10 life cycle costing.pdf

7/28/2019 10 Life Cycle Costing.pdf

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Revision G Page 1 of 3 28/06/2011

COMPREHENSIVE ASSET MANAGEMENT PLAN

TASK SHEET

LIFE CYCLE COSTING

APPLICATION AND PURPOSE

Reference

Life cycle costing presents the total cost of an item throughout its life, including the costs of

planning, design, acquisition, operations, maintenance and disposal, less any residual

value, or the total cost of providing, owning, and maintaining a building or component over a

predetermined evaluation period.

Life cycle costing will provide valuable input to design projects for new assets to ensure best

Total Cost of Ownership for IWK and should be used allow for economic evaluation of

equipment use in operations as well as for preferred vendor selection.

3.12

IWK CURRENT PRACTICE

Reference

IWK do not have a formal Life Cycle Costing process established or in use. 4.10

IWK RECOMMENDED PRACTICE

Reference

Since a large proportion of assets are inherited, IWK is to a large extent only managing the

latter part of life for these assets. It will be of outmost importance to have a holistic view and

recognise the need for optimising the whole life of all their assets. As such, IWK will need to

demonstrate to the regulators that in order to achieve an optimal LCC, a minimum quality

requirement for new assets is necessary for not overspending on costs for operation,

maintenance, decommissioning, environmental consequences etc. at the expense of a

cheap capital investment. The long term goal will have to be having LCC-certified quality

standards across all assets.

IWK needs to formally develop an approach to Life Cycle Costing. This may involve

obtaining commercially available software and associated trainings; however, this is not

necessarily a requirement.

Following decision on the approach, IWK must formally document their selected LCC

procedures, methodology and formats for wider dissemination (as required) within the

organization.

5.10

DATA REQUIREMENTS

Currently Recordedby IWK?Item Description Required Quality Level

Y / N Quality

Initial Costs Purchase prices Accurate Margins Y OK

Installation and

Commissioning

Start-up Costs Accurate Margins EST EST

Energy Costs Unit Rates Accurate Margins N N/A

Operational Costs Labour Known costs Y OK


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DATA REQUIREMENTS

Currently Recordedby IWK?Item Description Required Quality Level

Y / N Quality

Maintenance and

Repair Costs

Labour / Parts Known costs Y OK

Downtime Costs Lost Production Indirect costs EST EST

Environmental

Costs

Contamination / Clean-up Fines / Levees EST EST

Decommissioning

Costs

Disposal / Remediation Known costs Y OK

RELATED SECTIONS IN CAMP

Reference

Data Needs 3.14

ITC REQUIREMENTS

IFS data for associated costs, reliable data, easily recovered and researched.

CURRENT ITC CAPABILITIES

Labour and parts cost are available

Energy costs not recorded at this time.

Capital expenditure can be estimated as can Environmental and Decommissioning costs.

IWK ACTION PLAN

Timeframe Reference

IWK to develop formal procedures, documents and "formats" for

conducting LCC analysis. An internal champion is required to implement

LCC in the organization to establish the philosophy.

Short-term 5.10

IWK to review available market options and select a methodology /

software tool for LCC.

Short-term 5.10

IWK TRAINING REQUIREMENTS

IWK CAMP Manual Overview Training

INITIAL CHAMPION ACTIVITIES

Reference

Develop IWK LCC Document. WorleyParsons suggests that IWK utilise the attached high-

level "Process Coordination Map" (PCM) as a starting point for their ownership of LCC and

develop their process and procedures to further detail this flow.

IWK to review available market options and select a methodology / software tool for LCC.

5.10


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ADDITIONAL/SUPPORT NOTES

Please note, it is crucial that IWK engages with the respective regulators that to achieve an optimal LCC, a

minimum quality requirement for new assets is necessary for not overspending on costs for operation,

maintenance, decommissioning, environmental consequences etc. at the expense of less expensive initial

capital investment. The long term goal will have to be having LCC-certified quality standards across all assets.

10 life cycle costing.pdf

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