Strategic Slow Moving Spares Levels Optimisation€¦ · Gen. Gearbox Generator Fire/Gas Monitoring...

© The Woodhouse Partnership Ltd 2010 © UMS Group Inc 2010 1

Strategic Slow Moving Spares Levels Spares Levels

Optimisation Optimisation

By UMS Group Inc./ Asia Pacific

(Tony Saker, Principal)

Decision Support Tools Ltd&

The Woodhouse Partnership Ltd(Jack Huggett, Principal)


PRESENTATION OUTLINE

INTRODUCTION / OVERVIEW

TOOL DISCUSSION – DATA, INPUTS, COST/RISK CALCULATIONS, SENSITIVITIES

CASE STUDY

LIVE DEMONSTRATION


� An effective asset strategy must manage risk associated with the aging of the asset base and the overall growth in future asset demands

OVERVIEW

Mismanagement of the

Replacement

Wall Can Result In:

• Loss of asset performance

• Loss of market share

• Decreased asset value and function

• Loss of shareholder value

• Decline in business viability

Planning Horizon

Replacement Wall

Accumulated Asset Replacement Forecast

Potential Renewal

Liability at the end

of the planning

cycle

Accumulated Current Rate Of Renewal /

Spares Developments

Backlog

Accumulated Forecast

Replacement Cost

Ass

et R

epla

cem

ent C

ost

� The drive to asset life cycle optimality in cost, service, and risk performance is an ever increasing challenge to leading utilities worldwide. Effectively developing spares optimisation strategies and policies are key, supported by robust data systems, modelling and analysis techniques.


OPTIMUM = Minimum TOTAL cost/risk impact

Optimumis

2 spares

Number of spares held

Business Impact (A$000/year)

0

10

20

30

40

0 1 2 3 4

Money tied up

Storage & m'tce

Risk of write-off

Downtime risks


The European MACRO project

European EUREKA project EU1488

Main sponsors:


APT-Integrated Toolkit: 7 modules of structured

analysis & “what if?” techniques

APT-PROJECT Cost/Benefit/Risk Evaluation of Projects/Changes

APT-MAINTENANCE Optimisation of Planned Maintenance tasks

APT-INSPECTION Inspection, Condition Monitoring & Testing

APT-LIFESPAN Life Cycle Costs, Renewal & Upgrade Timing

APT-SCHEDULE Shutdown Strategy & Timing, Work Bundling

APT-SPARES Strategic/Slow-moving Spares Optimisation

APT-STOCK Purchasing & Inventory Optimisation


All decisions involve conflicting objectives

Ownership costs

• purchase costs

• money tied up

• storage costs

• in-storage

maintenance

• potential write-off

costs

Unavailability risks

• Production losses/delays

• Safety & environment

• Equipment damage

• Frustration and irritation

What spares should I hold?


APT-SPARES: Optimal stock holding of 50MVA transformers:

Optimal spares holding is 2:

If 1 spare is in stock:-

Consider purchasing 1

If 2 spares are in stock:-

Maintain stock level

If 3 spares are in stock:-

Do not restock if

1 spare is used


Step 1: Input Structured ‘best guesses’


Lack of accurate data?Lack of accurate data?

APT-SPARES

Range estimates of input factors

Max

Min

2

1

0

No. of spares

10


Step 2: Cost/risk calculations

Calculate

Risk if no spare is held

Residual risk if one spare

is heldCosts of

ownership for the spare

Total Business Impact is lowest if 1 spare is held

Conclusions & impact of change


Step 3: Data sensitivity analysis

But what if the data was

wrong?


Sensitivity to each input

Inputs ranked by the economic

effects of changing them by +/- 50%

Economic effect of reducingvalue by 50%

Economic effect of increasingvalue by 50%


What changes in assumptions are needed to change the result?


The ‘safety range’ for our decision

Our original ‘best guess’ assumptions (which implied that one spare is optimal)

The values that would be needed to justify holding a second spare

The values that would be needed

for the spare not to be justified


Using existing tacit knowledge - safely

• Forcing the right questions to be asked

• Range estimating – to the limits of credibility

• Tests for sensitivity, to find which assumptions really matter

• Rapid focus on the data that is (provably) worth collecting

• Clear audit trail for critical cost, risk and performance compromise decisions.


A further spare transformer would be worth holding from 2012-13 onwards (output from APT-SPARES)

Example of a Power transformer 50MVA class future spares requirements:

Spare 50MVA transformers:

0

1

2

3

4

2007

-820

08-9

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

Years:

Number of spares

no network support

Current policy


Power transformer 50MVA spares levels for various % of network support:

Spare 50MVA transformers:

0

1

2

3

4

2007

-820

08-9

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

Years:

Number of spares

no network support

30% network support

60% network support

90% network support

Current policy


APT-SPARES batch can handle large numbers of studies simultaneously:


APT-SPARES: optimal number of spares to hold now illustrated above:

www.decisionsupporttools.com/


APT Spares Optimisation Tool Description


Purchasing high cost spares might require investment funding:

APT-PROJECT – prioritises & evaluates investments such as purchase of high cost spares.


APT-PROJECT output page:


Optimal Timing - Restricted investment in the future?: Purchase of a 50MVA transformer could be delayed making it more cost effective with time:

As the risk of failure increases with network

expansion, payback of the spare transformer

improves from 2012-13:

0

20

40

60

80

100

120

140

160

2007

-8

2008

-920

09-1

020

10-1

120

11-1

220

12-1

320

13-1

420

14-1

520

15-1

620

16-1

720

17-1

820

18-1

9

Year:

Payback in y

ears

If from 2013 spare transformers need to have a minimum payback of 10 years (for

example), purchase of the spare would be delayed to

2014-15


Summary - for a future scenario of restricted investment funding…

• Spare transformers cost c.AUD $ 1,000,000 (for the illustration that follows)

• The investment in a spare is likely to be compared to other investments in a process of annual investment rationing

• The previous slides illustrates how one can carry out such a process:

• As the number of installed transformers increases and the risk of transformer failure increases too, the payback on the investment will improve until it is approved in a current annual investment budget.


An example of a model for project priority ranking & investment rationing:

Payback ranking @ 7% DR & investment rationing:

0500000

10000001500000200000025000003000000

1. Protecti

ve devic

e r...

2. Ove

rhead line in

sulat..

3. Increase

earth w

ire...

4. Spare 50MVA tra

ns...

5. T/fo

rmer fi

re & bund...

Investments

Cumulative $

invested

050100

150200250

Discounted

payback

(months)

Cumulative $ Payback months

24 month (2 year) payback

$2,750,000 cumulative investment


TAKING AN EVEN MORE WHOLISTIC VIEW IN priority ranking & investment rationing and part of an Asset and Spend Optimisation process: The UMS Group Spend Optimization Suite is designed to support the decision process; identifying and prioritizing the risks, analyzing investments and optimizing the portfolio of spend

SA IOIDSRIO

SO1

SO2

SO3

SO4

SO5

SO6

2.1 Inventory

and analysis of

risks

2.1 Inventory

and analysis of

risks

2.2Prioritizing

Risks

2.2Prioritizing

Risks

Risk Management Investment Planning Investment Strategy

3.4 Validate

Investment Plan

3.4 Validate

Investment Plan

4.1 Analyze

Investment Scenarios

4.1 Analyze

Investment Scenarios

4.2 Optimize

Investment Portfolio

4.2 Optimize

Investment Portfolio

4.3 Monitor/

Adjust Portfolio

4.3 Monitor/

Adjust Portfolio

3.1Generating Mitigation Solutions

3.1Generating Mitigation Solutions

3.2Analyzing Solutions

3.2Analyzing Solutions

3.3Develop

Investment Plan

3.3Develop

Investment Plan

R1

R2

R3

R4

R5

R6

.

R20

R21

R22

R23

R24

R25

.

R105

R106

R107

.

.

Rn

R1

R2

R3

R4

R5

R6

.

R20

R21

R22

R23

R24

R25

.

R105

R106

R107

.

.

Rn

S1

S2

.

S4

S5

S6

S7

S8

S9

.

.

S10

S11

.

.

S12

S13

S14

S15

.

S16

P1

P2

.

.

P5

P6

.

.

P9

.

.

P10

P11

.

.

P12

P13

.

P15

.

P16

P1

P2

.

.

P5

P6

.

.

P9

.

.

P10

P11

.

.

P12

P13

.

P15

.

P16

P1

P2

.

.

P5

P6

.

.

P9

.

.

P10

P11

.

.

P12

P13

.

P15

.

P16

P1

P2

.

.

P5

P6

.

.

P9

.

.

P10

P11

.

.

P12

P13

.

P15

.

P16

Optimized

Deferred

.

.

Optimized

Optimized

.

.

Optimized

.

.

Deferred

Optimized

.

.

Deferred

Deferred

.

Optimized

.

Optimized

1.1 Identify Business Strategy

1.1 Identify Business Strategy

Strategic Planning


Case study:


Spares for an Atlantic gas platform:


Cost effectiveness of proposed spares purchases:

0

10

20

30

40

50

60

70

80

90

100

< 2 years 2 to <5 yrs 5 to <10 yrs >10 yrs Not Cost

Effective

Overstocked

Payback in years:

Number of spares:


0 200000 400000 600000 800000 1000000 1200000 1400000 1600000

HP N2 Compressor

Sewage System

Production SIS

Allied Crane

Gen. Gearbox

Generator

Fire/Gas Monitoring

Auxilliary SIS

Fire H2O Pump Engine

Sump System

Gas Turbine (Gen)

MCC & Control Room HVAC

Pump Gearbox

Air Comp / LP N2

Gas Turbine (Comp)

Gas Compressor

Fire H2O Pump

Increased Spares Cost ($) Risk Reduction ($/yr)


Example of a compressor shaft:


Breakpoint analysis:


Sensitivity testing:


APT-SPARESlive demonstration

now follows:


Tony SakerPrincipal & General Manager

UMS Group Asia Pacific

Suite 2b12-14 Falcon StreetCrows Nest NSW 2065

AustraliaOffice: +61 2 8413 0007

Fax, +61 2 8413 0010Mobile: +61 (0) 439 88 55 39

[email protected]

Contact Information

Strategic Slow Moving Spares Levels Optimisation€¦ · Gen. Gearbox Generator Fire/Gas Monitoring...

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Transcript of Strategic Slow Moving Spares Levels Optimisation€¦ · Gen. Gearbox Generator Fire/Gas Monitoring...