Long Term Cost of Ownership: Seeing Beyond the Initial Price Tag

Over the years, LTCO concepts have evolved into a valuable tool for process industry buyers and purchase influencers to guide them in making more informed purchase decisions. Rather than just looking at the initial purchase price tag of equipment, LTCO looks at the costs of a product over its entire life cycle. It adds the expenses of maintenance, service, and spare parts.

While capital procurement budgets cannot ignore initial purchase price, LTCO can help purchasers look further down the road to see the long-term effects that purchasing one valve option or using one valve supplier will have over another. The cost differences can be dramatic. Here are eight factors that affect LTCO:

1. Choosing the right valve

Maybe this is an obvious point, but there are too many tales of valves misapplied in one way or another. In those cases, the cost impact can be dramatic. Specifying the right valve is simply a function of understanding the process parameters and then applying knowledge of valve’s characteristics. It only makes sense to work with suppliers that have similar application experience. These suppliers also should have expert tools such as valve sizing and selection software to take the uncertainty out of the selection process.

Once the right valve is chosen, there remains a wide range of options that go with that selection. Those choices and their effects are:

• Seats: Seats have an important bearing on shut-off performance and longevity of valves.
• Seals: Advance stem seal designs limit fugitive emissions, extending the life cycle of valves in service where restrictions of volatile organic compounds and other toxic emissions are a concern.
• Coatings: For metal-seated ball valves, properly selected coatings reduce the friction between the ball and seats, allowing smooth sliding operation, minimizing damage and wear from galling, abrasion, erosion, particle impact, cavitation, and thermal swings. Reducing friction in the trim lowers the valve operating torque, which has several advantages. Lower valve torque allows a smaller actuator to be used—which is more economical, results in smaller envelope dimensions of the assembly, improves signal response, and simplifies selection of accessories to meet cycle speed targets and other special requirements. Coating technology is one of the most important but frequently overlooked selection criteria for metal-seated valves.
• Trim: In certain applications, high media velocity and large pressure drops across the valve make the generation of noise, vibration, and/or cavitation inevitable.

3. Adopt the right technologies

The purchase price of critical process control and automated on/off valves amounts to only a fraction of their total LTCO. Often, paying a little more for equipment with advanced technologies will significantly reduce the LTCO. Life-cycle cost reductions come about in these ways:

• Intelligent valves reduce wiring costs because they can be integrated with a variety of communication technologies.
• During start up, intelligent valves reduce costs by recognizing installation problems and allowing cost-effective remote troubleshooting and calibration.
• Emergency shutdown (ESD) valves equipped with intelligence that allows for frequent automated condition monitoring and partial stroke testing (PST) reduces redundant solenoid valves.
• PST also eliminates the cost and risk of sending employees to remote or dangerous plant locations to perform manual safety checks.

The actual savings of using intelligent technologies varies by application; however, it is not unusual for plants that might pay 20% more for valves equipped with intelligent technologies to realize a life-cycle cost savings of 30%.

4. Ensure the quality of the valves purchased

5. Use a single resource for valve package purchases

Many companies already limit valve purchasing to a small number of vendors. But are these vendors also providing fully integrated package solutions? Certainly, a single source of supply can be convenient and save costs. Buying valve packages using components from a single valve manufacturer can also result in significant savings in LTCO. Why is this? Usually parts and materials have been manufactured to the same stringent quality standards using the same best practices and the latest technologies. This mitigates risk and cuts down significantly on initial investment, which is one of the keys to minimizing LTCO and maximizing return on investment.

6. Maintain valves for best service

Reducing the cost of valve ownership doesn’t begin and end with hardware. It is also important to understand specific application demands and what it takes to minimize, predict, and—better yet—prevent downtime.

It’s important to create routines for checking the performance of specific valves based on known life cycles and to keep track of data in historical databases to enable the analysis of trends and performance behaviors. Much of this can be automated.

Valve networking solutions allow for systematic, remote monitoring of on/off valves, while digital valve controllers enable advanced diagnostics and predictive maintenance for control valves. Pre-shutdown valve audits can identify where problems are likely to occur and what contingencies are required to address them. These strategies also help extend maintenance intervals. The key is to use all of the tools available to pinpoint potential problems before they happen.

7. Optimize spare parts inventories

Suppliers can help in performing a critical analysis of valve inventories. Based on equipment ratings, they can provide input to create an inventory strategy aimed at reducing redundant or unnecessary inventories. This ensures that the most critical components are readily available when needed. Critical assets (new or refurbished replacement valve assemblies) should be made ready so damaged or failed valves can be replaced quickly, thereby reducing downtime.

8. The right partner is the key

The right valve partner can help companies make choices that optimize process performance and continuously drive down costs. Shutdown planning reduces costs and improves safety. Recently, one of our customers decided to increase the intervals between shut down for maintenance from four to five years to improve productive uptime and reduce shutdown labor costs.

Knowing this made it possible to focus on automated on/off valves and ESD valves in particular. The scope of maintenance of the on/off valves was determined by a combination of factors, including SIL (safety integrity level) classification and operations experience.

A predictive maintenance program pays for itself many times over. Many valves are taken off-line and repaired because of an inaccurate understanding of their true condition. Predictive maintenance with a competent field service engineer can result in substantial savings by eliminating unnecessary assembly and disassembly work and reducing man-hours required during shutdown. Administrative costs required for planning and purchasing can be reduced because of the smaller numbers of valves identified for extensive service.

The cost of the predictive maintenance contract was paid for many times over by reducing the number of valves taken out during the process and disassembled. The mean time between repairs was extended for monitored valves, and the user saw additional savings by reducing the spare parts stock based on competent field service engineers’ recommendations. Also, this shop also reduced the administrative time normally spent buying spare parts. These savings were allocated to other important maintenance activities at the plant.

CONCLUSION

To truly understand the total cost of ownership of a valve, one must look beyond the obvious numbers on the initial price tag to take a long-range look at what a valve can really do to the company’s bottom line. Using the steps outlined in this LTCO approach can have benefits that far outweigh that initial savings. |

Arun Dhingra is national sales manager for Velan Valves, India. You may contact him at arun.dhingra@velan.com.