Professional Documents
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CaseStudieson AssetLifeCycleCostModelling
Contents
TheBasics TheProcess DifferentModels Examples/CaseStudies
AssetLifeCycleCostBasics
Life Span (Assessment Period)
Total Cost
Replacement
Refurbishment
Financial Year
Time
LifeCycleCostModellingProcess
Step 1:
Define the Scope of the Analysis
Stakeholder involvement Project plan review Scope of analysis Data requirements analysis Model selection Depreciation policies and rates Governing accounting practices Categorisation of cost contributors Validation of the model by Accounting Team identification Responsibility allocation Data collection and configuration Data verification Audit trail for data entries Consensus discussion Base results demonstration Reality checks Sensitivity analysis Variations Presentation to Stakeholders Consensus Budget alignment and Project Team appointment Implementation project definition and activation
Step 2:
Develop or adjust the LCC Model
Step 3:
Define Team. Collect Information
Step 4:
Populate the Model
Step 5:
Review and Optimise the Model
Step 6:
Decision and Implement the Solution
Step 7:
Maintain the Model
DifferentModels
OptimumReplacementAge Repair/Replacement AlternativeDecisionMaking MaintenanceStrategySelection OtherUses
OptimumReplacementAgeModels
LifeCycleCost
Replace every Year
LCC1
LCC2
LCC3
LCC4
Etc.
LCCX
Replacement Interval EveryYear Every2Years Every3Years Every2Years Every4Years Every5Years Every6Years Every7Years Every8Years Every9Years
CostSummationsacrossLifeSpan(Example)
Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 LCC $77.95M $47.95M $37.5M $34.45M $33.65M $32.55M $32.5M $35.2M $38.9M $41.7M $45.05M
9.00 3.20 3.30 3.70 3.85 3.90 3.90 3.90 3.90 3.90 Every10Years 3.90
8.40 8.40 3.70 4.20 4.50 4.50 4.50 4.50 4.50 4.50 4.50
7.80 1.00 7.80 4.05 3.60 3.65 3.65 3.65 3.65 3.65 3.65
7.45 7.45 0.85 7.45 3.55 3.45 3.50 3.50 3.50 3.50 3.50
7.05 1.35 1.05 0.85 7.05 3.50 3.45 3.60 3.60 3.60 3.60
6.80 6.80 6.80 1.00 0.80 6.80 3.30 3.75 3.65 3.75 3.75
6.65 3.65 1.40 1.05 0.90 0.70 6.65 3.90 4.40 4.65 4.75
6.35 6.35 3.50 6.35 0.95 0.85 0.65 6.35 4.25 3.75 3.55
6.25 1.60 6.25 3.30 1.15 0.95 0.80 0.50 6.25 3.80 3.75
6.20 6.20 1.30 1.25 6.20 1.20 0.85 0.70 0.45 6.20 4.10
6.00 1.95 1.55 1.25 1.10 3.05 1.25 0.85 0.75 0.40 6.00
9 8
Costs [$M]
7 6 5 4 3 2 1
Y0
Y1
Y2
Y3
Y4
Y5 Time
Y6
Y7
Y8
Y9
Y10
ExcelbasedModelRepresentation
AssetLifeDetermination
AssetLifeDetermination
RepairorReplace?
Old Truck?
New Truck?
Repair/ReplacementModels
LifeCycleCost
Replace After 1 Year
LCC1
LCC2
Maintain or Replace?
LCC3
LCC4
Etc.
LCCX
Replacement Year
ReplaceY0 ReplaceY1 ReplaceY2 ReplaceY3 ReplaceY4 ReplaceY5 ReplaceY6 ReplaceY7 ReplaceY8 ReplaceY9 ReplaceY10
CostSummationsacrossLifeSpan(Example)
0 Y0
Y1
10 Y2
Y3
20Y4
Y5
Y6 30
Y7
Y8 40
Y9 [$M] Y10
LCC
9.00 3.20 3.30 3.70 3.85 3.90 3.90 3.90 3.90 3.90 3.90
1.00 8.40 3.70 4.20 4.50 4.50 4.50 4.50 4.50 4.50 4.50
1.25 1.00 7.80 4.05 3.60 3.65 3.65 3.65 3.65 3.65 3.65
1.45 1.20 0.85 7.45 3.55 3.45 3.50 3.50 3.50 3.50 3.50
1.75 1.35 1.05 0.85 7.05 3.50 3.45 3.60 3.60 3.60 3.60
3.75 1.65 1.15 1.00 0.80 6.80 3.30 3.75 3.65 3.75 3.75
1.40 3.65 1.40 1.05 0.90 0.70 6.65 3.90 4.40 4.65 4.75
1.60 1.30 3.50 1.35 0.95 0.85 0.65 6.35 4.25 3.75 3.55
1.80 2.00 2.30 Replacement Capital 1.60 1.75 1.95 Maintenance Costs 1.20 1.30 1.55 Costs 1.25 3.30Process 1.25 1.15 3.20 1.10 Lost Productivity 0.95 Disposal 1.20 3.05 0.80 0.85 1.25 0.50 0.70 0.85 6.25 0.45 0.75 3.80 6.20 0.40 3.75 4.10 6.00
$27.30M $27.05M $26.80M $29.45M $30.65M $32.45M $32.50M $35.20M $38.90M $41.70M $45.05M
9 8
Costs [$M]
7 6 5 4 3 2 1
Y0
Y1
Y2
Y3
Y4
Y5 Time
Y6
Y7
Y8
Y9
Y10
ExcelbasedModelRepresentation
Repair/ReplaceModel
Replacement Year
Current Machine Depreciation Disposal Shutdown Lost Productivity Lost Productivity Lump Sum Capital Lump Sum OPEX Routine Process Routine Maintenance Replacement Capital
Re pla Re ce Y pla 0 (2 Re ce Y 00 6) pla 1 ce (20 Re 0 pla Y2 ( 7) 2 c Re e Y 008 pla 3 ( ) 2 Re ce Y 00 pla 4 9) (2 Re ce Y 01 pla 5 ( 0) 2 Re ce Y 011 ) pla 6 (2 Re ce Y 012 pla 7 ) (2 c Re e Y 013 pla 8 ( ) Re ce 201 pla Y9 4) ( c Re e Y 201 5) pla 10 Re ce Y (201 pla 11 6) c Re e Y (20 pla 12 17) ( Re ce Y 201 pla 13 8) ( c Re e Y 201 pla 14 9) Re ce Y (202 pla 15 0) c Re e Y (202 pla 16 1) Re ce Y (20 pla 17 22) Re ce Y (20 pla 18 23) ( c Re e Y 202 pla 19 4) Re ce Y (202 pla 20 5) c Re e Y (202 pla 21 6) ( Re ce Y 202 pl 22 7) a ( Re ce Y 202 pla 23 8) Re ce Y (20 pla 24 29) ce (2 Y2 030 5 ) (2 03 1)
CoalTerminalAssets
StackerRepair/ReplaceModel
ReclaimerRepair/ReplaceModel
Repair/ReplacementModelExample1
PasteuriserPerformanceImprovement
Alrode L9 Pasteuriser IQMS Results
100 90 80
70 60 50 40 30 20 10 0 Apr- May- Jun00 00 00 Jul00 Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun00 00 00 00 00 01 01 01 01 01 01
Month
AlternativeDecisionMaking
MaintenanceStrategySelection
MaintenanceStrategySelection
Risk Based Maintenance Task LCC Comparison
8000000 7000000 Alternative Risk Based Maintenance Solutions (Mitigated Risk) Current Risk
6000000 5000000 4000000 3000000 2000000 1000000 0 RBM: Condition Based Maintenance RBM: Usage Based Maintenance RBM: Run to failure Maintenance RBM: Design Improvement Maintenance
Non-RBM Maintenance
LifeSpanImpact
LifeCycleCostModelling
OtherUses
LifeCycleCostManagement
Life Cycle Costs
$
Time
22
10 12 14 16 18 20 22 24 26 30
Assets
1 2 3 4 5 6 7
FleetTotalLCC $
Fleet Plan
RollingYearsX?)
0 4 8 12 16 20 24 28 32 36
$ $ $ $ $ $ $ $ $
LifeCycleCost
MachineBenchmarking
Cumulative Costs
Usage
DubaiFestivalCity/DubaiPalmJumeirah
ModellingSoftwareTools
Excel APTLifespan(WoodhousePartnership) AssetLife (HansenCorporation) Meridium ReliabilitySolutionLifeCycleCostModule
References
Standards:
AustralianFederalIncomeTaxLegislation AS15288:2003SystemsEngineering SystemLifeCycleProcesses AS/NZS4356:Lifecyclecosting Anapplicationguide AustralianAccountingStandardAAS4Depreciation AustralianAccountingStandardAAS116Property,PlantandEquipment InternationalFinancialReportingStandards(lFRS)IAS16andIAS36Standards AustralianGovernmentDepreciationGuidelines AustralianMasterTaxGuide TR2009/4:TaxationRuling Incometax:effectivelifeofdepreciatingassets GAAP(GenerallyAcceptableAccountingPractices) LifecyclecostingBetterPracticeGuide AustralianNationalAuditOffice Maintenance,ReplacementandReliability,A.K.S.Jardine LifeCycleCostandEconomicAnalysis,PrenticeHall,EnglewoodCliffs,NJ LifeCycleCost,Reliability,Maintainability,andSupportabilityGuidebook,Warrendale,PA LifeCycleCosting:Techniques,ModelsandApplications,B.S.Dhillon LifeCycleCostandEconomicAnalysis,BenjaminS.Blanchard,Fabrycky,Wolter J APTLifespan:www.reliability.com.au LCCWare3:www.aptools.co.uk Barringer &Associates,Inc:http://www.barringer1.com/
Books:
Websites: