Cost management has always been a major focus for all business unit. There is always demand by investors for business to deliver expected profit. The singular strategy to achieve this is to emphasize a strong focus on cost management. Cost management is the act of planning and controlling the established budget of any business. When you are unable to measure and track your budget continuously, then maintaining or controlling the budget within a reasonable limit of the established budget becomes an arduous task. The major cost classification related to physical asset management that comes quickly to mind in a process plant are: Plant Maintenance Cost Non-Plant Maintenance Cost Tag Line: “Costs do not exist to be calculated, Costs exist to be reduced” (Taiichi 0hno)

1. Tips on Cost optimization For Process Plants.
Fortunatus Udegbue (MBA. M.Sc. CMRP. ASQ-CRE. PMP)
Tag Line: “Costs do not exist to be calculated, Costs exist to be reduced” (Taiichi 0hno)

2. Introduction - 1
• Cost management has always been a major focus for all business unit. There is always demand by investors for business
to deliver expected profit . The singular strategy to achieve this is to emphasize strong focus on cost management.
• Cost management is the act of planning and controlling the established budget of any business. When you are unable to
measure and track your budget continuously, then maintaining or controlling the budget within a reasonable limit of the
established budget becomes an arduous task.
• The major cost classification related to physical asset management that comes quickly to mind in a process plant are:
 Plant Maintenance Cost
 Non-Plant Maintenance Cost
• Plant Maintenance cost consist of all cost incurred to maintain, restore or ensure that a physical asset maintains its
design reliability and maintainability. These costs include:
 Cost of activities to find, discover and evaluate (inspect) conditions of physical assets proactively, before a failure
occurs. This technically involves identification of the failed or degraded object part or parts, the degradation
mechanism or mechanisms and deduction of the degradation remediation tasks.
 Cost of maintaining or delaying effect of the degradation of the target condition (Maintenance) of a physical asset.
Most Inspection if properly implemented will generates properly planned and scheduled Maintenance activities.
 Cost of activities for restoring a physical object to its operational state
 Cost of improving the reliability and maintainability of a physical asset without necessarily changing its original
intended function.

3. Introduction - 2
• Non-Plant Maintenance cost consist of all other physical asset management costs excluding the Plant Maintenance costs.
These costs are:
 Cost of Initial Procurement, installation, commissioning and Startup
 Cost of operation
 Cost of replacement and reinstallation (When asset completes its useful lifecycle and is not replaced due to
reliability issues)
 Cost of disposal, Mothballing etc., when stoppage of the use of the physical asset was not due to a reliability issue.
 Cost of plant upgrade due to non reliability or maintainability related issues.
 Manufacturing or production overhead costs
• From our earlier listings, It is clear that the Maintenance cost is a recurring and variable cost throughout the life cycle of
the asset. Comparing the maintenance cost to the non-maintenance cost, it is safe to conclude that the non-maintenance
cost are fixed costs and mostly one-time costs.
• In a manufacturing plant with a life span of 24 years, the initial first four years ( which involves the design,
procurement, construction, commissioning and startup) are mostly associated with the non- maintenance cost, while
the remaining 20 years are mostly associated with the maintenance cost.
• Therefore Our physical asset cost management tip will be primarily focused on Maintenance cost due to our inference
above (bullet #3).

4. Summary of Mtce Cost Components - 1
S/N Cost Description Cost Source S/N Cost Description Capture Source
1 Material Cost for Urgent &
Emergency Repair work
EAMS – Work Order 8. External Service Cost for
PPM Mtce. work.
EAMS – Work Order
2. External Service Cost for Urgent
& Emergency Repair work
EAMS – Work Order 9. Internal Labor Cost for PPM
Mtce. work.
EAMS – Work Order
3. Internal Labor Cost for Urgent
& Emergency Repair work
EAMS – Work Order 10. Material Cost for Mtce.
Project work.
EAMS – Work Order
4. Material Cost for Proactive
repair Work.
EAMS – Work Order 11. External Service Cost for
Mtce. Project work.
EAMS – Work Order
5. External Service cost for
Proactive Repair Work.
EAMS – Work Order 12. Internal Labor Cost for PPM
Mtce. Project work.
EAMS – Work Order
6. Internal Labor Cost for
Proactive Repair Work.
EAMS – Work Order 13. Rental Equipment Cost for
Mtce. Project work.
EAMS – Work Order
7. Material Cost for PPM Mtce.
work.
EAMS – Work Order 14. Rental Equipment Cost for
PPM Mtce. work.
EAMS – Work Order

5. Summary of Mtce Cost Components - 2
S/N Cost Description Cost Source S/N Cost Description Capture Source
15. Rental Equipment Cost for Non-
PPM Proactive Mtce. Work.
EAMS – Work Order 22. Cost of Total Productive
Maintenance (TPM)
EAMS-Work Order
16. Rental Equipment Cost for
Urgent & Emergency work.
EAMS – Work Order 23. Cost of Maintenance Induced
Failure
EAMS – Work Order
17. Prod. Resource Tool Cost for
Urgent & Emergency work.
EAMS – Work Order 24. Cost of Operational Induced
Failure
EAMS – Work Order
18. Prod. Resource Tool Cost for
Non-PPM Proactive Mtce.
Work.
EAMS – Work Order
19. Prod. Resource Tool Cost for
PPM Mtce. Work.
EAMS – Work Order
20. Prod. Resource Tool Cost for
Mtce. Project work.
EAMS – Work Order
21. Cost of PPM Optimization. EAMS – Work Order

6. S/N S/N
1 All Services Cost Not Pre-Planned in the WO 13 Lack of or Poor Failure Reporting and
Corrective Action System (FRACAS)2 Rental Service Cost Not tracked against Plan
3 Rework costs not tracked to eliminate rework 14 Ware house stock material cost not determined
using Economic Order Quantity model4 Mtce. Process destabilization and capability not monitored
5 Lack of or Ineffective Preventive & Predictive Mtce. (PPM) 15 Plants designed and built without considering
design for Maintainability (DFM) variables.6 Lack of or poor use of work order types in Mtce. Process.
7 Lack of or poor work order scheduling 16 Plants designed and built without considering
design for Reliability (DFR) variables.8 Lack of or Inefficient Preventive & Predictive Mtce.
9 Lack of implementation of follow-up action from PPM 17 Lack of or poor Equipment criticality rating
10 Lack of or ineffective Mtce. Planning and Scheduling 18 Lack of or poor implementation of RCFA
11 Poor Contract Engrg./Management/Admin. Practices 19 Not considering or poor use of LCCA variables
in equipment repair or maintenance decisions12 Lack of or poor work order priority assignment
Causes of Maintenance Cost Bad Actor

7. Contact Us
• If your plant is struggling with Maintenance cost optimization, contact us for help.
• Our contact:
 Email: info@fogaecelectrophysics.com
 Phone: (832) 496-1455