Recently, we got a great question from a maintenance supervisor: Should maintenance (including condition assessment) be skipped in favor of simply replacing a pipeline? The prospect of spending tens of thousands of dollars in maintenance on a pipeline that is well into its service life for much of its length is daunting. So is raising millions of dollars to replace the line and managing its replacement.
The same questions could then be posed for all large capital assets: “Why keep them? When should they just be replaced?”
The decision whether or not to retain a large capital asset depends on multiple, sometimes-competing objectives. Our detailed, realistic failure risk models establish a clear path to understanding the benefit of complex capital assets throughout their life cycles. Our work develops decision support tools that provide repeatable, transparent, flexible, and systematic bases for decision-making around large capital asset life cycle investments. Their mathematical models allows us to provide graphical expression of risks, consequences, benefits, and failure likelihoods in maps, graphs, and logic diagrams for easy communication with boards of directors with a range of technical expertise.
We strive to provide simple, easily calculated formulas that can yield (and have yielded) graphical, mapped results. They are oriented to answer these deceptively simple questions:
When should a pipeline asset be removed from service?
What is the maximum annual budget for maintenance activities, including condition assessment?
What is the optimum option for any particular capital asset: repair, replacement, rehabilitation, or refrain (do nothing)?
If you're asking the same questions or think that someone is going to ask these questions soon, consider developing a risk model as the first step to building a decision support tool.