Global Market Outlook on Condition Monitoring And NDT Services

  • Global condition monitoring market is expected to reach $ 2.45 billion by 2020. It is projected to grow at a CAGR of 7.6 percent
  • North America and Asia Pacific are the major markets for these services due to the presence of end-user industries like oil & gas and mining
  • Escalating the cost of machine failures, the need to maintain high uptime of the equipment and prevent any unwanted machine break down are the major drivers of the condition monitoring services
  • Asian Pacific is the ‘high growth’ market segment because of the presence of the major end-user industries and increased adoption of predictive maintenance strategy by the corporates

Non-destructive Testing Market Overview

  • Global NDT product and services market is expected to reach $ 9.68 billion by 2020. It is projected to grow at a CAGR of 8.6 percent
  • North America and Asia Pacific are the major markets for these services due to the presence of end-user industries like oil & gas and mining
  • Escalating the cost of machine failures, the need to comply with stringent regulations and expanding applications in petrochemical and manufacturing industries are the major drivers of the NDT services. Asia Pacific is the fastest growing market and it is projected to grow at a CAGR of 10 percent
  • Regulations and Standards: Vendors offering condition monitoring and NDT services should be ISO 9001 certified and have accreditation from the National Association of Testing Authorities (NATA). NATA provides assessment, accreditation and training services to laboratories and technical facilities. NATA monitors members' compliance with the OECD Principles of Good Laboratory Practice (GLP). NATA formally recognizes whether facilities produce reliable technical results
  • Technicians certified by the International Rope Access Trade Association (IRATA) are mostly preferred

Cost Drivers & Pricing Models 

Technician charges are the major cost drivers in the overall cost of the NDT services

Field services such as inspection services are charged at day rates while lab services are charged at per sample model

Pricing Models prevailing in the industry

  • There are two types of pricing models that are standard while offering NDT and condition monitoring services
  • Day rate model: All field services are charged at day rates  Ex: Inspection services are charged at A$ XXX/ day
  • Per unit or sample model: Laboratory testing services are charged at unit or per sample rates.  Ex: Oil analysis is charged at A$ XXX/unit or sample tested

Margins:

  • Rates are locked in case of long term relationships with planned predictive maintenance
  • Vendors often charge 10 percent margins in this industry while sub contractor gets 5 percent
  • Technician fee involves the technician entitlements, benefits, employer cost (food and stay)
  • Equipment usage cost not only includes the NDT and inspection devices but also the personal protective equipment given to the technician to carry out the inspection
  • Other costs includes the cost of consumables that are used in the inspection process

Sourcing Practices and Cost saving opportunities 

  • Regional and local service providers are often preferred while procuring these services
  • Scheduled predictive maintenance offers better cost savings than ad hoc/unplanned requests

Sourcing from Global Suppliers

  • If the requirement is global, it is best suited to procure from a global supplier rather than regional suppliers, because global suppliers will have much more visibility into applicable regulations for various geographies and have vast geographic presence. Consolidated spend could earn discounts on the pricing 

Sourcing from Regional Suppliers

  • If the requirement is for a regional scope or for local demand, it is best suited to procure from regional suppliers rather than global suppliers as it would incorporate cost savings and the repair and maintenance of the equipment would be easier 

Cost saving opportunities: Scheduled predictive maintenance offers better cost savings as the vendor is aware of the requirement in the near term. Vendors can allot his resources in way to reduce the overall cost of providing these services. Ad-hoc/unplanned predictive maintenance always costs higher as a vendor has limited time to allocate the resources.