Facilities Total Cost of Ownership (TCO), while critical to reducing rampant environmental and financial waste, is rarely practiced to mature levels capable of delivering signficant improvement.
Facilities Total Cost of Ownership (TCO) is a holistic, multidisciplinary approach to managing all the “costs” associated with ownership of a facility (or any built structure) over its lifespan, from planning, through procurement, construction, operations and maintenance, and disposal/recycling.
TCO is a nontrivial and non-static process that requires the collaboration of internal and external teams within a robust framework as well as real property owner leadership, capacity, commitment, and accountability.
At the core of TCO is actionable information. This includes an accurate inventory of physical assets and the associated physical and functional condition as well as future prioritized requirements. As the very core, an objective, granular, current, local market cost database of repair, renovation, maintenance, and new construction costs is a requirement to ensure cost visibility and cost management capability.
Alignment between built environment buildings, systems, and components with the organizational mission is clearly needed to manage associate lifecycle aspects and ensure built environment availability from a functional perspective.
Reach out if you would like to learn more about the various aspects of Facilities Total Cost of Ownership (TCO). How to quantify requirements and costs. Identify factors that impact TCO. How to demonstrate cost impacts over time.
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Holistic perspective:It goes beyond just the immediate purchase price and looks at the entire life cycle of a facility, including design, construction, operation, maintenance, and eventual decommissioning.
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Data-driven decision making:Facility managers use data on asset performance, maintenance history, and energy usage to calculate the total cost of ownership and make informed decisions about replacements, upgrades, and maintenance strategies.
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Cost components:Typical costs included in a facility TCO calculation are:
- Initial purchase price of the asset
- Installation costs
- Ongoing maintenance and repair costs
- Energy consumption
- Insurance costs
- Replacement costs at the end of the asset’s life
- Disposal costs
- Initial purchase price of the asset
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Benefits:
- Optimized resource allocation: By understanding the full cost of ownership, facilities managers can allocate budgets more effectively and prioritize investments in areas with the greatest potential for cost savings.
- Improved asset lifespan: Proactive maintenance strategies based on TCO analysis can extend the life of equipment and reduce unexpected breakdowns.
- Reduced operational costs: Identifying areas for energy efficiency or cost-saving maintenance practices can lead to significant long-term cost reductions.
- Optimized resource allocation: By understanding the full cost of ownership, facilities managers can allocate budgets more effectively and prioritize investments in areas with the greatest potential for cost savings.
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Conduct a facility condition assessment:Regularly assess the condition of all building systems and equipment to identify potential issues and prioritize maintenance needs.
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Develop a preventative maintenance plan:Implement a proactive maintenance schedule based on manufacturer recommendations and asset lifecycle.
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Utilize asset management software:Track asset data like purchase date, maintenance history, and performance metrics to analyze TCO.
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Consider energy efficiency upgrades:Evaluate opportunities to reduce energy consumption through building retrofits and equipment upgrades.
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Perform life cycle cost analysis:When making purchasing decisions, compare the initial cost of different options against their projected total cost of ownership over their lifespan.
