Detailed Report on Cost Estimation and Total Productive Maintenance

This report provides a detailed analysis of cost estimation and total productive maintenance (TPM) within a project context, specifically focusing on the 'Sinking of Ventilation Shaft and New Station Development' project. It includes calculations of Cost Variance (CV), Schedule Variance (SV), Time Variance (TV), and Critical Ratio (CR) based on provided financial data, followed by graphical representations comparing initial and changed project plans, as well as earned value analysis. The report also discusses the desirability of faster project completion and the implications of implementing Total Productive Maintenance for a Liebherr 9800 Mining Excavator, covering aspects such as autonomous maintenance, planned maintenance, quality integration, and safety considerations. The document concludes by emphasizing the importance of TPM in optimizing equipment performance and ensuring project success. Desklib offers a wealth of similar documents and study resources for students.

Running head: COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
Cost Estimation and Total Productive Maintenance
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1COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
Question B2
i. Calculation of CV, SV, TV, and CR
The following information related to the cost expended for the project of Sinking of Ventilation
Shaft and New Station development has been given,
Depth of sink to be shifted= 2.5km =2500m
Rate of shifting= $10,000/m
Total cost of shifting= $25,000,000
Time= 24mnths
For Excavation
Volume of rocks to be displaced= 30,000cc
Time= 3 mnths
Rate of displacement= $110/cc
Total cost= $330,000
For Additional Station
Volume of rocks to be displaced= 20,000cc
Rate of displacement= $80/cc
Total cost= $1,600,000

2COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
Hence, total budget of the project= $25,000,000 + $330,000 + $1,600,000
= $26,930,000
After 15 months,
Depth of Shaft= 1800m
% work completed= (1800/2500)*100
= 72%
Actual Cost at that time= $14,000,000
Solution:
Budget at Completion (BAC)= $26,930,000
Actual Cost= $14,000,000
Planned Completion= (15/24)*100
= 62.5%
Actual Completion= 72%
Planned Value (PV) = Planned Completion (%) * BAC = 62.5% * $26,930,000 = $16,831,250
Earned Value (EV) = Actual Completion (%) * BAC = 72% * $26,930,000= $19,389,600
Cost Variance= EV – AC= $19,389,600 - $14,000,000 = $5,389,600
Schedule Variance = EV – PV= $19,389,600 - $16,831,250 = $2,558,350

3COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
Time Variance= SV/PV
= $2,558,350/$16,831,250
=0.152
Critical Ratio (CR) = CPI * SPI (where CPI stands for cost performance index and SPI stands for
schedule performance index)
CPI=EV/AC
= $19,389,600/$14,000,000
=1.38
SPI= EV/PV
= $19,389,600/$16,831,250
=1.15
Hence, CR= 1.38*1.15
=1.59
ii. Graph Representation
The graph showing comparison of Initial Plan and Changed Plan for the project of
Sinking of Ventilation Shaft and New Station development is given below,

4COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
Initial Plan
Changed Plan
$0.00
$5,000,000.00
$10,000,000.00
$15,000,000.00
$20,000,000.00
$25,000,000.00
$30,000,000.00 $25,330,000.00 $26,930,000.00
$12,831,680.00 $14,000,000.00 Total Budget Cost
Cost after15 months
Figure 1: Graph for comparing initial and changed plan
The graph showing earned value, actual cost, planned cost, cost variance, and schedule
variance for the project of Sinking of Ventilation Shaft and New Station development is given
below,
Earned Value Actual Cost Planned Value Cost Variance Schedule
Variance
$0.00
$5,000,000.00
$10,000,000.00
$15,000,000.00
$20,000,000.00
$25,000,000.00
$19,389,600.00
$14,000,000.00
$16,831,250.00
$5,389,600.00
$2,558,350.00
Values
Values
Figure 2: Calculation Data Graph

5COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
iii. Desirability Analysis for Faster Project Completion
The high rate of spending would tend to exhaust large amount of sum for the project of
Sinking of Ventilation Shaft and New Station development. The 15 months of time period had
exhausted a sum of $14,000,000 whereas the expected money consumption should have been
$12,831,680.00. The high rate of expenditure would result in over running of the expected
budget as the total budget was fixed and with the increase of project budget, the cost expense has
been increased. The desirability is the interest of the completion of the project in time and
aligning the project with the successful completion of the project (Alvarez et al. 2015). The
maintenance of the project would also help in forming the analysis of the operations so that
quality management along with operation development can be implied. The completion of the
project of Sinking of Ventilation Shaft and New Station development would require faster
completion so that the project benefits can be achieved.
Sub-question (ii) of B2: Total Productive Maintenance (TPM)
Liebherr 9800 Mining Excavator is a bucket excavator that would be required for the
mining process. The machine is one of the largest machines and it weighs 9800 with bucket
capacity of 62 cubic yards. The price of the machine is 1,785,700 pounds. It works more
effectively and decreases the time taken for digging out large works. The Total Productive
Maintenance is based on autonomous maintenance, planned maintenance, quality integration,
focused improvement, new equipment management, training and education, safety, health and
environment, and TPM in administration (Djatna and Alitu 2015). The implication of the Total
Productive Maintenance for Liebherr 9800 Mining Excavator would allow the management of
the activities favouring the management of the activities. The autonomous maintenance would

6COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
allow the automatic management of the machine. The planned maintenance is done for forming
the alignment of the maintenance process at the scheduled event. The quality integration would
also help in forming the analysis of the machine quality and the alignment of the operations
favourable for the deployment of the operations. The focused improvement would help in
forming the successive development of the activities favouring the management of the improved
activities of Liebherr 9800 Mining Excavator. The new equipment management would also help
in forming the deployment of the operations and management of the new Liebherr 9800 Mining
Excavator equipment (Poduval and Pramod 2015). The training and education is developed for
providing the training to the workers for handling the operations. The safety, health and
environment would allow the formation of the improved operations favouring the alignment of
operations along with keeping the people and environment safe. The TPM in administration
would be based for the alignment of the improved activities favouring the deployment of the
operations by using Liebherr 9800 Mining Excavator.

7COST ESTIMATION AND TOTAL PRODUCTIVE MAINTENANCE
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