Supporting Business Cases for PHM: Return on Investment and Availability Impacts

Supporting Business Cases for PHM: Return on Investment and Availability Impacts

Peter Sandborn (CALCE, University of Maryland, USA), Taoufik Jazouli (CALCE, University of Maryland, USA) and Gilbert Haddad (Schlumberger Technology Center, USA)
DOI: 10.4018/978-1-4666-2095-7.ch014
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Abstract

The development and demonstration of innovative prognostics and health management (PHM) technology is necessary but not sufficient for widespread adoption of PHM concepts within systems. Without the ability to create viable business cases for the insertion of the new technology into systems and associated management processes, PHM will remain a novelty that is not widely disseminated. This chapter addresses two key capabilities necessary for supporting business cases for the inclusion and optimization of PHM within systems. First, the chapter describes the construction of life-cycle cost models that enable return on investment estimations for the inclusion of PHM within systems and the valuation of maintenance options. Second, the chapter addresses the support of availability-centric requirements (e.g., availability contracts) for critical systems that incorporate PHM, and the resulting value that can be realized. Examples associated with avionics, wind turbines, and wind farms are provided.
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Introduction

Prognostics and health management (PHM) is a discipline consisting of technologies and methods to assess the reliability of a system in its actual life-cycle conditions, to determine the advent of failure, and mitigate system risks (Pecht, 2008; Cheng et al. 2010). The objective of PHM is to avoid unanticipated system failure while concurrently minimizing the amount of remaining useful life that is thrown away by maintenance actions. As with any maintenance strategy, the incorporation of PHM within a system is a tradeoff between the value realized and the cost of creating, incorporating, and supporting the associated management activities. Quantification of this value is extremely important in order to justify the large investments of money, time and resources required to create and support PHM in a system.

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