Find the right data to justify electrical system upgrades

41% of all respondents in a recent ARC Advisory Group survey cited “lost production” and “failure costs” as the primary justification for projects to upgrade electrical power systems.

06/22/2011


In recent years, it has been notoriously difficult to justify and obtain approval for electrical power systems projects, and the global recession has only made this situation worse. While the sizeable and rapidly aging installed base clearly must be upgraded, management teams generally only approve projects that have specific beneficial econometrics associated with them. That is why 41% of all respondents in a recent ARC Advisory Group survey cited “lost production” and “failure costs” as the primary justification for projects to upgrade electrical power systems.

Justification based simply on upgrading to the latest version is not a successful strategy, nor a wise one. Justifying replacing electrical power systems based on asset amortization is also a flawed strategy. Almost all the end users ARC spoke with use the electrical power systems well past the point of full depreciation, so only 6% of the respondents cited amortized cost as a justification to upgrade.

In the current environment of scarce funds for capital expenditure, ARC recommends that users justify electrical power systems upgrades or replacements by emphasizing the costs of lost production and the cost of failure. This is a far more effective strategy with the CEO or CFO than focusing on amortization costs, or even trying to use arguments regarding obsolescence, improved performance, or even failure frequency.

Planning a project

Planning a migration project can be tricky. Some industry leaders will have lifecycle management policies to facilitate the planning process. However, the majority of the respondents, 72%, did not have such a lifecycle management policy, and “lost production” was the primary reason cited by 28% of the respondents to trigger the upgrade planning process.

Another planning issue was upgrading protection and control systems based on devices not currently made or supported by the suppliers, such as electromechanical relays. The survey found 63% of the respondents do have plans to upgrade their protection and control systems with devices not currently made or supported by the suppliers as long as those systems are based on devices that can be replaced by identical form-function components, such as relays. The current status of the devices is not a deciding factor in the upgrade decision. The most important factor is the reputation for reliability and durability of the device, even if it is no longer manufactured, as the lifecycle of the device will be many years into the future.

One encouraging finding was that 78% of respondents replaced their obsolete protection and control systems as part of their power equipment replacement, especially when this is done as part of a scheduled shutdown based on preventive maintenance, equipment upgrade, etc. These protection and control systems typically would not be replaced earlier, as the time, cost, and effort to replace these systems, along with potential production downtime, do not justify early replacement, especially if the reason for replacement is solely for upgrade versus equipment failure.

ARC recommends that users do not follow the majority of the respondents who did not have lifecycle management policies to facilitate the planning process. Users should establish lifecycle management policies by establishing a team with representatives from multiple disciplines ranging from plant management to operations, engineering, and maintenance.

Users should also not follow the majority of respondents, and should upgrade their protection and control systems based on devices that are currently made or supported by the suppliers to ensure accessibility to spare parts. However, users should follow the majority of respondents and replace their obsolete protection and control systems as part of their power equipment replacement.

Project scope

The scope of a migration or upgrade project is another key issue. For example, roll-in replacement options for switchgear are well accepted by 64% of the respondents, who feel that this offers a good balance of installation ease and lower costs, without compromising the integrity of the solution. Also, 74% of respondents do conduct a systems and equipment condition assessment before an upgrade as an essential step, especially to take advantage of the scheduled downtime by upgrading all that needs to be done to best prevent potential future unscheduled downtime incidents.

Many users found that projected failure rates can be correlated somewhat to the results found based on a condition assessment, so this offers the opportunity to plan proactively to prevent future loss of production rather than having to react later after the fact.

Many plants have multiple parallel processing trains. However, 84% of the respondents will only consider upgrading one train at a time due to concerns over lost production time. This is consistent with the overarching concern regarding the large impact that downtime has on profitability. Also, an overwhelming 95% of respondents prefer to do upgrade and migration projects in a phased manner versus an all-at-once or total rip-and-replace approach.

ARC recommends that users conduct condition assessments before any upgrade so they can base decisions on a qualitative assessment of the state of obsolescence, physical condition, and expected operating life of the plant. This will maximize the efficiency of any planned downtime, and help prevent future costly, unplanned downtimes. Also, all migrations need to be done in phases, as the risks of all-at-once migrations, especially regarding possible extension of the planned downtime, far outweigh the cost savings.

To view an accompanying ARC video on Electrical Power Systems Lifecycle Management Strategies that the author of this report recorded at the 2011 ARC World Industry Forum in Orlando, visit the ARC channel on YouTube.



Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
October 2018
Tools vs. sensors, functional safety, compressor rental, an operational network of maintenance and safety
September 2018
2018 Engineering Leaders under 40, Women in Engineering, Six ways to reduce waste in manufacturing, and Four robot implementation challenges.
July/Aug
GAMS preview, 2018 Mid-Year Report, EAM and Safety
October 2018
2018 Product of the Year; Subsurface data methodologies; Digital twins; Well lifecycle data
August 2018
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
October 2018
Complex upgrades for system integrators; Process control safety and compliance
September 2018
Effective process analytics; Four reasons why LTE networks are not IIoT ready

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
Design of Safe and Reliable Hydraulic Systems for Subsea Applications
This eGuide explains how the operation of hydraulic systems for subsea applications requires the user to consider additional aspects because of the unique conditions that apply to the setting
click me