Why you should use Life cycle cost analysis as an evaluation tool?

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Why you should use Life cycle cost analysis as an evaluation tool?

Life cycle cost analysis (LCC) concept developed to understand the real costs associated with procuring, operating and maintenance energy consuming equipment’s as pumps, boilers, HVAC and others.

Life-cycle cost can be broken-down for analysis purposes into a number of key components, Initial Capital Cost, Operating/Energy Costs, Replacement/Wear Part Costs, maintenance & Repair Costs.

Initial Capital Cost Capital cost is the most visible cost and has historically been the primary selection criterion for most items of capital equipment.

For example Pump users are now becoming increasingly aware of post installation costs and their impact on the total cost of ownership.

Lowest capital cost purchases rarely prove economic in the longer term and given that the initial capital cost of a centrifugal, inclusive of installation, typically equates to between 5%-20% of whole life cost, placing more emphasis on post installation cost will clearly prove much more economic.

Energy costs can easily equate to as much as 90% to 70% of the whole life cost of a pumping installation based on the energy cost applied.

Analysis of operating costs, in terms of energy consumption, is relatively straightforward, given that pump utilization and demand profiles are understood and predictable. The wire to water efficiency of existing or proposed installations can be compared and the results projected over the estimated lifetime of the installation. This should be a fundamental component of any tender assessment process or existing asset review procedure.

For more information and examples you can refer to the below links

https://www1.eere.energy.gov/manufacturing/tech_assistance/pdfs/pumplcc_1001.pdf

http://net.grundfos.com/doc/webnet/mining/downloads/7484_WSWW_Life_cycle_cost_GB.pdf

 

Magdy Aly

Energy manager, Energy efficiency consultant Passionate to help others to save Energy and Environment.

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