Life Cycle Cost Analysis
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Transcript Life Cycle Cost Analysis
Life-Cycle Cost Analysis
Lecture No.22
Chapter 6
Contemporary Engineering Economics
Copyright © 2006
Contemporary Engineering Economics, 4th
edition, © 2007
Why Life-Cycle Cost (LCC) Analysis?
To select from among design
alternatives that fulfill the same
performance requirements, but differ
with respect to initial costs and
operating costs
To predict the most cost-effective
solution
Contemporary Engineering Economics, 4th
edition, © 2007
Stages of Life-Cycle Cost
Contemporary Engineering Economics, 4th
edition, © 2007
Sketch of a Pumping System in Which the
Control Valve Fails
Contemporary Engineering Economics, 4th
edition, © 2007
Engineering Solution Alternatives
Option A: A new control valve can be installed to
accommodate the high pressure differential.
Option B: The pump impeller can be trimmed so
that the pump does not develop as much head,
resulting in a lower pressure drop across the current
valve.
Option C: A variable frequency drive (VFD) can be
installed, and the flow control valve removed. The
VFD can vary the pump speed and thus achieve the
desired process flow.
Option D: The system can be left as it is, with a
yearly repair of the flow control valve to be expected.
Contemporary Engineering Economics, 4th
edition, © 2007
Life-Cycle Cost Elements
Contemporary Engineering Economics, 4th
edition, © 2007
Cost Comparison for Options A Through D
Contemporary Engineering Economics, 4th
edition, © 2007
Sample LCC Calculation for Option A
Contemporary Engineering Economics, 4th
edition, © 2007
Comparison of LCC for Option A - D
Contemporary Engineering Economics, 4th
edition, © 2007
Life-Cycle Cost Analysis – Standard Motor versus
Premium Efficiency Motor
Standard
Motor
Size
25 HP
Cost
$13,000
Life
20 Years
Salvage
$0
Efficiency
89.5%
Energy Cost
$0.07/kWh
Operating Hours 3,120 hrs/yr.
Premium
Efficient Motor
25 HP
$15,600
20 Years
$0
93%
$0.07/kWh
3,120 hrs/yr.
(a) At i= 13%, determine the operating cost per kWh for each motor.
(b) At what operating hours are they equivalent?
Contemporary Engineering Economics, 4th
edition, © 2007
Solution:
(a):
Operating cost per kWh per unit
Input power =
output power
% efficiency
Determine total input power
Conventional motor:
input power = 18.650 kW/ 0.895 = 20.838kW
PE motor:
input power = 18.650 kW/ 0.93 = 20.054kW
Contemporary Engineering Economics, 4th
edition, © 2007
Determine total kWh per year with 3120 hours of
operation
Conventional motor:
3120 hrs/yr (20.838 kW) = 65,018 kWh/yr
PE motor:
3120 hrs/yr (20.054 kW) = 62,568 kWh/yr
Determine annual energy costs at $0.07/kwh:
Conventional motor:
$0.07/kwh 65,018 kwh/yr = $4,551/yr
PE motor:
$0.07/kwh 62,568 kwh/yr = $4,380/yr
Contemporary Engineering Economics, 4th
edition, © 2007
Capital cost:
Conventional motor:
$13,000(A/P, 13%, 12) = $1,851
PE motor:
$15,600(A/P, 13%, 12) = $2,221
Total annual equivalent cost:
Conventional motor:
AE(13%) = $4,551 + $1,851 = $6,402
Cost per kwh = $6,402/58,188 kwh = $0.11/kwh
PE motor:
AE(13%) = $4,380 + $2,221 = $6,601
Cost per kwh = $6,601/58,188 kwh
= $0.1134/kwh
Contemporary Engineering Economics, 4th
edition, © 2007
B
C
D
E
F
G
H
Example 6.6 How Premium Efficiency Motors Can Cut Your Electric Costs
Conventional
Premium
Motor
Efficiency Motor
Output power (hp)
Operating hours per year
Efficiency (%)
25
6,742
89.5
Initial cost ($)
Salvage value ($)
Service life (year)
Utility rate ($/kWh)
interest rate (%)
$
Capital cost ($/year)
Energy cost ($/year)
Total Equ. annual cost
Cost per kWh
$
$
$
$
25
6,742
93
13,000 $
0
20
0.07
13
1,850.60
9,834.28
11,684.88
0.09
Operating
Hours
$
$
$
$
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
6500
7000
7500
8000
8500
8750
15,600
0
20
0.07
13
2,220.72
9,464.17
11,684.89
0.09
16000
14000
12000
10000
Conventional Motor
8000
PE Motor
6000
4000
2000
85
00
75
00
65
00
55
00
45
00
35
00
25
00
15
00
0
50
0
(b) break-even
Operating
Hours = 6,742
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Contemporary Engineering Economics, 4th
edition, © 2007
Conventional
Motor
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,851
2,580
3,309
4,039
4,768
5,497
6,227
6,956
7,685
8,415
9,144
9,873
10,603
11,332
12,061
12,791
13,520
14,249
14,614
PE
Motor
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,221
2,923
3,624
4,326
5,028
5,730
6,432
7,134
7,836
8,538
9,240
9,941
10,643
11,345
12,047
12,749
13,451
14,153
14,504