How can we use the CMMS to help us make Repair/Replace Decisions?

At its most basic level, you must first compare the equipment’s value to the repair cost you would repair the equipment when the repair cost is less than the equipment’s value. Or, you would replace the equipment when the repair cost exceeds the equipment’s value.

Knowing when to stop holding equipment and replace it has always been challenging. Holding onto underperforming equipment can cause increased downtime, greater risk of accidents (assets and personnel), labor costs, and production delays.

Repair/replace criteria is an advanced process which if proceduralized, adds value to any size organization. Many believe, that if the repair cost is <= 50% of the replacement cost, and the equipment's life-cycle expiration is 50% or lower of its expected life-cycle, the equipment will be repaired. But I would be wary of basic rules of thumb.

There can be many other factors to consider when making repair/replace decisions, such as service history, dependability, maintainability, operability, cost to repair, age, active warranty, remaining lifetime, manufacturer out of business, excessive lead-time on parts, technical manuals not available, and the cost of downtime.

Ask the Reliability Team to Create a Set of Questions by Asset Class

You can be as creative as you need to be to make an accurate decision.

Other Thoughts from Industry Professionals

[Answer #1] If a cost estimate is made on the sum of all pump replacement pieces, e.g., volute, wear plate, impeller, bearings, etc. the costs (without labor) can be several times more than a complete brand new, replacement pump of newer design. But will the property department responsible for CAPEX vs OPEX decisions be “okay” with the decision to buy new pumps?

[Answer #2] Economics often drives the repair/replace decision. The most important is production. The option that provides maximum availability might be the best choice. Any increase in availability will far outweigh the repair/replace cost. If the asset takes longer to repair than replace and the production output is more than the repair (and replace is quicker), then replacement is the best option.

[Answer #3] The Asset Manager should acquire Replacement Asset Value (RAV) for every asset. Regarding repair/replace analysis, the asset should be replaced if the annual running costs (ARC) exceed the value, e.g. ARC > 0.02 x RAV (i.e. > 2%). But because money is not all, the trade-off ARC - availability - reliability - risk is in my opinion the key.

[Answer #4] I would run a SQL query against the CMMS database that pulls 3-5 years of history to calculate asset cost-effectiveness by dividing the AVERAGE ANNUAL MAINTENANCE COST by REPLACEMENT COST. If this answer is greater than 7% then "this asset is in trouble" and deserves deeper analysis by the reliability team:

Develop a Formal Repair/Replace Procedure and Process

The ideal repair/replace analysis relies on objective data captured from the CMMS. As a matter of protocol, the maintenance supervisor (and/or reliability engineer) would be involved in the final justification before this information is then taken to the maintenance manager for approval.

In the Old Days

A maintenance supervisor would simply walk into the maintenance manager's office and say, “We need a new asset.” After a short discussion, a purchase requisition would be initiated.

How do you Know when a Repair/Replace Discussion is Needed?

1. For those sites that have a strategic asset management plan, they create a 5-year budget plan that addresses this very subject - called a long-range capital plan which gets updated annually.
2. The reliability team may have had their monthly meeting and run the Bad Actor Report and picked this asset for study.
3. Planner/scheduler reviews, e.g. during the work planning stage [but not likely in the heat of the battle]
4. The warranty date may be near.
5. The projected end-of-life may be near.
6. A planned disposal date may be near.

A Prebuilt Checklist May Help

• Is total downtime too great; what is the total repair cost to date for this asset?
• What is the MTBF – and service history? If the repaired motor cannot meet the MTBF of the equivalent new one, then you may not want it at any price.
• Is outside expertise typically required for this asset – making it expensive to troubleshoot and repair?
• What is the cost to repair internally? If the quote to repair is 80% or more than the cost of the new motor, then it is better to purchase. Conversely, at <= 50% of the cost of a new motor, it is always better to repair than purchase. If the motor is less than 25 horsepower, it generally is better to purchase a new motor, with a warranty.
• Do we have the right PM/PdM strategy?
• Is the manufacturer still in business; the manufacturer is “having quality problems”
• Are parts hard to find; parts may have long lead times; or, on-site staff have to make their parts (which oftentimes introduces errors)
• Is this asset under warranty?
• Is there a large backlog of work for this asset? What is the total estimated cost?
• Also note that newer technology may improve ease of use, capacity/capability; enhance quality; improve maintainability; become easier to predict problems; and become safer to operate.
• Does the current asset have a design flaw present? Or, is a redesign necessary to improve production?
• How is asset condition trending?
• Past repair actions for this asset may not have always returned the asset to 100% capability; is the knowledge to repair resident in the department (perhaps key staff departed); or, is MTTR getting longer?
• Is technical documentation available on-site?
• Are energy efficiency improvements with newer assets possible? Are there potential energy savings when replacing a lower efficiency motor with NEMA Premium, and expected remaining life of the system in which the motor in question resides?
• Impact on worker productivity and/or job quality.
• Any training costs on replacement equipment, plus management of change considerations?

Without the Above, Finance May Take Charge

This link will go to a LinkedIn post that explains this calculation: Equivalent Annual Cost (or EAC).