How engineers can conduct cost-benefit analysis for PHM systems

Abstract

Individuals who work in the field of Prognostic and Health Management (PHM) technology have come to understand that PHM can provide the ability to effectively manage the operation, maintenance and logistic support of individual assets or groups of assets through the availability of regularly updated and detailed health information. Naturally, prospective customers of PHM technology ask, 'How will the implementation of PHM benefit my organization?' Typically, the response by individuals in the field is, 'Anecdotal evidence indicates that PHM decreases maintenance costs, increases operational availability and improves safety'. This information helps the prospective customer understand the practical benefits of the technology but that customer stills needs more information to justify their investment in the technology. The customer needs a calculated return on investment (ROI) figure for their particular asset that provides financial assessment of the benefit of the investment.The data, time and expertise required to conduct a rigorous cost benefit analysis makes the effort seem daunting to the average engineer with little to no financial analysis training. The reality is that with a cursory understanding of the asset operation, maintenance and logistic issues, a useful cost benefit analysis can be conducted by engineers without business school training.The purpose of this paper is to provide a general methodology for conducting a preliminary cost benefit analysis that calculates an ROI for PHM implementation. The paper will discuss the general types of information needed for the analysis, the quantifying of expected benefits and the types of supporting data required to validate the benefit assumptions as well as an outline for the costing of the PHM technology.

Analyzing the Return on Investment Associated With Prognostics and Health Management of Electronic Products

“…ROI analysis may be used to select between different types of PHM, to optimize the use of a particular PHM approach, or to determine whether to adopt PHM versus more traditional maintenance approaches. 1 The economic justification of PHM has been discussed by several authors, e.g., [3][4][5][6][7][8][9][10]. The ROI associated with PHM approaches have been examined for specific non-electronic military applications, including ground vehicles, power supplies and engine monitors [11,12].…”

“…A comparison of the ROI of prognostics for two types of military ground vehicle platforms was performed using data from Pennsylvania State University's battery prognostics program [6]. Non-recurring development costs were estimated for the prognostic units developed for the batteries of the Light Armored Vehicle (LAV) and the Stryker platform used in the Stryker Brigade Combat Team (SBCT) family of vehicles.…”

“…For this case study, 1,000 sockets were simulated; divergence in life cycle cost due to randomness and variability of parameters can be seen as the support life progresses. (6) where C us is the life cycle cost of the system with unscheduled maintenance and C PHM is the life cycle cost of managing the system using a PHM approach. Equation (6) measures ROI relative to unscheduled maintenance, i.e., if C PHM = C us , then ROI = 0 (breakeven).…”

The effect of current military maintenance practices and regulations on the implementation of Integrated Vehicle Health Management technology

“…As a result, CBAs for IVHM technology are carried out considering the following areas (Banks et al, 2009): However, the knowledge that can be inferred from the exponential increment of data generates all sorts of additional benefits. These tools can be used to, among other things, enforce quality policies (Benedettini et al, 2009), to reduce costs in manufacturing, testing and certification phases (Scandura, 2005;Trichy et al, 2001), to react automatically to a fault (Kurien and R-Moreno, 2008); and to generate all sort of benefits for stakeholders that are not directly involved in manufacturing, supporting or operating the vehicle (Wheeler et al, 2009).…”

The Development of a test bed to support the Design of Diagnostics and Prognostics Applications of a complex system

“…Diagnostics and prognostics application are required in a system due to its capability to predict and manage the life cost of the system [11]. Meanwhile, this application through the PHM have improved safety in operation, increases system availability and decreases maintenance cost [12]. The diagnostics and prognostics application in aircraft operation have enhanced quality operation and improve safety as well as cost reduction in maintenance.…”