Lesson 7 - Maintenance SAQ
This lesson enables you to test yourself on the material covered in the lesson on Maintenance and to determine the level to which you have met the learning outcomes.
Suggested Response - Q7
** Provide the complete equation for the Total Cost of Ownership (TCO) and describe in detail what costs are comprised within each element.
Response:
The Total Cost of Operation (TCO) equation is:
Total Cost of Operation (TCO) =
Initial Cost + Installation + Operation + Maintenance + Disposal
A tabular format is recommended to clearly and briefly describe each of the five TCO elements. An example response is as follows:
|
TCO Element |
Element Details |
|
Initial Cost |
The price paid to purchase the item. It is generally the easiest to quantify and is considered by many to be the only cost when purchasing a new asset. Be sure to include taxes and freight. |
|
Installation |
Costs associated with infrastructure needed to support the asset. It includes rigging, integration into existing systems (such as utility tie-ins and automation systems), commissioning costs, and personnel training (operators and maintenance staff), as well as recommended spare parts. It is important to mention that these are one-time costs. |
Operation |
These are associated with using the asset for production, and account for resources spent on labour, energy to run the equipment, scrap, and waste and emissions disposal, along with any training required due to system changes or upgrades. These are ongoing costs that accrue for the life of the asset while in production. Operational costs along with Maintenance costs typically account for the majority of the Total Cost of Operation. |
|
Maintenance |
Maintenance costs include the labour necessary to keep the asset running, spare parts used, consumables such as oils, belts, fuses, etc., and potential annual events like inspections and manufacturer service. As with Operation costs, costs associated with maintenance accrue for the life of the asset while it is in production. These costs, coupled with the cost of Operation, typically account for the majority of the Total Cost of Operation. |
|
Disposal |
Costs associated with the removal and proper disposal of the asset once it reaches the end of its usable life. In your response, be certain to include costs beyond simple removal and disposal of the asset, and mention costs related to the decommissioning of the asset such as physical separation from the plant (process piping, utilities) and site removal. |