Uncertainty of Net Present Value calculations and the impact on applying integrated maintenance approaches to the UK rail industry
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Affiliation
Cranfield UniversityIssue Date
2015-10-27Subjects
Cost Modelling
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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.Citation
Kirkwood L, Shehab E, Baguley P, Starr A (2015) 'Uncertainty of Net Present Value calculations and the impact on applying integrated maintenance approaches to the UK rail industry', Procedia CIRP, 38 (), pp.245-249.Publisher
ElsevierJournal
Procedia CIRPAdditional Links
https://www.sciencedirect.com/science/article/pii/S221282711500815XType
ArticleLanguage
enISSN
2212-8271Sponsors
EPSRC and Network Railae974a485f413a2113503eed53cd6c53
10.1016/j.procir.2015.07.056
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