I Would like to hear moreI think the oil change issue should be re-visited. If the WPT system really impacts this cost it seems to me it is a really major issue and should be covered more thoroughly with more WPT literature. It's way under-estimated if this report it is correct.
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There are many hidden costs associated with oil changes that are often not taken into account when the action is scheduled. For example a very simplistic approach might only consider labor to change oil + disposal costs + cost of new oil. But there are other more significant hidden costs such as downtime, administrative purchasing costs, storage, handling, testing and spills, often accounting for many times that of the oil alone. For example, damage to the machine during a change can occur for the following reasons:
• Adding the wrong oil.
• Over/under-filling the sump or reservoir.
• Cross threading a drain plug.
• Starting the equipment dry (it happens).
• Introducing contaminated oil
Oil spills, like fires, they happen, but the degree to which you are prepared often determines the extent of the damage. The consequences of spills can range from the need for solvents and cleaning agents to remove oil from equipment and walkways, to replacing pavement or digging up soil, to major expenses and adverse publicity if the oil gets off site and into local waterways. Costs might range from hundreds of dollars to millions of dollars depending, of course, upon the nature and severity of the occurrence. Oil spills can occur at all phases in the oil change process, including the following:
• In storage
• During transport to the equipment
• While draining the old oil
• While adding the new oil
• When disposing of the used oil
It is important to know your options when it comes to lubrication, and the real costs associated with each option, not just for oil changes but also for costs like re-engineering with better seals or filtration equipment. Facts and information reduce uncertainty and improve the quality and profitability of decisions about lubrication. Some of the following activities can, if well thought through, yield tremendous savings to the organization:
• Test oil so that it is only changed when required.
• Use the correct oil for the application.
• Filter oil so it is not changed just because of particulate contamination.
• Purchase good products, not allowing mixtures or cocktails.
• Use extended-life lubricants.
• Upgrade seals to reduce leaks and contaminant ingress.
• Provide staff with proper training and oil change equipment.
The Search for Hidden Costs
Like most activities, changing oil is not as simple as it seems on the surface. There are supply personnel, planners, schedulers, coordinators, health and safety staff and procedures involved in the process. These behind-the-scenes activities add "hidden" overhead cost to the oil change process that is often difficult to clearly define. Maintenance activities have to do with preventing or correcting wear of lubricated surfaces. The behind-the-scenes support often costs multiples of the simple cost to perform the maintenance activity itself.
Availability Cost - If the oil is being changed, the equipment is unavailable, not for just the time to change the oil, but from the time it is isolated until the time isolation is removed. The impact of unavailability is estimated to be one day or 0.3% of the annual usage because attempts to get a dollar value have not been successful, mainly because the cost depends upon where in the production cycle the equipment is located.
Labor and Benefits - The hourly pay is just part of the cost for labor. Benefits and corporate costs to administer human resources functions must be included in the total.
Ancillary Activity Labor - Estimates of the time required to complete the oil analysis task should account for ancillary activities such as wait time, travel time, tool and material collection. Costs can range from two, to as high as eight times “wrench time.”
Supervision - Supervisory tasks always accompany the oil change job. Include time to issue work orders, assign and schedule the work and monitor activities in the estimate. This involves supervisors, maintenance support and maintenance planners. For example, each crew might have a lead hand and there will be a supervisor for every so many maintainers. Estimated as 20% over and above direct labor costs.
Oil Disposal Costs - This is the cost to pay an independent trucker and waste disposal company to collect and properly dispose of oil.
Transfer Costs- Transfer burden should consider costs for temporary storage site, safeguarding, moving to the shipping truck or to a secondary site and, finally, transfer to the loading dock or long term storage.
Solid Waste - When oil is changed solid waste will also be generated that should be included in the estimate. This includes gloves, filters, wipes, solid absorbents, plastic bottles and hoses for sampling and the empty oil drums.
Liquid Waste - If the oil has been allowed to degrade too far there will be liquid waste in the form of solvents or flush fluid for which disposal is required. This factor is very relevant to cost benefits associated with proactive maintenance and the use of long-life products.
New Oil - Estimated at cost times volume.
New Oil Overhead - These costs include inventory or carrying charges and the costs of storage areas. Costs for the heated storage is taken to be $1/year/cubic-foot, although it would be higher because oil storage and local oil rooms require extra fire protection, venting and grounding. Further, a typical supply crib requires staff. There can also be carrying charges for stock. Estimated as $100 per drum or about $2 per gallon.
Purchase Orders - Several costs are incurred during the purchasing process. These include preparation and submission of the request-for-bid, review of available options, selection of successful bidder, running credit checks, making payments, etc.
Equipment Failure and Spills - Changing oil is an intrusive maintenance action and there is some risk, as previously discussed.
Safety - Changing oils involves a number of potential safety hazards, including slipping, skin contact and lifting associated back injury. With regard to back injuries each 55-gallon drum of oil weighs about 400 lb (180 kg) so that lifting devices are usually required and are often not included in the cost estimation. Estimated as $20 per change.
New Oil Testing - A new oil sample should be taken and analyzed to verify that the correct oil was supplied and to baseline for subsequent testing. The cost of this testing and all aspects associated with it (data management, sampling consumables, etc.) should be included in the cost estimate. The total cost might include the cost of the testing, the labor to take the sample, the cost of the sample bottle, the shipping, the interpretation of the results and the record keeping. Also, the practice of frequently changing oil can greatly complicate used oil analysis. As Figure 1 shows, it is extremely challenging when make-up oil alone is added to the tank. If part of a large program, the associated costs of new oil testing should be very low.
The Bottom Line
To calculate the real cost of an oil change, one must add up all the direct costs, the overhead costs and the implicit risk-based costs. The actual "real cost" to change the oil in a rather small system at a power plant requiring 5-gallons of oil (at $5 per gallon), two man-hours of direct labor and a purchase order to obtain the oil is $988.70 ALMOST 40 TIMES THE COST OF THE NEW OIL!