Implementing Life Cycle Cost Management (LCCM) Saves Millions

October 30, 2017

Our client, PanAust, is an operator of two very efficient metals mines in Laos with larger projects in other parts of the world. PanAust wanted to develop a life cycle cost management approach for their mining assets in order to ensure the assets’ life cycles were managed in a way to maximise their value to their business. With many hundreds of machines, it is essential to know that the life cycle costs are optimised.

Bluefield was asked to assist PanAust on this journey and enable them to embed the good practices required to realise the value to their business. The approach taken by Bluefield was to do the following:

  • Bluefield prepared the life cycle cost models (LCCM) for each of the machine types
  • Bluefield utilised the information in the client's maintenance management system to align the LCCM with what they actually did in maintenance. This is a critical step to ensure that the LCCM represents what will actually occur. It is of no practical value to model something that is different to how they actually manage their equipment.
  • Bluefield then optimised the life cycle cost models to minimise the whole of life equivalent unit cost (EUC) and worked with the client's people to transfer these skills
  • We then documented the approach to LCCM and included this with their business planning approach so it was embedded in their business from the top down
  • PanAust progressed the work and saved millions of dollars across their business. (See results below)

The Problem:

PanAust knew that they did not have their equipment life-cycle costs optimised and were repairing when they should have been replaced and vice versa.

Our Solution:

Bluefield assisted PanAust to implement the best practice approach.

The Results:

  • The business continued to embed this approach and before any equipment replacement or overhaul, the LCCM and EUC was developed so that the site could make the best business decision
  • Equipment lives were extended and sites did not spend money on equipment that was due for replacement
  • The business implemented a rule that any machine with a capital value of greater than $100K would be included in the process
  • The business subsequently advised Bluefield that they were saving many millions of $$$ dollars across the company
  • The key to success was in the engagement with the business stakeholders and working with them openly and honestly to ensure the outcome was achieved not pretending to create perfect LCCM upfront but implementing the discipline into the way the business works

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