Maintenance Costs and Life Cycle Cost Analysis

Diego Galar, Peter Sandborn, Uday Kumar

• Publisher: CRC Press
• Year: 2017
• ISBN:
  9781351650236
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: Civil Engineering
• Index: Technology & Engineering

Authors have attempted to create coherent chapters and sections on how the fundamentals of maintenance cost should be organized, to present them in a logical and sequential order. Necessarily, the text starts with importance of maintenance function in the organization and moves to life cycle cost (LCC) considerations followed by the budgeting constraints. In the process, they have intentionally postponed the discussion about intangible costs and downtime costs later on in the book mainly due to the controversial part of it when arguing with managers.

The book will be concluding with a short description of a number of sectors where maintenance cost is of critical importance. The goal is to train the readers for a deeper study and understanding of these elements for decision making in maintenance, more specifically in the context of asset management. This book is intended for managers, engineers, researchers, and practitioners, directly or indirectly involved in the area of maintenance. The book is focused to contribute towards better understanding of maintenance cost and use of this knowledge to improve the maintenance process.

Key Features:

• Emphasis on maintenance cost and life cycle cost especially under uncertainty.

• Systematic approach of how cost models can be applied and used in the maintenance field.

• Compiles and reviews existing maintenance cost models.

• Consequential and direct costs considered.

• Comparison of maintenance costs in different sectors, infrastructure, manufacturing, transport.

1
Relevance of Maintenance Function in Asset Management

1.1Purpose of Maintenance Function

Webster’s dictionary defines maintenance as

• To maintain
• Keep in existing condition
• Preserve, protect
• Keep from failure or decline

EN 13306:2010 defines maintenance management as “all activities of the management that determine the maintenance objectives, strategies, and responsibilities, and implement them by means, such as maintenance planning, maintenance control and supervision, improvement of methods in the organization, including economical, environmental, and safety aspects.

Therefore, the overall goal of maintenance within an industry is to preserve, with reliability, the system (or product) operation at a level that meets the company’s business needs, and to ensure

A specific duration of failure-free performance under stated conditions.

Maintenance management will take care of the resource allocation required to accomplish the maintenance goals; and maintenance costs definitely play a key role in this equation to achieve those goals at minimum cost and also to know how to calculate, register, and control those costs.

Everyone has an understanding of what maintenance is. If asked, they will mention things like fix, restore, replace, recondition, patch, rebuild, and rejuvenate. To some extent, there is a place for these concepts, but they miss the mark in understanding the totality of maintenance. Maintenance is the act of maintaining. The basis for maintaining is to keep, preserve, and protect; that is, to keep in an existing state or preserve from failure or decline. There is a major difference between this definition and the words and functions normally mentioned by those considered “knowledgeable” about maintenance.

The maintenance department is responsible and accountable for maintenance. It is responsible for the way equipment runs and looks and for the costs incurred in achieving the required level of performance. This is not to say that operators have no responsibility for the use of equipment when it is in their hands—they do. But to split responsibility between maintenance and any other department is to leave no one accountable.

Therefore, the maintenance department is responsible for the frequency and level of maintenance, thus balancing responsibility and cost control. That said, the maintenance function should report to top management. This allows maintenance problems to be dealt with in the best interests of the plant or company as a whole. Maintenance efforts and costs must not be manipulated as a means for a department to achieve its desired results.

When the maintenance department or group is held responsible and accountable for maintenance, its relationship with other departments takes on new meaning. The maintenance department can’t afford to have adversarial relationships with others. It must base its interdepartmental relationships on credibility and trust. This is essential for the successful operation of a maintenance management system (Smith and Mobley, 2007).

1.1.1Maintenance Function

The process of maintaining physical assets covers all actions necessary for

• Retaining an asset in a specified condition
• Restoring an asset to a specified condition

Deterioration of the condition and capability of a manufacturing system starts as soon as the system is commissioned. In addition to normal wear and deterioration, other failures may occur, especially when the equipment is pushed beyond its design limits or suffers operational errors. Equipment downtime, quality problems, processing speed losses, safety hazards, and/or environmental pollution all occur because of deterioration. These outcomes can negatively impact the operating cost, profitability, customer satisfaction, and productivity. To ensure a plant or a company meets its production targets at an optimal cost, maintenance management has to carefully plan its maintenance objectives and strategies.

Good maintenance assumes that maintenance objectives and strategies are not determined in isolation, but are derived from such factors as company policy, manufacturing policy, and other potentially conflicting demands and constraints in the company. According to Muchiri et al. (2010), maintenance objectives are related to the attainment of production targets (through high availability) at a required quality level, and within the constraints of the system’s condition and safety. Furthermore, maintenance resources are used to ensure the equipment is in good condition, the plant achieves its design life, the safety standards are met, and the energy use and raw material consumption are optimized, among other factors.

Some of the important factors influencing the maintenance objectives are shown in Figure 1.1: ensuring the plant functionality (availability, reliability, product quality, etc.); ensuring the plant achieves its design life; ensuring plant and environmental safety; ensuring cost-effectiveness in maintenance; and ensuring the effective use of resources (energy and raw materials). The maintenance objectives of a given company or plant will obviously influence the specific performance indicators used to measure success.

FIGURE 1.1
An illustration of factors influencing maintenance objectives.

Once the maintenance objectives are outlined, the nex...

Table of contents

• Cover
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• Preface
• Acknowledgments
• Authors
• 1. Relevance of Maintenance Function in Asset Management
• 2. Maintenance Costing in Traditional LCC Analysis
• 3. Maintenance Budget versus Global Maintenance Cost
• 4. Maintenance Performance Measurement: Efficiency
• 5. Consequential Maintenance Cost: A Problem Area
• 6. Maintenance Services and New Business Models: A New Way to Consider Costs
• 7. Maintenance Costs Across Sectors
• Index