Calibration versus Cost Cutting Economics: The Cost; the Risk and the Challenges

The times we are in

Measurement and measurement-related operations account for a largely significant percentage of industrial processes. The economic success of most manufacturing industries is critically dependent on how well products are made and measurement plays a key role in this.

cal_challengeThe stunning fall in oil prices, from a peak of $115 per barrel in June 2014 to under $35 at the end of February 2016, has been one of the most important global macroeconomic developments of the past 20 months. The oil and gas industry is performing at its worst over the past 10 years and same can be said of other industries, as such companies are under pressure to find a way to reduce their cost base. Calibration cost is one of those at the mercy of being reduced by company management. In bid to reduce calibration cost, most companies are re-examining their calibration policies and questioning the need for calibration and frequency of calibration for much of their inspection, measurement and test equipment. However, it is important to note that the risks and costs associated with inaccurate measurement which can arise from failure to calibrate instruments are much higher than calibration cost. Hence calibration cost reduction could be an expensive mistake. But first we need to ask ourselves why do we even need to calibrate?

Why Calibrate?

This takes us back to the basics: What is calibration?

Calibration can be described as an activity where the instrument being tested is compared to a known reference value or standards.

When a sensor or instrument experiences physical condition variations (e.g temperature) and stress over time, its performance will invariably begin to decline, which is known as ‘drift’. This means that measurement data from the sensor or instrument becomes unreliable and could even affect the quality of a company’s production. Though it is almost impossible to completely eradicate drift but it can be discovered and corrected through calibration process. Hence calibration is a powerful tool to determine how accurate an instrument or sensor is which is directly related to measurement accuracy which ultimately affects final product quality  Even with today’s high accurate standards and regulatory bodies still need how inaccurate a particular instrument is and whether it drifts in and out of specified tolerance over time. Calibration is often required in the following cases:

  • Testing of new instrument
  • Testing of instrument after it has been repaired or modified
  • Testing after the specific usage has elapsed
  • Prior to and/or after a critical measurement
  • When observations are not accurate or instrument indicators do not match the output of a surrogate instrument
  • After events such as shock, vibration, or exposure to adverse conditions, which can put it out of calibration or damage it

 The costs and risks of not calibrating

In these uncertain economic times, companies are out to cut cost as much as they can. Calibration definitely involve a considerable  cost; calibration equipment rentage or purchase, expert services, manpower, documentation preparation etc. and for most technical groups, inspection, measurement and test equipment calibration cost account for the lion’s share of service expenses. Hence the pressure to reduce such cost and these are usually direct mandate from senior management to reduce operating expenses. The direct result of this is companies neglecting calibration, or increasing the calibration intervals.

However, there are awful lots of risks associated with not calibrating an instrument:

  • Unreliable measurement data caused by instrument drift
  • Unscheduled production or machine downtime
  • Safety concerns: Uncalibrated instruments may cause potential safety hazards both to the employee in high pressure and temperature environments, and the consumers or customers of the end product e.g. edible items.
  • Potential wastage of resources.
  • Increased expenses
  • Withdrawal of license to operate: highly regulated industries like pharmaceutical, food, oil and gas pay strict attention to the quality of products that is provided to customers. There are stringent policies that might lead to withdrawal of licences of erring companies.
  • Reduced productivity/profitability.

In summary, the plummeting nature of today’s global economy requires that drastic cost-cutting approach be taken to ensure that an organization remains viable. Cost savings realized from circumventing industry-accepted calibration practices are rarely significant when compared to the costs of a product recall or inability to sell product because of the suspension of ISO accreditation.

More often than not, the contributions of calibration-related measurement risk to faulty business decisions often go unrecognized. Due to lack of information and inadequate understanding or appreciation of the ramifications, companies seldom take into consideration calibration-related measurement risk exposure when making calibration cost-cutting decisions—a short-sighted approach that costs everyone in the end.

Common calibration challenges

In this era of cost cutting approach, the major challenge posed to decision makers in process industries as regards the calibration of their instruments is how to manage the cost associated with calibration without running at the risks involved in not calibrating their instruments.

Another major challenge posed to instrument calibration is documentation. There are usually a lot of errors encounter during documenting calibration data. This includes but not limited to typos, lost or difficult-to-read notes and “mis-keying” of calibration data. These are particularly inherent in paper-based calibration management system which is being currently adopted by most companies across the process industries; hence, industry players are suggesting calibration management software to reduce the errors.

In addition, instruments required to be calibrated are always located at different locations in the process line, more specifically for oil and gas fields these instruments may be situated over a large geographical region. Different instruments also require different standard calibration device and different techniques. These pose the problem of logistics.

How frequently should instruments be calibrated? Although most international standards are not specific on calibration interval, however, they tend to suggest that instruments calibration frequency should be based on the following factors:

  • Frequency of usage
  • Maintenance history
  • Environmental conditions (e.g. humidity, temperature, vibration) where the instrument is stored and used
  • The required uncertainty in measurement
  • Requirements of your company’s quality program

In summary, calibration is vitally important wherever measurements are important, it enables users and businesses to have confidence in the results that they monitor record and subsequently control.

At GIL we can help manage your calibration challenges and come up with a balance in fitting your budget into your calibration programme. We can also come up with a robust calibration programme for you as well as developing a solid calibration database for all your equipment.

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