May 30, 2020, 1:06 pm

Equipment Selection and Life Cycle Costing Analysis

Purchasing equipment that has the lowest initial capital cost is often suboptimal.

In heavy industry, the ongoing costs of operating and maintaining equipment generally far outweigh the initial capital cost. Yet the decisions that are made during the design, specification and selection phase of new equipment commits the organisation to spending at least 90% of the total cash flow throughout the life of the equipment. Clearly, making the correct decisions in this phase of any new plant is critical to ongoing commercial success.

The selection of equipment and particularly heavy mobile equipment in the mining industry cannot be performed effectively without active cooperation and coordination between Engineering, Procurement, Operations and Maintenance.

Our approach recognises this, and we regularly achieve better business outcomes by bridging organisational boundaries, and guiding cross-functional teams towards better decisions.

Using Life Cycle Costing tools and Discounted Cash Flow techniques, we can evaluate the trade-offs between Operational Efficiency, Equipment Reliability and Uptime, Maintenance Costs, and Initial Capital Cost, and quantify the impact of alternative design/configuration/equipment selection options.

Frequently, this leads to decisions to spend a greater amount of capital initially in order to minimise the total cost of ownership throughout the life of the asset.

Contact us now to speak to an expert consultant.

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