Using life cycle costing (LCC) techniques for the acquisition of refinery equipment

Traditionally when purchasing new products, the number one priority is to choose the conforming product with the lowest purchase cost. Companies procuring new equipment know that other expenses, such as those related to maintenance, are going to add significantly to the cost in the long run, but they are often unable to quantify these costs. For this reason they are limited to making the decisions solely on the initial purchase costs. Life Cycle Costing enables the purchaser to assess the products using the costs occurred over the entire life of the product. This paper discusses the benefits associated with the use of Life Cycle Costing (LCC) principles in the procurement of equipment. A LCC method for the acquisition of equipment is introduced. Included in this method is a freestanding computer program which calculates and produces results which aid in the analysis process.