Optimizing Your Product Support Solution · – Maintenance – Contracted ... coolants, fluids analysis program. • Scheduled preventive maintenance • Filters ... –Consider

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Optimizing Your Product Support

Solution


Running the Power Station:

… costs, costs, costs

• Mobilization costs

• General Liability Insurance

• Machinery Breakdown Insurance

• Staff labor – Operations

– Maintenance

– Contracted & Plant security

– Administrative

– Training cost

– Vehicles

• Shop equipment & offices, – Hand tools cost

– Shop consumables

– Office supplies & communications cost

– Sewer and telephone connections

– Fuel, water or other consumables

– Non-hazardous waste disposal

– Equipment & Software

• Scheduled & Unscheduled Engine & Auxiliary Parts

• Strategic Spare Parts Inventory Cost – Unscheduled Repair Reserve

– On-Site Warehouse. Parts administration

• Emergency & Maint. Electrical Connections

• Building & Grounds Maintenance Cost

• Legal, HR & Accounting Services – Hiring/screening

– Payroll services

• Operating Licenses, Permits or Approvals – Facility Taxes and Fees Imposed or

Assessed

– Tariff and Import expenses


Availability


Factors Ensuring Equipment Up-time

Customer value equation

Cost / kW-hr (optimize)

Cost / Hour (minimize)

kW/ Hour (maximize)

REBUILD COSTS COMPONENT LIVES PRODUCT AVAILABILITY

% After failure

Repairs

Parts Reuse

Parts Salvage

Design

Application

Maintenance

Repair Quality

• MTBS

• MTTR

• Availability Index

• % Scheduled Down time

• Maintenance Ratio Labor Efficiency

Application

• Ambient condition

• Load factor

• Transient requirements

Operation

• Load management

• Peak shaving

• Ancillary equipment operations

MTBS – mean time between service

MTTR – mean time to repair


Understanding the Customer

• Do it myself – Dealer provides parts and customer does all of the work.

– Dedicated PSSR meeting customer needs.

– Great parts opportunity but not really showing the value.

• Do it for me – Dealer technician develops relationship and provides 100% support.

Build a partnership with customer.

– Value driven opportunity but higher cost to customer.

– Great opportunity to negotiate “pay for performance”.

• Do it with me – Customer does the basics, dealer does the heavy lifting.


Life Cycle Costs

“LCC”


Life Cycle Cost – Principles

• LCC is the total cost of ownership of machinery and equipment,

including its cost of acquisition, operation, maintenance, conversion,

and/or decommission (International Electrotechnical Commission, IEC

60300-3-3).

• The primary objective of life cycle costing is to provide input to decision

making in any or all phases of a product’s life cycle.

• Simplified LCC analysis summarizes results in net present value (NPV)

format considering depreciation, taxes and the time value of money.

• ISO/IEC 15288:2008-System Life Cycle Processes establishes a

common framework for describing the life cycle of systems created by

humans.


Inputs That Impact a LCC

Numerous inputs go into a Life Cycle Cost Analysis.

Fuel cost Electricity Price Wages

Fuel quality

Peak Hours

CSA Pricing Resale Value

Oil Cost Site Ambient

Labor Hours

Genset Price Heat Price

Interest Rate

Capacity - = Net Profit Energy

Value x Operating

Cost - Total

Owning

Cost

Availability x


The CSA Teamwork Strategy Customer Service Agreements Are a Team Effort.

CSA Strategy


• Contract Factors • Availability guarantees

• Redundancy

• Staffing levels

• Commercial • Margin & liquidated damages

• Contract term

• Customer / service provider financial stability

• Contract scope

• External • Ambient conditions

• Air & fuel quality

• Site access

• Environmental compliance

• Parts logistics & customs clearing

• Statutory restrictions & overall industry financial health

• Equipment • Product reliability

• BOP complexity

• Plant engineering & construction quality

• Critical spares & on-site tools

• Plant condition

• Operations • Application

• Redundancy

• Operating regime • Load duty

• Run hours

• Number of starts

• Service provider • Operation expertise

• Field response capability

Risk is Neither Created Nor Destroyed,

… Only Transferred. First Law of Customer Support Agreements


Operating Costs … typically expressed in cents/ekW-hr or $/hr

For Power generating equipment:

• Fuel • Fuel consumption is the major portion of non-standby O&O costs for power

applications, whereas capital cost is the primary concern for backup generators.

• Fluids

• Oil, coolants, fluids analysis program.

• Scheduled preventive maintenance • Filters

• Parts

• Scheduled engine/systems overhauls • Top-end,

• In-Frame,

• Major

• Unscheduled repairs and overhauls


Operating Costs – Prime Application

Fuel

Fluids

PM

Components

Overhauls

Fuel: 0,5 $/liter

2,3%

2,2% 1,1%

3,1%

91,3%

Having Fuel cost a main factors, makes Performance and Efficiency factors a dominant decision

driver!


Fuel Quality


Fuel Quality Impact on Engine M&R Costs

High Contaminant= 7k, 21k, 35k Hours

Low Contaminant= 18k, 54k, 90k Hours

Contaminants : Ammonia, Halides, Siloxanes, Hydrogen Sulfide

Cost / kWh

Assumed Overhaul Schedule (Top End, In Frame, Major)


Fuel Contaminants & Bottom Line

G3520C 1600kW Genset


Managing the Risk of the LCC


B(x) life is the measure of time in

which (x)% of component population

will have failed.

• B10 Life - “No Fail Scenario”

– Cat Brand Standard (O&M), use for

low risk scenarios

• B50 Life - “Average Case”

– Industry Standard, use for any

competitive scenario

Operating Cost – B(x) Life Expectance

0

10

20

30

40

50

60

A

B

Line A = B10 Life

Line B = B50 Life

Operating Hours


Preventative Maintenance (PM) Tasks

• The specific maintenance tasks are established based on manufacturer

recommendation (O&O manual), along with dealer experience.

• Each Maintenance Task has 3 major Cost Components

– Parts : ~80% of the cost, represents the parts being replaced in the service task

– Labor : ~15% of the cost, represents the time and labor cost to execute the service

– Travel : ~5% of the cost, represents travel costs to get tech to site

• Managing the frequency of these tasks is critical to minimizing your PM

Costs. Consider:

– Fuel Type

– Application

– Site Conditions

– Component life expectancy approach (B10 vs. B50)


Repair Risk Management

• Scheduled repairs per service manual intervals

• Predictive repair scheduling – Use valve recession, oil consumption, other indicators

• LEXE0681-00 – Natural Gas Engines

• LEXE0682-00 - Landfill Gas Engines

Cat G3520C HV Low Energy Gas @ 1613 kW, 1200rpm

Cat G3520C HV Low Energy Gas @ 1613 kW, 1200rpm

Cost $289,416.97 $246,443.11

Revenue $1,338,064.96 $1,343,508.03

Profit $1,048,647.99 $1,097,064.92

$0.00

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

$1,400,000.00

$1,600,000.00

Pe

r Y

ea

r

Average Cost / Revenue Comparison

Cost

Revenue

Profit

Overhauls by Prediction Overhauls by Schedule


Operating Cost – Overhauls

• Overhauls represent significant preventative maintenance events

– Involves the replacement or reconditioning of major ware components

– Requires additional service expertise beyond standard PM

– Represents the largest of the PM costs (4-6% of total Operating Cost)

– Cost often can be mitigated via rebuild or remanufactured components.

• Overhaul common terms

– Top End (E50) : Cylinder heads and Turbos - 12-25% of new Genset

– In Frame or Interim (E60): Adds main and rod bearings - 30-50% of new Genset

– Major (E70) : Adds cams, pumps, and gear train – 40-70% of new Genset

• Late life cycle overhauls are often excluded or optional to lower cost.

– Consider the impact on the Genset residual value.


Unscheduled Maintenance…


Operating Cost

… Unscheduled Maintenance

• Represents repair contingency

• Very difficult to assess accurately (estimate

from experience)

• Not always included in ‘Simplified Life Cycle

Cost’ analysis

• Results in downtime, which hurts availability

and could expose you to penalties

• Work with the service department to

understand this component

• Use oil sampling data to help define

maintenance intervals


Addressing Unscheduled Maintenance Costs

• Unscheduled maintenance can be addressed by adding a % based

contingency to existing PM costs.

• Typical Unscheduled Maintenance costing includes:

– Parts : 2-4% adder to total parts, 4-15% for corrosive fuels

– Labor : 10-20% additional labor hours, depending on dealer experience

– Travel : 3-5 additional trip per year

Unplanned repair costs

are always higher


Exhaust gas heat exchanger on a Ag Biogas cogen plant.


Radiator at a landfill site-Pigeons found the radiators to be a nice place to

hang out in the winter


Questions or Comments are

Encouraged!


Thank You!

Documents

Optimizing Your Product Support Solution · – Maintenance – Contracted ... coolants, fluids analysis program. • Scheduled preventive maintenance • Filters ... –Consider