Destructive vs. Non-Destructive Failures

There is a distinction between an asset failure that is repairable (non-destructive) and one that is not. An example of the former is a fault in a direct-buried cable, which can be repaired with a splice, returning the cable to essentially the same condition as before the fault. A destructive failure might be a pole-top transformer that is simply replaced when it fails. Some assets have failures that fall somewhere in-between these extremes, but in general failures are put in one of these categories.

Whether an asset’s failure is destructive or non-destructive has significant implications for determining the end of economic life of the asset. The reason is that a destructive failure carries with it some offsetting benefit – a new asset – that a non-destructive failure does not. Risk is defined as the probability of failure times the consequence of failure. However in the case of destructive failures, the replacement cost of the asset is subtracted from the consequence cost, reducing risk and extending the economic life of the asset:

Risk cost, asset with non-destructive failure

risk = probability of failure X consequence of failure

Risk cost, asset with destructive failure

risk = probability of failure x (consequence of failurereplacement cost)

Consider the risk-cost stream of an asset, increasing over time as the asset degrades and becomes more likely to fail. If the failure is modeled as non-destructive, the economic life of the asset will be determined based on the full consequence of failure cost. On the other hand, if the failure is modeled as destructive, the economic life will be based on the reduced consequence of failure (i.e., cost of replacement is subtracted), which extends the life of the asset. This is shown in the figure below.

Perhaps an intuitive way to think about this is that the benefit of a destructive failure, the new asset, makes the failure less painful, which means you have less incentive to prevent failures by pre-emptively replacing or rehabilitating the asset.

Continue to multiple failure modes.


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