Thanks to visit codestin.com
Credit goes to www.scribd.com

Scribd
Upload
36 views2 pages

Life Cycle

The document outlines the concept of life cycle costs for equipment and plant, detailing the total costs incurred from inception to disposal, including acquisition, operations, support, and phase-out costs. It emphasizes the importance of maximizing life cycle profits, defined as revenue generated minus life cycle costs, and identifies various factors affecting life-cycle profitability. Additionally, it provides formulas for calculating present values and life cycle costs based on different parameters.

Uploaded by

Ayodapomola Kola-Ajimobi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
36 views2 pages

Life Cycle

The document outlines the concept of life cycle costs for equipment and plant, detailing the total costs incurred from inception to disposal, including acquisition, operations, support, and phase-out costs. It emphasizes the importance of maximizing life cycle profits, defined as revenue generated minus life cycle costs, and identifies various factors affecting life-cycle profitability. Additionally, it provides formulas for calculating present values and life cycle costs based on different parameters.

Uploaded by

Ayodapomola Kola-Ajimobi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Maintenance Overview and

Management System 1.2 PLANT MAINTENANCE AND LIFE CYCLE


PROFITS
Life cycle costs are total costs from inception to disposal for equipment and plant.
It is the sum of all costs incurred during the lifetime of an item, that is, the total
procurement and ownership costs. It is the total cost of ownership. A typical cost
element structure is as follows:
Cost categories
a) Acquisition costs
• Research and development
- Management
- Engineering
• Design and prototyping
- Engineering design
- Fabrication
- Testing and evaluation
• Production
- Manufacturing
- Plant facilities and overhead
- Marketing and distribution
b) Operations and support costs
• Operations
- Facilities
- Operators
- Consumables (energy and fuel)
- Downtime
• Support
- Repair resources
- Supply resources
Repairables
Expendables
Tools, test, and support equipment
- Failure costs
- Training
- Technical data
c) Phase out
• Salvage value
• Disposal costs
Life cycle cost = Acquisition costs + operation costs + failure
Cost + support cost – net salvage value
Where, Net salvage value = salvage value – disposal cost
To discount monetary values over time, all revenues and costs can be expressed in
present day equivalent values
If P = present value
f = inflation rate
e = annual return on investment rate
i = real, or effective, discount rate
6
i ≈ e – f for small values of e and f
PF (i ,d) = present value of a future single payment ‘F’ at the end of year ‘d’ Planned Maintenance
Management System and
1 Controls
= ––––––––
d
F
(1 + i)
PA (i, d) = present value of equal annual payment ‘A’ over ‘d’ years

[(1 + i ) d − 1] 1 − (1 + i ) − d
= A = A
[i (1 + i ) d ] i
In case Cu =Unit acquisition cost
N =Number of identical units to be procured
Fo =Fixed cost of operating
Co =Annual operating cost per unit
Fs =Fixed support cost
Cs =Annual support cost per unit
Cf =Cost per failure
to =Operating hours per year per unit
td =Design life (in years)
S =Unit salvage value (a negative value is interpreted as disposal cost)
to
Life Cycle Cost = Cu N+[Fo + PA (i, td)Co N] + [PA (i, td)Cf ––––––.N]
MTTF
+ [Fs + PA (i, td) Cs N] – [PF (i, td) S N]

Where is the expected number of failures per year

And Cf is Cost per failure may be a repair cost, replacement cost, or a warranty
cost. Our objective is maximization of life cycle profits, which can be defined as:
t0 Life Cycle Profit = Revenue Generated – Life Cycle Costs
MTTF
Figure 1.1 illustrate the expected variation of profit during the life cycle as a
difference between achieved revenue and the sum of operation, maintenance,
downtime and capital costs. The factors affecting life-cycle profitability are given in
Table 1.1.

Table 1.1 : Factors affecting life-cycle profitability

1. Acquisition Costs Capital cost


Installation cost and Time
Commissioning cost and time

2. Sustaining costs Production costs


Maintenance costs
Energy costs

3. Output factors Useful Life


Plant Performance
Product Quality
Plant Availability

4. Outside Factors Product Demand


Product Price
Obsolescence

You might also like