Cost of Equipment Failure Modelling as a Tool for Maintenance Strategy

Abstract

The cost of equipment failure has been recognized as a significant tool for the assessment of maintenance performance. Sound strategic maintenance decision making based on maintenance problem identification leading to planning and improvement is central to the improved operational performance of manufacturing plants. Researchers have developed models based on the fundamental premise that poor maintenance has a cost. This article illustrates how this tool is developed practically to ensure a structured approach in developing specific strategies with respect to maintenance for the kiln of a cement plant based on equipment failures over a ten-year period. The cost of failure elements included in the analysis are the opportunity losses, direct incremental fixed element costs and the impact of equipment failure on variable costs. In examining the last, a detailed model development and analysis of the energy efficiency losses related to equipment failure was carried out. The resulting cost of equipment failure model was used in a simulation exercise for a five-year period from 2013 to 2017. The results of this simulation indicate that while opportunity losses are the most significant and make up more than 85% of the losses, efficiency losses are also important, comprising close to ten percent of losses. The variable cost losses, which are independent of selling price assume added relevance in driving efficiencies when competitive market conditions are at play.