Life cycle planning is an assessment tool which can be used to evaluate and compare the economic benefits of alternative design solutions to find the best option for the project.
It involves the prediction of the future performance of an asset, or a group of assets, based on investment scenarios and maintenance strategies.
This requires consideration of an engineering system or asset from the first installation through to the final demolition and disposal. This also includes the maintenance activities throughout the life of the installation.
Crofton are often asked to consider this when undertaking appraisals of existing installations on operational sites, where we report on upcoming plant replacement requirements, repairs, and improvements.
The evaluation of the lifecycle cost takes into account the initial capital cost of purchase and installation, operational costs for fuel and maintenance, and the final disposal costs. It will be no surprise that the most economic option in terms of capital cost can easily be a more expensive option after a number of years considering high running costs.
Often a simple value comparison of the options is made utilising today’s market prices for equipment and parts throughout its life.
However, Crofton are sometimes requested to derive a net present value combining present-day capital expenditures together with discounted future costs. (On the basis that £100 today will be worth more in the future if invested, and hence subject to the investment rate a lower amount of money can be allocated today to meet future cost.)