10 life cycle costing.pdf
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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.
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