Uncertainty of Net Present Value Calculations and the Impact on Applying Integrated Maintenance Approaches to the UK Rail Industry

L. Kirkwood, E. Shehab, P. Baguley, A. Starr

Research output: Contribution to conferencePaper

2 Citations (Scopus)

Abstract

The Public performance indicator (PPI) is an important Key Performance Indicator for Network Rail and monitored carefully by the organisation and their external stakeholders. Condition monitoring is of increasing interest within network rail as a suitable method for increasing asset reliability and improving the PPI metric. As condition monitoring methods are identified each will need assessment to establish the cost and benefit. Benefit can be measured in cost savings as poor PPI performance results in fines. Within many industries Net Present Value (NPV) calculations are used to determine how quickly investments will break-even. Cost-risk is a term that is used to describe the financial impact of an unexpected event (a risk). This paper outlines a more detailed approach to calculating NPV which considers the cost-risk effect of changes of the denial of service charging rate. NPV prediction is of importance when assessing when to deploy different fault detection strategies to maintenance issues, and therefore the cost-risk of the NPV calculation should be used to support asset management decisions.
Original languageEnglish
Number of pages5
DOIs
Publication statusPublished - 2015

Fingerprint

Rails
Condition monitoring
Costs
Industry
Asset management
Fault detection
Uncertainty

Keywords

  • Cost engineering
  • KPI
  • NPV
  • cost-benefit
  • rail industry
  • through-life cost

Cite this

Uncertainty of Net Present Value Calculations and the Impact on Applying Integrated Maintenance Approaches to the UK Rail Industry. / Kirkwood, L.; Shehab, E.; Baguley, P.; Starr, A.

2015.

Research output: Contribution to conferencePaper

@conference{d1db6b030408430ba71a2c753e1bee91,
title = "Uncertainty of Net Present Value Calculations and the Impact on Applying Integrated Maintenance Approaches to the UK Rail Industry",
abstract = "The Public performance indicator (PPI) is an important Key Performance Indicator for Network Rail and monitored carefully by the organisation and their external stakeholders. Condition monitoring is of increasing interest within network rail as a suitable method for increasing asset reliability and improving the PPI metric. As condition monitoring methods are identified each will need assessment to establish the cost and benefit. Benefit can be measured in cost savings as poor PPI performance results in fines. Within many industries Net Present Value (NPV) calculations are used to determine how quickly investments will break-even. Cost-risk is a term that is used to describe the financial impact of an unexpected event (a risk). This paper outlines a more detailed approach to calculating NPV which considers the cost-risk effect of changes of the denial of service charging rate. NPV prediction is of importance when assessing when to deploy different fault detection strategies to maintenance issues, and therefore the cost-risk of the NPV calculation should be used to support asset management decisions.",
keywords = "Cost engineering, KPI, NPV, cost-benefit, rail industry, through-life cost",
author = "L. Kirkwood and E. Shehab and P. Baguley and A. Starr",
year = "2015",
doi = "10.1016/j.procir.2015.07.056",
language = "English",

}

TY - CONF

T1 - Uncertainty of Net Present Value Calculations and the Impact on Applying Integrated Maintenance Approaches to the UK Rail Industry

AU - Kirkwood, L.

AU - Shehab, E.

AU - Baguley, P.

AU - Starr, A.

PY - 2015

Y1 - 2015

N2 - The Public performance indicator (PPI) is an important Key Performance Indicator for Network Rail and monitored carefully by the organisation and their external stakeholders. Condition monitoring is of increasing interest within network rail as a suitable method for increasing asset reliability and improving the PPI metric. As condition monitoring methods are identified each will need assessment to establish the cost and benefit. Benefit can be measured in cost savings as poor PPI performance results in fines. Within many industries Net Present Value (NPV) calculations are used to determine how quickly investments will break-even. Cost-risk is a term that is used to describe the financial impact of an unexpected event (a risk). This paper outlines a more detailed approach to calculating NPV which considers the cost-risk effect of changes of the denial of service charging rate. NPV prediction is of importance when assessing when to deploy different fault detection strategies to maintenance issues, and therefore the cost-risk of the NPV calculation should be used to support asset management decisions.

AB - The Public performance indicator (PPI) is an important Key Performance Indicator for Network Rail and monitored carefully by the organisation and their external stakeholders. Condition monitoring is of increasing interest within network rail as a suitable method for increasing asset reliability and improving the PPI metric. As condition monitoring methods are identified each will need assessment to establish the cost and benefit. Benefit can be measured in cost savings as poor PPI performance results in fines. Within many industries Net Present Value (NPV) calculations are used to determine how quickly investments will break-even. Cost-risk is a term that is used to describe the financial impact of an unexpected event (a risk). This paper outlines a more detailed approach to calculating NPV which considers the cost-risk effect of changes of the denial of service charging rate. NPV prediction is of importance when assessing when to deploy different fault detection strategies to maintenance issues, and therefore the cost-risk of the NPV calculation should be used to support asset management decisions.

KW - Cost engineering

KW - KPI

KW - NPV

KW - cost-benefit

KW - rail industry

KW - through-life cost

UR - http://www.mendeley.com/research/uncertainty-net-present-value-calculations-impact-applying-integrated-maintenance-approaches-uk-rail

UR - http://www.mendeley.com/research/uncertainty-net-present-value-calculations-impact-applying-integrated-maintenance-approaches-uk-rail

U2 - 10.1016/j.procir.2015.07.056

DO - 10.1016/j.procir.2015.07.056

M3 - Paper

ER -