My Take on Managing the Cost of Aging Assets

4 August, 2020 by Add Energy

Managing operational expenditure is a challenge for any asset, but as the age of an asset increases, additional challenges are introduced, and the cost of operational expenditure typically rises. These additional costs are usually driven by equipment failure, obsolescence, and lack of sufficient maintenance.

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To help manage the costs of aging assets, maintenance and operational stakeholders need to consider, and invest into proven initiatives that optimise ways of working, increase equipment reliability and assure safety integrity of the facility.

In this blog, we sat down with Robert Hart, one of our senior consultants based in our Houston office to discuss his experience with aging assets, and understand what cost saving initiatives are available, and are proven to have a direct impact on asset performance and safety assurance for aging assets.

Where do you see the most wasted expenditure on older assets, that could be avoided?

Insufficient Maintenance Strategies

In my experience, I often see companies simply fail to adjust their preventative maintenance strategies to account for the age of the equipment. Surprisingly, we see a lot of the preventative maintenance in the CMMS that is derived from the Original Equipment Manufacturer (OEM) maintenance recommendations, that are designed and based on the equipment condition being new, meaning the strategy is outdated and not fit for purpose. It is therefore crucial to continuously review the PM’s through FMECA (Failure, mode, effects, consequence, analysis) to help determine the optimal frequency and mitigation tasks to avoid known failures and consequences.

On the contrary, I have also witnessed a common trend on switching from a preventative maintenance regime to reactive maintenance strategy, where equipment is being fixed on failure rather than maintained to avoid failure. A consequence of having a reactive maintenance strategy is you introduce the risk of catastrophic failure because you are allowing the failure to happen before intervention (maintenance). This can have an impact on personnel safety, environment, and production, which all ultimately impact the bottom line.

Materials Management

Equipment obsolescence can incur significant costs if it is not managed properly. I have seen millions of dollars wasted because spares cannot be sourced for equipment that has been superseded or upgraded, and not updated through the management of change process – meaning there was no foresight of this change, or actions put in place to manage this.

Poor Data

An aging asset is one that has typically been operating over number decades and has therefore gone through a vast amount of changes, and these changes are commonly not captured and updated in the CMMS. Equipment upgrades, modifications of systems and decommissioned equipment are some examples of these types of changes that can cause the asset register to be out of date – meaning there is no assurance that equipment is being managed, spares and BoMs cannot be assigned, safety integrity barriers cannot be put in place, etc. All of which expose the asset to increased risk of incident or downtime.

What proven initiatives would you recommend considering to reduce the costs associated with aging assets?

1. In addition to my suggestions offered for maintenance strategy optimisation in my last response, I would recommend identifying your reoccurring corrective maintenance, and look for opportunities to change your reactive maintenance, into a preventative maintenance strategy by embedding corrective maintenance into your predictive maintenance schedule. In my opinion, maintenance is an investment which is critical for mitigating risks, and without it, asset stakeholders expose themselves to risk of poor reliability and potential downtime

2. Assure your Bill of Material (BoM) data is up to date and accurate so you can order the right spares, with the correct specifications, in a timely manner to maintain or replace your equipment efficiently. Having this information at your fingertips will also reduce costs associated with:

  • Purchasing the wrong parts
  • Time wasted during part sourcing
  • Storing parts you don’t need - this is expensive and will take up valuable space

3. Last, but by any means not least; companies should consider re-investing in their people, by having the correct training courses in place to establish a high level of competency and accountability within your maintenance and engineering team, companies are guaranteed to see an impact on OPEX. As we continue to experience the effects that COVID-19 is having on our industries, it is understandable that it can be difficult to unlock budget to fund training and competency programmes, so it is important to prioritise individuals based on the exposure of risk they pose to the asset in their position, and their current competency and capabilities to determine who requires investment now.

How would you recommend prioritising improvement actions and opportunities for an aging asset?

  • Build the business case for change and focus on safety impacts and the return on investment to be heard, to gain buy in from Leadership
  • Prioritize individuals and invest in training to assure competency
  • Identify your equipment and its importance to make sure your asset register reflects the physical plant, so you have access to the data you need to manage equipment effectively
  • Shop around for more cost-effective maintenance contractors to provide maintenance support services to avoid paying premium prices demanded by the OEM’s
  • Review and update the Repair and Spare Strategy to help determine the optimal spares holding and avoid wasting money buying and storing equipment you will never need, or is easily accessible, and avoid maintaining equipment that should be simply replaced because it is not economically viable to maintain it
  • Update and validate your BoMs to assure you have the correct information and have a means to identify obsolescence early
  • Optimise and adapt your maintenance strategies based on FMECA, corrective maintenance (failure patterns), engineering changes, age, and demand of the equipment
  • Review and identify all safety or regulatory requirements to assure compliance as the asset ages and legislation/regulations changes over time
  • Review/Develop KPIs to assure they are fit for purpose and aligned to the age of the asset, and put a continuous review programme in place to help drive improvement opportunities – a FRACAS (failure reporting and corrective action system) is a good process to use

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