by other
effective communication between all parties. Itrequires departments to carry out their own optimization
an understanding of management and accounting and exercises, on an organization-wide basis.
knowledge of the technology associated with the
5.5.3 Furthermore, this can, and frequently does,
particular industry or asset.
require adepartment to collect data not required for its
The following are two examples which may help to own purposes but necessary for proper use by other
illustrate this principle: departments.
a) The designer of a product should take into
5.5.4 This collection, analysis and dissemination of
account the feasibility of producing his design
data does not necessarily remain within the organization
and its cost to the consumer in operation and
but can and should extend to the suppliers of the assets
maintenance.
used by the organization. Only in this way, can the
b) When assessing the proposed design of aproduct supplier organization refine its designs in the overall
the management will require feedback data on interests of its customer organizations.
the price the market may be prepared to pay for
5.5.5 Data may berequired for central decision making.
the product and the cost of producing it.
These may be central data orthey maybe departmental
5.3.2 However, it should be remembered that these data, but they should be collected in a form which
are only two examples of a wide range of satisfies both the central and the departmental needs.
interrelationships and each memb er ofthe team should
5.5.6 Experience to date has shown that in many
endeavour to prepare his own list of the ways inwhich
organizations there is an advantage in appointing a
his role should interact with the whole team. This is
senior person to oversee adoption of the principles of
discussed in more detail in Section 3.
terotechnology throughout the organization. This
5.4 Interdepartmental Cooperation person should be appointed by and be responsible to,
the Board of Management. Ideally he should be
5.4.1 Itiscommon practice for senior management of
independent of any particular department, but in any
an organization to require individual departments to
case he needs to be free to cut across departmental
optimize their individual activities. Unfortunately if
boundaries.
this istaken as the primary objective of departments it
can result in a less than optimum performance of the 5.6 Minimum Activities Necessary for Implementing
organization as awhole. This arises from the inevitable Terotechnology
interaction of decisions between departments.
5.6.1 The minimum activities necessary for the
Examples of this are not hard to find. If apurchasing
implementation of terotechnology are the following
department acquires the cheapest possible asset it is
Iikely that the operating and/or maintenance costs will a) Decide what production and cost targets are to
tend to be higher. Similarly inadequate maintenance, be met;
to reduce maintenance costs, invariably results in b) Decide what physical assets are needed and how
penalties in the cost of operation and/or a shorter touse them toachieve the targets over aspecified
working life of the asset. period, taking into account their forecast cost of
ownership and use;
5.4.2 Consequent upon the above, the primary
objective of all departments working under the c) Specify the performance of the assets to be
principles of terotechnology, is that their individual acquired;
3
IS 15363 (Part 1) :2003
d) Acquire, install and commission those assets; 7 COSTS OF IMPLEMENTING
e) Care for them; TEROTECHNOLOGY
O Monitor their use; and 7.1 One ofthe principal obstacles tothe implementation
of terotechnology has been the lack of data. Data are
g) Replace and improve the assets and improve their
care, using information from them to help anessential input for implementing terotechnology, and
minimize total life cycle costs. this may include detailed cost, performance [see Note
to 6,1 (b)] and marketing information.
6 BENEFITS FROM INTRODUCING
7.2 The main costs associated with terotechnology data
TEROTECHNOLOGY
are:
The benefits which may be gained by the use of
a) Cost of collecting additional data, not already
terotechnology maybe broadly described as:
collected for management purposes;
a) Improved control by the client or senior
b) Cost of making existing data compatible with
management in the making of vital decisions;
the needs of terotechnology;
leading to;
c) Cost of any additional analysis; and
b) Better investment decisions arising from :
1) Improved information regarding costs and d) Cost of supplying feedback information or of
performance requirements; as related to processing feedback received.
particular patterns ofexpenditure and design
7.3 However, with the improvements in information
choice.
technology now taking place there is avast increase in
NOTE—Performanceincludessuchthingsas:
data availability and the cost of collecting and
i) Reliability;
processing data is reducing dramatically as time goes
ii) Durabilityandlifeexpectancy/requirement; on. Solutions to some of the other problems involving
iii) Quality control; the implementation of terotechnology are dealt within
iv) Howwelltheproductdoesitsjob; Section 3.
v) Safety, includingstatutory liability andproduct
liability; SECTION 3 INTRODUCING
2) Improved client identification of TEROTECHNOLOGY TO AN ORGANIZATION
requirements and development of abrief for
8 GENERAL
the asset acquisition;
3) Information regarding the cost consequences 8.1 Terotechnology requires no new techniques or
of the options under consideration; disciplines. It is essentially a new way of examining,
and grouping some familiar activities and involves a
4) Better investment analy sis of cost options
bringing-together of well tried methods in a new way
available; leading to; and
which can be used to improve management of physical
c) Better value for money from the final product assets inaccordance with the objectives ofan enterprize.
andlor an improved market for the product.
8.2 Terotechnology is a combination of management
Other benefits may include: and technology and can be applied by both users and
a) Increased profitability through areduction inthe manufacturers inindustry, building and commerce. Its
total cost of ownership; basic principles can be applied at company level and
also by management, engineers, accountant and other
b) Improved control of the product and the
specialists in their day-to-day working lives.
production process;
c) As a result of common orientation on cost and 8.3 No matter what acompany orundertaking designs,
performance from the perspective of the constructs, manufactures, processes or purchases,
organization as whole, together with a more terotechnology has avital effect upon efficiency, profits
frequent contact, an expectation that there will and market share.
begreater understanding between client orsenior
9 MANAGEMENT PARTICIPATION
management and other functions on how to
achieve common goals; and 9.1 For management, terotechnology isone ofanumber
d) The cross-fertilization of good ideas and data of concepts which can contribute to the overall
across traditional boundaries. efficiency ofanenterprise. Like others, itcan be classed
ascommon sense or ‘simple when you know how’, but
For convenience, the benefits that can be derived from requires careful, thought and planning to realize the
the use ofterotechnology are summarized inAnnex A. potential benefits of its application.
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IS 15363 (Part l):2003
9.2 The principal function of the chief executive in need to be some changes in individuals’ attitudes to
any organization isto examine investment options and their responsibilities. These changes should betowards
to make choices between them. He needs to consider a more collective corporate attitude and away from
the availability or cost of raising funds and the various narrow departmental or professional allegiances.
opportunity costs and make judgments on the best
11 INCORPORATION OF TEROTECHNOLOGY
courses of action that are available. He needs to
INTO ACTIVITIES
remember that the best economic solution may need to
be used. He maybe faced with conflicting advice from 11.1 Modification of and Additions to Existing
various advisers and a decision has to be made. Activities in the Organization
9.3 Senior managers have to consider and evaluate all 11.1.1 Terotechnology involves understanding and
the various available options in acquisition, operation, CO1Iaboration between functions to be effective. An
maintenance and disposal of allassets. Allthe financial organization will besaid tobepracticing terotechnology
answers need to be converted to a common base and when itisconsciously managing the cost of owning its
any government orcustomer incentives ordisincentives assets. The concepts of ‘cost of ownership’ involves
evaluated. The results of all of the findings of senior the appreciation oftrade-offs between acquisition costs
managers have to be inasimple and consistent format and running costs. It is easy to understand, but not
to enable the options to be evaluated inthe light of the necessarily easy to apply.
organization’s overall policy and strategy to come to a
decision on the best course of action to follow. More 11.1.2 The application of terotechnology requires
details of this are given in Part 2 of this standard. senior management to have a thorough understanding
ofeach specialist’s role. This also means that specialists
9A The role of the senior manager in an organization need to have a broad recognition of their own
seeking to apply terotechnology isfivefold as follows: contribution plus that of their colleagues in other
disciplines. Ifsenior management has tomake decisions
a) To encourage departmental managers to work
on the purchase :f new plant with little or no
together, and provide each other with all the
information on past performance and operating costs,
information that each requires;
this can lead to wasted resources, high costs, higher
b) To foster friendly rivalry between departments
downtime and lostorders. The till terotechnology cycle
and to encourage ideas on economies to come
begins atthe investment appraisal stage and ends with
from the shop floor (possibly by incentive
the disposal ofthe asset, but the circle can be entered at
schemes);
any point. For example, a company may decide to
c) To coordinate the departmental managers to improve maintenance and reduce downtime on existing
arrive at a number of possible options (all plant; although the trade-off between initial capital
prepared using the same ground rules to allow costs and subsequent costs cannot betaken into account,
correct comparisons to be made); the company’s decision will have avery real effect on
d) To decide on which optio n to adopt (see 4.1); the cost of ownership. The fact that terotechnology
cannot be applied from the beginning of the life cycle
and
of a piece of plant should not deter a company from
e) To ensure that the departmental managers attempting to improve reliability, or to improve or
implement the decision which is made. design out maintenance.
10 ORGANIZATIONAL FRAMEWORK 11.1.3 Experience to date has shown that in many
organizations there is an advantage in appointing a
10.1 The introduction of terotechnology into an
senior person to oversee adoption of the principles of
organization does not require any significant changes
terotechnology throughout the organization. This
in the organization’s functional and departmental
person should be appointed by and be responsible to,
framework. There will still be aneed for the individual
the Board of Management. Preferably he shou!d be
specialized activities; all that will be changed will be
independent of any particular department, thus being
the basis of the primary objectives of the individual
capable of cutting across departmental boundaries
departments.
without ‘bias.
10.2 The principal change will be in the extent and
11.2 Modification to Customer/Supplier
content of interdepartmental communications, and also
Relationship
in the relationship between the organization and the
suppliers of its principal assets, whether these be
11.2.1 Many ofthe problems which arise atalate stage
buildings, plant or both.
in the life of physical assets stem from inadequate
specification ofrequirements and poor communication
10.3 With the changes in internal and external
between customer and supplier. It is important to
communications there will inevitably be some
distinguish between specification for function and
modification to individual responsibilities and there
5
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