LTMP clearly explained2 EAC

  • A LTMP is a long term maintenance plan as part of an overall asset management strategy.  A LTMP includes metrics that are necessary for compiling an effective maintenance framework.  These metrics however offers huge value with decision making.On of the most important decisions that property managers/owners are faced with has to do with Acquiring, managing, replacing an asset.  These decisions are a trade off between value and cost.  The optimal position is depicted by the EAC (equivalent annual cost) of an asset.  This metric allows for comparison of assets with differing life cycles and cost dimensions. The lowest EAC equals the highest possible ROI.

    The cost components are the capital cost and the marginal operating cost. The latter being the combined cost of maintenance and risk. An annual life cycle cost or marginal cost is an indicator of the relative total cost of an asset over its life cycle.

    Maintenance strategies (re-active, pro-active and predictive) have notable different cost curves.

    • Re-active strategies are beneficial, with a lower cost margin, with life cycles up to 5, but the cost margin exponentially increases after 5 years.
    • Pro-active is beneficial in rendering the lowest marginal cost with life cycles exceeding 5 years.
    • Predictive strategies generally prolongs the life of an asset by reducing failure probability thus reducing the marginal cost and extending the life expectancy.

    Through the EAC metric and knowing the cost elements and asset lifecycle dimension can we determine the most effective asset management strategy

    1. The optimal asset management strategy mix.
    2. The optimal replacement time for an asset
    3. Determining the best alternative with asset replacement comparisons

    For example

    • with a asset such as a gate motor with a life expectancy of 5 years, can a  Re-active –predictive strategy mix be considered (maintenance activity focused on predictive cycle to replace certain components), which renders the lowest EAC and maximize ROI. (Illustrated position  b- B)
    • With an asset such as a timber window frames, will a Pro-active strategy be beneficial, where provision is made for regular pro-active maintenance to maximize life expectancy and minimize degradation. (Compare life span at illustrated position A-B-C)
    • With an asset such as water supply pipes will a Pro-active – predictive strategy mix be employed to replace aging sections of the circuit and increased monitoring at latter stage of its life cycle. This extend the life cycle and reduce marginal & risk cost associated with unexpected failures with aging infrastructures (Illustrated position c-C)
    • The optimal replacement time for an asset is where the EAC equals the marginal cost of an asset. Employing the correct strategy can optimize, extend or reduce actual life of an asset (as illustrated from B to A and B to A)
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