Integrating Life Cycle and Risk Management
Asset failures and their consequent costs are a routine and often unavoidable aspect of the operation of utility plant. Optimum planning requires risk of failure to be taken into account over the life cycle of the assets. This achieves the right balance of replacement capital, preventive maintenance costs, and the risk-weighted costs of failures. This constitutes risk-based asset management.
Hyland McQueen Ltd are specialists in this field and employ advanced methods for determining life cycle costs of assets under failure risk. The conceptual issues are discussed in this paper that includes examples of generator hazard assessment and the value obtained from wood pole condition assessment. Examples of replacement planning for different classes of assets are discussed in this paper. Consideration of what constitutes an appropriate problem structure for evaluating maintenance and replacement under failure risk in the wider context of a portfolio of assets is described more fully in this paper that examples appropriate spares management of unit transformers.
Benefits realised include:
- Justification of maintenance and replacement decisions either for business goverenance or regulatory compliance.
- Alignment of risk reporting and forecasting with asset management planning.
- Ad-hoc testing of different maintenance or replacement scenarios.
- Increasing business valuation through minimising asset life cycle costs.
- Improved basis for setting insurance excess costs.
- Ability to value risk controls such as the marginal value of an additional spare or improving asset protection systems.
Keywords and phrases
computer simulation, process modelling, hazard, failure, asset management, risk management, net present value, Monte Carlo.