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Assessing the life cycle costs of an investment strategy

Voetdijk, N.J. (2019) Assessing the life cycle costs of an investment strategy.

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Abstract:Liander’s workload has increased significantly due to the energy transition. As a consequence, a prioritisation between investments is required. An investment can be an asset purchase and installation, maintenance, inspection and disposal. We argue that the impact of an investment decision made during the life cycle of an asset cannot be determined in isolation, and advocate for a holistic approach. An investment strategy is the set of rules defining which decisions are made during an asset’s entire life cycle. Our research objective is to build a simulation model which can assess the life cycle costs of an investment strategy. The monetisation of the impact of decisions during an asset’s life cycle enables the determination of the performance of an investment strategy on a single measure. An important impact is the impact of maintenance on the probability of failure. We model the relationship between the asset’s condition and the probability of failure with an asset degradation model. This model is based on a Markov chain. Transition probabilities are fit on real data for a case study on power transformers. Our research provides the foundation for making more intelligent investment decisions by considering its impact on the entire asset life cycle.
Item Type:Essay (Master)
Clients:
Liander, Arnhem, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:31 mathematics, 50 technical science in general, 83 economics
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/80192
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