COMPREHENSIVE ASSET MANAGEMENT PLAN TASK SHEET LIFE CYCLE COSTING

APPLICATION AND PURPOSE

Reference

Life cycle costing presents the total cost of an item throughout its life, including the costs of planning, design, acquisition, operations, maintenance and disposal, less any residual value, or the total cost of providing, owning, and maintaining a building or component over a predetermined evaluation period. Life cycle costing will provide valuable input to design projects for new assets to ensure best Total Cost of Ownership for IWK and should be used allow for economic evaluation of equipment use in operations as well as for preferred vendor selection. IWK CURRENT PRACTICE

3.12

Reference

IWK do not have a formal Life Cycle Costing process established or in use. IWK RECOMMENDED PRACTICE

4.10

Reference

Since a large proportion of assets are inherited, IWK is to a large extent only managing the latter part of life for these assets. It will be of outmost importance to have a holistic view and recognise the need for optimising the whole life of all their assets. As such, IWK will need to demonstrate to the regulators that in order to achieve an optimal LCC, a minimum quality requirement for new assets is necessary for not overspending on costs for operation, maintenance, decommissioning, environmental consequences etc. at the expense of a cheap capital investment. The long term goal will have to be having LCC-certified quality standards across all assets. IWK needs to formally develop an approach to Life Cycle Costing. This may involve obtaining commercially available software and associated trainings; however, this is not necessarily a requirement. Following decision on the approach, IWK must formally document their selected LCC procedures, methodology and formats for wider dissemination (as required) within the organization. DATA REQUIREMENTS
Item Description Required Quality Level

5.10

Currently Recorded by IWK? Y/N Quality

Initial Costs Installation and Commissioning Energy Costs Operational Costs

Revision G

Purchase prices Start-up Costs

Accurate Margins Accurate Margins

Y EST

OK EST

Unit Rates Labour

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Accurate Margins Known costs

N Y
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N/A OK

DATA REQUIREMENTS
Item Description Required Quality Level Currently Recorded by IWK? Y/N Quality

Maintenance and Repair Costs Downtime Costs Environmental Costs Decommissioning Costs

Labour / Parts

Known costs

OK

Lost Production Contamination / Clean-up

Indirect costs Fines / Levees

EST EST

EST EST

Disposal / Remediation

Known costs

OK

RELATED SECTIONS IN CAMP

Reference

Data Needs ITC REQUIREMENTS IFS data for associated costs, reliable data, easily recovered and researched. CURRENT ITC CAPABILITIES Labour and parts cost are available Energy costs not recorded at this time. Capital expenditure can be estimated as can Environmental and Decommissioning costs. IWK ACTION PLAN
Timeframe

3.14

Reference

IWK to develop formal procedures, documents and "formats" for conducting LCC analysis. An internal champion is required to implement LCC in the organization to establish the philosophy. IWK to review available market options and select a methodology / software tool for LCC. IWK TRAINING REQUIREMENTS IWK CAMP Manual Overview Training INITIAL CHAMPION ACTIVITIES

Short-term

5.10

Short-term

5.10

Reference

Develop IWK LCC Document. WorleyParsons suggests that IWK utilise the attached highlevel "Process Coordination Map" (PCM) as a starting point for their ownership of LCC and develop their process and procedures to further detail this flow. IWK to review available market options and select a methodology / software tool for LCC.

5.10

Revision G

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ADDITIONAL/SUPPORT NOTES Please note, it is crucial that IWK engages with the respective regulators that to achieve an optimal LCC, a minimum quality requirement for new assets is necessary for not overspending on costs for operation, maintenance, decommissioning, environmental consequences etc. at the expense of less expensive initial capital investment. The long term goal will have to be having LCC-certified quality standards across all assets.

Revision G

Page 3 of 3

28/06/2011