Monetised Risk Values and Cost-Benefit Evaluation of Maintenance Options for Aging Equipment

Monetised Risk Values and Cost-Benefit Evaluation of Maintenance Options for Aging Equipment

Maria Chiara Leva (Technical University of Dublin, Ireland), Micaela Demichela (Politecnico di Torino, Italy) and Gabriele Baldissone (Politecnico di Torino, Italy)
DOI: 10.4018/978-1-7998-3904-0.ch014


In this chapter, the authors present an overview of methods that can be used to evaluate risks and opportunities for deferred maintenance interventions on aging equipment, and underline the importance to include monetised risk considerations and timeline considerations, to evaluate different scenarios connected with the possible options. Asset managers are compelled to continue operating aging assets while deferring maintenance and investment due to the constant pressure to reduce maintenance costs as well as short-term budget constraints in a changing market environment. Monetised risk values offer the opportunity to support risk-based decision-making using the data collected from the field. The chapter presents examples of two different methods and their practical applicability in two case studies in the energy sector for a company managing power stations. The use of the existing and the new proposed solutions are discussed on the basis of their applicability to the concrete examples.
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Asset managers are often required to maintain operational continuity with aging assets while deferring maintenance and investment. The consequences of such decisions are rarely immediate, deferring maintenance and investment can result in cost reduction in the short term, however it also required on the other end to set up an “intelligent prognostics” system, which can measure, control, and alert the operating personnel, detecting unavoidable risk degradation (Mc Nett 2016).

Overall the situation calls for better monitoring and control on ageing equipment, to quantify the impact of operating modes on system reliability, to accurately estimate their residual life and to adapt the maintenance strategy, while respecting safety, regulation and operational performance.

Any power plant is required to supply the amount of energy demanded by the market and to comply with the regulatory requirements defined by government laws. To attain the objective, one of the most important aspects is to guarantee technical availability. This feature is not always easily achieved: during operation, the equipment that are used the most are gradually deteriorating, until they reach a deterioration failure, or other types of failures, such as fatigue or corrosion, induced by the specific operating conditions of the equipment itself.

New opportunities are given by monitored systems in modern process plants, whose data have to be integrated in DCS (distributed control systems) and PLC (programmable logic controller) to prevent potential dangerous outcomes. Data gained through the automated monitoring and control systems, but also through inspections, are fundamental and can bee used to support risk- based decision making, and ultimately the risk management of ageing equipment. To understand, identify, and manage critical states in aging or deterioration, it is necessary to develop mathematical models that represent the aging process to show the deterioration of power equipment, and determine the cause of aging. A review of the most recurrent causes of trips in a power generation company in The republic of Ireland showed that 43% of all the trips are attributed to equipment aging as root cause and in those 43% more than 65% explicitly mention equipment aging as the primary causes. Although aging and deterioration effects are unavoidable, it is desirable to find a way to slow down the deterioration rate, and to extend equipment’s service life and this could be obtained by reducing exposure to the operating, environmental or transient conditions that cause or exacerbate deterioration.

This chapter presents a risk-based assessment for decision related to different maintenance intervention options as applied to the context of power generation (Darabnia & Demichela, 2013a & b).

Asset Management and Risk Analysis

The standard ISO 5500 (ISO 55001, 2014 & ISO 55002, 2014) provides guidelines and industry bets practices for asset management that can apply to organisations of any size, in any sector. The ISO 55000 family stem from PAS 55, a publicly available specification introduced by the British Standards Institution (BSI). In the section of ISO 55001 that deals with planning to achieve asset management objectives there is a clause (Clause 6.2.2) that states the following:

"When planning how to achieve its asset management objectives, the organization shall determine and document….actions to address risks and opportunities associated with managing the assets, taking into account how these risks and opportunities can change with time, by establishing processes for:

  • Identification of risks and opportunities;

  • Assessment of risks and opportunities;

  • Determining the significance of assets in achieving asset management objectives;

  • Implementation of the appropriate treatment and monitoring of risks and opportunities.”

Appropriate asset management strategies allows companies to achieve risk reduction, opportunity identification or process improvement, which can be identified early in the implementation, and can be exploited to demonstrate returns and gain stronger stakeholder support. An asset management system can help in gaining an understanding of assets, their performance, the risks associated with managing assets, it supports a long-term and sustainable approach to decision making and the organization’s risk-based decision making processes can become more effective by addressing asset and financial risks together, and by balancing performance, costs and risks.

A company asset management policy should also take into consideration the evolution of PACS (protection, automation and control system) as they should be developed keeping in mind the possibility of future extension, modification and functional upgrading until complete system refurbishment.

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