Oil Analysis saves you Money, but how much?

Multiple studies across many laboratories have shown consistently an effective fluid analysis condition monitoring programme gives an excellent return on investment. A recent study in 2013 by LearnOilAnalysis showed one truck fleet operator with 5000 vehicles saved £4.50 for every £1 spent with LearnOilAnalysis. Oil analysis can help:

  • Development of more efficient maintenance strategies.
  • Reduce number of failures.
  • Extend oil drain intervals
  • Improve equipment efficiency and reduce energy wastage.
  • Decrease equipment downtime.
  • Increase your profits

How much money will it save me?” is quite a difficult question to answer as there are quite a lot of variables involved and each case is unique. It also depends a lot upon how much notice is taken of the diagnostic reports that come back so as to avoid the failures. With the best will in the world if the people doing the sampling and reading the reports are not sold on the idea it risks unrepresentative samples and potentially ignored lab diagnostic advice meaning the machine still fails and no benefit is gained. However, assuming the programme is implemented in your business correctly a good model to use to calculate the potential savings would be one as below. You would complete figures in blue A to I and the calculations using these figures are shown below.

Cost TypeSevere FailureModerate FailureMinor FailureWeighted Total cost
Downtime (revenue lost because machine unavailable)ADG
Parts & Lubricant & FiltersBEH
Repair Labour & Machine Operator Overtime CostsCFI
Total Failure costsA + B + CD + E + FG + H + I
Probability of Failure Type Without OCM (may vary slightly on industry)20%30%50%
Weighted cost without OCMX =

(A + B + C) x 0.2

Y=

(D + E + F) x 0.3

Z =

(G + H + I) x 0.5

S = X + Y + Z
Probability of Failure Type With OCM (may vary slightly on industry)5%10%85%
Weighted Cost With OCMP =

(A + B + C) x 0.05

Q=

(D + E + F) x 0.1

R =

(G + H + I) x 0.85

T = P + Q + R
Savings per failure event with OCM% Saving = ((S – T) / S) X 100

A couple of examples of completed potential cost savings calculations are as follows

Industry example – Mobile plant equipment (example here was done in Euros)

Cost TypeSevere FailureModerate FailureMinor FailureWeighted Total cost
Downtime (revenue lost because machine unavailable)50000100000
Parts & Lubricant & Filters100002000500
Repair Labour & Machine Operator Overtime Costs1000030001000
Total Failure costs70000150001500
Probability of Failure Type Without OCM (may vary slightly on industry)20%30%50%
Weighted cost without OCM14000450075019250
Probability of Failure Type With OCM (may vary slightly on industry)5%10%85%
Weighted Cost With OCM3500150012756275
Savings per failure event with OCM67% Saving

 

Industry example – Energy Production Sector (example here was done in GBP)

Cost TypeSevere FailureModerate FailureMinor FailureWeighted Total cost
Downtime (revenue lost because machine unavailable)1000000100000
Parts & Lubricant & Filters257000500007000
Repair Labour & Machine Operator Overtime Costs1000050002500
Total Failure costs1267000650009500
Probability of Failure Type Without OCM (may vary slightly on industry)20%30%50%
Weighted average failure cost without OCM253400195004750277650
Probability of Failure Type With OCM (may vary slightly on industry)5%10%85%
Weighted average failure Cost With OCM633506500807577925
Savings per failure event with OCM72% Saving