Cost-benefit analysis of the application of prognostics and health management technology

Abstract

This paper presents a methodology to perform costbenefit analysis on the application of Prognostics and Health Management (PHM) technology for equipment. The purpose of the methodology is to estimate the economic feasibility of the application of the PHM technology. This paper discusses the calculation of economic metrics for PHM technology, and determines the potential Return on Investment (ROI) and Payback Period of a PHM approach relative to unscheduled maintenance policy using Monte Carlo simulation. The case study of a kind of electronic equipment indicates the proposed methodology of cost-benefit analysis can be used as a useful tool for aiding the decision-making for the application of PHM technology. Keywords-prognostics and health management; cost-benefit analysis; return on investment; Monte Carlo simulation978-1-4799-1014-4/13/$31.00 ©2013 IEEE