Page 329 - Improving Machinery Reliability

Life Cycle Cost Studies 297

Disposal costs occur as a lump sum at the end of the ten-year remaining life are
expected to be US$500 for permits and legal costs associated with disposition,
US$500 for wreckingldisposal costs, US$l,OOO for remediation costs, US$O for
write-offlrecovery costs, and US$l,OOO estimated greedclean costs associated with
disposal of the asset. These costs will occur in the final year. Table 5-13 shows non-
annualized acquisition and sustaining costs for the parallel ANSI pumps; Table 5-14
shows the annualized recurring costs for parallel/redundant ANSI pumps.
A quick cost review of the redundant ANSI pump shows electrical power costs are
the biggest annual cost problem shown in Table 5-14 for a sustaining cost of
US$21,493lyear.

Alternative #3 Replace Solo ANSI Pump with Solo API Pump. Use the follow-
ing details from plant experience.
Capital costs are $18,000 for a solo API pump plus $3,500 for construction and
installation along with US$l,OOO for program management, US$1,5OO for engineer-
ing design, US$l,OOO for documentation, and US$500 for technical data. Likewise,
the plant maintenance organization will incur US$l,OOO for engineering documenta-
tion costs to put the equipment into the paperwork system and US$1,500 for training
costs associated with the new class of equipment. Spare parts for the new equipment
will be increased by $2,900 for a new set of seals and bearings.
Lost gross margin occurs at US$4,000/hour when the process is down for repairs.
Costs will be charged for each specific case using the accounting principle that cost
follows activity.
Annual power cost for running the pump is US$165/year per horsepower. The
plant incurs 1.6 power outages each year for an average downtime of 0.5 hours, and
this cost is charged into plant overhead rather than to individual pieces of equipment.
Annual power costs are (US$165/hp-year) * (100 hp) = US$16,500
See Table 5-13 for other failure details, and plan to depreciate the assets over the
10-year project life.

Table 5-13
Non-annualized Acquisition and Sustaining Costs for Parallel ANSI Pumps

PanlleURedundant ANSI Pumps:
Year Year Year Year Year Year Year Year Year Year Year
Cost Element
0 1 2 3 4 5 6 7 B 9 10
Acqulsnion Cosls
Program Managemenl io00
Engineering Design 1500
Engineering Dala 0
Spare parts B Logsl~cs 0
Faulilles 8 Construction 0
Inibal Training 0
Technical Dala 0
Capital Equipmenl 13500
Sustaining Costs
Documenlalion Costs 1000 0
[Pisposal costs 3000
~otai= 17000 0 0 0 0 0 0 0 0 0 3000