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Operations and maintenance costs are just as important as the initial capital costs. That is one of the concepts behind life cycle costs (LCC). While this idea was proposed more than 30 years ago, at a recent trade show I attended one special session on LCC and heard the phrase used on two other occasions.
Why the sudden interest in LCC? Some of it is the direct result of the energy crisis and the increased cost per kWh associated with electricity. The life cycle cost of any piece of equipment is the total lifetime cost to purchase, install, operate, maintain and dispose of that equipment.
The object of LCC analysis is to choose the most cost-effective approach from a series of alternatives so the lowest long-term cost of ownership is achieved. This analysis helps justify equipment and process selection based on total costs rather than the initial purchase price. As with most engineering tools, LCC provides best results when both art and science are merged with good judgment.
A greater understanding of all the components that make up the total cost of ownership will provide an opportunity to reduce energy, operational and maintenance costs. The components of a life cycle cost analysis typically include initial costs, installation and commissioning costs, energy costs, operation costs, maintenance and repair costs, environmental costs, and decommissioning and disposal costs.
Many existing systems provide a greater opportunity for savings through the use of LCC methods than do new systems. This is because the existing systems have pumps or controls that have not been optimized since their tasks have been changed over time.
When applying the evaluation process, the best information concerning the output and operation of the plant must be used. If incorrect or imprecise information is used, an incorrect or imprecise assessment will result. For a majority of facilities, the lifetime energy and maintenance costs will dominate the life cycle costs. Therefore, it is important to accurately determine the current cost of energy and the expected annual energy price increase for the estimated life along with the expected maintenance labor and material costs. It was suggested to have the manufacturers of products provide maintenance and energy use information before buying the product so an analysis can be made.
The LCC process is just a way to predict the most cost-effective solution. It does not guarantee a particular result but permits the plant designer or manager to make a reasonable comparison between alternate solutions within the limits of the available data. While operating requirements sometimes may override cost considerations, on the other hand, it may be beneficial to replace systems before they are broken according to the cost analysis.