Efficient Plant May 2022 - 21

feature | lubrication solutions
Fig. 2: Five-year lube business case
benefi ts in year three and beyond, seems far more realistic.
We also must be mindful that companies don't have unlimited
capital. Most companies have a " cost of capital " that determines
the long-term value of an investment in today's dollar (net present
value or NPV) and an internal rate of return (IRR) that determines
whether an investment makes sense.
By presenting the project as an investment, it is far more likely
Present lubrication improvement plans as an investment that will eliminate
losses over time.
fl uid each of the past three years, is it reasonable that we can reduce
all of this in the fi rst year? Instead, discounting cost avoidance by
50% in year one and 25% in year two, before fi nally realizing the full
that senior management will support the project, particularly if
accompanied by MRO and lubricant costs and specifi c examples of
where lubrication could have been improved throughout the plant.
In essence, the business case shown in Fig. 2 becomes a value
statement that reads: Each year we lose around $210,000 from
failed equipment and $20,000 in excessive lubricant purchases. By
investing $110,000 upfront as well as smaller investments over the
next three to fi ve years, we stand to eliminate $331,000 in costs
over the next fi ve years, which will yield an annual rate of return
of 54%. " Described in that manner, it's hard to see how a company
could not invest. EP
Mark Barnes, CMRP, is Senior Vice President at Des-Case Corp.,
Goodlettsville, TN (descase.com). He has 21 years of experience in
lubrication management, oil analysis, and contamination control.
The steel industry's top performing calcium
sulfonate grease specially designed for the
unique challenges of continuous casters,
furnaces, and rolling mills.
daubertchemical.com | 1.866.719.4332
MAY 2022
EFFICIENTPLANTMAG.COM | 21

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Efficient Plant May 2022

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