Page 288 - Improving Machinery Reliability

Chapter 5

Life Cycle Cost Studies

Virtually every process plant manager subscribes to the goal of extending equip-
ment life, availability, and reliability. Achieving these objectives usually requires
up-front effort and money, and both seem to be scarce resources.
But even the realistic manager who knows that reliability comes at a price may not
want to authorize these expenditures on the basis of intuition alone. Instead, he may
ask for cost justification linked to a payback period, a cost-benefit calculation, a life
cycle improvement multiplier, or some other tangible factor.
It is usually at this point in the chain of consideration that the reliability engineer
decides he has no data and the issue is closed. Back to status quo-business as usual!
But it doesn't have to be that way. There are many means to determine with rea-
sonable accuracy the monetary incentives or justification for equipment and compo-
nent upgrading. This chapter illustrates how some experienced technical people are
accomplishing this task, and highlights other avenues available to reliability profes-
sionals who see merit in de-emphasizing the purely intuitive approach and wish to
use appropriate numerical alternatives instead.
We start out by explaining a variety of greatly simplified, but nevertheless, valid
approaches. The interested reliability professional may then wish to direct his atten-
tion to the second part of this chapter, dealing with the more rigorous, classical life
cycle cost (LCC) methods.

Simplified Life Cycle Cost Estimating

Life cycle cost estimating is rapidly becoming one of the reliability engineer's most
effective improvement tools. This estimating approach takes into account the initial
purchase and installation costs of equipment, auxiliaries, and software systems; to
these it adds the cost of failure events, including, of course, lost production.'.*

Electronic Governor Example

Consider the sample case of an electronic governor system installed on a mechani-
cal drive steam turbine coupled to a process gas compressor in the late 1980s. Let's
assume the plant expected to operate for at least 30 more years, but had to consider
three options. The first choice was to keep the existing hydro-mechanical gover-
nor-a zero initial cost option.

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