3 Reasons Why Equipment Life Cycle Costs Matter

Design engineers work hard to design comfort systems that serve the goals of the building and, ultimately, achieve that ever-elusive dream of perfect comfort for building occupants. But after all the meetings are over and the bids are submitted, design is sometimes sacrificed for initial equipment costs. Or, a design is scrapped altogether because the building owner is frightened of initial costs. However, according to a recent article written by AEGIS, the lifetime cost breakdown of ownership of something as simple as an electric motor is boiled down to this:

• Purchase cost: 1%
• Downtime: 5%
• Re-build costs: 4%
• Electricity: 90%

In their example, the total cost of ownership of a 200HP motor operated with no VFD, with a VFD, and then with a VFD that has a shaft grounding ring installed can vary from over $950k to $675,500.  That's an enormous cost savings realized with just a few simple additions to the overall equipment design.  Add a VFD?  Save almost $20,000 over the motor life.  Add a shaft grounding ring in addition to the VFD?  Well, that's a savings of $275,000 in the example.  Who couldn't use an extra $275k? 

But there are more reasons to dive deep into life cycle costs when designing, selecting or deciding to repair an aging HVAC system.

1. Review the cost of unexpected down time.  These costs can often have an enormous impact on equipment decisions.  While mechanical failures are just a part of life, it's important to review the why of a mechanical failure.  Is it a manufacturing problem, an installation problem or a system problem?  If so, you have to decide how your unexpected down time is affecting your life cycle costs.  Sometimes, replacing a piece of equipment with a higher initial cost will result in tremendous savings down the line over the life of the equipment.
   
   
2. Don't discount energy consumption.  In the example I gave from the AEGIS article, energy consumption was 90% of the overall lifetime cost of the equipment.  If you can do something as simple as adding a shaft grounding ring to reduce energy consumption, do it without hesitation.  Because we see so many examples of incorrect equipment installations in the field, we know that there are many things that can be done in the design process and in the installation process to improve energy consumption and decrease the overall costs of equipment ownership.
   
   
3. Remember the old adage:  Pay now or pay later!  This is a critical consideration in selecting a new HVAC system or deciding to repair an HVAC system.  Take some time to review not only equipment first costs but also proper installation costs, maintenance costs, energy efficiency and, as stated above, potential down time costs.  

These are all practical considerations when it comes to equipment selection.  If you need assistance with equipment selection, you should contact your local manufacturers rep who may be able to help you ascertain which product is right for your project.