Financial Implications And Cost Justification

Introduction:

The simple process of financial justification for an investment project would normally be to compare the initial and ongoing expenditure with the expected benefits, translated into cost savings and increased profits. If the capital can be paid off in a reasonable time, and concurrently earn more than an equivalent investment in secure stocks, then the project is probably a good financial investment.

ASSESSING THE NEED FOR CONDITION MONITORING 

Any maintenance engineer’s assessment of plant condition is influenced by a variety of practical observations and analyses of machine performance data, such as the following:

• Frequency of breakdowns

• Randomness of breakdowns

• Need for repetitive repairs

• Number of defective products produced

• Potential dangers linked to poor performance

• Any excessive fuel consumption during operation

• Any reduced throughput during operation

Installation Cost

Some of the capital cost will be clearly defined by the equipment price and any specialist installation cost. There may also be preliminary alterations required, such as creating access, installing foundations, covering or protection, power supply, service access, and so on.

Operating Cost

• Once the unit has been installed and commissioned, the major cost is likely to be its staffing requirement.
• If the existing engineering staff has sufficient skill and training, and the improved plant performance reduces their workload sufficiently, then operating the equipment and monitoring its results may be absorbed without additional cost.
• In our experience, this time-saving factor has often been ignored in justifying the case for improved maintenance techniques.
   

The relationship between cost and amount of preventive maintenance