Our last blog post, “DCS Migration Checklist”, addressed several important questions to consider during the initial planning stages of a migration project. We referenced a white paper written by one of our technology leaders, Chad Harper, entitled, “Upgrading Your DCS: Why You May Need to Do It Sooner Than You Think.” Among the most important reasons was that the cost of staying with an old system eventually outgrows the cost of migration.
Now, you might be asking, “How can this be so? This new DCS is going to cost millions of dollars, in terms of new equipment, engineering costs, retraining, perhaps major infrastructure rebuilding. My old DCS is hanging in there. How can I justify its very expensive replacement to management?”
The answer to this very reasonable question is found in a method of engineering, economic, and financial analysis referred to as “total cost of ownership” (TCO). TCO looks at the total impact of the legacy DCS and the new DCS, over a long time horizon (typically 20 years). Let’s look at how MAVERICK applied this methodology to a recent DCS migration study in a large U.S. paper mill.
The majority of the DCSs in this paper mill were obsolete, no longer actively supported by the manufacturer. Replacement parts were hard to find. Remanufactured parts were available, but failure rates were high. The control engineering and technician staff spent a large part of their time just keeping the DCSs running.
As part of the study, MAVERICK documented the initial DCS installation, DCS upgrade, and DCS maintenance costs — including the time the control engineering and technician staff spent doing maintenance-related work — over a period of 24 years. More importantly, we also estimated the cost of lost mill production due to unplanned outages and upsets that could be attributed to DCS issues. Finally, we extrapolated these rising costs over the next several years, as the DCSs became even less reliable and parts became even harder to replace and remanufacture.
Next, MAVERICK used bids from several DCS vendors to perform a similar analysis for the new DCS over a span of 20 years into the future. The investment cost for replacement of the old DCS was offset by several cost reductions and savings:
The initial maintenance costs were very low and increased very slowly over the first 10 to15 years of the new DCS.
The initial upgrade costs were similarly very low and were managed by formal programs offered by the DCS vendors.
The cost of lost production dropped dramatically because the new DCS is much more reliable.
Not insignificantly, benefits could be anticipated due to improved control (for example, via targeted advanced process control applications) that were not available with the legacy DCS.
When the extrapolated TCO for the legacy DCSs was compared with the estimated TCO for the new DCS…surprise, surprise. The TCO of the new DCS was significantly lower, with the projected cash flow difference yielding a before-tax, internal rate of return of 12.3%. Now, that’s something you can take to management!
So was this an isolated case? Not in MAVERICK’s experience. Over many DCS migration studies and projects, we’ve seen marked improvements in process visibility (improved HMI features), process operability (improved control functions and features), alarm management, and utilization of new technologies — all resulting in reduced operating costs and measurable productivity improvements. Get a MAVERICK expert to assist you with a TCO analysis that proves the value of replacing your legacy DCS.