A through-life costing methodology for use in product-service-systems

Availability-based contracts which provide customers with the use of assets such as machines, ships, aircraft platforms or subsystems like engines and avionics are increasingly offered as an alternative to the purchase of an asset and separate support contracts. The cost of servicing a durable product can be addressed by Through-life Costing (TLC). Providers of advanced services are now concerned with the cost of delivering outcomes that meet customer requirements using combinations of assets and activities via a Product Service System (PSS). This paper addresses the question: To what extent are the current approaches to TLC methodologically appropriate for costing the provision of advanced services, particularly availability, through a PSS? A novel methodology for TLC is outlined addressing the challenges of PSS cost assessment with regard to 'what?' (cost object), 'why/to what extent?' (scope and boundaries), and 'how?' (computations). The research provides clarity for those seeking to cost availability in a performance-orientated contractual setting and provides insight to the measures that may be associated with it. In particular, a reductionist approach that focuses on one cost object at a time is not appropriate for a PSS. Costing an advanced service delivered through a PSS is a problem of attributing the value of means to the economic activities carried out for specific ends to be achieved. Cost results from the interplay between monetary and non-monetary metrics, and uncertainties thereof. Whilst seeking to ensure generality of the findings, the application of TLC examined here is limited to a military aircraft platform and subsystems. © 2014 Elsevier B.V. All rights reserved

Activity-based life-cycle cost analysis : design, operation and maintenance in Arctic environment

Currently the oil and gas exploration and production is moving north towards the Barents Sea on the northern coast of Norway, north of the Arctic Circle. This unfamiliar operational environment of the Arctic poses new challenges for the industry, as climate is harsher, the geographical location is more remote from the market and oil and gas fields are located in an environmentally sensitive area. Due to lack of data and experience with Arctic operations, the uncertainty and risks can be higher than in the familiar climate on the North Sea, as well as it is expected that there may also be increased operational and maintenance costs. This research highlights the main challenges of the Arctic climate affecting life-cycle costs of advanced, complex and integrated offshore oil and gas production facilities. The research evaluates the current practices of the usage of the conventional life-cycle cost analysis by the oil and gas industry and identifies the needs and motivation for development of a more suitable and simplified engineering decision making support tool. The research work demonstrates and discusses a comparison of the conventional and non-conventional cost systems, life-cycle cost (LCC) analysis and activity-based life-cycle costing (AB-LCC) analysis, respectively. This thesis studies the activity-based life-cycle costing method as an alternative cost assessment methodology, and suggests it as a more suitable methodology when designing of oil and gas production facilities to be used in the harsh, remote and sensitive environment of the Arctic

Identification of Factors Causing Time and Cost Overruns in Offshore Petroleum Modification Projects

Part 1: Production ProcessInternational audienceMany of the production facilities and technologies operated on the Norwegian Continental Shelf are getting older and need to be modified to maintain the production performance at the desirable level. Each modification project is unique, and therefore needs to be evaluated and verified with consideration to all specifications. However, the oil and gas industry experience shows that the execution of modification projects within predefined time and cost are rather an exception, than a rule. In this paper we identify and discuss some of the factors that cause time and cost overruns in offshore facility modification projects. Furthermore, we discuss alternative cost methods to improve the quality and the accuracy of costs and time assessments

Assessing Maintenance Time, Cost and Uncertainty for Offshore Production Facilities in Arctic Environment

Part 1: Production ProcessInternational audienceMany of the oil and gas fields on the Norwegian Continental Shelf are entering their tail-end phase of the production life cycle, and the production in temperate areas is slowly declining. Thus, the oil and gas industry looks northwards, and this trend can be seen in all countries bordering the Arctic. Arctic conditions in the form of climate, darkness, ice, remoteness from infrastructure, etc. will cause different and bigger strains on the human factor of the working personnel and machinery than can be seen in more temperate areas. Furthermore, the fact that less data exists – in the form of both statistics and experience of the operation and maintenance strategies to be executed in the Arctic areas – poses additional challenges for the design of offshore production facilities to be used in the less familiar environment of the Arctic. This paper introduces and discusses a method for maintenance cost and time assessments and their uncertainty, using the Monte Carlo simulation method. The method is to be employed when designing for operation and maintenance in Arctic conditions of offshore production facilities. The proposed method can enable a decision maker to assess and adjust maintenance time and cost data more realistically