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By Andrew Gager
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A manager's job is to make the most appropriate financial decision on the best available technology by determining its payback using a simplified LCCA tool. The box below shows the basic formula for calculating life-cycle costs. Managers can evaluate life-cycle costs in three ways:
Before investing in the latest, greatest technology, managers must clearly understand the ultimate goal in buying it. Do not let a salesperson sell the department a Lexus when all it needs is a Ford. A legitimate alternative might be to outsource the technology. Instead of laying out thousands of dollars for a technology, consider outsourcing or using it on a trial basis before investing.
Too many organizations believe if they invest in new technology, the moon, stars, compressors, chillers, and weeds all will align. In reality, what matters are the systems in place and the strategies to properly support the systems. If managers do not clearly define these strategies, all technology will do is speed up their mistakes.
Andrew Gager, CMRP, CPIM, is director of consulting services with Marshall Institute, an asset management consulting and training company that helps companies improve the maintenance contribution to organizational performance. Gager has more than 25 years of experience, ranging from warehousing operations to plant management.
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New Technologies Require Life-Cycle-Cost Analysis
Three Ways to Evaluate Life-Cycle Costs