Retirement Day – Developing asset renewal strategies

Anyone involved in maintenance and reliability work has experienced the use of assets that are beyond their useful life. In many cases, it is a cost centre issue: we don’t have capital, so continue maintenance, or, our maintenance budget is blown, capitalize it!

So how do we actually optimize the lifecycle to attain peak value? What is life limiting? What drives obsolescence?

A renewal program enables an organization to manage the final lifecycle phase of assets in a proactive way. This forward-looking approach prevents value destruction caused by unreliable and unserviceable assets that have reached their life limit. Developing a program requires a clear understanding of what is life limiting. There are many things that should be considered when determining what defines the end of the serviceable life of an asset.

The first consideration would be to understand what is truly life limiting. For example, if an engine is burning oil, it is not at the end of its life. It can be rebuilt. So what is life limiting on a gasoline engine? The cylinder wall thickness. It can only be bore out to a predetermined measurement. Following are other considerations.

1. A physical life-limiting factor that can no longer be maintained. This would be a primary component that cannot be satisfactorily restored by maintenance. It may require metallurgy or non-destructive testing to validate the limiting factor where loss of function is inevitable.
2. An economic end-of-life condition. In this case, the asset can function and can be rebuilt, but the cost of providing the required function is no longer acceptable. The full restoration of the asset to like-new condition – for example, replacing degraded wiring harnesses – is not cost effective.
3. Operational cost factors. This may be energy consumption driven, and there may be a positive ROI for upgrading to a more energy efficient unit. Another example would be replacing haul trucks with autonomous units. With advances in automation and controls, operational cost drives many renewal efforts.
4. Environmental impact factors. Some assets can no longer meet evolving environmental standards. With the onset of carbon management and contamination containment standards, some assets are incapable of meeting emerging requirements. This has risen to a primary asset renewal concern.
5. Technological factors. With advanced automation and control systems, some assets may no longer fit the process. For example, if all functions are managed through the operator’s distributed control system, but one asset has to be manually started or controlled, it is technologically obsolete.
6. Performance requirements. In some situations, the designed throughput is not aligned with the production objectives. Some asset in a process may be capable of delivering the throughput, but at some point there may be assets that bottleneck the operation. This is a functional change of an asset, which would fall under modification, not renewal, but is still a consideration for strategic planning.

To develop an asset renewal program, the objectives of the operation are the primary input. This factor must be understood. The renewal program for a mine, for example, must be aligned with the mine’s plan. A mine that has an ore body reaching depletion within five years will manage renewals differently than a mine with 50 years of life remaining. Some factories are disposable, as the product they manufacture will be obsolete in five years. However, breweries, for example, run plants that will be there until humanity stops drinking beer. So, what are the objectives of your operation?

The next consideration is to define which assets qualify for the renewal program. Though asset criticality is considered, it is not the only criteria. Asset qualification can be driven by answering the following questions:

1. What is the criticality of the asset?
2. What are the consequences of this asset failing in a non-restorable manner?
3. Can contingency plans be developed?
4. Is there redundancy or buffering to consider?
5. What is the availability (lead time) of replacement assets?

After the selection of high-risk assets as qualifiers for a renewal program, devloping a forward-looking plan is a must and should be for the long term. Using a 100-year plan may seem very unrealistic, but keep in mind that, regardless of the timeframe, the plan will have lower resolution as one progresses into the future. There is nothing wrong with this. For example, if an asset requires replacement or restoration every 12 years, enter it. In 50 years there may be new technology – then change the plan. A key point is: The plan is only a plan, it can change. The objective to strategically manage the assets doesn’t change. Fill in the plan with what you know.

Now the current state of the assets must be understood. Where are they in their remaining useful life profile?

In far too many situations I have seen organizations with sudden failures. Consider the following scenario:

Suddenly, the hydrogen buffers were cracking at the longitudinal weld. This was a “very” high risk issue. The buffers were engineered for a 30-year lifespan and were only 10 years old. As per any root cause analysis, the question was, “Why?” The buffers were designed for a 30-year lifespan based on a pressurization every hour. The site decided to change the process (operational loading) to pressurize every 20 minutes. This resulted in the “sudden” failure after 10 years. Now let’s phone Hydrogen-Buffers-R-Us and have one delivered… So sorry, three years’ lead time!

How to determine the current state of an asset to enable forecasting of replacement

There are many things to consider, as the example above shows, and operational loading is a key consideration. Here are some of the factors considered to gain confidence in estimating the remaining useful life. (For best results compare all inputs):

1. What are the original design specification estimates?
2. What is the duty cycle the asset is subjected to?
3. How is operational loading managed? (Overloading, under-loading, shock-loading, environmental-loading, etc.)
4. What is the plant history with similar assets?
5. What does Weibull analysis of failure data indicate?
6. What does the inspection and work history data reveal?
7. What are the metallurgical examination results?
8. What are the results of the cost analysis review?
9. Are there any operational, environmental, technological and performance considerations?

Armed with a list of assets and their estimated reaming useful life, we can then develop an asset renewal strategy. Assets that have exceeded 75 per cent of their useful life should be considered for budgeting and availability. The renewal of an asset becomes a project within itself. There are multiple considerations within this project, as it is an opportunity to improve the asset from multiple perspectives, such as maintainability, durability and operational performance.

Asset renewal strategies must be aligned with the objectives of the organization. In some cases, this is not replacement or improvement but conscientiously not maintaining. For example, if you run a mining operation and will deplete the ore body in three years, then you should “run-out” your assets. The ideal situation would be to have the last truck break down as it reached the scrapyard after dumping the last reclamation top soil load. There is little point in scrapping assets with rebuilt engines and new wheel motors. The value of managing a renewal program cannot be overstated.

Jeff Smith is a reliability subject matter expert and the owner of 4TG Industrial. His work spans a cross-section of industries, including oil sands, mining, pulp and paper, packaging, petrochemical, marine, brewing, transportation, synfuels and others. Reach him at smith@4tg-ind.ca or visit www.4tg-industrial.com.