Page 58 - Root Cause Failure Analysis

Root Cause Failure Analysis Methodology 49

The analysis should include the effect of the problem on downstream production
facilities. Since most plants are integrated to some degree, a problem in one area of
the plant generally has a direct impact on all downstream plant areas. For example. if
the preparation area fails to deliver an adequate volume of prime-quality flake in a
timely manner, the performance of all downstream production areas is adversely
affected. Therefore, it is important that the loss of revenue, potential increase in con-
version costs, and resultant benefits of the corrective action on the downstream areas
be considered in the cost-benefit analysis.

Cost Analysis
The cost analysis consists of two parts. Thejrst part should quantify the impact of the
problem, incident, or event on the process. For this analysis, the impact must be
defined in financial terms rather than in terms of delays, downtime, and other tradi-
tional tracking mechanisms. If the problem is proven to cause an increase in unsched-
uled delays, it must be defined in costs rather than hours or percentages. The second
part of the analysis should define all costs directly or indirectly associated with actu-
ally implementing the recommended corrective action(s).

Process-Related Costs
The Cost-Accounting Department in most plants can provide some assistance con-
verting non-financial data into actual costs. They should have established guidelines
that define the operating costs for each production unit or system within the plant in
terms of dollars per unit time (e.g., dollarshour). In most cases, these costs consist of
production labor, consumable materials, power consumption, and plant overhead.

While operating costs are the “true” costs, they do not include all the financial
impacts that result from delays or downtime. Other process-related costs that must be
included are capacity losses and delivery-schedule slippage.

Materials Most problems that result in equipment failure or deviations in process
performance have a history of abnormal material costs, which should be quantified as
part of the cost-benefit analysis. These costs include replacement parts, spare machin-
ery, special expediting charges, and all other material-related costs incurred by the
machine or process system being investigated.

Note that the cost analysis should define only those costs that are unusual and are
incremental costs due to the specific problem. The best way to determine the actual
incremental material costs due to the abnormal machine is to compare the total
incurred costs to the recommended material cost provided in the vendor’s O&M
manual. In these manuals, the vendor provides specific recommendations on the
number of spares, replacement parts, and expendables that should be required by
the machine. This data provide the means to calculate the total material cost that
should have been incurred for the investigated machine. Incremental cost is the dif-
ference between the actual cost incurred and the projected cost derived from vendor
information.