How Pump Troubleshooting Programs Deliver Measurable Cost Savings

In my previous article (How to Empower Operators to Evaluate Abnormal Machinery Conditions), I explained how field troubleshooting can save your site time and money by avoiding unneeded centrifugal pump outages.

To convince management that the cost of training, specialized equipment, and analysis time for field personnel required for pump troubleshooting activities are economically justified, you need to present a clear business case for instituting the program.

Your proposal requires you to analyze all the anticipated costs and compare them with the economic benefits of your proposed program. Here is a list of some of the fixed and recurring costs associated with a typical troubleshooting program:

1. Cost of troubleshooting training: fixed costs.
2. Cost of field tools, such as pressure gauges, vibration analyzers, temperature probes, infrared guns, strobe lights, and anything else you deem is required to perform a thorough field analysis: fixed costs.
3. Cost to maintain instruments and tools: recurring costs.
4. Cost of the time required to perform the analyses and report the results: recurring costs.
5. Cost of the time to incorporate troubleshooting methodologies and reporting across the organization: fixed costs
6. Cost to train new hires: recurring costs.

You must clearly quantify the annualized economic benefits. The primary benefit is the reduction in pump repair costs obtained by improved pump surveillance. (Below, I will present a quick way to determine the approximate economic benefits of troubleshooting your centrifugal pumps.)

Once we know the economic benefits and the fixed and recurring costs required, you can then determine if the program makes economic sense or not by determining its payback period. (The payback period is defined as the time required for a program to generate enough cash flow to recover all its initial investment. Most managers would like to see a payback period in the 2-to-5-year range. Note: There are several more in-depth analysis methods to use, such as the net present value (NPV) approach and the internal rate of return (IRR). )

Quantifying the Program Savings

To quantify your savings, we must first know:

1. The population of pumps you wish to analyze
2. The MTBR (mean time between repair) of the pump population
3. The average repair costs for the population.

Once you have this information, you can use Equation A to estimate the number of repairs (R) expected at a site over a given interval. To simplify the calculation, I recommend that the MTBR value be in pump-years per repair.

R = M x T /MTBR (Equations A)

MTBR = pump-years/repair

M = number of pumps in a site

T = time interval of interest

If p is the percentage of pump repairs avoided by troubleshooting, then:

The number of repairs avoided*, i.e., saves per year with troubleshooting, is determined by using Equation B (See Figure 1):

Repairs Avoided = M x T /MTBR x p (Equation B)

Note: We assume that savings are the result of deferring pump repairs until true-end-of-life conditions have occurred. Deferring repairs should be considered a cost savings over the time period that the repairs were deferred.

If we assume the average cost of a repair is C, then the expected annual savings ($) are determined by using Equation C:

$ = p x C x M x T / MTBR (Equation C)

To get results in dollars, be sure to consistently use the following units:

Dollars = (dollars/repair) x pumps x years/ pump-years/repair

Annual Repair Dollars= % x (dollars/repair) x pump-years/(pump-years/repair)

Example #1

Let us assume p = 5% and T = 1 year:

Annual savings = 0.05 x $10,000 /repair x 1000 pumps x 1 year / 4 pump-years/repairs

$125,000 per year

Example #2:

Let us assume p = 10% and T = 1 year:

Annual savings=0.1 x $15,000 /repair x 1500 pumps x 1 year / 3 pump-years/repairs

$750,000 per year

These two hypothetical examples provide a hint at the potential savings that troubleshooting can provide. Keep in mind that the value of p can vary widely from site to site based on multiple site factors. My colleague, Julien LeBleu, suggests that p can vary from 5% all the way up to 20% depending on the skill of the troubleshooters.

Working backwards, in example #1, you should be able to justify up to $250,000 ($125,000 x 2) in analysis equipment and training, if a 2-year payback period is required. In example #2, you should be able to justify up to $1,500,00 ($750,000 x 2) in analysis equipment and training if a 2-year payback period is required.

It’s also possible that your actual savings may be less than those shown in these examples. Therefore, be careful to select your repair cost data carefully to avoid overestimating your potential savings.

Note: Your management may require a more in-depth analysis than the simple Payback Period method shown here. You can use the payback methods as a quick “go/no-go” method to see if a troubleshooting program makes sense.

Rules of Thumb for Repair Cost per Pump

Here are my recommendations for estimating the pump repair cost in the absence of precise site data. There are three factors to consider when estimating repair costs: 1) The size of the pumps in your population, 2) the pump’s design standard, i.e., ANSI or API type, and 3) if chemical-resistant components are used. Table 1 is a good starting point for estimating pump repair costs, but use these estimates carefully. Other adders may make sense depending on local economic factors.

In Table 1 below, the reader will find some pump repair cost estimation examples for selected pump population types.

Moving Forward with Pump Troubleshooting Justification

The reader can see that the range of pump repair costs varies widely, so the estimated cost savings also tend to vary widely. It is best to start your justifications with conservative p (the percentage of pump repairs avoided by troubleshooting) values and use the best MTBR numbers you can find.

Also, begin with a small, i.e., pilot, program, keeping track of saves, and then build on your successes. Eventually, you can grow the program across the site. Continue to track your savings and publish your overall results to management annually. If effectively managed, this type of basic troubleshooting program has the potential to dramatically reduce repair costs and increase pump availability at your site.

Acknowledgement: I would like to thank Julien Lebleu for his valuable input during the writing of this article. We both have a keen interest in training operators to optimize machinery reliability. Mr. Lebleu can be reached on LinkedIn.