Life Cycle Costs and the Disc Pump [written June 1998]

In the competitive, cost conscious 1990s, a pump is no longer simply a commodity to be repaired and replaced with little regard to cost. This article looks at Life Cycle Cost analysis, and how this concept can be successfully applied to severe service pumping applications.

By Sarah Benson, Communications Manager, Discflo Corporation

Life Cycle Cost is an idea whose time has come. Although Life Cycle Cost (LCC) analysis was first proposed over 25 years ago, it was until recently a theoretical concept, mentioned in economics course, discussed at academic level, but rarely applied in practice. This situation is changing with the adoption of the first sections of ISO 14040, a part of the international environment protection standard (ISO 14000) that deals with the principles and application of Life Cycle Assessment, by ANSI in the US and CEN in Europe, and the publication of NORSOK, a standard for the Norwegian offshore oil industry, which uses LCC as the basis for making investment decisions on plant and equipment.

Like the NORSOK model, most LCC programs have been designed for specific industries and processes. Here, a model for LCC for pumping systems, based on the ANSI/SAE ARP 4293 standard, will be presented. Published in 1992, this standard was developed originally for military aircraft and is in the process of gaining recognition as an American National Standard.

When to use Life Cycle Cost Analysis

Why apply LCC techniques to pumps? While for a simple pumping application, a full LCC analysis would probably be unnecessary, in the ‘hard-to-pump' area, however, the purchase cost can become insignificant compared with the running costs over the life of the pump. In these difficult applications, the costs of excessive wear, maintenance, spare parts, unplanned downtime, loss of productivity, seal replacements, and product damaged by the pump can form a substantial proportion of the LCC, dwarfing the capital expenditure and routing operating costs.

Examples of these hard-to-pump applications include pumping highly abrasive fluids, slurries with a high solids content, sludges with viscosities of 500 cPs or higher, fluids with high levels of entrained air or gas, shear sensitive (thixotropic or dilatant) slurries, and fluids containing delicate or stringy solids. These fluids are found in all areas of industry, from chemical processing to oil refining, pulp and paper manufacture to food processing, and it is for these ‘hard-to-pump' applications that LCC should be considered.

Cost drivers in pumping difficult fluids

LCC analysis is a simple theory. It can be defined for a pumping system as follows: the sum of all monies expended, attributed directly and indirectly to a defined pumping system from its inception to its dissolution, encompassing the acquisition, ownership and disposal phases. The key cost drivers in the ‘hard-to-pump' applications are listed in Table 1. There are, of course, other cost factors that can be attributed to the pumping system, such as power consumption, piping at installation, compressed air (if required) and water. But these are not significant compared with the other cost factors involved, or between competing pump systems.

Pump Problems	Problems Caused in Non-Disc Pump Systems
Pump pulsation	Shortened seal life in centrifugal pumps Vibration/weakening of surrounding pipework Possibility of product defects
High radial and axial loads	Shortened seal life Shaft fatigue and bearing failure
Not able to run dry	Limits production flexibility
High NPSH requirement	Pump damage due to cavitation

Difficult Fluid	Problems Caused in Non-Disc Pump Systems
Highly abrasive fluids	Premature wear of pumping mechanism with ‘impingement' devices, centrifugal and PC pumps
High solids slurries	Premature wear, depending on nature of solid Loss of capacity in centrifugal pumps, leading to downtime Possible clogging in PC pumps, leading to high maintenance and downtime
Viscous (over 500cP) fluids	Loss of capacity in centrifugal pumps, leading to downtime
Air/gas-entrained fluids	Excessive cavitation and vapor-locking in centrifugal pumps, leading to high maintenance, downtime Possibility of catastrophic failure in PC pumps
Fluids with large or stringy solids	Clogging of mechanism, leading to high maintenance and downtime, with centrifugal and PC pumps
Shear sensitive fluids or with delicate solids	Degradation of product by ‘impingement' of pump on product, in centrifugal, lobe and PC pumps

 

Benefits of Life Cycle Cost Analysis

What are the benefits of carrying out an LCC analysis? They can be categorized as follows:

• To provide justification for "spend to save" decisions.
• Enable competing systems to be compared.
• Allow alternative systems (eg pumping rather than conveying) to be evaluated.
• Enable decisions to be better informed.
• Enable a program or process to be monitored more effectively.
• Allow the impact of different levels of reliability and maintainability to be measured to facilitate "trade-off" decisions with other priorities.

Turning now to the phases of LCC for comparing two or more pump systems, the first stage is to identify the key cost drivers for the process being evaluated. What is the nature of the fluid? Is it abrasive, viscous, high solids, containing entrained air/gas, large solids or stringy material? Is the product shear sensitive or contain delicate solids, and therefore at risk of being damaged in the pump? How critical is downtime, and what is the effect on productivity?

From the answers to these questions, now consider the effect on the existing pump system, and generate costs associated with each factor. (LCC can also be used to compare different design options, such as replacing a conveyor with a pump, but there is not enough space here to include the analysis required.) How much is spent in spare parts due to wear in a month or year? How much labor is used in repairing, unclogging and carrying out unplanned maintenance? What is the cost of downtime (deferred production)? How many seals are replaced in a year due to pump pulsation and high radial and axial loads?

In the case of delicate and shear sensitive products, there is also the cost of product degradation to consider. Although this can be the largest, most significant factor in Life Cycle Cost, it is one that is nevertheless frequently overlooked. So many pump systems operate on an ‘impingement' principle - ie, high amount of contact between the fluid and pump mechanism - that the degradation problem is seen as inevitable. But consider the handling of a chemical crystal slurry. Impingement by the pump can damage as much as 40% of the product and/or lower the quality (size) of the final product, which can equate to a sizeable sum when you take account of the retail value of the crystals and the extra production required to make up for the loss.

Putting a value for each of the cost drivers is the key to successful LCC analysis. Cost estimates are a mix of analysis of existing data and prediction of future costs. Estimating procedures first use statistical analysis of historical data then prediction based on experience gained from previous systems. As you become more familiar with LCC techniques, and start to accumulate a database of operational data is accumulated, it becomes feasible to simulate the logistic elements. Simulation gives you the ability to investigate the interplay between random events and those with time-related variations, and more explicitly evaluate uncertainty.

The estimates should be as accurate as possible given the stage at which the assessment is being undertaken. Risks and uncertainties should be recognized and defined, if possible, and the estimate should be consistent. It should also be appropriate. It is not necessary to apply the full rigors of the LCC discipline to arrive at a meaningful result.

Making Life Cycle Cost Analysis workable

One of the key reasons for not implementing an LCC program is that it is perceived as excessively time-consuming and complex. As mentioned earlier, limit your LCC estimates to those few elements known to account for most of the total costs, i.e., for a pump system in hard-to-pump applications, include the initial purchase cost, spare parts costs and labor for repairs and maintenance, costs associated with downtime and lost productivity, damaged product, seal life, etc.

LCC analysis can be made as easy or as difficult as you want to make it. The time spent collecting and analyzing the necessary data for comparison purposes should be appropriate to the level of investment and project at hand. For a single pump purchase with no special metallurgies or design consideration, no more than an hour's preparation may be required. For multiple pump purchases or long-term strategic planning, which may require a redesign of the existing production process, a more thorough analysis would be required.

Having said that, LCC does have a role in the smaller investment decisions. David Gess, an LCC consultant for the utilities industries, remarks: "Although major investment decisions often reflect total Life-Cycle Costs, most firms make thousands of ‘smaller' decisions without life-cycle costs in mind... these costs can add up to a large part of operative expenses."

Risk and uncertainty

In using predictive techniques in LCC analysis, there is a need to recognize risk and uncertainty. From the earliest stage, the feasibility of a project has to be assessed and associated levels of risk attributed to the elements of the project. Risks could be technical or financial. Technical risks may be such that the required performance cannot be achieved using the level or type of pump technology proposed.

The issue of risk is especially important if you want to compare an existing pump system with one that you have no experience with. How can you obtain the data necessary to use as the basis for cost estimates to fit the LCC model? Firstly, there is the information supplied by the pump manufacturer or distributor, admittedly not an objective source of information, and secondly, there is information obtained from existing users, which is probably more reliable but more difficult to acquire.

To minimize or alleviate some of the risk associated with the former approach, you could legitimately ask for a manufacturer's performance guarantee. The policy of individual pump manufacturers on this issue varies widely. However, if a manufacturer is making claims of performance in hard-to-pump applications, with regard to levels of wear, breakdown, seal life, etc, to form the basis of your LCC analysis, it is not unreasonable to expect a performance guarantee to stand behind those claims.

There are other factors to consider in a comprehensive LCC program. Firstly, the price you ultimately pay for equipment depends on how economic conditions vary during the course of the program. Therefore, to forecast affordability against a given budget, the effects of inflation and interest rate changes or possibly exchange rate fluctuations should be taken into account.

A second consideration is standardization. LCC analyses should be accompanied by sufficient explanation of the underlying assumptions of the cost elements to ensure understandability and traceability. Consistency is important both in the definition of terms and in the costing and accounting conventions used.

It is also important that the accuracy of the cost elements is defined. The relative accuracy of LCC estimates helps to determine their value, validity, and the extent to which they can be used unadjusted in future investment decisions. Ideally, estimates should be accompanied by a sensitivity rating for the major cost drivers.

At the inception of any program, costs can only be predicted, while at the disposal stage, costs are sunk. Between these two extremes, cost is a combination of sunk, committed, planned, and speculative. Bear in mind that decisions can only affect the future, and costs already incurred (sunk) are therefore irrelevant to decision making.

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