Optimizing Your Product Support

Solution

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 Running the Power Station:
… costs, costs, costs
• Mobilization costs • Scheduled & Unscheduled Engine &
• General Liability Insurance Auxiliary Parts
• Machinery Breakdown Insurance • Strategic Spare Parts Inventory Cost
• Staff labor – Unscheduled Repair Reserve
– On-Site Warehouse. Parts administration
– Operations
– Maintenance • Emergency & Maint. Electrical
– Contracted & Plant security Connections
– Administrative • Building & Grounds Maintenance Cost
– Training cost • Legal, HR & Accounting Services
– Vehicles – Hiring/screening
• Shop equipment & offices, – Payroll services
– Hand tools cost • Operating Licenses, Permits or Approvals
– Shop consumables – Facility Taxes and Fees Imposed or
– Office supplies & communications cost Assessed
– Sewer and telephone connections – Tariff and Import expenses
– Fuel, water or other consumables
– Non-hazardous waste disposal
– Equipment & Software

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Availability

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 Factors Ensuring Equipment Up-time
Customer value equation

Cost / Hour Cost / kW-hr kW/ Hour

(minimize) (optimize) (maximize)

REBUILD COSTS COMPONENT LIVES PRODUCT AVAILABILITY

% After failure Design Application

• MTBS
Repairs • Ambient condition
Application • MTTR
Parts Reuse • Load factor
• Availability Index
Maintenance • Transient requirements
Parts Salvage • % Scheduled Down time
Repair Quality • Maintenance Ratio
Labor Efficiency Operation
• Load management
• Peak shaving
• Ancillary equipment operations
MTBS – mean time between service
MTTR – mean time to repair

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Understanding the Customer
• Do it myself
– Dealer provides parts and customer does all of the work.
– Dedicated PSSR meeting customer needs.
– Great parts opportunity but not really showing the value.
• Do it for me
– Dealer technician develops relationship and provides 100% support.
Build a partnership with customer.
– Value driven opportunity but higher cost to customer.
– Great opportunity to negotiate “pay for performance”.
• Do it with me
– Customer does the basics, dealer does the heavy lifting.

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Life Cycle Costs
“LCC”

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 Life Cycle Cost – Principles
• LCC is the total cost of ownership of machinery and equipment,
including its cost of acquisition, operation, maintenance, conversion,
and/or decommission (International Electrotechnical Commission, IEC
60300-3-3).
• The primary objective of life cycle costing is to provide input to decision
making in any or all phases of a product’s life cycle.
• Simplified LCC analysis summarizes results in net present value (NPV)
format considering depreciation, taxes and the time value of money.
• ISO/IEC 15288:2008-System Life Cycle Processes establishes a
common framework for describing the life cycle of systems created by
humans.
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 Inputs That Impact a LCC
Numerous inputs go into a Life Cycle Cost Analysis.
CSA Pricing
Fuel quality Resale Value
Electricity Price Fuel cost
Peak Hours Wages

Total
- x Availability -
Energy Operating
Value Cost x Capacity Owning
Cost
= Net Profit

Site Ambient Interest Rate

Oil Cost Genset Price
Heat Price
Labor Hours

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The CSA Teamwork Strategy
Customer Service Agreements Are a Team Effort.

CSA Strategy

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Risk is Neither Created Nor Destroyed,
… Only Transferred.
First Law of Customer Support Agreements

• Contract Factors • Equipment

• Availability guarantees • Product reliability
• Redundancy • BOP complexity
• Staffing levels • Plant engineering & construction
• Commercial quality
• Margin & liquidated damages • Critical spares & on-site tools
• Contract term • Plant condition
• Customer / service provider financial stability • Operations
• Contract scope • Application
• External • Redundancy
• Ambient conditions • Operating regime
• Load duty
• Air & fuel quality • Run hours
• Site access • Number of starts
• Environmental compliance • Service provider
• Parts logistics & customs clearing • Operation expertise
• Statutory restrictions & overall industry • Field response capability
financial health

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Operating Costs
… typically expressed in cents/ekW-hr or $/hr
For Power generating equipment:
• Fuel
• Fuel consumption is the major portion of non-standby O&O costs for power
applications, whereas capital cost is the primary concern for backup generators.
• Fluids
• Oil, coolants, fluids analysis program.
• Scheduled preventive maintenance
• Filters
• Parts
• Scheduled engine/systems overhauls
• Top-end,
• In-Frame,
• Major
• Unscheduled repairs and overhauls

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Operating Costs – Prime Application
Having Fuel cost a main factors, makes Performance and Efficiency factors a dominant decision
driver!

Fuel: 0,5 $/liter

91,3% Fuel
Fluids
PM
Components
Overhauls

3,1% 2,3%
1,1% 2,2%

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Fuel Quality

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 Fuel Quality Impact on Engine M&R Costs
Cost / kWh

Contaminants : Ammonia, Halides, Siloxanes, Hydrogen Sulfide

Assumed Overhaul Schedule (Top End, In Frame, Major)

High Contaminant= 7k, 21k, 35k Hours

Low Contaminant= 18k, 54k, 90k Hours
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Fuel Contaminants & Bottom Line

G3520C 1600kW Genset

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Managing the Risk of the LCC

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Operating Cost – B(x) Life Expectance
B(x) life is the measure of time in Line A = B10 Life
which (x)% of component population Line B = B50 Life

will have failed. 60

B
50

• B10 Life - “No Fail Scenario”

40
– Cat Brand Standard (O&M), use for
low risk scenarios 30 A
• B50 Life - “Average Case” 20

– Industry Standard, use for any

competitive scenario 10

Operating Hours 

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Preventative Maintenance (PM) Tasks
• The specific maintenance tasks are established based on manufacturer
recommendation (O&O manual), along with dealer experience.
• Each Maintenance Task has 3 major Cost Components
– Parts : ~80% of the cost, represents the parts being replaced in the service task
– Labor : ~15% of the cost, represents the time and labor cost to execute the service
– Travel : ~5% of the cost, represents travel costs to get tech to site
• Managing the frequency of these tasks is critical to minimizing your PM
Costs. Consider:
– Fuel Type
– Application
– Site Conditions
– Component life expectancy approach (B10 vs. B50)

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Repair Risk Management
• Scheduled repairs per service manual intervals
• Predictive repair scheduling
– Use valve recession, oil consumption, other indicators
• LEXE0681-00 – Natural Gas Engines
• LEXE0682-00 - Landfill Gas Engines
Average Cost / Revenue Comparison

$1,600,000.00
$1,400,000.00
$1,200,000.00
$1,000,000.00 Cost
Per Year

$800,000.00 Revenue
$600,000.00 Profit
$400,000.00
$200,000.00
$0.00
Cat G3520C HV Low Energy Cat G3520C HV Low Energy
Gas @ 1613 kW, 1200rpm Gas @ 1613 kW, 1200rpm
Cost $289,416.97 $246,443.11
Revenue $1,338,064.96 $1,343,508.03
Profit $1,048,647.99 $1,097,064.92
Overhauls by Schedule Overhauls by Prediction

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 Operating Cost – Overhauls

• Overhauls represent significant preventative maintenance events

– Involves the replacement or reconditioning of major ware components
– Requires additional service expertise beyond standard PM
– Represents the largest of the PM costs (4-6% of total Operating Cost)
– Cost often can be mitigated via rebuild or remanufactured components.
• Overhaul common terms
– Top End (E50) : Cylinder heads and Turbos - 12-25% of new Genset
– In Frame or Interim (E60): Adds main and rod bearings - 30-50% of new Genset
– Major (E70) : Adds cams, pumps, and gear train – 40-70% of new Genset
• Late life cycle overhauls are often excluded or optional to lower cost.
– Consider the impact on the Genset residual value.

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Unscheduled Maintenance…

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Operating Cost
… Unscheduled Maintenance
• Represents repair contingency
• Very difficult to assess accurately (estimate
from experience)
• Not always included in ‘Simplified Life Cycle
Cost’ analysis
• Results in downtime, which hurts availability
and could expose you to penalties
• Work with the service department to
understand this component
• Use oil sampling data to help define
maintenance intervals

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Addressing Unscheduled Maintenance Costs
• Unscheduled maintenance can be addressed by adding a % based
contingency to existing PM costs.
• Typical Unscheduled Maintenance costing includes:
– Parts : 2-4% adder to total parts, 4-15% for corrosive fuels
– Labor : 10-20% additional labor hours, depending on dealer experience
– Travel : 3-5 additional trip per year

Unplanned repair costs

are always higher

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Exhaust gas heat exchanger on a Ag Biogas cogen plant.

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Radiator at a landfill site-Pigeons found the radiators to be a nice place to
hang out in the winter

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Questions or Comments are
Encouraged!

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Thank You!

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