Total value of ownership

The theme of the Netherlands’ WIB mini seminar was the added value that timely replacement of control systems brings. We report from TWP on use of APT’s Lifespan to optimize the process.

Speakers at the WIB-NL* mini seminar in The Hague last month, emphasized that control system replacement should be move from ‘cost’ to ‘value.’ John Woodhouse (CEO of asset management specialist The Woodhouse Partnership) outlined the methodology developed by his company to optimize the timing of digital control systems’ replacement. TWP advocates using the British Standards Institute’s PAS 55:2008 guidelines. These are owned and maintained by TWP and provide publicly available specification for the ‘optimized management of physical assets.’

Plant operators are frequently influenced by KPI pressures, lack of data, departmental conflicts/boundaries and ‘uncertain’ equipment life. A lifecycle view of an asset is hampered by hard to evaluate risk, tax/accounting issues and in general short term reasoning. Such issues were the focus of the EU ‘Macro’ project, a five year, $2.5 million R&D programme exploring best practices in risk-based industrial decision-making. Macro members included Shell and PDVSA and deployed software from Asset Performance Tools.

The main finding was that the ‘true’ optimum time to replacement may differ from a simplistic balance of planned replacement and failure risk. The big problem in risk assessment is poor data and assumptions. There can easily be a fourfold variation in risk estimates and ‘you need to be careful who/what questions to ask, and you need to tell people what the data will be used for.’

A proper risk-optimized strategy allows assets’ life to be extended beyond a rule-based useful life determination, while staying short of ‘high risk reactive decisions.’ The process includes a mathematical evaluation of immediate and future cash flows into an ‘equivalent annual cost.’

APT’s Lifespan is the tool of choice, allowing for the combination, at a very granular level, of the present value and time to replacement of DCS components. The approach is said to avoid errors due to interacting failure modes, and deprecates models (FMEA, Weibull) that treat risks separately. Key to the process is the ‘structured use of tacit knowledge.’ Range estimating is better than ‘lots of dubious quality hard data.’ Business impact can be 10 times efficiency improvements. Flagship use of the approach was an analysis of Saudi Aramco Basic Chemicals’ (SABIC) DCS.

The approach is now being extended with another EU-backed project, ‘Strategic assets life cycle optimization,’ extending the Macro results to an asset portfolio. Participants in the three year include Cambridge University, Sasol, and Centrica. More from the WIB-NL on page 9 of this issue.

* The international instrument users association.

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