This activity-based costing (ABC) method calculates the actual cost of a failure incident and uses the total dollar value to the business as the means to rate equipment criticality. The criticality of an item of plant is determined by the cost consequences and losses of equipment failure across the whole company. Using this method puts a real dollar value on a production equipment loss incident. This financially robust and reliable method provides an accurate way to prioritise production equipment and to justify the necessary risk management and maintenance measures to protect against failure. It recognises that a production failure event has cost repercussions throughout an organisation affecting many people and departments, with all of them incurring costs. These costs are lost business profit that could have been earned and banked, but for the incident. The financial model reflects the actual production and maintenance practices in the operation and their cost implications to the whole organisation if they are inadequate. It delivers clear indication of the responsibility’s managers, supervisors, operators, and maintainers have of properly running, maintaining, and caring for plant and equipment to prevent production-losses to the business.
