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Copyright © TWI Ltd 2008World Centre for Materials Joining Technology

Palisade User ConferencePalisade User ConferenceApril 22April 22 ndnd & 23 & 23 rdrd

LondonLondon

Maximising the Net Present Value of Investment in the Maintenance of Assets

- Ujjwal Bharadwaj, TWI Ltd, Cambridge, UK


Presentation Outl inePresentation Outl ine• Overview of TWIOverview of TWI• Risk ManagementRisk Management• Risk Based Asset Management Risk Based Asset Management • The Risk Based Approach to Plant The Risk Based Approach to Plant

MaintenanceMaintenance– Qualitative AssessmentQuali tative Assessment– Quantitative AnalysesQuantitative Analyses– Risk Based OptimisationRisk Based Optimisation

• Benefits of using the RB methodologyBenefits of using the RB methodology• Some issues Some issues • QuestionsQuestions


Overview of TWIOverview of TWI


What is TWI?What is TWI?•Independent Research & Independent Research & Technology Organisation for Technology Organisation for welding and joining related welding and joining related technologies technologies •Serves industrial member Serves industrial member companies/government companies/government

•Non-profit distr ibuting and Non-profit distr ibuting and l imited by guarantee of memberslimited by guarantee of members

•Derives from The Welding Derives from The Welding Institute and the Brit ish Welding Institute and the Brit ish Welding Research AssociationResearch Association


Key FiguresKey Figures

• 530 + staff 530 + staff

• 300 graduate status 300 graduate status

• 3500 industrial members 3500 industrial members

fromfrom

• 66 countries world-wide66 countries world-wide

• 4 major UK locations4 major UK locations

• 4 overseas operations and 4 overseas operations and

training basestraining bases


Where is TWI HQ?Where is TWI HQ?

On Granta Science Park 8 miles South of Cambridge


TWI – UK LocationsTWI – UK Locations

Cambridge

North East

Yorkshire

Wales


TWI OverseasTWI Overseas

• Operations/training in Malaysia, Brazil, Iran & Operations/training in Malaysia, Brazil, Iran & China China

• Associates in Australia, France, Ukraine & USAssociates in Australia, France, Ukraine & US• Agents/presence in US, India, Korea, Japan, Agents/presence in US, India, Korea, Japan,

Indonesia, Italy, Saudi Arabia and the United Indonesia, Italy, Saudi Arabia and the United Arab Emirates, Kazakhstan.Arab Emirates, Kazakhstan.

Training base at MalaysiaTraining base at Malaysia


Key Industry Sectors ServedKey Industry Sectors ServedAerospaceAerospace AutomotiveAutomotive ConstructionConstruction

ElectronicsElectronics MedicalMedical Oil & GasOil & Gas PowerPower

Equipment, Equipment, Consumables & MaterialsConsumables & Materials


Risk ManagementRisk Management• Risk:Risk:

– Combination of the probabil i ty of an event and its Combination of the probabil i ty of an event and its consequences (ISO/IEC Guide 73)consequences (ISO/IEC Guide 73)

• What is Risk Management?What is Risk Management?– Direction and control with regard to riskDirection and control with regard to risk– In a f inancial sett ingIn a f inancial sett ing

• Concerned with events that pose opportunities for gain as well Concerned with events that pose opportunities for gain as well as potential for lossas potential for loss

– Currency fluctuation, interest rates etcCurrency fluctuation, interest rates etc– In an engineering sett ingIn an engineering sett ing

• Risk is a combination of occurrence of harm and the severity of Risk is a combination of occurrence of harm and the severity of that harm ( ISO/IEC Guide 51:1999 )that harm ( ISO/IEC Guide 51:1999 )

• Harm is physical injury or damage to the health of people, or Harm is physical injury or damage to the health of people, or damage to property or the environmentdamage to property or the environment

• Risk management process…Risk management process…


Risk Management Strategic Objectives

Risk AnalysisRisk Identif icationRisk Descript ionRisk Estimation

Risk Evaluat ion

Risk Assessment

Risk Mit igation

Risk Acceptance

Risk Communication

Monitoring

Mod

ific

atio

n Form

al Audit


Risk Based Asset ManagementRisk Based Asset Management• Asset Integrity Management Asset Integrity Management

– Ensure integrity of engineered systemsEnsure integrity of engineered systems– ‘‘Fit for purpose’ throughout asset l i fecycleFit for purpose’ throughout asset l i fecycle– Abil i ty of an asset to perform required Abil i ty of an asset to perform required

function effect ively and eff iciently whilst function effect ively and eff iciently whilst safeguarding l i fe and the environmentsafeguarding l i fe and the environment

• Objective: Maximize returns, minimize Objective: Maximize returns, minimize risksrisks

– Safety, Health and Environmental (SHE) Safety, Health and Environmental (SHE) risksrisks

– Business risksBusiness risks


Risk Based Asset ManagementRisk Based Asset Management• Attributes of a good RBM for asset Attributes of a good RBM for asset

mgmtmgmt

– Consistent, Transparent and AuditableConsistent, Transparent and Auditable– Identify potential and active DMs of plantIdentify potential and active DMs of plant– Plan inspection, such that residual r isk for Plan inspection, such that residual r isk for

each DM is within acceptable l imitseach DM is within acceptable l imits– Increased reliabil i ty, safety and Increased reliabil i ty, safety and

availabil i tyavailabil i ty– Reduced scope of work for shutdown Reduced scope of work for shutdown

inspectioninspection


Failure rate over asset l i fe cycleFailure rate over asset l i fe cycle

Wear out failures

Infant mortality failures

Constant random failures

Failure

rate

Life of the asset

Infant mortality failures


Failure rate over asset l i fe cycleFailure rate over asset l i fe cycle

Failure

rate

Operat ing Life

Infant Mortality

Stage

Useful LifeAgeing/ Final Stage


The Ageing Stage in a Plant’s The Ageing Stage in a Plant’s LifeLife

• Accumulated damage e.g.Accumulated damage e.g.– Thinning due to Corrosion/ ErosionThinning due to Corrosion/ Erosion– Fatigue due to Cyclic StressesFatigue due to Cyclic Stresses– Creep due to high temperatureCreep due to high temperature

• Remaining Life Assessment/ EstimatesRemaining Life Assessment/ Estimates– Prediction for replacement/maintenancePrediction for replacement/maintenance– DeterministicDeterministic– Probabilistic Probabilistic

» to capture the uncertainty involvedto capture the uncertainty involved


The Risk Based Approach to Plant The Risk Based Approach to Plant MaintenanceMaintenance

• Risk is a combination of probabil i ty of an Risk is a combination of probabil i ty of an event and its consequence (API 580)event and its consequence (API 580)

• Step 1: Preliminary Risk Analysis of the Step 1: Preliminary Risk Analysis of the System System – By Qualitative Risk AnalysisBy Qualitative Risk Analysis– Identify high risk componentsIdentify high risk components

• Step 2: Detailed Risk Analysis of identif ied Step 2: Detailed Risk Analysis of identif ied System components System components – By Quantitative Risk AnalysisBy Quantitative Risk Analysis– Develop a probabil ist ic RL model of the Develop a probabil ist ic RL model of the

degradation mechanism degradation mechanism

• Step 3: OptimisationStep 3: Optimisation– Such that f inancial benefit is maximisedSuch that f inancial benefit is maximised


Qualitative Risk AnalysisQualitat ive Risk Analysis• System AnalysisSystem Analysis

– ETA using @Risk ETA using @Risk Precision tree for all Precision tree for all sub componentssub components

– System boundaries, System boundaries, fai lure criteria fai lure criteria specif iedspecif ied

– Data usedData used• Historical (local)Historical (local)• Specific dataSpecific data• GenericGeneric• Expert OpinionExpert Opinion


Qualitative Risk AnalysisQualitat ive Risk Analysis

40Very High Low Foundation

48High Medium Tower

36Medium Medium Coupling

36Medium Medium Entire Nacelle

48Medium High Mech Control

36Medium Medium Axle/ Bearing

48Medium High Brakes

36Medium Medium Blades

24Low Medium Grid Connection

32High Low Hydraulic

48High Medium Generator

40Very High Low Entire Turbine

24Medium Low Yaw System

40Very High Low Gear Box

48Medium High Elec Control

Risk Score

Consequence

Likelihood Component

• qualitat ive analyses

• semi quantitat ive analyses

Risk Histogram using Risk Priority Measure (RPM)

0

20

40

60

Elec C

ontro

l

Gea

r Box

Yaw S

yste

m

Entire

Tur

bine

Gen

erat

or

Hydra

ulic

Grid

Con

nect

ion

Blade

s

Brake

s

Axle/ B

earin

g

Mec

h Con

trol

Entire

Nac

elle

Coupl

ing

Tower

Found

atio

n

Component number

RP

M


Quantitative Risk Analysis Quantitative Risk Analysis

• Qualitat ive Analysis highlighted a structural Qualitat ive Analysis highlighted a structural component as high r isk.component as high r isk.

• FMEA identif ied FMEA identif ied three main damage mechanisms three main damage mechanisms

– Corrosion Corrosion – Scouring Scouring – Fatigue Fatigue

• Corrosion chosen to i l lustrate Risk Based Corrosion chosen to i l lustrate Risk Based approach approach

• Probabil ist ic Corrosion Model gives failure Probabil ist ic Corrosion Model gives failure rate with respect to years of service.rate with respect to years of service.

Failure Mode Effect Consequence category Consequence Cost (£k) Source/commentMaintenance durationRegulator penaltiesOther turbinesSea vehicleslocal structuresInjuryDeathInstallation of new structureRepair and recommissionInsurance premiumTechnology confidence lossLost productionMaintenance cost

Keep in serviceMaintenance durationRegulator penaltiesOther turbinesSea vehicleslocal structuresInjuryDeathInstallation of new structureRepair and recommissionInsurance premiumTechnology confidence lossLost productionMaintenance cost

Keep in serviceMaintenance durationRegulator penaltiesOther turbinesSea vehicleslocal structuresInjuryDeathInstallation of new structureRepair and recommissionInsurance premiumTechnology confidence lossLost productionMaintenance cost

Keep in service

Personnel

Maintenance costs

Reputation

Repair

Corrosion - Uniform Band in

Splash Zone

Collapse

Find and Assess

Collapse

Scouring

Fatigue - Circumfrential

cracking

Collapse

Find and Assess

Find and Assess

Reputation

Repair

Production loss

Secondary Damage

Personnel

Maintenance costs

Reputation

Repair

Production loss

Secondary Damage

Production loss

Secondary Damage

Personnel

Maintenance costs


Quantitative Risk AnalysisQuantitative Risk Analysis

• Main input is distr ibution of corrosion Main input is distr ibution of corrosion rate (CR) reflecting the uncertainty rate (CR) reflecting the uncertainty involved.involved.

• Remaining l i fe model:Remaining l i fe model:• RL= (Tstart - MAT)/ CRRL= (Tstart - MAT)/ CR

Tstart= Starting wall thickness (mm)Tstart= Starting wall thickness (mm)MAT=Minimum Allowable Thickness to maintain integrity MAT=Minimum Allowable Thickness to maintain integrity

(mm)(mm)CR=Corrosion Rate (mm/yr)CR=Corrosion Rate (mm/yr)

• Probabil i ty of fai lure is P(RL<0)Probabil i ty of fai lure is P(RL<0)


Quantitative Risk AnalysisQuantitative Risk Analysis• Corrosion rate estimateCorrosion rate estimate• Curve f it ted over historical values Curve f it ted over historical values

using @Riskusing @Risk• Expert opinionExpert opinion

Normal(0.40000, 0.1)Trunc(0,+inf)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

>5.0% 90.0%

0.2355 0.5645

Typical Corrosion Rate of Steel, mpy

Mud Line

Quiet Sea Water

Low Tide

High Tide

Splash Zone

Marine Atmosphere



Material Process conditions Current thick ness

MONTE CARLOSIMULATION

Remaining li fe, years

Fre

qu

enc

y


Pro

babi

lity

Material Process conditions Current thick nessMaterialMaterial Process conditionsProcess conditions Current thick nessCurrent thick ness

MONTE CARLOSIMULATION


Fre

qu

enc

y


Fre

qu

enc

y


Pro

babi

lity


Pro

babi

lity

•Repeated sampling of values from input distributions gives PoF based on RL for the considered DM.



Probability of Failure (PoF) Vs Time

0

20

40

60

80

100

1990 2000 2010 2020 2030

Year

Po

F (

%)

Probability of Failure VsTime

%age Remaining Life consumed Vs Year of Operation

0

20

40

60

80

100

1995 2000 2005 2010 2015

Years of Operation

%ag

e R

emai

nin

g L

ife


Risk Based Optimisation (1/3)Risk Based Optimisation (1/3)• Risk expressed in Expected Values (EV)Risk expressed in Expected Values (EV)• EV= PoF x CoFEV= PoF x CoF• Consequences of failure mainly lost Consequences of failure mainly lost

production production • The Optimisation model f inds the t ime of The Optimisation model f inds the t ime of

replacement of the plant when the Net replacement of the plant when the Net Present Value (NPV) is the maximum Present Value (NPV) is the maximum over planning periodover planning period

• The optimisation weighs the EV of The optimisation weighs the EV of replacement with the EV of not replacement with the EV of not replacing to identify the optimum year of replacing to identify the optimum year of replacement. replacement.


Risk Based Optimisation (2/3)Risk Based Optimisation (2/3)

Probability of Failure (PoF), Action NPV Vs Years of Operation

0

10

20

30

40

50

60

70

80

90

2000 2005 2010 2015 2020

Years of Operation

Pro

ba

bility o

f F

ailu

re

(Po

F)

%

012345678910

Actio

n N

PV

Probability of Failure (PoF) % Vs Years of Operation

Action NPV Vs Years of Operation


Risk Based OptimisationRisk Based OptimisationOptimized Action Schedule (w/o budgetary constraints)

Description Action Year Capital Cost NPV

Str 1 2010 -4.072237 -0.548586Str 2 2009 -3.878321 -0.62253Str 3 2005 -3.190704 -0.283258Str 4 2009 -3.878321 0.15813

Total NPV -1.296244

(3/3)(3/3)

Optimized Action Schedule (with budgetary constraints)

Description Action Year Capital Cost NPV

Str 1 2010 -4.072237 -0.548586Str 2 2006 -3.350239 -0.647286Str 3 2003 -2.894063 -0.32284Str 4 2009 -3.878321 0.15813

Total NPV -1.360582


Potential Benefits from using the Potential Benefits from using the Risk Based MethodologyRisk Based Methodology

• Target SHE and business risksTarget SHE and business risks• Maximize return on investment in O&M Maximize return on investment in O&M

by risk priorit isingby risk priorit ising• Better understand DMsBetter understand DMs• Better control and prevent unexpected Better control and prevent unexpected

system outagessystem outages• Identify and eliminate gaps in existing Identify and eliminate gaps in existing

integrity mgmt process at a siteintegrity mgmt process at a site• Provide an auditable path for integrity Provide an auditable path for integrity

mgmtmgmt


Some issuesSome issues• Limitations of the optimisation toolLimitations of the optimisation tool

For complex systems, non-linear optimisation tools For complex systems, non-linear optimisation tools required.required.

Increasing dependencies require more computing power.Increasing dependencies require more computing power.

• Limitations of the methodologyLimitations of the methodology Used mainly in the Ageing phase when time dependent Used mainly in the Ageing phase when time dependent

damage has accumulated. Needs to be used in damage has accumulated. Needs to be used in conjunction with an overall strategy for plant/equipment conjunction with an overall strategy for plant/equipment life management.life management.

More suitable to business critical systems as opposed to More suitable to business critical systems as opposed to safety critical systems.safety critical systems.

• Availabil i ty and quality of dataAvailabil i ty and quality of data


QuestionsQuestions

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