PERDEC: Plant Machinery and Equipment Replacement Decisions
PERDEC FACT SHEET
Install Educational Version DEMO
PERDEC calculates the best replacement time for your equipment.
Best practice management of plant equipment will create the lowest costs with
the highest efficiency so that production continues with a minimum of downtime
disruption. Balancing the decreasing ownership costs of equipment with the increasing
costs of operations and maintenance is crucial. An understanding of economic life
models will allow a manager to apply mathematical calculations that will determine
the ideal time to replace, the year in which the total cost of equipment has its
lowest value; before replacement time, repair costs are understood as necessary
expenditures to maintain the equipment, and beyond the replacement time, repair
creates an unnecessarily high cost for use.
PERDEC applies your data through sound mathematical models.
As with the foundation for the AGE/CON software, the mathematical models needed
to calculate ideal replacement time with PERDEC have been readily available for
decades, notably in Dr. Jardine's text Maintenance, Replacement and Reliability.
PERDEC is designed for easy and accurate application of statistical analysis for
optimizing maintenance and replacement decisions for plant machinery and equipment.
The manual available for the software provides definitions and explanations of
the key terms and concepts that are important to this process of optimization,
as well as displaying examples of problems that can be solved with use of PERDEC.
The fundamental principles behind the methodology are explored more exhaustively
in research literature and training courses.
PERDEC simplifies your decision-making.
One advantage of PERDEC is that the user only needs to input the necessary
data for the calculations to be made by the software. Typical calculation would
involve the following:
the scope of time the user would like to consider for the data available
the acquisition cost of purchasing a new item of equipment in present day
parameters of constant utilization, variable utilization (unplanned fluctuations),
and planned changes to
utilization (considering the workload to be assigned to equipment of a particular
age) over the life of the
inflation (the decrease in the purchasing value of a given currency as purchasing
costs rise) with the consequent necessity of making calculations using a constant
value for currency
the discounting rate -- considering the present time-value of future cash
flows to obtain a fair comparison of future and present values
calculation of taxes, such as through a tax depreciation rate and corporate
tax rates (which may be appropriate for companies in the private sector)
operations and maintenance costs -- the relevant costs in establishing economic
life, primarily including all values that may vary from year to year in the use
of the equipment: regular maintenance, downtime of equipment caused by unexpected
failure or planned time for maintenance or rebuilding, materials needed for operations
(including fuel), and cost of holding inventory of spare parts
resale values and resale rates to consider the value of dispensing with an
item of equipment in any given year
PERDEC provides an accurate and clear solution.
PERDEC utilizes the data provided to calculate the EAC (the Equivalent Annual
Cost). The economic life model for an item considers an infinite chain of replacements
or by modification for the first N cycles. Using the CRF (the Capital Recovery
Factor), the values for total discounted cost can be converted into the EAC, the
Equivalent Annual Cost, to better manage comparisons that will indicate the ideal
year of service at which to replace the equipment. The lowest EAC value within
a cycle represents the ideal year of replacement, based on the data that has been
entered. Based on the calculations for EAC, PERDEC advises the best year for replacement.