02192018Mon
Last updateFri, 16 Feb 2018 8pm

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Putting Servo Valves Back to Work

Putting Servo Valves Back to Work

Industries as varied as paper production...

Corrosion and Fouling: Is There a Solution?

Corrosion and Fouling: Is There a Solution?

According to a 1998 study released by the ...

Valves with All the Trimmings

Valves with All the Trimmings

The term valve trim has been around for ...

VMA Chair Mark Nahorski: Industry Has Many Pathways to Success

VMA Chair Mark Nahorski: Industry Has Many Pathways to Success

Part of the discussion today about what ...

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Industry Headlines

ValvTechnologies ITC 2018 Recap

Friday, 16 February 2018  |  Chris Guy

The biennial ValvTechnologies’ International Technical Conference and Users Group (ITC) was held on February 8-9 in Houston. Seeking to educate,...

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Putting Servo Valves Back to Work

Putting Servo Valves Back to Work

Monday, 12 February 2018  |  Christopher Valiquette

Industries as varied as paper production, steelmaking and power generation rely on servo valves for precise motion control. A servo valve can last wel...

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Industry Headlines

ValvTechnologies ITC 2018 Recap

2 DAYS AGO

The biennial ValvTechnologies’ International Technical Conference and Users Group (ITC) was held on February 8-9 in Houston. Seeking to educate, inspire and engage attendees over a two-day period, the event brought together hundreds of attendees from across the globe to share valuable insight ...

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Matthew Davis Named Field Service Manager at Weir

3 DAYS AGO

Weir Valves & Controls USA (WVC USA) has appointed Matthew Davis to the position of field service manager. In his new role, Davis will be responsible for managing the WVC USA Field Service crew and organizing WVC Service jobs for power plants worldwide.

Davis joins WVC USA with over 20 years of ex...

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TransCanada Turns Attention to Natural Gas System

3 DAYS AGO

TransCanada Corp. will move forward with a $1.9 billion expansion of its NGTL System to connect incremental supply and expand basin export capacity by one billion cubic feet of natural gas per day at the interconnection with its Canadian Mainline. NGTL expects to begin construction in 2019.

The increme...

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U.S. Oil Output Surge Reminiscent of Run-Up to 2014 Dive

4 DAYS AGO

According to the International Energy Agency (IEA), fast rising production in non-OPEC countries, led by the U.S., is likely to grow by more than demand in 2018. For now, the upward momentum that drove the price of Brent crude oil to $70/bbl has stalled; partly due to investors taking profits, but a...

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U.S. Industrial Production Fell 0.1% in January

2 DAYS AGO

Industrial production edged down 0.1% in January following four consecutive monthly increases. At 107.2% of its 2012 average, total industrial production was 3.7% higher in January than it was a year earlier.

Manufacturing output was unchanged in January for a second consecutive month; the index has i...

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U.S Business Inventories Rose 0.4% in December

3 DAYS AGO

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,902.2 billion, up 0.4% from November 2017 and were up 3.2% from December 2016.

A poll of economists “had forecast inventories, a key component of...

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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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