Capital Equipment Replacement Chapter 4

OPTIMAL RELIABILITY AND MAINTENANCE IN THE MINING INDUSTRY

Andrew K S Jardine

ANDREW K. S. JARDINE
University of Toronto, Canada

October 19, 2012

A.K.S. JARDINE

EVIDENCE-BASED ASSET MANAGEMENT (EBAM)

Evidence-based medicine is considered the gold

standard in modern medical practice.
Why shouldnt evidence occupy the same rank
in the costly, critical area of asset management?

A.K.S. JARDINE

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WE WANT

FACT-BASED ARGUMENTS
(data driven decisions)
NOT

INTUITION-BASED PRONOUNCEMENTS

A.K.S. JARDINE

A RECENT E-MAIL

Professor Jardine:
My company (XXXXXXX) is one of the largest marine cargo handing firms in
the U.S. We have approx 2400 pieces of rolling stock, mostly powered lift
equipment (stationary cranes, mobile cranes, side & top handlers, forklifts,
etc). We have no corporate strategy on equipment repair/replacement, lease
vs. buy, economic service life, etc. These decisions are based often on
strength of personalities and # of mechanics complaints, not objective
analysis. I'm looking to change that.
On the plus side, we do have a CMMS (Maximo) and 4 years of pretty good
equipment information and cost history. So we have some data to analyze.
I'll be back in my office Sept 18-19, perhaps we could connect then. I'm on
U.S. west coast time (based in XXXXX). Look forward to learning more.

A.K.S. JARDINE

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THE VISIT

The outcome of the previous message was that I visited

the company for one day. In the morning I spoke about
the procedure to be used to establish the economic life
of their mobile equipment. In the afternoon they
brought into the meeting the IT person who could
access their company data base.

A.K.S. JARDINE

CONCLUSION

We then inputted data from their data base into economic life
software to establish the economic life for a sample asset it
was a Hustler truck - costing about USD 60,000 new.
Company present policy was to replace their Hustlers at about
18 years of age.
The economic life established by using the economic life model
was about 10 years. Cost saving per year was USD 3340.
There were 449 similar vehicles in their fleet.
Therefore total annual saving was estimated at:
USD 3340.00 x 449 = USD 1.5 millions PER YEAR

A.K.S. JARDINE

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MAINTENANCE OPTIMIZATION

OPTIMIZING EQUIPMENT MAINTENANCE AND REPLACEMENT DECISIONS

Component Inspection Capital Equipment Resource

Replacement Procedures Replacement Requirements

MAINTENANCE MANAGEMENT SYSTEM (CMMS/EAM/ERP)

A.K.S. JARDINE

PREVENTIVE REPLACEMENT COST CONFLICTS

OPTIMAL REPLACEMENT TIME

Total Cost Per Week, C (tp)

$/Week

Failure Replacement
Cost/Week

Preventive Replacement
Cost/Week

tp

Optimal Value of tp

A.K.S. JARDINE

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Capital Equipment Replacement Chapter 4

BEARING REPLACEMENT

HISTORICAL DATA

12 25 9 13 19

TODAY

Shortest Time: 9 weeks

Longest time: 25 weeks
Then: Establish risk of bearing failing as it ages

A.K.S. JARDINE

FAILURE DISTRIBUTION

BEARING FAILURE DISTRIBUTION

0.06
f(t) 0.05

0.04

0.03

0.02

0.01

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
TIME

A.K.S. JARDINE

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THE BEST TIME

Risk curve
Economics (Cf & Cp)
Blend to establish the
optimal tp

A.K.S. JARDINE

CATERPILLAR D10N TRACK-TYPE TRACTOR

A.K.S. JARDINE

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Capital Equipment Replacement Chapter 4

STEERING CLUTCH, L.H.

(FROM A GROUP OF 6 CAT D10 DOZERS)

MG707
FAILURE REPLACEMENT

7979 h 2027 h 9671 h

New Today
Failure intervals (F) 7979 h, 2027 h
Suspension interval (S) 9671 h

Assume Clutch re-built to as new condition

(assumption can be checked)

Similar data obtained for 5 other

dozers F=7, S=6, Sample Size = 13

Statistical Analysis of Failure Data

From Weibull analysis: MTTF = 6500 h = 1.79

A.K.S. JARDINE

COST DATA

CP = $5640 Labour: 16 * $40/h = $ 640

Parts 2600
Vehicle off the road (VOR) (8 h * $300/h) = 2400
$ 5640

Cf = $7160 Labour: 24 * $40/h = $ 960

Parts 2600
VOR (12 h * $300/h) = 3600
$ 7160

CHEAPEST POLICY: REPLACE ONLY ON FAILURE (R-O-O-F) @ $1.10/HR

A.K.S. JARDINE

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REMARKS: L.H. STEERING CLUTCH

A run-to-failure policy was a surprising conclusion

since the clutch was exhibiting wearout characteristics.
However, the economic considerations did not justify
preventive replacement according to a fixed-time
maintenance policy.

A.K.S. JARDINE

THE EQUIPMENT (10 SCOOPS, 9 TRUCKS)

A SCOOP A TRUCK

A.K.S. JARDINE

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COMPONENTS ANALYZED

MAJOR COMPONENTS
SCOOP TRUCK
Engine Engine
Front Axle Front Axle
Rear Axle Rear Axle
Transmission Transmission
Bucket

A.K.S. JARDINE

OPTIMAL PREVENTIVE REPLACEMENT FOR MAJOR COMPONENTS

MAJOR COMPONENT OPTIMAL PR INTERVAL (HOURS)

Engine 25,000
Front Axle 30,000
Rear Axle 7,000
Transmission 7,000

A.K.S. JARDINE

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TOTAL COST FUNCTION FOR TRANSMISSION

A.K.S. JARDINE

COMPONENTS ANALYZED

Item parts: Components smaller than major components of

engine, transmission etc.

695 item parts associated with scoops and trucks were

analyzed. Examples are: unit air conditioner; alternator;
throttle pedal; etc.

A.K.S. JARDINE

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PARETO HISTOGRAM (DOWNTIME)

695
parts

A.K.S. JARDINE

JACK-KNIFE SCATTER PLOT (DOWNTIME)

10000

1000 Acute Acute &

Mean Failure Downtime (hr)

Chronic

100

Chronic A
10

Normal Chronic B

1
1 10 100 1000
Failure Frequency

A.K.S. JARDINE

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Capital Equipment Replacement Chapter 4

PREVENTIVE REPLACEMENT COST CONFLICTS

Optimal Replacement Time

Total Cost/Week
C(tp)
$/Week

Failure Replacement
Cost/Week

Preventive Replacement
Cost/Week

tp
Optimal

A.K.S. JARDINE

CONCLUSION FOR PARTS

Optimal preventive replacement ages were

identified for key components along with
associated cost savings compared to current
practices.
Cost savings ranged in percentage from 0 to
slightly less than 50.
Applying the optimal preventive replacement
policies to the majority of item parts will yield a
cost saving of 10-20%.

A.K.S. JARDINE

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SPARE PARTS PROVISIONING:

INSURANCE SPARES

A.K.S. JARDINE

CRITICAL/EMERGENCY/CAPITAL SPARES

A.K.S. JARDINE

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REAL WORLD RESEARCH

MANAGING RISK: A SPARES OPTIMIZATION TOOL

A.K.S. JARDINE

RESEARCH TEAM @ C-MORE, UNIVERSITY OF TORONTO

RESEARCH STUDENTS RESEARCH STAFF

Lorna Wong (Condition based maintenance)
Corey Kiassat (Human reliability)
Janet Sung (Condition based maintenance)
Maliheh Aramon (Maintenance scheduling)
Soroush Sharifi (Life cycle costing)
Laurent Caudrelier (Cancer screening)
Clayton Van Volkenburg (Condition based
maintenance)
Erik Bjarnason (Emergency spares)
Stephan Trusevych ( Life cycle costing)
Dr. Dragan Banjevic, Project Director
Neil Montgomery, Senior Research Associate
Dr. Ali Zuashkiani, Research Associate
Dr. Daming Lin, Research Associate
Dr. Elizabeth Thompson, Research/Admin
Assistant
RESEARCH FELLOW
Dr. Hossein Mohammadian
(Sustainability)

PRINCIPAL INVESTIGATOR COLLABORATING RESEARCHERS

Prof. Andrew K.S. Jardine Professor Baris Balcioglu ( Spares provisioning)
Professor Chris Beck ( Maintenance scheduling)
Professor Roy Kwon ( Life cycle costing)

A.K.S. JARDINE

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REPAIRABLE SPARES

SYSTEM

STOCK

OUT OF STOCK

REPAIR SHOP

A.K.S. JARDINE

CRITERIA FOR DECISION MAKING

1. Instant reliability (Maintainer)

2. Interval reliability (Stores)
3. Cost minimization (Finance)
4. (Process) Availability (Plant Manager)

A.K.S. JARDINE

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SPARE PARTS PROVISIONING: SLOW-MOVING SPARES

A.K.S. JARDINE

CONVEYOR SYSTEMS: ELECTRIC MOTORS

Number of motors 62
SCENARIO
Planning Horizon 1825 Days (5 years)

RELIABILITY AND MTBRemovals 3000 Days (8 years)

MAINTAINABILITY
MTTRepair 80 Days

Cost of spare motor $15,000

Value of unused spare $10,000

COST Cost of emergency spare $75,000

Downtime cost $1000/day

Holding cost $4.11/day

QUESTION: HOW MANY SPARE PARTS TO STOCK?

A.K.S. JARDINE

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RESULTS: REPAIRABLE MOTORS

Instant reliability: 95% reliability requires 4 spares

Interval reliability: 95% reliability requires 7 spares
Cost minimization: requires 6 spares
Availability of 99%: requires 2 spares

A.K.S. JARDINE

MAINTENANCE OPTIMIZATION

OPTIMIZING EQUIPMENT MAINTENANCE AND REPLACEMENT DECISIONS

Component Inspection Capital Equipment Resource

Replacement Procedures Replacement Requirements

MAINTENANCE MANAGEMENT SYSTEM (CMMS/EAM/ERP)

A.K.S. JARDINE

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CONDITION MONITORING DECISIONS

A.K.S. JARDINE

CONDITION MONITORING: AN ANALOGY

HEART FAILURE
EQUIPMENT FAILURE

Hazard or Risk = f (Age) + f (Risk factors)

RISK FACTORS:
RISK FACTORS:
Oil Analysis level
Cholesterol (Fe, Cu, Al, Cr, Pb..etc.)
Vibration
Blood (Velocity
pressure and Acceleration)
Thermography
Smoking
Visual Inspection
Lifestyle
Levels of protein
Constituent
Homocysteine

A.K.S. JARDINE

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CONDITION MONITORING VIA WARNING LIMITS

Simple to understand
Limitations: Alarm > 300ppm
o Which measurements?
o Optimal limits? Warning > 200ppm
o Effect of Age?
o Predictions? Normal < 200ppm
o Consequence of failure
CBM optimization extends
and enhances the Control
Chart technique

A.K.S. JARDINE

EXAKT OPTIMAL DECISION A NEW CONTROL CHART

A.K.S. JARDINE

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WARNING LIMITS IN PPM

NORMAL WARNING ALARM

Al <20 20-40 >40

Cr <10 10-20 >20

Cu <50 50-100 >100

Fe <200 200-300 >300

Si <15 15-25 >25

A.K.S. JARDINE

MEASUREMENTS & DECISION

A.K.S. JARDINE

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CARDINAL RIVER COALS

OIL ANALYSIS DATA FROM 50 WHEEL MOTORS

Twelve covariates measured

Covariates used: Iron and Sediment
Estimated Saving in Maintenance
Costs: 22% for cost ratio 3:1

A.K.S. JARDINE

OPEN PIT MINING OPERATION

CAT 793B TRANSMISSIONS OIL DATA ANALYZED

Covariates used: Iron,

Aluminum, Magnesium
Saving in Maintenance
Costs: 25%
Average replacement time
increase: 13%
Warranty limit could be
increased

A.K.S. JARDINE

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Capital Equipment Replacement Chapter 4

MAINTENANCE OPTIMIZATION

OPTIMIZING EQUIPMENT MAINTENANCE AND REPLACEMENT DECISIONS

Component Inspection Capital Equipment Resource

Replacement Procedures Replacement Requirements

MAINTENANCE MANAGEMENT SYSTEM (CMMS/EAM/ERP)

A.K.S. JARDINE

CAPITAL EQUIPMENT REPLACEMENT

Constant Annual Utilization

Varying Annual Utilization

Technological Improvement

Tracking Individual Units

Repair versus Replace

A.K.S. JARDINE

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ECONOMIC LIFE MODEL

ECONOMIC LIFE TOTAL COST

MAINTENANCE

DOWNTIME
$$

OPERATIONS

INVENTORY

DEPRECIATION

TIME
Source: H. Greene & R.E. Knorr, Managing Public Equipment, American Public Works Association, Kansas City, 1989.

A.K.S. JARDINE

CATERPILLAR 992D WHEEL LOADER

REBUILD VERSUS REPLACE

A.K.S. JARDINE

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REPAIR VERSUS REPLACE

Cash Flows Associated with Acquiring New

Equipment at Time T

R A-Sp,T A-Sn A-Sn

Cp,1 Cp,2 Cp,3 Cp,T Ct,1 Ct,2 Ct,3 Ct,n Ct,1 Ct,2 Ct,3 Ct,n

0 1 2 T-1 T 1 2 n-1 n n+1 n+2 n-1 2n

(Years)

Today

A.K.S. JARDINE

REPAIR VERSUS REPLACE

A = $1,083,233 (Unit operational)

R A-Sp,T A-Sn A-Sn

Cp,1 Cp,2 Cp,3 Cp,T Ct,1 Ct,2 Ct,3 Ct,n Ct,1 Ct,2 Ct,3 Ct,n

0 1 2 T-1 T 1 2 n-1 n 1 2 . . . n-1 2n (Years)

Today Cash Flows Associated with Acquiring New Equipment at Time T

R = $390,000 (includes arms + Zbars) Excludes Variable Maintenance Costs

Front Frame, Rear Frame and Bucket components (excludes operator, fuel, wear parts)
Cp,1 = $138,592 Sp,0 = $300,000 Ct,1 = $38,188 S1 = $742,500
Cp,2 = $238,033 Sp,1 = $400,000 Ct,2 = $218,583 S2 = $624,000
Cp,3 = $282,033 Sp,2 = $350,000 Ct,3 = $443,593 S3 = $588,000
Sp,3 = $325,000 Ct,4 = $238,830 S4 = $450,000

A.K.S. JARDINE

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THE SOLUTION

R A-Sp,T A-Sn A-Sn

Cp,1 Cp,2 Cp,3 Cp,T Ct,1 Ct,2 Ct,3 Ct,n Ct,1 Ct,2 Ct,3 Ct,n

0 1 2 T-1 T 1 2 n-1 n 1 2 . . . n-1 2n (Years)

Today Cash Flows Associated with Acquiring New
Equipment at Time T

CHANGE-OVER TIME TO NEW LOADER, T

T=0 T=1 T=2 T=3

Overall EAC ($) 449,074 456,744 444,334 435,237

Note: n = 11 yrs

A.K.S. JARDINE

THE BAD NEWS

Most likely additional component to be replaced at re-build: Front frame ($99,870)

R = $489,970 (was $390,000)

CHANGE-OVER TIME TO NEW LOADER, T

T=0 T=1 T=2 T=3

Overall EAC ($) 449,074 471,725 459,319 450,217

MINIMUM

A.K.S. JARDINE

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THE LIFE CYCLE COST ICEBERG

Source: B.S. Blanchard and W.J. Fabrycky, Systems Engineering and Analysis, Prentice Hall, 1990

A.K.S. JARDINE

MAINTENANCE MANAGEMENT

A.K.S. JARDINE

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REFERENCES

Maintenance, Replacement, and Reliability: Theory and Applications,

by A K S Jardine and A H C Tsang, CRC Press/Taylor and Frances, 2006

Software information: www.banak-inc.com

A.K.S. JARDINE

THANK YOU

ANDREW JARDINE
jardine@mie.utoronto.ca

A.K.S. JARDINE

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