Understanding the fundamentals of Life Cycle Costing by Tom Coolican, Senior Reliability Engineer, Woodside Energy Limited, 2006

The function of LCC in projects is significant, as a maintenance and reliability practitioner in an oil and gas company I am regularly tasked with the development and refinement of life cycle cost models.

Through the phases of projects LCC is used to validate the asset integrity and assure management that the project delivery will meet the basis of design. LCC in projects primarily happens between Financial Investment Decision and Project Handover at the beginning of production.

The LCC model grows and develops at each phase throughout the asset life.
• Detailed design
• Delivery
• Execute
• Operation

Detailed design is the first phase of our projects that requires a high level LCC report Project execution phase requires a detailed LCC model.
The delivery phase refines the LCC model and integrates into the “whole of asset” LCC model.
As detail becomes clearer and decisions more final, the LCC model is again refined and prepared for input into the facility LCC model.
During the operation phase the LCC model may be used to validate budget forecasting and to conduct sensitivity analysis for future business changes.

The LCC models must cover two investment decisions.

CPAEX Capital Investment LCC model covers the plant, equipment, installation and commissioning. The use of depreciation and annual cost equivalent are common in CAPEX decisions.

OPEX Operational Investment is the ongoing annual budget to extract maximum value from the CAPEX investment. Manpower costs, operations and maintenance, whole of life spares and logistics, regulatory body prescribed function tests and performance degradation over time are all calculated here.

Why estimate costs?
“Operations will continue, maintenance will be performed.”

The answer is business forecasting, these forecasts allow the planning groups to pre-sell product to buyers while guaranteeing supply at calculated prices.

The forecasting groups provide many of the predicted values to be entered into the LCC estimate. Strong links with business management and financial accounting allow market predictions to some level of accuracy. The planners should be able to predict average interest rate movements, corporate direction, and the market price for the product. This feeds back into the LCC model increasing accuracy and continuously refining the model.

The LCC golden rules:

• Define the DELIVERABLES
LCC models quickly run out of control unless firm and agreed ground rules are in place.

• Get the FACTS
The facts come from the design team; best facts are after the purchase order.

• Establish the PROBABLE
The business forecasting groups are able to provide the economic probabilities; this creates alignment between forecasting, sales and maintenance.

• Stick to the METHOD
The prescribed method for our organization is based on sound theory and lessons learned from previous projects.

• Analyze the RESULTS
The analysis is done in multi disciplinary workshops after the maintenance engineer’s report.

Management and Operations usually want to start sensitivity analysis straight away. LCC is seen as an important tool within the development and delivery of projects and this tool empowers engineers who generally have little to do with budget delivery.

Most management groups get excited at the prospect of delivering additional value to a project and sensitivity analysis of the LCC model is an easy target.

As LCC is progressed through the life cycle of a facility it should evolve and grow, not be put on the shelf as a static document handed over at project completion. This financial function of maintenance management can return actual value to an organization.

References: Capital Investment Analysis for Engineering and Management by Canada, Sullival, White and Kulonda from Academic Internet Publishers, Inc.

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In my working experience with a Certralised Lubrication systems, I have repeatedly encountered Maintenance personnel inserting pennies and/or dimes into the rupture disc port (safety disc) when system pressure blows the 1500/2500 psi disc.

When questioned, I always meet with the same reply-"it won’t damage the equipment, so why not.”

I actual fact, it does not damage the system, since the lube lines are either copper, steel or a mixture of both.

Beside being a method to alert the maintenance practitioner of high pressure in the lines (fault condition), by inserting the penny, the grease during normal system cycle cannot go into the lube lines (due to high fault pressure) and therefore creates a back pressure on the grease within the pump. This situation leads to base oil separating from the thickening agent, and clogging the pump over time.

So that even if the lube line is open to atmosphere, the problem is now turned from a clogged line, to a clogged pump. For the most part a new pump is replaced, but the line is still clogged when reattached, and the cycle continues.

Best practice - Use the correct rated rupture disc, and locate the root cause of the problem, and make it the order of the day.

Reader tip provided by Kurt Ferreira, Manager, Maintenance In Action, Toronto ON Canada.

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The scrubber motor/atomizer units are frequently pulled for inspection or maintenance. We have a spare unit but occasionally just a motor will get swapped in emergency situations. The motors have a magnetic label with the atomizer number they are mounted on since the motor is the only thing visible when in the chamber. Our vibration data for the motor and atomizer was recorded by the magnetic label on the motor so when a motor was swapped without our knowledge (and relabeled) it raised havoc with vibration history on the motor. To avoid an additional label for each motor we started recording the motor S.N. when the motor vibration is read. This has cleared up a lot of confusing trends.

Reader Tip provided by Craig Muri, Mechanical Engineer I, Basin Electric Power Co-op, Beulah, North Dakota

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In a very ultrasonically noisy environment, use the smallest microphone cone that you have to better locate a particular ultrasonic noise. Ultrasonic noise is of very short wavelengths and therefore does not travel around corners too easily. The close opening of the ultrasonic instruments cone will block out noises coming from the sides making it much easier to locate the troublesome noise. With each single correction you make with ultrasound, the easier it is to locate the next one.

Reader Tip provided by Gary Wiggins, Condition Monitoring Technician, Alcoa Primary Metals, Goose Creek SC

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by Joel Levitt

Maintenance can be a pressure cooker. Emergencies, short staffing, vendor problems, high customer expectations all contribute to be stressors on the job. While removing the stressors is impossible, changing your attitude might be possible.

A person who feels mastery over his/her environment transforms the `bad’ stress into good excitement. Workings on time management as a skill helps people feel mastery. The goal is not to feel in control because that is an illusion. The goal of time management is feeling that you can master anything that comes at you.

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Kill Off the Training Program & Other Excuses to Go to Florida (6 of 12)

Training is something that can disrupt the wrecking of a maintenance program if you are not careful to avoid it. In the high technology world we live in today, people need constant access to new methods and techniques, or they quickly fall behind. In just a few months, one can completely hobble a maintenance organization by simply turning off the funding for training.

Try your best to strangle your training budget down to the bare minimum. Provide no value, and include ample amounts of vendor training aimed at selling equipment. Best practice companies usually budget 80+ hours of quality training per year, per employee. When your budget accidentally contains money for training, squash this by fabricating urgent tasks that will not allow anyone to go to the training. Or, schedule the training, pay the trainer, and then cancel the class to waste more money.

If you are lucky enough to have no training budget, keep you mouth shut about it. The last thing you want is your maintenance team spending their time in Florida or Las Vegas attending training or a good trade show. When they come back, they will be full of all kinds of wild ideas about how to fix problems and save money. It will take you months to shut them up and make them disgruntled again.

Tune in next week as we continue to expose the secret lives of seriously disturbed maintenance “professionals” with The Dirty Dozen Tip #7: Make Sure Everyone Works 60+ Hours a Week.

“Tip” provided by NoBreakDowns.com
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Calculating Motor Load with a Voltmeter and Ammeter

Accurately evaluating electric motor load can be useful when troubleshooting conditions. Using just an ammeter is not accurate. However, for loads over 50% the percent load can be found reasonably accurately using a voltmeter and ammeter.

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