Cost Implications of Equipment Failures Using Life Cost Based Failure Modes and Effects Analysis (FMEA) on 365KVA Caterpillar Generator

Abstract

Equipment failures have implication on financial sustainability of the organization. This showcase the fact that equipment failures have cost implications and there is need to convert failures using Failure Modes and Effect Analysis, FMEA numerical analysis of 3parameters of severity, occurrence and detection that resulted to Risk Priority Number (RPN). The formula used in analyzing the results includes labour cost, material cost and opportunity cost. The labour cost is equals to the occurrence {[Delay Time.Labor rate.no of Operators]} plus [Fixing Time. Labor rate.no of Maintenance of personnel. Quantity] + [Detection Time. Labor rate no of Operators]}. Material Cost is equals to the occurrence x Quantity of parts to replace x Cost of Part. Opportunity Cost is equals to the Loss Time x Hourly Opportunity Cost. Loss Time is equals to the {Detection Time + Fixing Time + Delay Time}. This researched have proven that since installation of 365kva caterpillar generator in NNPC Lokoja that every time the generator failed to run, we can easily calculate the cost of labour, material to replace failed parts and opportunity cost of those idle times of failed production. Using the concept of FMEA, Failure Modes, Effects Analysis which produces Risk Priority Number (RPN) that is being computed by multiplying severity, occurrence and detection in which occurrence was gotten from equipment history card and logbooks since year 2005 when the installation of 365kva caterpillar generator was made till date. Likert questionnaires from industry experts were collated and Delphi method used to arrive accepted severity and detection to aid in the analysis. Millions of naira are being lost whenever equipment failures occurs and engineers from all fields, should always carry out root cause analysis whenever equipment failure occurs in order to prevent further occurrence.