Life Cycle Cost & Reliability For Process Equipment (Page 3 of 22) in pdf

Life Cycle Costs & Reliability for Process Equipment

H. Paul Barringer, P.E., Barringer & Associates, Inc.,

P. O. Box 3985, Humble, TX, Phone: 281-852-6810, FAX: 281-852-3749

ABSTRACT

Life cycle costs (LCC) are cradle-to-grave costs summarizing all ownership costs. Reliability plays an

important role in selection of equipment for lowest long term cost of ownership. Results of a Monte

Carlo simulation using an Excel™ spreadsheet show good maintenance practices (GMP) can alter

outcomes of both cost and reliability. Maintenance strategies are shown for an API pump using LCC.

LIFE CYCLE COST DEFINITIONS

Life cycle costs are summations of estimated cost from inception to disposal for both equipment and

projects as determined by an analytical study and estimate of total costs experienced during the life of

equipment or projects (Barringer 1996a). The objective of LCC analysis is to choose the most cost

effective approach from a series of alternatives so the least long term cost of ownership is achieved

while considering cost elements which include design, development, production, operation, maintenance,

support, and final disposition of a major system over its anticipated useful life span. LCC is the sum of

acquisition, logistic support and operating expenses (Landers 1996). LCC is the language of money

(Goble 1992).

LCC analysis helps engineers justify equipment and process selection based on total costs rather than

the initial purchase price as the cost of operation, maintenance, and disposal costs exceed all other costs

many times over. Details of LCC have been recently summarized in a tutorial which includes an

extensive listing of references (Barringer 1996b).

INTRODUCTION

Procurement costs are widely used as the primary (and sometimes only) criteria for selecting equipment

or systems. This simple criteria is easy to use but often results in bad financial long term decisions.

Procurement costs tell only one part of the story and equipment maintenance tells the rest of the story as

equipment failure cost is often many times larger than procurement costs. Procurement of cheap

equipment often increases maintenance costs and results in greater LCC. Complete cost details over

the life of the equipment are needed for smart financial decisions, and this requires use of failure details,

simulations, and net present value calculations.

WHY USE LCC?

LCC emphasizes economic competitiveness by working for the lowest long term cost of ownership.

LCC requires many viewpoints to produce cost numbers and thus a teamwork approach is needed for

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