South African Journal of Industrial Engineering December 2016 Vol 27(4), pp 142-152

A DECISION-MAKING FRAMEWORK FOR EFFECTIVE MAINTENANCE MANAGEMENT USING LIFE

CYCLE COSTING (LCC) IN A ROLLING STOCK ENVIRONMENT

C.J. Fourie1* & T.G. Tendayi1

ARTICLE INFO ABSTRACT

Article details In this paper, a life cycle costing (LCC) framework for effective
Submitted by authors 4 Apr 2016
Accepted for publication 28 Oct 2016 maintenance management is investigated and developed for use in
Available online 6 Dec 2016 a railway rolling stock environment. The framework consists of
combining typical mission-critical components together with their
Contact details failure and maintenance history. All costs related to the operation
* Corresponding author and maintenance of these components throughout their life cycle
[email protected] are also determined. The next step involves considering different
scenarios under which the components can be used in relation to
Author affiliations operations, maintenance, and replacements. The decision about
1 Department of Industrial which scenario to take is based on the one with the most favourable
Engineering. Stellenbosch
University, South Africa net present value after life cycle costing is performed over a
specified period of time. A typical railway rolling-stock
maintenance organisation in South Africa was used to highlight the
DOI
http://dx.doi.org/10.7166/27-4-1526 practical implications of such a framework and how the company
could make informed and appropriate decisions. The conclusion of
this study is that such a framework is useful, and that it can be used
as a basis for estimating LCC across a spectrum of critical assets
found in the rolling stock environment.

OPSOMMING

In hierdie artikel is ’n lewenssikluskoste raamwerk ondersoek en

ontwikkel om instandhoudingsbestuur in ’n spoorweg rollende
materiaal omgewing te verbeter. Die raamwerk bestaan uit ’n
kombinasie van tipiese missie-kritiese komponente saam met hulle
falings- en instandhoudingsgeskiedenis. Alle koste verbonde aan die
bedryf en instandhouding van hierdie komponente gedurende hulle
lewenssiklus is ook bepaal. Deur verskillende bedryfscenario’s se
lewenssikluskoste te vergelyk in terme van netto huidige waardes,
kan ’n besluit oor die beste scenario geneem word. ’n Suid-
Afrikaanse gevallestudie is gebruik om die waarde van hierdie
raamwerk te illustreer. Resultate toon dat die raamwerk wel
bruikbaar is oor ’n wye spektrum van scenario’s.

1 INTRODUCTION

Having a life cycle framework in place to support the reliability, availability, maintainability, and
safety of all mission-critical assets has become an integral part of decision-making in the railway
environment. Maintenance management has also been described by Takata, Kirnura, van Houten,
Westkamper, Shpitalni, and Ceglarek [1] as an essential way to ensure that life cycle management
is achieved. Having effective maintenance management techniques in place during the operational
phase of the life cycle of a product or system can make the difference between profit and loss for
an organisation. This becomes even more vital as the condition of the product or system deteriorates
with age. This paper acknowledges the important role that maintenance plays in the life of a product
or system, and incorporates it into the traditional economic life cycle costing approach with an
emphasis on the cost of ownership and the effective maintenance and replacement strategies that
influence it. As a follow-up to work done by Tendayi and Fourie [2], this paper addresses the issue
of uncertainty in life cycle costing — an aspect that the earlier paper did not address.
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The rest of the paper is organised as follows: the literature about LCC and the financial calculations
that are involved is discussed in Section 2. LCC and its application in the railway environment are
then discussed in Section 3. The relationship between LCC, RAMS (reliability, availability,
maintainability, safety) and maintenance is then investigated in Section 4. In Section 5, a framework
that incorporates maintenance management principles and LCC is developed and applied in a case
study in the rolling stock environment. A discussion then follows in Section 6, and the paper
concludes in Section 7.

2 LIFE CYCLE COSTING

Life cycle costing (LCC) is a major requirement of life cycle management. It refers to the technique
used to “provide increased visibility of the total costs of doing business” [3]. Life cycle costs consider
the cost estimates from inception to the disposal of either equipment or projects as determined by
an analytical study, and an estimate of total costs experienced during the life of the equipment or
projects [4]. This analytical study of life cycle costs is commonly referred to as ‘life cycle cost
analysis’, and has been used mostly to evaluate building design alternatives and other capital
investment decisions. It takes a much longer-term view than other economic analysis methods, such
as the payback method, which is more concerned about getting return on investment in the shortest
possible time [5]. Life cycle costs can sometimes be referred to as ‘the total cost of ownership’, a
concept that involves identifying all future costs and reducing them to their present value using
discounting techniques. These discounting techniques help to assess the value of products or product
options before the investment is actually made [6].

2.1 Discounting and present value calculations in LCC

Life cycle cost analysis considers the costs that will be incurred sometime in the future, and so it is
necessary to discount all costs to a specific decision point or value. The decision point or present
value in question is known as ‘the net present value’ (NPV) and is calculated as shown below:

𝑇𝑇

𝑁𝑁𝑁𝑁𝑁𝑁 = � 𝐶𝐶𝑚𝑚 (1 + 𝑥𝑥)−𝑛𝑛 (1)

𝑛𝑛=0
where:
𝐶𝐶𝑚𝑚 is the nominal cash flow in the 𝑛𝑛th year;
𝑛𝑛 is the specific year in the life cycle costing period;
𝑥𝑥 is the discount rate; and
𝑇𝑇 is the length of time period under consideration.

Discount rates vary from organisation to organisation, and are highly dependent on the desired cost
profile. It is also worth noting that high discount rates favour options with low capital cost, short
life, and high recurring cost; while low discount rates have the opposite effect [6].
2.2 Dealing with uncertainty in LCC
Factors such as project life, discount rate, tax, etc., are not always easy to accurately determine
and predict into the future. There is always a level of uncertainty associated with such predictions
especially if there is insufficient information. This presents a challenge for the decision-maker, who
now has to find ways to reduce this uncertainty and give more credibility to the final decision made.
The literature is full of different approaches to dealing with uncertainty in LCC; these can be divided
into deterministic and probabilistic approaches. The former approach changes one uncertain key
value or combination of values at a time, whereas the latter considers a large number of possible
outcomes, with the possibility accompanied by an associated probability. Table 1 illustrates a list of
selected deterministic and probabilistic approaches used in LCC analysis. Of the many approaches
available, as shown in the table, the deterministic method of sensitivity analysis was chosen for
reasons that will be discussed in the next section.

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 Table 1: Selected approaches to uncertainty assessment in LCC analysis [5]

APPROACHES TO UNCERTAINTY ASSESSMENT

Deterministic Probabilistic
1. Conservative benefit and cost 1. Input estimates using probability
estimating distributions.
2. Breakeven analysis 2. Mean-variance criterion and coefficient
of variation
3. Sensitivity analysis 3. Decision analysis
4. Risk-adjusted discount rate 4. Simulation
5. Certainty equivalent technique 5. Mathematical/analytical technique
6. Input estimates using expected values

Sensitivity analysis measures the impact on project outcomes of changing one or more key input
values about which there is uncertainty. Sensitivity analysis has several advantages that are
discussed by Jun and Kim [7] as follows:

1. It shows how significant a single input variable is in determining project outcomes.

2. It recognises the uncertainty associated with the input.
3. It can be executed when there is little information, few resources, or little time to use more
sophisticated techniques.

It has two main disadvantages: it gives no explicit probabilistic measure of risk exposure, and it
includes no explicit treatment of risk assessments.

3 LCC IN THE RAILWAY ENVIRONMENT

Decision-makers in the railway environment have recently made use of the principles of life cycle
costing in their capital investment decisions. In the literature, there has been a fair distribution of
LCC studies covering both railway infrastructure and railway rolling stock (passenger service vehicles
that operate on a railway). In these studies, LCC is found mainly in capital acquisition decision-
making and maintenance strategy decision-making problems. A summary of some of the railway LCC
literature available in the body of knowledge is presented in Table 2.
Table 2: Literature on railway LCC studies
Author (s) Year Field Objective of LCC
Zoetman [8] 2003 Railway To create a decision-support system
infrastructure for analysing the long-term impacts of
design and maintenance decisions in
railway infrastructure.

Patra [9] 2007 Railway Optimisation of maintenance

infrastructure strategies for maintenance and
renewal decisions.
Kumar et al. 2004 Rolling stock Prediction of cost of ownership of
[6] capital assets and estimation of design
life of wagons.
Jun and Kim 2007 Rolling stock Estimation of life cycle costs on the
[7] brake disks and pads of commercially-
operating subway vehicles.
Puig et al. 2013 Rolling stock To provide a framework of
[10] maintenance decisions involving
acquisitions of passenger service
rolling stock.

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4 MAINTENANCE MANAGEMENT, RAMS, AND LCC

Having a well-structured maintenance programme in place can help to achieve low LCC without
increasing the acquisition cost [7]. The performance indicators for checking the desired objectives
or targets during the operation and maintenance phase of a product or system can be given by taking
reliability, availability, maintainability, and safety (RAMS) into consideration. RAMS is a qualitative
and quantitative indicator of the degree to which a system or its components can be relied on to
function as specified, and to be both available and safe as defined by the European Standard EN
50126-1:1999 [11], with specific application to the railway environment. The standard goes on to
explain that RAMS is a characteristic of a system’s long-term operation, and is achieved by the
application of established engineering concepts, methods, tools, and techniques throughout the life
cycle of the system. A commonly-used performance indicator in RAMS is the mean time between
failure (MTBF), which addresses the ‘availability’ part of RAMS, as described by Kim, Chung, and Han
[12], who also explain that setting RAMS targets too high can make the purchase, operations, and
maintenance costs prohibitively high; but that on the other hand, setting low RAMS targets will
affect the service quality of the product or system.

5 APPLICATION OF MAINTENANCE/LCC FRAMEWORK

5.1 LCC framework

The framework that is going to be used in this research is based on the premise that, to perform
effective life cycle costing, the maintenance and operational costs have to be accurately identified
and calculated. The objective of the framework is to determine which maintenance and operational
conditions will result in the most ideal life cycle costs over a given period of time. The framework
will be in the form of three alternatives or scenarios that involve either capital investment or
maintenance implications in running the equipment in question. This framework uses concepts
developed in a life cycle costing tutorial by Barringer and Weber [4].

In order to test the applicability of such a framework, a case study in the railway rolling stock
maintenance environment was chosen. The direct current traction motors used on the standard
‘5M2A’ motor coaches, as defined by the company in question, were considered. Each motor coach
contains four such traction motors fitted on to individual axles, which are in turn fitted on to two
bogies. The maintenance department of the organisation currently practises a combination of
routine maintenance and condition-based maintenance on all motor coaches. The former is done
every eight weeks, during which the condition of mission-critical components — such as the traction
motors — is also tested. If the condition of the traction motor is still good, the only work that is
done on it is to renew the carbon brushes and replace the brush boxes. In the event that the
condition of the traction motor has deteriorated, it will then have to go through stripping and
replacing of worn-out or defective parts, such as bearings and insulation. Currently this work is
mostly carried out by contractors hired by the organisation, and is classified as ‘standard work’. The
contractor may, on further testing, determine that more work needs to be done; this is classified as
‘additional work’. This additional work includes tasks such as rewinding armatures, fitting new
shafts, and refurbishing commutators. The decision to perform standard or additional work is also
taken when there is an outright failure of the traction motor and it is brought into the workshop for
investigation and repairs. A list of tasks carried out during standard work and additional work on the
traction motor armature is shown in Table 3.
5.2 Framework calculations and assumptions
Table 4 shows the base-cost figures that were used in the calculations that follow. These cost figures
were obtained from interviews with systems engineers dealing directly with the maintenance and
day-to-day operations of the 5M2A traction motors. The ‘lost gross margin’ figures for delays and
cancellations are based on a study conducted by Conradie [13], who investigated the cost
implications of train failures. All amounts are quoted in the local currency of South African Rands (R
or ZAR).

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 Table 3: Standard vs additional work for 5M2A traction motor armature
Standard work Additional work
Strip, clean, mechanical checks, electrical Renew PTFE ring
tests, assess
 Megger at 5000 V Supply and fit new shaft
 Hi pot at 4500 V AC for 15 sec Bore out old shaft
 Megger test at 5000 V Repairs on shaft: Pinion end and
commutator end journal, shaft threads,
shrink ring journal
 Surge comparison test at 500 V Replace labyrinth seals — per set
bar-to-bar (250 V)
 Commutator bar-to-bar test Replace resi-binder — commutator and
pinion ends
 Check polarity Commutator
Clean and paint armature Repair commutator: front V-ring only
Skim, undercut, and bevel commutator Repair commutator: Old steel parts,
new copper pack, new V-rings
Fire proof commutator Repair commutator: Refurbish steel
parts, new copper pack, new V-rings
Balance armature Supply and fit complete new
commutator
Renew pinion key Replace core
Final test armature (tests as per item 1) Renew pinion
Rewind armature complete

The following assumptions were made for the purpose of simplifying the calculations and illustrating
the concepts involved in the model:

• Mean time between failure (MTBF) of the different components on the traction motor is
uniform. The MTBF values used in the calculations are historical average values obtained from
the organisation’s computerised maintenance management system database.
• Time to perform standard maintenance work on different components on the traction motor is
uniform.
• Time to perform additional repair work on different components on the traction motor is
uniform.
• The failure of one traction motor results in the whole motor coach being forced to stop
operating.
Table 4: Maintenance and operational baseline costs

Cost breakdown Carcass Armature Field coil Interpole coil

Maintenance crew/hr R 673.00 R 673.00 R 673.00 R 673.00
Part replacement R 80 192.00 R 146 715.00 R 69 017.00 R 63 928.00
Part renewal R 16 297.00 R 6 326.00 R 21 444.00 R 16 481.00
Lost gross margin (cancellation) R 56 175.00 R 56 175.00 R 56 175.00 R 56 175.00
Lost gross margin (delay) R 10 000.00 R 10 000.00 R 10 000.00 R 10 000.00
Logistics cost/incident R 500.00 R 500.00 R 500.00 R 500.00
Stripping and testing R 5 171.00 R 5 171.00 R 5 171.00 R 5 171.00
Assembling R 6 094.00 R 6 094.00 R 6 094.00 R 6 094.00

5.3 The three alternatives

5.3.1 Alternative 1: Do nothing
The first alternative considered is to keep running the traction motors as-is with the current
expected failure rate and maintenance regime as described in the previous section. The cost
implications of this scenario are shown in Table 5.
5.3.2 Alternative 2: Replace traction motor
Alternative 2 involves replacing the current traction motor with a new one. It is expected that the
performance of the new traction motor, in terms of the MTBF, will significantly improve from the
current one that has been in use for over 50 years. The improvement will be around 60 per cent, as

146
estimated by the systems engineer interviewed. Shown in Table 6 are the expected maintenance
and operational costs associated with this alternative. The requirements for preventative
maintenance will not be as great because the components are newer. However, capital costs will be
incurred in acquiring the new motors, together with training and installation costs.
5.3.3 Alternative 3: Add redundant traction motor
Alternative 3 involves having a standby/redundant traction motor in place so that, as soon as the
currently operational one stops working, the standby motor kicks in. The current design of the 5M2A
motor coach allows for one of the motors to ‘cut out’, allowing it to run with three instead of four
motors. The MTBF will remain virtually the same as for the new one; although, if the motor coach
remains in this ‘cut-out’ stage for many trips, the likelihood of failure will significantly increase.
The lost gross margin due to cancellations will be eliminated, although there will be some delays
experienced, as a technician would have to be called out to the site to isolate the failed traction
motor. The overall MTBF will also improve, since it is now the MTBF of a system that has a redundant
motor on standby. The costs associated with this option are shown in Table 7.
5.4 Net Present Value (NPV) calculations
The following information is used as input into the LCC cost profile:
• A 10-year project lifespan;
• A 12 per cent discount rate [14];
• Capital equipment cost, on the applicable scenarios; and
• Annual recurring costs for the maintenance and operational calculations given in the three
scenarios discussed.
Table 5: Alternative 1: Do nothing
Failures Elapsed Cost for Logistics
MTBF Lost gross Total
or repair or labour, Part cost cost —
— margin — cost —
activity activity exp, & — ZAR ZAR per
years ZAR ZAR/year
Cost element per year — hours mat — ZAR incident
Electricity R0
Testing and stripping R 12 066
Carcass - standard
Work 3 0,33 120 R 26 920 R 5 432 R0 R 22 058 R 54 411
Carcass — additional
work 4 0,25 200 R 33 650 R 20 048 R 125 R 16 544 R 70 367
Armature - standard
Work 3 0,33 120 R 26 920 R 2 109 R0 R 22 058 R 51 087
Armature —
additional work 4 0,25 200 R 33 650 R 36 678 R 125 R 16 544 R 86 998
Field coil renewal 3 0,33 120 R 26 920 R 7 148 R0 R 22 058 R 56 126
Field coil repairs 4 0,25 200 R 33 650 R 17 254 R 125 R 16 544 R 67 573
Interpole coil
renewal 3 0,33 120 R 26 920 R 5 494 R0 R 22 058 R 54 472
Interpole coil repairs 4 0,25 200 R 33 650 R 15 982 R 125 R 16 544 R 66 301
Assembling R 14 219
PM maintenance
visits 52 R 34 996 R 34 996
Training costs R0
R 110
TOTAL 2,33 1332 R 277 276 146 R 500 R 154 408 R 568 615

Key: exp – expendables (consumables); mat - material

Table 6: Alternative 2: Replace traction motor
Elapsed
Failures Cost for Logistic
MTBF repair Part Lost gross Total cost
or labour, s cost —
— or cost — margin — —
activity exp, & ZAR per
years activity ZAR ZAR ZAR/year
per year mat — ZAR incident
Cost element — hours
Electricity R0
Testing and stripping R 8 273
Carcass - standard
work 5 0,2 120 R 16 152 R 3 259 R0 R 13 235 R 32 646
Carcass — additional R 13
work 6 0,167 200 R 22 433 365 R 83 R 11 029 R 46 911
Armature - standard
work 5 0,2 120 R 16 152 R 1 265 R0 R 13 235 R 30 652
Armature — R 24
additional work 6 0,167 200 R 22 433 452 R 83 R 11 029 R 57 998

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 Elapsed
Failures Cost for Logistic
MTBF repair Part Lost gross Total cost
or labour, s cost —
— or cost — margin — —
activity exp, & ZAR per
years activity ZAR ZAR ZAR/year
per year mat — ZAR incident
Cost element — hours
Field coil renewal 5 0,2 120 R 16 152 R 4 289 R0 R 13 235 R 33 676
R 11
Field coil repairs 6 0,167 200 R 22 433 503 R 83 R 11 029 R 45 049
Interpole coil
renewal 5 0,333 120 R 26 920 R 5 494 R0 R 22 058 R 54 472
R 10
Interpole coil repairs 6 0,167 200 R 22 433 655 R 83 R 11 029 R 44 200
Assembling R 9 750
Maintenance PM
visits 52 R 17 498 R 17 498
Training costs R 72 000 R 72 000
R 74
TOTAL 1,6 1332 R 254 607 282 R 333 R 105 880 R 453 127
Key: exp – expendables (consumables); mat - material
Table 7: Alternative 3: Add redundant traction motor
Cost element Failures Elapsed
Cost for Logistics
or repair Part Lost gross Total
MTBF — labour, cost —
activity or cost — margin — cost,
years exp, & mat ZAR per
per activity ZAR ZAR ZAR/year
— ZAR incident
year — hours
Electricity R0
Testing and R 6 895
stripping
Carcass - standard 6 0,17 120 R 13 460 R 2 716 R0 R0 R 16 176
work
Carcass — additional 8 0,125 200 R 16 825 R 10 024 R 63 R 8 272 R 35 183
work
Armature - standard 6 0,167 120 R 13 460 R 1 054 R0 R0 R 14 514
work
Armature — 8 0,125 200 R 16 825 R 18 339 R 63 R 8 272 R 43 499
additional work
Field coil renewal 6 0,167 120 R 13 460 R 3 574 R0 R0 R 17 034
Field coil repairs 8 0,125 200 R 16 825 R 8 627 R 63 R 8 272 R 33 787
Interpole coil 6 0,33 120 R 26 920 R 5 494 R0 R0 R 32 414
renewal
Interpole coil 8 0,125 200 R 16 825 R 7 991 R 63 R 8 272 R 33 150
repairs
Assembling R 8 125
Maintenance PM 52 R 34 996 R 34 996
visits
Training costs R0
TOTAL 1,33 R 169 596 R 57 819 R 250 R 33 088 R 275 773
Key: exp – expendables (consumables); mat - material

The net present values of the three alternative scenarios were determined, and are shown in Figure
1 as a graphical comparison. Left out of these NPV calculations were the disposal and depreciation
costs that could not immediately be determined, but that would likely have little influence on the
cost comparisons carried out in this study.

148
 Figure 1: Comparison of alternatives in terms of NPV
5.5 Sensitivity analysis of preferred alternative
The inputs with the most uncertainty were identified, and are shown in Table 8 for each of the three
alternatives. The table also illustrates the base values that were used to calculate the first NPV
values. In order to accommodate the uncertainty that can occur, a range of possibilities between -
20 per cent and +20 per cent was calculated for each of the inputs.
Table 8: Base case values and uncertainty limits for LCC input variables
Lower limit
Input description Base value Upper limit (+20%) (-20%)
Alternative 1 Discount rate 12% 9,6% 14,4%
Project life 10 8 12
Recurring costs R 568 615 R 454 892.00 R 682 338.00
Alternative 2 Capital equipment R 1 200 000 R 960 000 R 1 440 000
Discount rate 12% 9,6% 14,4%
Project life 10 8 12
Recurring costs R 453 127 R 362 502 R 543 752
Alternative 3 Capital equipment R 800 000 R 640 000 R 960 000
Discount rate 12% 9,6% 14,4%
Project life 10 8,0 12,0
Recurring costs R 275 773 R 220 619 R 330 928

A tornado plot was then created to summarise the impact of each variable on the net present value,
which is the figure of merit. The results of the three alternatives are shown in Figures 2 to 4; it is
clear that the most critical input variable in all three alternatives is the recurring operations and
maintenance costs.

6 DISCUSSION

The negative NPV values obtained in Section 5.3 can be attributed to the absence of expected
revenues from the operation of fully functional motor coaches. The absence of these costs was due
to insufficient data being available at the time of performing the calculations. Therefore, from the
results of the NPV calculations given in section 5.3, it is apparent that Alternative 3 (add redundant
traction motor) would be the most desirable alternative, as it has the least-negative NPV value (of
R2 358 180). There is a difference of R547 467 between Alternatives 1 and 2, and of R854 622
between Alternative 3 and Alternative 1, which is the next-best option (at R3 212 802). The worst
option is Alternative 2 (replace traction motor), which would result in an NPV of R3 760 269. This
result was unexpected, as the generally-held perception was that replacing the traction motor would
always be better than using the current one. The only logical explanation for this result would be

149
due to the marginal difference in the maintenance and operations costs of the old traction motor
when compared with the estimated cost of purchasing a new one.

In the sensitivity analysis, a uniform limit of +/- 20 per cent was used for the input values. According
to Seif and Rabbani [15], taking a uniform limit may be misleading, as the inputs might not all fall
within that range. However, because not enough information was available for getting the exact
limits, the authors decided to take this route. The results of the sensitivity analysis show that the
recurring operations and maintenance costs are the most sensitive input factor, which could result
in a significant change in the NPV value across all three alternatives. A change in the actual discount
rate, increasing or decreasing the running life of the equipment, or a change in the estimated
purchasing price of the equipment will all have a smaller effect on the NPV. It is also observed that
the upper NPV limit of the recurring costs of Alternative 3 (R2 669 816) is still more favourable than
all the other alternatives. It is prudent, therefore, to ensure that these recurring costs are estimated
as accurately as possible to minimise the assumptions made, and thus to reduce the level of
uncertainty in the model.

Figure 2: Tornado diagram of input variables for Alternative 1

Figure 3: Tornado diagram of input variables for Alternative 2

150
 Figure 4: Tornado diagram of input variables for Alternative 3

7 RECOMMENDATIONS

One possible improvement to this study would be the use of stochastic models and simulations to
obtain more accurate estimations of failure costs, as suggested by Seif and Rabbani [15]. In their
research, the problem is modelled using mixed-integer programming with a genetic algorithm being
developed to find an optimal solution. A model such as this one would be useful to address the
probabilistic nature of failures and the subsequent failure costs. Other costs that can also be difficult
to determine are the operations costs; these could also benefit from models that make accurate
estimations of their values.

Another possible improvement would be to determine the remaining life in the current batch of
5M2A traction motors by using lifetime prediction models, such as the one developed by Herrmann,
Kara and Thiede [16]. Knowing the remaining life of the component would help to develop a more
accurate timeline for the LCC cost profile. This would go a long way to addressing the usual dilemma
associated with maintenance — i.e., maintaining high availability but still remaining cost-effective
and not spending more than necessary on spare parts and labour.

8 CONCLUSION

The focus of this paper has been to develop and test a life cycle costing framework for mission-
critical assets, such as railway rolling stock traction motors, using their maintenance, operations,
and failure history. The main assumptions made during the testing of this framework were taken
through a sensitivity analysis exercise to determine the most critical factors that would affect the
results of the studies undertaken. The end result was that the decision-maker is able to make
informed financial decisions about which strategy to follow to obtain the best performance from
components or systems in terms of reliability, availability, maintainability, and safety (RAMS).

While this study does not necessarily contribute new theory in the field of life cycle costing, it does
make a contribution to applying the LCC method in a practical case study in a sector that has not
been sufficiently explored. Another important contribution has been to add to the body of knowledge
about innovative decision-making methods in acquiring and replacing deteriorated assets. The
concept of applying LCC in RAMS is also still in its infancy, and this study helps to expand knowledge
in that area. The study could be improved by including stochastic models to address the probabilistic
nature of some of the costs. Another useful addition to the study would be the use of lifetime
prediction models that would improve the accuracy of the calculations and assumptions made.

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