Solving the maintain vs. modernization equation
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Facility personnel often face the choice of maintaining aging equipment or buying new. Now there is another, more cost-effective, option to increase equipment reliability, efficiency and productivity….modernization. Learn key considerations and advantages of upgrading existing equipment to current technology.
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Solving the maintain vs. modernization equation
- 1. Schneider Electric 1- Division - Name – Date Solving the Maintain vs Modernization Equation Steve Maling Marketing Director, Field Services Bryan West Services Sales Manager Tweet Live! #SchneiderXE
- 2. Schneider Electric 2- Division - Name – Date Objectives Upon Completion of this course, you will be able to ●Identify key market drivers ●Differentiate OpEx from CapEx ●Define key customer concerns ●Define causes of equipment breakdowns ●Define key decision factors ●Define equipment maintenance ●Characterize options to maintain vs. modernize ●Describe equipment modernization solutions
- 3. Schneider Electric 3- Division - Name – Date Market Drivers O&M Environment Aging facilities and budget gaps forcing organizations to maintain with fewer resources Labor Conditions Increasingly difficult to hire, develop, and retain qualified staff Outsourcing Businesses choosing to outsource services and engage in strategic partnerships Risk Management Awareness & accountability of facility risks and worker safety is increasing and becoming more complex Emerging Technology Technology will impact how facility managers do their jobs and buildings operate Sustainability Demand escalating for environmentally friendly high performance buildings Critical facility management drivers that are impacting all industries…
- 4. Schneider Electric 4- Division - Name – Date Lifecycle Costs: Opex vs. Capex ●Investment in Technologies vs. Infrastructure Systems ● Automation & Control technologies are on a 5 to 20 year life-cycle ● Infrastructure systems are on a 15 to 30 year life-cycle ●Infrastructure Lifecycle
- 5. Schneider Electric 5- Division - Name – Date Time Cost Impact Severity Probability Cost of Facility Operations Utility Costs Maintenance Costs Cost Reduction Risk Mitigation Negative Event Financial Performance Revenue Time Key Concerns Cost Reduction Risk Mitigation Financial Performance Time Impact Severity Time Probability Revenue Cost
- 6. Schneider Electric 6- Division - Name – Date Building Systems need Maintenance and/or Modernization Electrical distribution Safe: Protect people and assets Critical Power & cooling Reliable: Prevent power outages & quality variance HVAC control Lighting control Energy monitoring & control Motor control Access control Security Efficient & productive: • Measure and control energy, automate, provide relevant diagnosis • Manage processes • Make all the utilities of any Infrastructure more efficient Renewable energies Green: Ensure systems function properly to impact energy savings System Maintenance
- 7. Schneider Electric 7- Division - Name – Date 3X Causes of Equipment Breakdown
- 8. Schneider Electric 8- Division - Name – Date Cost of Equipment Breakdown ●Tangible Costs ● Equipment replacement costs ● Contractor costs ● Loss of production ● Additional inventory/spares ● Impact to personnel/medical costs/lawsuits ●Intangible Costs ● Fixed and variable costs wasted during downtime ● Possible loss of customer orders due to inability to fulfill shipments ● Time spent in internal/external meetings ● Personnel resources allocated to the repair Application Loss** Heathcare Human Lives Stock market transactions $12,600,000 Credit card sales $3,600,000 Petrochemical $140,000 Automobile $40,000 Food Processing $30,000 *Source: Contingency Planning Research and Schneider Electric **Based on 1-hr. production shutdown True Cost of Downtime*:
- 9. Schneider Electric 9- Division - Name – Date *Example of complete costs for a device *The costs shown are yearly costs ●“Total Costs” are lower as the useful service life of the equipment is longer ●Preventive maintenance limits the cost of curative or reactive maintenance (reliability) Impact of Maintenance on Costs
- 10. Schneider Electric 10- Division - Name – Date Balancing Key Decision Factors ●First Level of Needs ● Safety ● Cost ● Uptime ●Second Level of Needs ● Business Effectiveness ● Environment Conditions ● Product Quality ● Safety Concerns ● Energy Efficiency ● Operational Costs The question is not whether the equipment will malfunction, but WHEN!
- 11. Schneider Electric 11- Division - Name – Date “I think my spell checker is broken, it keeps changing l-u-c-k to m-a-i-n-t-e-n-a-n-c-e!”
- 12. Schneider Electric 12- Division - Name – Date Maintenance of Equipment “Active” components consist of the protective devices that protect both people and assets ●Mechanical Components ● Involve moving parts, therefore they must be maintained in order to operate as intended ● Will wear out over time ● Some components require replacement upon use ●Solid State Components ● The rise in utilization gives rise to another mode of failure that cannot be easily detected ● Inspection and verification for proper functionality ● Obsolescence is a key consideration
- 13. Schneider Electric 13- Division - Name – Date Approaches to Maintenance ●Corrective Maintenance ● Repair work conducted after a failure or breakdown ●Preventive Maintenance ● A specified list of inspections, cleaning, testing and part replacement during a pre- defined, time-based schedule ●Predictive Maintenance ● Scheduled based on diagnostic evaluations. Also factors in equipment age, environmental stresses, criticality of equipment, etc to decide on schedule
- 14. Schneider Electric 14- Division - Name – Date Maintain Equipment vs. Modernize? ●Even properly maintained equipment is subject to two key phenomena: ● Ultimately degrades and reaches the end of its useful life ● No longer sustainable solution due to technological advances ●Factors to consider: ● Age of Equipment ● Operating Environment ● Availability of Spare Parts ● Reliability of System Components ● Cost of Ongoing Maintenance ● Emerging Technology ● Worker Safety
- 15. Schneider Electric 15- Division - Name – Date Modernization Solutions ●Cost-effective options ● Reconditioning ● Replacement ● Retrofill ●Benefits ● Reduced Maintenance and Operating Costs ● Improved Reliability ● Increased Capabilities* ● Less Downtime and Cost for Installation vs. New Equipment *Applicable to Retrofill and Replacement, not Reconditioning
- 16. Schneider Electric 16- Division - Name – Date Modernization Project Example ● LV direct replacement breakers and monitoring system install ● Each feeder/main breaker trip unit communicates data for energy analysis ● Enhanced safety features of upgrade and improved system reliability ● Existing asset upgraded at reduced cost/downtime compared to a new install Before After 180 view
- 17. Schneider Electric 17- Division - Name – Date Modernization Project Example ● Platform standardized to simplify operations and maintenance ● Improved integration by streamlining SCADA ● Improved reliability by migrating late stage equipment ● Improved network connectivity ● Validated solutions through automated software conversion ● Reduced labor time due to pre-engineered Quick wiring adapters ● Minimal production disruption by rapid turnkey installation Before After Rockwell SLC500 Schneider Electric M340
- 18. Schneider Electric 18- Division - Name – Date Summary ●Equipment Preventive Maintenance is Critical ●Equipment Ages and Will Eventually Fail ●Key Factors to Consider in Maintain vs. Modernize Equation: ● Age of Equipment ● Operating Environment ● Availability of Spare Parts ● Reliability of System Components ● Cost of Ongoing Maintenance ● Emerging Technology ●Cost Effective Options are Available to Modernize Aging Equipment ●Maintaining and Modernizing Equipment will: ● Reduce Costs ● Mitigate Risks ● Improve Productivity
- 19. Schneider Electric 19- Division - Name – Date Schneider Electric Services Dedicated to maintaining and improving your system’s productivity and efficiency, our broad range of services support your facility’s infrastructure, and include: Automation & Control Services Critical Power & Cooling Services Energy Sustainability Consultation Services Industrial Repair Services Building Lifecycle & Energy Services Electrical Distribution Services Engineering Services Power Monitoring Services
- 20. Schneider Electric 20- Division - Name – Date Thank You! Questions? The Schneider Electric Field Services Team
- 21. Schneider Electric 21- Division - Name – Date Test Questions 1. Critical facility management drivers that are impacting all industries include: a) Risk Management b) Labor Conditions c) Out Sourcing d) All the above (Identify key Market Drivers) 2. Operational Expenditures make up 25% of the total facility Lifecycle costs. a) True b) False (Define Opex vs. Capex) 3. Companies that focus on Cost Reduction solutions while striving to Mitigate Risk can improve their overall Financial performance. a) True b) False (Specify Key Customer Concerns) 4. According to IEEE, the rate of equipment failures is ____ times higher in facilities that do not perform preventive maintenance on their electrical systems. a) 2X b) 3X c) 4X d) 5X (Delineate Causes of Equipment Breakdowns) 5. Facility Managers must balance Key Decision Factors that can impact Worker Safety, Costs associated with an outage and Uptime to maintain production. a) True b) False (Detail Key Decision Factors)
- 22. Schneider Electric 22- Division - Name – Date Test Questions 6. End-users that don’t employ a solid Electrical Preventive Maintenance program, often rely on this to avoid an unplanned outage. a) Skill b) Knowledgeable personnel c) Luck d) None of the above (Describe Equipment Maintenance) 7. Active components consist of protective devices that require maintenance in order to: a) Protect on time shipments and production goals b) Protect people and assets c) Protect jobs and benefits (Describe Equipment Maintenance) 8. A sound approach to an Electrical Preventive Maintenance Program will employ: a) Corrective Maintenance b) Preventive Maintenance c) Predictive Maintenance d) All the above (Describe Equipment Maintenance) 9. Even properly maintained equipment can degrade and reach the end of its useful life. a) True b) False (Characterize Options to Maintain vs. Modernize?) 10. Equipment Modernization Solutions exist that can save an end-user downtime and money. a) True b) False (Describe Equipment Modernization Solutions)
Editor's Notes
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- As the cost of energy along with the lifecycle costs of operations for maintenance/modernization continue to escalate, the Facility Manager must find ways to reduce the overall Cost of Operations thru improved technology & energy efficiency measures along with the need to maximize the infrastructure lifecycle. Another key concern that facilities face is risk mitigation whether related to Arc Flash compliance or a catastrophic failure. Companies should initiate emergency contingency plans to lessen the impact of such an event while enhancing training and awareness with respect to the probability that an event may even happen. These two key concerns can impact the fiscal performance over time by reducing costs and decreasing the probability of a major negative event. As managers we are responsible for the safe, secure and environmentally sound O&M of key assets within the facility infrastructure.
- There are two types of costs associated with an unplanned outage related to any system – tangible and intangible. When an equipment failure incident occurs that stops the business operation a number of things immediately happen. Future profits are lost because no product can be made (though inventory can still be sold until it is gone). The fixed costs continue accumulating but are now wasted because no product is being produced. Some of the variable costs will fall because they are not used, whereas some, like maintenance, will suddenly rise in response to the incident. Other variable costs are retained in the expectation that the equipment will get back into operation quickly. These are also wasted because they are no longer involved in making saleable product. Usually workers are put onto other duties they are not meant to be doing. Losses and wastes continue until the plant is back in operation. The cost for repair from a severe outage can be many times the profit made in the same time period. When an equipment failure happens many people suddenly get involved in solving it. Meetings are held, overtime is worked, subcontractors are brought-in, engineers investigate, parts and spares are purchased to get back in operation. Instead of the variable costs being a proportion of production, as intended, they instead rise and take on a life of their own in response to the failure. The losses grow proportionally bigger the longer the equipment repair takes or the greater the consequences of the equipment failure.When an equipment failure happens the cost to the business is lost future profits, plus immediately wasted fixed costs, plus immediately wasted variable costs, plus the added variable costs needed to get the operation back in production. There are many other consequential costs too.When equipment fails, operators stop normal duties that make money and start doing duties that cost money. The production supervisors and operators, the maintenance supervisors, planners, purchasers and repairmen start spending time and money addressing the stoppage.If it escalates managers from several departments get involved - production, maintenance, sales, dispatch, finance - wanting to know what is being done to fix the stoppage. Meetings are held formally in meeting rooms and impromptu in corridors. Parts are purchased and specialists may be brought in. Customers do not get deliveries and liability clauses may be invoked. Word can spread that the company does not meet its schedules and future business is lost. A rushed work-around is developed that puts people at higher risk of injury. Items are brought, men are moved, materials and equipment are transported in an effort to get production going. Time and money better used on business-building activities is drawn into the 'black hole of equipment failure'.
- The key question that the Facility Engineer or Maintenance Manager must continuously ask is not whether a component will malfunction or fail, but WHEN will it occur AND they must plan accordingly. There is a fine balance between safety factors related to the worker, the asset and the building structure; the tangible and intangible costs associated with an unplanned outage vs. routine maintenance of the equipment vs. the equipment integrity to maximize the useful life of the asset; all of which comes back to uptime to maintain production because 100% uptime means producing products that make money!However management cannot disregard the key Operational Drivers related to:Business effectiveness – are we producing products efficiently and reliablyEnvironmental conditions – are we a good citizen and concerned about the environmentProduct quality – does our operation allow us to produce a quality productSafety Concerns – do we have an established safety program to protect our workers and reduce our liability exposureEnergy Efficiency – with increasing base costs related to energy, are we evaluating how we can save money related to the cost of operationOperational cost – do we understand the costs to create the product AND do we know the cost per hour for an unplanned outage
- New or existing electrical equipment installations are expensive assets which are the life blood of any facility whether an office building, industrial manufacturing facility, hospital or government installation – all of which can not function without a reliable flow of electricity. So what makes up the asset? Active components which consist of the protective devices that protect both people and assets and consist of (read list). Also the passive components which are the structure components along with the internal connection devices and mechanical support components.Mechanical components on the piece of equipment have moving parts and these components require lubrication – just like the engine in your vehicle. Any time there is lubrication material, this will age, dry out and solidify especially in the presence of dirt and contaminants. This issue is often the reason that a switch or circuit breaker will not function properly. Over time, many components within the mechanism such as the contact points, the springs and other components will wear out and require replacement to maintain the integrity and functionality of the component. The electronic components are typically the “brains” of the protective device and the function is to monitor and detect a problem and then tell the mechanical device to operate often when the system detects a fault that has to be cleared by opening the circuit in order to protect a worker or the asset. These devices need to be tested and often calibrated per the recommendations from the Power System study. The system study performed by a Professional Engineer determines the optimal settings to coordinate safety with normal operating conditions. When these components go bad, they must be replaced or upgraded.
- Reactive (Corrective) Reactive is mostly unplanned and is usually the result of or results in an outage Twice as expensive as preventive maintenance Ten times as expensive as predictive - Reasons on next slidePreventive Follow standard procedures on all gear regardless of condition Half the cost of Corrective maintenanceBut five times the cost of Predictive maintenanceAnd about 60% is unnecessaryPredictive (Condition Based) Least expensive Provides significant reduction in equipment related incidents
- It’s obvious that we don’t want to position our facilities to face the costs associated with an unplanned outage and the Facility Engineer or Maintenance Manager is concerned about the integrity of those Active Protective Devices that can prevent damage to asset, facility or a human life – what are the options?Many facilities have to determine the downtime cost and the impact to the operation – can they afford either an unplanned or IF planned what is an acceptable duration.Do we replace the equipment even though the Structural Integrity is intact vs. upgrade or modernization of the existing asset/Can we effectively enhance the reliability of the system protective components?Do we have Arc Flash concerns related to aging equipment and worker safety?Often these questions are asked when equipment is 20+ years old where parts and parts availability become a concern. As equipment ages, the risk of a catastrophic failure also increases. Where is the equipment located in the event of a failure, how easy is it to replace/repair? What safety issues do we have with the aging equipment and the ability to minimize the impact of an Arc Flash event? What options are available to modernize the existing equipment vs. replacement and with these alternatives, will they meet ANSI & IEEE design standards?Options are available and the chart shows the relative costs associated with the various options. We’ve talked about On-site maintenance, but let’s now look at the options to the left. Many decision makers are often unaware of the available solutions for consideration.The most expensive options is typically complete replacement of the equipment which includes both the cost to manufacture along with the associated installation costs. The options to upgrade the existing structure with a modern protective device is shown as a Retrofill and/or Direct Replacement. These comparative costs are based upon the upgrade of the entire line-up and these comparisons typically include a complete metering and monitoring solution.
- EPM should be part of any facility’s culture to ensure proper functionality per factory recommended procedures and frequencyPerforming proper equipment maintenance can improve reliability, enhance safety and ultimately save a facility money Inevitably, equipment has a finite life and the challenge of any facility manager is to maximize the useful life of the existing asset with compromising safety & productionKey Factors to Consider in Maintain vs. Modernize Equation:Age of EquipmentOperating EnvironmentAvailability of Spare PartsReliability of System ComponentsCost of Ongoing MaintenanceEmerging TechnologyThere are many options available that can affect the decision making process concerning downtime, costs, and overall reliability which will drive the decision to recondition or refurbish aging equipment, modernize the protective component within the original OEM gear or replace with brand new equipment.These options apply to all types of equipment that may part of the existing infrastructureWhether you maintain or modernize your equipment, your key concerns of cost reduction and risk mitigation will be addressed.