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Hi everyone, I’m looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

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Vinicius Pereira
PMP, CMRP


Rio De Janeiro
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Hi Vinicius,

Great question. Can't say I am an expert on this particular matter, but I agree a long shut-down and re-order lead time would make it candidate for that category. Many agencies also have a financial threshold, in the tens of thousands of dollars, for a capital expense. So if the spare in question requires capital, as opposed to operating, funding to acquire, it would fit that category as well. Curious to see other respones.

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John Helwig
Asset Management Consultant
CDM Smith
Kensington MD
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Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

I'll have to say the same as John, I'm not an expert, but I think the term Capital Spare can differ between companies and countries (tax laws).  I think the term is mostly an accounting term to define when to capitalize parts and not. "Capitalization" of parts changes the dynamic in the books.   I though capital parts were (as john said) expensive +$25,000, and set by each individual company.   Second(at least in the US) I think capital spare parts have to start their depreciation when installed (not when bought), but I am not 100% sure on this.  But I'm pretty sure the start date for depreciation is a factor.

I don't think the risk of failure is a factor, possibly the consequence (in $ including downtime, damage to equipment, but also, safety, environmental impact) of a break-down/ failure.

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Torbjorn Idhammar
President & CEO
IDCON, Inc.
http://www.idcon.com
Raleigh NC
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Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

Vinicius,
If the spare part maintains the useful life of a defined plant asset it is a maintenance expense. If the spare part is an asset (listed on your asset register) it is a candidate for being a capital spare, ie a complete pump (not impeller, seal, bearings), a complete heat exchanger (not tubes), a transformer (not bushings or tap changer parts), or a complete analyzer (not tubing or valves).
Every company will have some differences.
Internet search for Generally Accepted Accounting Principles (GAAP) for Capital Spares. You will find some good discussions.
From a Maintenance Manager’s view, I want the spare part the plant needs NOW!
You may call it spare part or Capital Spare Part, I still just want it NOW!
I have found that Capital Spares require more Maintenance/Reliability work (paperwork) to replace or repair. They don’t automatically reorder. They require review from “someone” in your organization and that’s where the reorder step gets lost and therefore you can be without a spare for some period of time. “Someone” must request the Capital Spare item through the Capital Authorization for Expenditure justification process. Remember, the Capital Spares are paid for before stocking. Note that there is typically a minimum value to qualify for being a capital spare ($3k, 10k?). General Maintenance stock is typically bought on a stores budget and then bought and charged against the maintenance account/work center/equipment no. when it’s needed.
Most maintenance people prefer the simple “automatic grocery store type replacement“ process to the Capital “justify, budget, request and obtain approval” order process. However they are both necessary.
Above is just my experience.
The quick answer for you is that your Stores and Accounting Groups have your answers in their procedures. Someone who is audited regularly by insurance or accounting auditors has your company’s definition that you are requesting.
Sincerely,
Bud Lockwood
Maintenance Manager Retired


Original Message:
Sent: 5/4/2021 12:58:00 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I’m looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

Vinicius,
In some countries it is also called Insurance spares. Most of the time they are ordered during the project. For example critical un-spared machinery trains (Steam turbine driving a compressors). I would order a spare rotors for both turbine and compressor, diaphragm for turbine and diffusers for compressor. These are not shelf items and would take 3-5 months minimum to manufacture even if company is will to top $$$. Non availability of these key components in case of a failure will cause significant loss to the production and environment hazards too.

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Francis (Frankie) Castelino P.Eng
Machinery Engineer Consultant
Aramco
Ras Tanura Refinery
+966547739406
Saudi Arabia
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Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

My 2cents.

I think the term Capital spares is a special name involving accounting practices and is dependent on company rules.  I've seen some accounting rules be any spare over 100K or 50K or even 10K.

Another term is "Critical" spare which is spare equipment in stores for a critical asset - from a criticality ranking.  This may or may not be a "Capital" spare depending on the cost/accounting rule piece but I'd so pretty much every Capital spare is a critical spare.  These Capital spares are typically large items and they do not turn very often.  They also typically have very long lead times and if failure occurred it could threaten the business with very long shutdown.  As Francis called it an insurance spare for that reason.

I've seen some capital spares sit for decades and never used which probably may not have been needed.  I have also been in situations where a major failure occurred on a large gearbox (7 million inch-lbs torque) and we didn't have a spare.  1 year delivery on new unit.  The scramble by the plant to survive that was extreme.  The spare and risk got overlooked when plant was installed.

Work a high level look at your big critical plant assets in case of failure or at least have a feasible plan B if not a capital spare.

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Randy Riddell, CMRP, PSAP, CLS
Reliability Manager
Essity
Cherokee AL
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Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

Great responses from other esteemed members.
In my experience, the Total Inventory of Spares are typically classified into four: 1. Insurance Spares, 2. Non-Stock Items (Items procured only against a Demand - Planned Maintenance Order and meant for consumption in certain time period), 3. Stock Items (Items that are reordered through MRP Runs) and Consumables. There could be some other Names for these Classes. 
Insurance Spare or Capital Spares (procured at the Capital Project Stage or subsequently based on Identification as per Definitions and Guidelines) are treated and accounted for separately from other Spares. The considerations would include the Risks to the Business (high consequence of Asset downtime, even if the likelihood is very low), unique and made to order by Vendors, high cost items with long lead times for their procurement (when needed). These Spares have life almost the same as the Installed Asset and are many a times repairable (depending on the condition as removed from service) and hence their new procurement is always with proper scrutiny and approvals at the right levels (based on the decision on their Refurbishment Vs Replacement). The non-availability of such Insurance Spares (including those under Refurbishment Cycle or New Procurement Cycle) are periodically tracked and reported from the Risk perspective. Hope this helps, Thanks

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Sundar Naranammalpuram P.
Navi Mumbai
Maharashtra
India
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Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------

Thanks very much! The answers contributed a lot!

---------------------------------
Vinicius Pereira
PMP, CMRP
---------------------------------



Original Message:
Sent: 05-12-2021
From: Sundar Naranammalpuram
Subject: RE: Capital Spares

Great responses from other esteemed members.
In my experience, the Total Inventory of Spares are typically classified into four: 1. Insurance Spares, 2. Non-Stock Items (Items procured only against a Demand - Planned Maintenance Order and meant for consumption in certain time period), 3. Stock Items (Items that are reordered through MRP Runs) and Consumables. There could be some other Names for these Classes. 
Insurance Spare or Capital Spares (procured at the Capital Project Stage or subsequently based on Identification as per Definitions and Guidelines) are treated and accounted for separately from other Spares. The considerations would include the Risks to the Business (high consequence of Asset downtime, even if the likelihood is very low), unique and made to order by Vendors, high cost items with long lead times for their procurement (when needed). These Spares have life almost the same as the Installed Asset and are many a times repairable (depending on the condition as removed from service) and hence their new procurement is always with proper scrutiny and approvals at the right levels (based on the decision on their Refurbishment Vs Replacement). The non-availability of such Insurance Spares (including those under Refurbishment Cycle or New Procurement Cycle) are periodically tracked and reported from the Risk perspective. Hope this helps, Thanks

------------------------------
Sundar Naranammalpuram P.
Navi Mumbai
Maharashtra
India
------------------------------

Original Message:
Sent: 05-04-2021 12:58 PM
From: Vinicius Pereira
Subject: Capital Spares

Hi everyone, I'm looking for the best definition of Capital Spares. I made a quick survey in the wikipedia and the result was: Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them. Could you help me?

---------------------------------
Vinicius Pereira
PMP, CMRP


Rio De Janeiro
---------------------------------