Palisade User Conference

1. Palisade User Conference Maximising the Net Present Value of Investment in the Maintenance of Assets - Ujjwal Bharadwaj, TWI Ltd, Cambridge, UK April 22nd & 23rd London

2. Presentation Outline • Overview of TWI • Risk Management • Risk Based Asset Management • The Risk Based Approach to Plant Maintenance • Qualitative Assessment • Quantitative Analyses • Risk Based Optimisation • Benefits of using the RB methodology • Some issues • Questions

3. Overview of TWI

4. What is TWI? • Independent Research & Technology Organisation for welding and joining related technologies • Serves industrial member companies/government • Non-profit distributing and limited by guarantee of members • Derives from The Welding Institute and the British Welding Research Association

5. Key Figures • 530 + staff • 300 graduate status • 3500 industrial members from • 66 countries world-wide • 4 major UK locations • 4 overseas operations and training bases

6. Where is TWI HQ? On Granta Science Park 8 miles South of Cambridge

7. TWI – UK Locations North East Yorkshire Wales Cambridge

8. TWI Overseas • Operations/training in Malaysia, Brazil, Iran & China • Associates in Australia, France, Ukraine & US • Agents/presence in US, India, Korea, Japan, Indonesia, Italy, Saudi Arabia and the United Arab Emirates, Kazakhstan. Training base at Malaysia

9. Key Industry Sectors Served Aerospace Automotive Construction Equipment, Consumables & Materials Electronics Medical Oil & Gas Power

10. Risk Management • Risk: • Combination of the probability of an event and its consequences (ISO/IEC Guide 73) • What is Risk Management? • Direction and control with regard to risk • In a financial setting • Concerned with events that pose opportunities for gain as well as potential for loss • Currency fluctuation, interest rates etc • In an engineering setting • Risk is a combination of occurrence of harm and the severity of that harm ( ISO/IEC Guide 51:1999 ) • Harm is physical injury or damage to the health of people, or damage to property or the environment • Risk management process…

11. Risk Management Strategic Objectives Risk Assessment Risk Analysis Risk Identification Risk Description Risk Estimation Formal Audit Modification Risk Evaluation Risk Mitigation Risk Acceptance Risk Communication Monitoring

12. Risk Based Asset Management • Asset Integrity Management • Ensure integrity of engineered systems • ‘Fit for purpose’ throughout asset lifecycle • Ability of an asset to perform required function effectively and efficiently whilst safeguarding life and the environment • Objective: Maximize returns, minimize risks • Safety, Health and Environmental (SHE) risks • Business risks

13. Risk Based Asset Management • Attributes of a good RBM for asset mgmt • Consistent, Transparent and Auditable • Identify potential and active DMs of plant • Plan inspection, such that residual risk for each DM is within acceptable limits • Increased reliability, safety and availability • Reduced scope of work for shutdown inspection

14. Failure rate over asset life cycle Infant mortality failures Infant mortality failures Wear out failures Failure rate Constant random failures Life of the asset

15. Failure rate over asset life cycle Infant Mortality Stage Ageing/ Final Stage Useful Life Failure rate Operating Life

16. The Ageing Stage in a Plant’s Life • Accumulated damage e.g. • Thinning due to Corrosion/ Erosion • Fatigue due to Cyclic Stresses • Creep due to high temperature • Remaining Life Assessment/ Estimates • Prediction for replacement/maintenance • Deterministic • Probabilistic • to capture the uncertainty involved

17. The Risk Based Approach to Plant Maintenance • Risk is a combination of probability of an event and its consequence (API 580) • Step 1: Preliminary Risk Analysis of the System • By Qualitative Risk Analysis • Identify high risk components • Step 2: Detailed Risk Analysis of identified System components • By Quantitative Risk Analysis • Develop a probabilistic RL model of the degradation mechanism • Step 3: Optimisation • Such that financial benefit is maximised

18. Qualitative Risk Analysis • System Analysis • ETA using @Risk Precision tree for all sub components • System boundaries, failure criteria specified • Data used • Historical (local) • Specific data • Generic • Expert Opinion

19. Qualitative Risk Analysis Component Likelihood Consequence Risk Score Elec Control High Medium 48 Gear Box Low Very High 40 Yaw System Low Medium 24 Entire Turbine Low Very High 40 Generator Medium High 48 Hydraulic Low High 32 Grid Connection Medium Low 24 Blades Medium Medium 36 Brakes High Medium 48 Axle/ Bearing Medium Medium 36 Mech Control High Medium 48 Entire Nacelle Medium Medium 36 Coupling Medium Medium 36 Tower Medium High 48 Foundation Low Very High 40 • qualitative analyses • semi quantitative analyses

20. Quantitative Risk Analysis • Qualitative Analysis highlighted a structural component as high risk. • FMEA identified three main damage mechanisms • Corrosion • Scouring • Fatigue • Corrosion chosen to illustrate Risk Based approach • Probabilistic Corrosion Model gives failure rate with respect to years of service.

21. Quantitative Risk Analysis • Main input is distribution of corrosion rate (CR) reflecting the uncertainty involved. • Remaining life model: • RL= (Tstart - MAT)/ CR Tstart= Starting wall thickness (mm) MAT=Minimum Allowable Thickness to maintain integrity (mm) CR=Corrosion Rate (mm/yr) • Probability of failure is P(RL<0)

22. Quantitative Risk Analysis Marine Atmosphere Splash Zone High Tide Low Tide Quiet Sea Water Mud Line Typical Corrosi on Rate of Steel, mpy • Corrosion rate estimate • Curve fitted over historical values using @Risk • Expert opinion

23. Quantitative Risk Analysis • Repeated sampling of values from input distributions gives PoF based on RL for the considered DM.

24. Quantitative Risk Analysis

25. Quantitative Risk Analysis

26. Risk Based Optimisation (1/3) • Risk expressed in Expected Values (EV) • EV= PoF x CoF • Consequences of failure mainly lost production • The Optimisation model finds the time of replacement of the plant when the Net Present Value (NPV) is the maximum over planning period • The optimisation weighs the EV of replacement with the EV of not replacing to identify the optimum year of replacement.

27. Risk Based Optimisation (2/3)

28. Risk Based Optimisation (3/3)

29. Potential Benefits from using the Risk Based Methodology • Target SHE and business risks • Maximize return on investment in O&M by risk prioritising • Better understand DMs • Better control and prevent unexpected system outages • Identify and eliminate gaps in existing integrity mgmt process at a site • Provide an auditable path for integrity mgmt

30. Some issues • Limitations of the optimisation tool • For complex systems, non-linear optimisation tools required. • Increasing dependencies require more computing power. • Limitations of the methodology • Used mainly in the Ageing phase when time dependent damage has accumulated. Needs to be used in conjunction with an overall strategy for plant/equipment life management. • More suitable to business critical systems as opposed to safety critical systems. • Availability and quality of data

31. Questions