Asset Useful Life Evaluation Model by Annualized Total Cost of Ownership

Abstract

Asset management integrates multi-functional view to achieve the effectiveness and efficiency of the assets by balancing costs, risks, opportunities, and performance benefits. However, the relation between maintenance strategy and asset Total Cost of Ownership (TCO) has not been widely discussed in previous researches. This study evaluates the useful life of a typical physical asset by considering the aspect of maintenance strategy in the TCO calculation. The maintenance and failure database are utilized to accomplish this objective. Monte Carlo simulation is used as an integrated approach in the proposed model, specifically to simulate the failure uncertainty. An equipment from a cement production plant is used as a case study to test the proposed model and results in the desired output. Therefore, the proposed model contributes to the integration of maintenance strategy and asset TCO to evaluate the useful life of an asset.