TCO Approach

Take into account costs across the entire life cycle

The costs of asset maintenance and performance must be analyzed over time, hence the development of the concept of the total cost of ownership (TCO). Maintenance programs and to a greater extent maintenance policy have a significant impact on the performance of assets and are therefore major contributors to TCO costs.

Context and challenges

The decision to carry out more preventative maintenance or more corrective maintenance depends on where the technical and economic optimum is considered to lie between maintenance costs and the unavailability of industrial assets. Preventative maintenance can be planned, conditional, or predictive. It will also be subject to trade-offs.

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Maintenance method- or maintenance engineering-type functions are central to such trade-offs. It is crucial for them to be regularly reviewed, at least once a year, based on the nature and criticality of the assets, to ensure consistency between the maintenance policy and performance targets.

Ageing equipment also needs to be taken into account when deciding whether to maintain, modernize, carry out a like-for-like replacement, or upgrade the technology of assets.

The implementation of a TCO approach, which analyzes the performance of assets over one or more life cycles, means that these different trade-offs can be effected. Ultimately, it makes it possible to challenge certain established choices or to re-address important questions, such as the expected performance of each asset (to clarify its target availability).

How can Argon Consulting help you?

  • Analyzing the performance of maintenance and the control of TCO concepts by the organization, maintenance costs/availability of assets, rate and nature of preventative maintenance, cost of unavailability of critical assets, trade-offs between maintenance and renewal
  • Ranking assets according to their criticality: a maintenance/unavailability cost matrix identifies assets that account for 80% of maintenance and/or unavailability costs
  • Challenging established maintenance choices relating to critical assets: supporting the maintenance/engineering units, redefining the best maintenance policy, based on failure mode, effects and criticality analysis (FMECA) method types (which, in addition to maintenance units, require the active contribution of employees directly involved in maintenance and production, as well as external suppliers and even asset manufacturers)
  • Building a business case that allows for the extrapolation of accessible savings identified in the initial range of assets to a wider range
  • Deploying the TCO approach and revising maintenance programs: the aim being to get maintenance units to take ownership of the TCO methodology and tools so that maintenance choices are periodically reviewed
  • Gathering feedback on the implementation of TCO and transfer of skills to client teams