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Maximizing Value Across the Lifecycle of Long-lived Capital-intensive Assets

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It is exceptionally difficult, if not impossible, to manage and operate a complex, long-lived asset in a way that derives maximum value across the entire service life. Maintenance of complex engineered systems tends to be focused on a short-term perspective relative to the asset lifecycle because of the difficulty understanding and quantifying the systemic drivers of material condition over time. The rate of deterioration in material condition increases exponentially over time when assets are not fully maintained. This can lead to short-term maintenance decisions reducing the asset's effective lifetime without explicit consideration of the net loss in asset use or value. A top-down asset maintenance framework and method to quantify the material condition over the asset life cycle under different scenarios is needed to maximize the lifecycle value of complex engineered systems and assets.

Frequent and unexpected material problems on U.S. Navy ships in 2009 led the U.S. Navy surface fleet to realize that past maintenance and modernization decisions had resulted in ship conditions much worse than expected (Balisle 2010), Ship performance and the ability to reach planned service life had been compromised over many years, potentially costing the Navy billions of dollars in early replacements. In response, the Office of Naval Research (ONR) sponsored a project with the Naval Sea Systems Command (NAV-SEA) under a Total Ownership Cost (TOC) research initiative to find a way to effectively manage the life cycle value of complex assets, like warships, on a day-to-day / year-to-year basis. The project developed a maintenance framework capable of assessing ship material condition, expected life cycle and risk of failure over the course of the ship's life to influence short-term maintenance and operational decisions. The framework became the basis for a dynamic simulation model of surface combatant material condition, which was validated with historical material inspection scores. The framework and simulation model provide actionable insight in support of maintenance and modernization management, and can be readily adapted to other complex engineered systems.

Document Type: Research Article

Publication date: September 1, 2014

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  • The Naval Engineers Journal is the peer-reviewed journal of the American Society of Naval Engineers (ASNE). ASNE is the leading professional engineering society for engineers, scientists and allied professionals who conceive, design, develop, test, construct, outfit, operate and maintain complex naval and maritime ships, submarines and aircraft and their associated systems and subsystems.
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