Whole life cycle cost plans.

We can prepare detailed whole life cost plans to aid selection of the most suitable products, following pareto analysis of the project we compare relative products, life cycle costs will be based on. The following formula considers the main factors to consider. Including the energy cost.

Life Cycle Costs = [Years x (ExHrs+B+Rp+M+F+X)] + (C+D+En)

Note each factor should be multiplied by an inflation element which will be different for each element (not shown for simplicity).

Factor

Factual / Estimated

Description

E

Annual

Estimated

Energy cost multiplied by hours used

R

Annual

Estimated

Reliability cost

B

Annual

Estimated

Business interruption cost

Rp

Annual

Estimated

Repair cost

M

Annual

Estimated

Maintenance cost

C

Initial

Fact

Capital cost

D

Single cost

Estimated

Disposal cost

En

Single cost

Estimated

Environment cost

F

Annual

Fact

Cost to finance

X

Annual

Estimated

Unknown factor

 

E

Calculated from the energy consumption table below, then multiplied by the number of years, with an annual increase factor

R

Calculated as 10% of the capital cost C, divided by the number of years, then multiplied by the number of years, with an annual increase factor

B

A cost which the user might define financially, what they would loose if the system failed

Rp

Repair cost, a sinking fund representing 2% per annum of the Capital cost C, then multiplied by the number of years, with an annual increase factor

M

The cost of maintaining the asset per annum, in addition to Rp, then multiplied by the number of years, with an annual increase factor

C

Initial unit capital cost including installation, multiplied by the quantity of units

D

disposal cost today at 5% of initial capital cost C, factored for future cost by the % increase and the number of years

En

Environmental cost today, factored for future cost by the % increase and the number of years

F

Simple calculation of interest on the capital over the term

X

For future risk of owning the asset

The purpose of undertaking the above calculation is to theoretically appraise one product to another and aid the selection process. The purpose of the factors is to give a comparative measure against the features of two different products.