Elements Of Mechanical Equipment Life-Cycle Cost Analysis.
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Mechanical equipment typically comprises 25 to 35 percent of total capital investment in a new plant project. This percentage usually increases in upgrade, revamp, or debottleneck project. For lump sum turnkey projects, the contractor’s main focus is in plant capital, installation, and commissioning costs, and the “afterstartup” costs, such as power consumption, maintenance, or-stream time, spare parts consumption, etc., may not always receive equal consideration in equipment selection. Thus the end user may not be getting the best value over the life of the plant. Contractors, working in alliances with end users and mechanical equipment suppliers, can add long-term value by considering these and other evaluation parameters during the procurement process. This paper discusses many of the parameters that comprise a complete mechanical equipment life-cycle cost evaluation, including how to determine to most critical parameters for a given project. A few examples of the total process are presented. Emphasis is placed on the less frequently considered elements, such as performance, reliability, and maintenance cost, as well as some subjective elements such as design flexibility, future growth potential, and factors that affect the cost of doing business. The discussions and examples given in this paper focus on compressors, but the concepts presented can be applied to any capital purchase. Plant owners and contractors will understand that life-cycle cost analysis and lump sum turnkey project costs need to be considered equally in the justification of a capital project. The desired result will be a closer working alliance between the owner, contractor, and capital equipment supplier.
Bryant, Jim E.; Pead, Ernest F.; Polonski, Stan; Sabrsula, Jim; Spiller, Joe V. (2001). Elements Of Mechanical Equipment Life-Cycle Cost Analysis.. Texas A&M University. Turbomachinery Laboratories. Available electronically from