What's the most effective way to increase performance?

Unfortunately, in modern day society, we have adopted a throwaway culture where it's commonplace to change cars every 3 years and swap mobile phones every couple of years. We are always looking to upgrade to the latest piece of technology regardless of whether our existing equipment was doing its job properly or not.

If only it was that simple in industry, but it does highlight a common question ‘Should I refurbish or replace my asset?'

It is easy to assume that purchasing a new asset will fix all your problems. However, careful evaluation is needed to ensure the best all round option is selected as the initial capital expenditure maybe large and restrict other business development works from going ahead.

Topics in making your evaluation should include:

Finance

Procuring new assets or extending the life of an existing one often incurs Capital Expenditure, perhaps the use of a loan to finance or diversion of funds from other projects. How does this financial cost impact the achievement of business objectives? Does the Return on Investment (ROI) meet requirements (often 3-5 years)?

If refurbishing an asset, what are you going to get for your money, and can you be sure you'll get it? Is it a straightforward refurbish or are there hidden risks which could catch you out?

Evaluate the whole life cycle cost of both options. If you want to keep your existing asset going, how long for, what's the residual life on the asset at present, what repair works are required to extend its life, how much will these works cost? Will it require additional inspections or maintenance to keep it going? Will some parts require more regular replacement? These minor things soon add up to a large unforeseen cost.

In some cases, you may be eligible for tax breaks or grants to help fund a new investment, this might provide the justification to invest.

Maintenance

A new asset may result in increased maintenance initially as early failures occur and operators get used to the equipment whilst it settles down into normal operation. Whereas an old asset will also incur increased maintenance costs as components start to fail as they reach end of life.

Customisation

The new asset may have to be adapted or modified to meet your specific requirements, pushing the original ‘off the shelf' quotation price up. This is important to get right as early on the process as possible to avoid any last-minute financial surprises or frustration due to an extended procurement process. Also, any major modifications may require recertification to meet UKCA (or CE outside of UK) standards which could incur additional costs.

Robustness

A new asset is often manufactured to the original User Requirement Specification (URS) and Functional Design Specification (FDS). But this could result in a less robust or forgiving asset (dependent on the standard of specification provided at procurement stage). Perhaps resulting in an asset unable to be n modified in the future. Older assets, hoever, are often engineered with more capacity for enhancements or modifications and may tolerate more variable operating conditions.

Safety and Environmental Compliance

What works may be required to make your old asset compliant or reduce risks to As Low As Reasonably Practicable (ALARP) are a big factor in the choice to repair or replace. As new regulations and standards evolve old assets can be left far behind from a compliance perspective. Whilst not all new standards are applicable retrospectively, there is often an expectation that they are taken into consideration, especially during major refurbishment works, or relocation.

Consideration should also be given to the residual life of existing safety systems as they steadily move through their safety performance level life expectancy and failure is more likely.

The cost of disposal should be considered when looking at replacement, an old asset may contain materials (e.g., asbestos, lead) or be subject to legislation making decommissioning costs higher than expected.

Reliability

A reliable asset makes everyone's life easier. As with maintenance, age can have a big impact on an asset's reliability. With age an asset is likely to have had more modifications to improve reliability and life (using a good continuous improvement process), but it will also start to suffer with component failure as parts reach their end of life or wear out.

User Requirement Specification

When looking to procure a new asset or even undertake a major refurbishment/upgrade, it is important to ensure that you have correctly documented your requirements. Ensuring you are clear on what you expect the machine to do may seem obvious, but many issues with performance following new asset commissioning are down to incorrect or poor specification at procurement stage. From expected operating capacities to Safety Performance Levels to company standards compliance, these should all be documented and provided to suppliers at the procurement stage to avoid any assumptions or uncertainty in what is required.

Whilst this might seem a little daunting, the good news is that Finch can help at all stages through the process, from initial feasibility and specification to options assessment to equipment specification to tender reviews to Factory Acceptance Testing (FAT) to commissioning and handover support.

Let us help you make the right choice for your business.

Contact paul.wood@finch-consulting.com to discuss your requirements

www.finch-consulting.com