Consequential Equipment Costs Associated with Lack of Availability and Downtime

Abstract

This paper presents a model that has the capability to quantify the consequential costs of downtime and lack of availability in four categories. The first, associated resource impact costs, deals with the costs that arise when failure in one machine impacts on the productivity and cost‐effectiveness of other machines working in close association with it. The second category, lack‐of‐readiness costs, addresses the cost that may be incurred when a capital asset is rendered idle by the downtime resulting from a prior failure. The third cost category, service level impact costs, deals with the situation that arises when one machine in a pool of resources fails to the extent that other machines in the pool must work in an uneconomical manner to maintain a given service level. The fourth cost category, alternative method impact costs, deals with the consequential costs that arise when failure causes a change in the method of operations. The methodology developed represents a significant step toward the rational quantification of consequential costs. An understanding of the philosophy behind each category, as well as the methodology used for quantification, should make it possible to model most situations, given a little thought and creativity in applying the model.