Page 133 - Challenges in Corrosion Costs Causes Consequences and Control(2015)

DATA COLLECTION AND ECONOMIC ANALYSIS 111

gathered was reduced to coefficient and range changes so that adjustments could be
made in the I/O model to account for corrosion costs on moving from economy I to
World II (no corrosion) and World III, a world of best corrosion practice where all
avoidable costs are eliminated.
In the B.C.L. model, World II and World III flow coefficient adjustments were
stated as percentages of the corresponding World I coefficient. Capita/output
coefficient adjustments were expressed as a percentage of excess capacity for an
entire industry or as a percentage of a specific World I coefficient for redundant
equipment adjustments. Replacement adjustments were expressed as change in years
such as 10–30 years for World I and 20–30 years for World II. Final demand changes
were expressed as a percentage change of World I values.
Thus, the input/output model used by N.B.S./B.C.L. captured all direct and indi-
rect costs of corrosion through the creation of a total economic model for each chosen
scenario.
Corrosion lifetimes of capital assets deserve particular attention, as replacement
lives of capital items are affected by corrosion. The items are replaced at a greater
rate than the rate when corrosion is absent. Corrosion costs of this type were treated
by B.C.L. in the I/O model by adjusting the replacement life of the corroded capital.
Capital replacement is also necessary because of wear and obsolescence.
Premature failure because of corrosion is well defined but proved to be difficult to
be treated quantitatively in the B.C.L. model. The two difficulties encountered are:

1. Paucity of data on replacement lives of capital equipment.
2. Each capital-producing sector in the I/O model produces a bundle of goods and
as a consequence of this, each capital sector produced diverse products with
respect to the effects of corrosion.

As a starting point, in World I, a range of single values for replacement life in years
was assigned by B.C.L. to each capital-producing sector on the basis of U.S. Inter-
nal Revenue Service data for depreciation rates. These replacement lives provided a
useful starting point, although the replacement lives did not represent actual lives in
service.
B.C.L. used the following procedures to estimate changes in replacement lives
from the base range because of corrosion.
1. Products by industrial sectors that are affected by corrosion were identified.
2. The effect of corrosion on replacement life was estimated as “minor, moderate,
or major.”
3. The base ranges for replacement lives in World I were changed to reflect the
relative impact of corrosion (World II).
4. The best corrosion practice (World III) was identified.

The procedure used by B.C.L. permitted changes in a consistent manner with the
identification of relative magnitude of corrosion effects even in the absence of quan-
titative service life information. The judgment of the magnitude of corrosion effects