Facility And Equipment Cost Management Study

With the remarkable growth of China Economy and the rapid growth of globalization, enterprises face increasing market competition, and cost management become a critical action for most companies. Facility and equipment cost, which occupy a significant part of the total operating costs in technology intensive factories, has attracted sustained attention of management of firms. In order to drive improvement on this point, a new facility and equipment cost management strategy from the perspective of life cycle cost theory, is developed in Company A, and is applied to daily operation with good result.Firstly, this paper describes the definition of full life-cycle cost (LCC) of facility and equipment, status of LCC studies in China and developed countries, and especially the advantage of this theory. Moreover, difficulties in daily practice of LCC are discussed by the end of this part.Secondly, facility and equipment’s cost structure is investigated. Although cost of design and construction just take a small part of LCC, it is identified to be the most important component to LCC, because it has a significant impact to future operation and maintenance expense, a major part of LCC.Thirdly, a new strategy is formed to improve cost management of facility and equipment, based on the study of LCC theory and disadvantage of current assets cost management practice. Detailed strategies, including assets demand analysis, implementation of "maintenance and manufacturing conscious engineering", and execution of energy conservation in new facility and equipment design, are introduced to get improvement in assets cost management. Moreover, LCC was utilized as an important guideline for final decision making.Finally, the practicality and effectiveness of strategy with LCC perspective in assets cost management is verified in compressed air system renovation project. Although this article is based on the study and practice of Company A, the viewpoint and conclusion also can be reference for other similar equipment and technology-intensive enterprise.