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Basics of Elastomeric Seal Design

Basics of Elastomeric Seal Design

Engineers need critical design informati...

Wastewater Treatment

Wastewater Treatment

Society’s desire for a clean envir...

Controlling Our Water Systems, Part II

Controlling Our Water Systems, Part II

To better understand the actuators and c...

Controlling Our Water Systems

Controlling Our Water Systems

Actuators and controls are a critical pr...

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Industry Headlines

Crane Co. Reports Second Quarter 2016 Results

15 HOURS AGO

Crane Co. reported second quarter 2016 GAAP earnings of $1.15 per diluted share, compared to $0.95 per share in the second quarter of 2015. Excluding Special Items, second quarter 2016 earnings per diluted share were $1.21, compared to $1.06 per share in the second quarter of 2015.

Second quarter 2016 ...

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Emerson Exploring Acquisition of Pentair Valves & Controls

1 DAY AGO

Reuters UK has spoken to sources that confirm Emerson has made an offer to acquire Pentair Valves & Controls. Pentair Plc added the Valves & Controls division after its merger with Tyco Flow Control in 2012.

“Pentair has received offers for the valves and controls business from companies o...

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Chemical Activity Barometer Grows for Fourth Consecutive Month

16 HOURS AGO

The Chemical Activity Barometer (CAB) expanded 0.4% in July following a revised 0.7% increase in June, 0.8% increase in May and 0.6% increase in April. All data is measured on a three-month moving average. Accounting for adjustments, the CAB remains up 2.6% over this time last year, an improvement ove...

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SABIC, ExxonMobil Evaluating Joint Venture on U.S. Gulf Coast

16 HOURS AGO

SABIC and an affiliate of Exxon Mobil are considering the potential development of a jointly owned petrochemical complex on the U.S. Gulf Coast. If developed, the project would be located in Texas or Louisiana near natural gas feedstock and include a world-scale steam cracker and derivative units.

Befo...

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Sharpest Rise in U.S. Manufacturing Production Since November

1 DAY AGO

July data signaled a further rebound in business conditions across the U.S. manufacturing sector, led by a robust expansion of incoming new work and the fastest upturn in production volumes for eight months. Job creation also strengthened in July, with the latest increase in payroll numbers the fast...

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Texas Manufacturing Activity Stabilizes

1 DAY AGO

Texas factory activity held steady in July, according to business executives responding to the Texas Manufacturing Outlook Survey . The production index, a key measure of state manufacturing conditions, came in near zero after two months of negative readings, suggesting output stopped falling this mon...

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Life-Cycle Costing

vmwnt12_lifecycleFor most of us, the purchasing process is relatively simple: Find the lowest cost for the desired item, make the purchase and then move on to the next task. However, the purchase price may only be the first installment of that cost.

Too frequently the simple, short-term view of looking at the price only results in a purchase that ends up costing much more over a period of time than the original price tag. What’s more, the entity doing the buying may be pulled back to revisit that purchase multiple times if the item fails prematurely, turns out to be less efficient than expected, requires more time to install or maintain than anticipated, or some other, unanticipated problem comes up.

In the 1960s, life-cycle costing (LCC) became popular as a means to evaluate the true cost of something over its entire useful lifetime. LCC seeks to quantify all costs associated with ownership. In addition to the initial cost, LCC commonly attempts to weigh factors such as the cost to install, maintain, repair, operate, replace, even dispose of an item, and depending on how comprehensive the analysis is intended to be, the list can include many more factors. As this shows, the final cost of an item is almost always much more than its purchase price.

But alas, LCC is not a precise process—its calculation can become so complex that it involves factors as scary as scientific calculations using probability theory, risk assessments and statistical analysis. The degree of use depends on how precise the LCC calculation must be. This is probably one of the reasons LCC fell out of favor. However, that attitude is changing; in this time of tight budgets and the need to wring every bit of value out of each dollar spent, there’s renewed interest in LCC.

Fortunately, LCC as a concept can be applied without having to deal with much of the complexity, which is what this article seeks to do. Those who want to complete a “true” life-cycle cost analysis, the way such analyses have traditionally been done, can find ample source material on the Internet to help them and provide guidance. Those who choose this path can search some of the following terms:

  • Life-cycle cost
  • Life-cycle cost analysis
  • Life-cycle cost summary
  • Life-cycle cost calculator
  • Water distribution life-cycle cost
  • Water system life-cycle cost

However, before deciding to engage in this comprehensive LCC analysis with all its complexities, the following concepts about LCC should be understood:

LCC is not an exact science. Despite the many scientific principles and calculations that can be involved, the result itself is almost always only an estimate. That’s because the only part of the LCC equation that is well-known and clearly defined is the procurement cost. All other data is estimated or assumed, with no guarantees that one factor will behave exactly the same as another when trying to quantify things such as performance or repair histories. LCC estimates, by the very nature that they are estimated, lack hard accuracy.

A detailed LCC analysis can require costly procedures to obtain needed data. The more accurate the LCC calculation needs to be, the more cost and time involved to develop the input data.

Although LCC can call for volumes of data, typically only limited data will exist.

LCC for a given item that comes from different sources, such as from a seller versus an end user, can differ significantly. This is because each party has a bias when selecting or establishing the input data.

“Something” is almost always better than “nothing.”

Despite these realities, including LCC concepts in the procurement process can result in a more cost-effective purchasing decision. Even when a comprehensive analysis is not done, it is good practice to inject LCC into the discussion for no other reason than to push the various purchasing influences towards a team-like approach to the procurement process. In other words, considering only the initial cost without LCC:

  • Designers or engineers might cut back on an item’s performance variables to meet a capital budget constraint that only considers initial cost.
  • The purchasing department might focus on the lowest cost thinking as the desired goal, when in fact operating and other costs might mushroom once a less capable item is put into service.
  • The operations department might assume an item will perform at 100% of its capacity and last forever when in fact almost nothing lasts that long.
  • The maintenance department might plan an optimistic maintenance or repair program to reduce preventive maintenance costs and meet short-term management goals.

Including LCC principles in discussions and planning can push out each party’s cost horizon and encourage a more realistic assessment of potential costs over a longer period of budget years.

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