calculating the value unplanned downtime

Calculating the value of unplanned downtime

In a recent article titled “Calculating the value of avoided unplanned downtime” from Plant Services magazine, Burt Hurlock poses the question “How much have the avoidable catastrophic events of the 21st century cost us, and how much would we have willingly spent to prevent them?”

He goes on to talk about how downtime events that were avoided still have value and sophisticated plant operators know exactly how much value. Understanding that downtime, of any length, has rippling effects on the entire organization is valuable in itself. One small event can cause unproductive labor hours, costly incident investigation, wasted raw materials, product spoilage, etc. and the bigger the event, the higher the risk and higher the cost is.

Knowing that your compressed air system is not only critical to your production but also affects the quality of your products, would you invest to avoid downtime from your compressed air system? We often encounter customers who tell us “If my compressor goes down, the facility stops.” But in the next breath tell us a back-up compressor isn’t worth the investment. Customers are frequently more concerned with purchasing a larger than necessary compressor that accommodates future growth than planning for the present with a redundant solution.

So, what’s the cost of unplanned downtime? Estimates of the average cost vary from $30,000/hr (Industry research by Stratus) to $260,000 (Aberdeen research). At that rate, any investment in back up quickly pays for itself.

Planning your compressed air system to have redundancy with a back-up compressor or using the 50-50-50 approach with three smaller compressors can help eliminate the risk of unplanned downtime in your compressed air supply. Not only will a multi-unit solution eliminate the compressed air system as a downtime risk for your production lines, it will also supply air more efficiently as your compressed air demands vary by shift and production level.

Ask yourself Burt’s initial question about your own company. “How much have the avoidable events of this year (or the past 2 years or 5 years) cost us, and how much would we have willingly spent to prevent them?”

As Burt Hurlock writes in the article, “all avoided unplanned downtime has value.” Knowing that your compressed air system is vital to your plant, realizing the value, and planning to have a back-up air supply will help you avoid downtime from an unplanned event or even downtime for scheduled maintenance. The value of a reliable second compressor may far outweigh the cost of the downtime it prevents.

Burt goes on to say “The single most important ingredient to the just-right balance between investment and risk is information. Companies that know the value of events that don’t happen also understand that reliability is nine-tenths information and only one-tenth perspiration. The opposite is true for companies that don’t know the value of events that don’t happen.”

When you have your next event, how much will you be sweating?

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