1. © 2006 Swagelok Company. Swagelok confidential. For internal use only. NeSSI Life Cycle Cost Model CPAC FALL 2006 SPONSORS MEETING NeSSI WORKSHOP Thursday, November 9, 2007 John Wawrowski Dave Simko

2. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Definition Life cycle cost analysis help justify equipment and process selection based upon total costs rather than initial purchase price. – Includes all costs incurred during the life of an item – Sum of the operation, maintenance, and decommissioning/disposal costs far exceed procurement costs

3. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Objective The objective of a life cycle cost analysis is to determine… – The lowest long term cost of ownership – Not cheapest first cost

4. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Effectiveness Considerations Availability – The amount of time the system is performing its intended function – The objective is to maximize analyzer uptime Reliability – Failure-free performance – Reduce or eliminate failures over a prescribed time interval – Key to a successful design

5. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Effectiveness Considerations Maintainability – Ease and speed with which both scheduled and unscheduled maintenance can be diagnosed and performed – Objective is to minimize downtime of the analyzer system Capability – How well the system performs its intended function – Objective is to design, build, and operate system reliably and repeatedly provide accurate information needed to control the process

6. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Reliability Reliability is the key issue in the effectiveness of process analyzer systems Reliability is the assurance that a system will provide trouble-free service over a long period of time without interruptions or failure, resulting in increased productivity and decreased maintenance and manpower, lowering overall costs

7. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Reliability Factors System deterioration Equipment deterioration Component failures Order changes to disorder unless interventions occur Front-end engineering can build in reliability and maintainability Three Important Issues – Installation and use practices – Grade and quality of equipment employed – Load profiles on the equipment

8. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Life Cycle Cost Model Total Costs 1. Acquisition – Design – Build – Install – Commission 2. Sustaining – Operate – Maintain – Decommission

9. © 2006 Swagelok Company. Swagelok confidential. For internal use only. NeSSI Fits The Model Acquisition Costs – Design and development Analyzer System, sample system, protection system/enclosure, primary equipment, support equipment, data processing equipment – Procurement/Installation OEM Suppliers, Integrators, Fabricators, Contractors installers, Testing/commissioning – Support Facilities modifications, Training, Management of Change

10. © 2006 Swagelok Company. Swagelok confidential. For internal use only. NeSSI Fits The Model Sustaining Costs – Operating Spares, consumables, utilities/energy, labor, documentation – Maintenance Scheduled, unscheduled, downtime/lost production, spares – Support Facilities/infrastructure, ongoing training, safety/regulatory compliance, documentation – Decommissioning

11. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Current Life Cycle Cost Analysis Acquisition data is available from end users – Reduced downtime – Minimized drafting time – Higher internal cost for modular components and assemblies – Easier installation and commissioning – Simplified, effective training Component cost data is available from suppliers Predictable data can be estimated – Lower cost of consumables – Lower transport cost

12. © 2006 Swagelok Company. Swagelok confidential. For internal use only. Current Life Cycle Cost Analysis Operation and maintenance data is needed from end users – A model cannot be completed without this data – Generation I units have been in the field for extended period of time Some as many as four years or longer – A formula is needed so data that is sanitized but accurate can be reported

13. © 2006 Swagelok Company. Swagelok confidential. For internal use only.