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 Type Severe Failure Moderate Failure Minor Failure Weighted Total cost
Downtime (revenue lost because machine unavailable) A D G
Parts & Lubricant & Filters B E H
Repair Labour & Machine Operator Overtime Costs C F I
Total Failure costs A + B + C D + E + F G + H + I
Probability of Failure Type Without OCM (may vary slightly on industry) 20% 30% 50%
Weighted cost without OCM X =

(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 OCM P =

(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 Type Severe Failure Moderate Failure Minor Failure Weighted Total cost
Downtime (revenue lost because machine unavailable) 50000 10000 0
Parts & Lubricant & Filters 10000 2000 500
Repair Labour & Machine Operator Overtime Costs 10000 3000 1000
Total Failure costs 70000 15000 1500
Probability of Failure Type Without OCM (may vary slightly on industry) 20% 30% 50%
Weighted cost without OCM 14000 4500 750 19250
Probability of Failure Type With OCM (may vary slightly on industry) 5% 10% 85%
Weighted Cost With OCM 3500 1500 1275 6275
Savings per failure event with OCM 67% Saving

 

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

Cost Type Severe Failure Moderate Failure Minor Failure Weighted Total cost
Downtime (revenue lost because machine unavailable) 1000000 10000 0
Parts & Lubricant & Filters 257000 50000 7000
Repair Labour & Machine Operator Overtime Costs 10000 5000 2500
Total Failure costs 1267000 65000 9500
Probability of Failure Type Without OCM (may vary slightly on industry) 20% 30% 50%
Weighted average failure cost without OCM 253400 19500 4750 277650
Probability of Failure Type With OCM (may vary slightly on industry) 5% 10% 85%
Weighted average failure Cost With OCM 63350 6500 8075 77925
Savings per failure event with OCM 72% Saving

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