Life Cycle Cost & Reliability For Process Equipment Page 13
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22Table 4: Discounted Values For Acquisition & Sustaining Costs For Fix When Broken
Discounted Values of Acquisition + Sustaining Costs @ 12%
Present value of US$1
1.00
0.89
0.80
0.71
0.64
0.57
0.51
0.45
0.40
0.36
0.32
Project Year And Annual Costs Expected From Simulation
Cost Element
0
1
2
3
4
5
6
7
8
9
10
Total
Acquisition
$18,000
$18,000
Electricity
$
14,685
$
13,200
$
11,715
$
10,560
$
9,405
$
8,415
$
7,425
$
6,600
$
5,940
$
5,280
$93,225
Seal
$
9,023
$
11,828
$
12,483
$
11,892
$
11,409
$
10,052
$
9,165
$
8,022
$
7,448
$
6,473
$97,794
Shaft
$
2,263
$
2,521
$
2,684
$
2,468
$
2,541
$
2,113
$
1,937
$
1,646
$
1,637
$
1,469
$21,279
Impeller
$
75
$
334
$
605
$
870
$
984
$
1,237
$
1,414
$
1,595
$
1,515
$
1,595
$10,223
Housing
$
2,580
$
3,204
$
3,296
$
3,278
$
2,998
$
2,912
$
2,728
$
2,429
$
2,345
$
1,912
$27,681
Pump Bearings
$
6,819
$
8,613
$
9,114
$
8,382
$
7,737
$
6,989
$
6,420
$
5,635
$
5,216
$
4,695
$69,618
Motors
$
3,816
$
4,379
$
4,126
$
3,989
$
3,790
$
3,428
$
3,250
$
2,682
$
2,646
$
2,194
$34,300
Coupling
$
176
$
167
$
155
$
149
$
136
$
129
$
120
$
107
$
100
$
93
$1,332
Maintenance PM visits
$
534
$
480
$
426
$
384
$
342
$
306
$
270
$
240
$
216
$
192
$3,390
Operations PM visits
$
324
$
291
$
258
$
233
$
207
$
186
$
164
$
146
$
131
$
116
$2,057
Vibration Dept PdM
$
463
$
416
$
369
$
333
$
296
$
265
$
234
$
208
$
187
$
166
$2,938
Training costs
$
113
$
102
$
91
$
82
$
73
$
65
$
57
$
51
$
46
$
41
$720
Disposal
$
960
$960
Total=
$18,000
$
40,872
$
45,536
$
45,320
$
42,619
$
39,917
$
36,096
$
33,183
$
29,360
$
27,427
$
25,186
$383,516
Costs incurred, less acquisition, are $365,516 (including the high cost of lost gross margins for outages)
which is 20 times larger than the acquisition cost of the pump at $18,500! On a Pareto basis, the vital
few elements are centered in three categories as shown in Table 5—remember each failure carries with
it the high costs for lost gross margins because of the failures.
Table 5: The Vital Few Items Of Importance For Fix When Broken
Cost Element
Total
Cum %
Priority
Seal
$97,794
25.5%
1
Electricity
$93,225
49.8%
2
Pump Bearings
$69,618
68.0%
3
Motors
$34,300
76.9%
Housing
$27,681
84.1%
Shaft
$21,279
89.7%
Acquisition
$18,000
94.4%
Impeller
$10,223
97.0%
Maintenance PM visits
$3,390
97.9%
Vibration Dept PdM
$2,938
98.7%
Operations PM visits
$2,057
99.2%
Coupling
$1,332
99.6%
Disposal
$960
99.8%
Training costs
$720
100.0%
Total= $383,516
In the top items from Table 5, both seal costs and bearing costs are shown as high values because they
are connected to the high cost of downtime. Each component failure is charged for the lost gross
margin which follows their individual failures.
Finally, putting the data into a NPV calculation, Table 6 shows the expected NPV based on a tax rate
of 38% and a straight line depreciation—of course the discount factor used in Table 6 is the reciprocal
of the present value information shown in Table 4.
13
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