Calculating Cost of Ownership
In your company, what criterion drives your purchasing decisions? Does first cost win or do you evaluate the life cycle cost? Does the purchasing manager win with the low priced bid or does the diligent engineer who has thoroughly calculated all costs and scenarios win? The answer – it likely depends and each scenario is different. At Colfax, we focus our discussion on total cost of ownership as our products have value beyond the purchase price and are designed to last for years once properly installed.
As stated in the Hydraulic Institute/EuroPump guidebook, the lifecycle cost of pump can be calculated by:
LCC = Cic + Cin + Ce + Co + Cm + Cs + Cenv + Cd
Where
- Cic is the initial cost or purchase price
- Cin is the installation and commissioning costs
- Ce is the energy costs
- Co is the operating costs
- Cm is the maintenance costs
- Cs is the downtime costs
- Cenv is the environmental costs (leakage losses and permit violations)
- Cd is the decommissioning costs
One area where a firm can lower its first cost of positive displacement pumps is to properly size the pump to the requirements of the systems. Frequently, we see companies oversize their pumps in an effort to plan for future expansion. Our recommendation is to be realistic in your expectations as you will likely waste a lot of energy, time and money compensating for that pump. Pump energy consumption and maintenance issues are 52% of the total cost of ownership.[1]
If you have already installed your system, watch the bypass valve and see if it is continually lifting to return fuel back to the system. This can be an indication that your pump is oversized for the system requirements. If you do a better job of matching the flow requirements of the system with the delivered flow of the pump, you will lower the brake horsepower required to operate the pump and your energy costs.
If you’d like additional information on this topic, the Hydraulic Institute Division, Pump System Matters, offers a class on Pumping System Optimization: Opportunities to Improve Life Cycle Performance. You may also want to experiment with the free downloadable modeling tool offered by Pump Systems Matter.
Our application engineers are ready to help you answer your application and total cost of ownership questions. We look forward to hearing from you.
[1] Hydraulics Institute www.pumps.org
