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If we conduct a similar analysis for the Pump #2, we get an NPV of -$861,627. Comparing results we can clearly see that Pump #2 costs about $115,493 less to own than Pump #1. This is in spite of the fact that Pump #1's purchase price is less that Pump #2, as seen in Table #3.
 Breakdown of Pump #2 Life Cycle Costs
Breaking Down the Costs
Let's look at the life cycle costs of Pump #2 in more detail. By rerunning the Barringer analysis to find the NPV numbers for pump costs, pump installation costs, energy costs, and repair costs separately, we can determine, on a percentage basis, the relative value of each component. A summary of Pump #2 can be found in the figure below.
You can easily see, the most prominent (82.4%) cost of ownership is energy cost, with the cost of installation coming in a distant second at 12.3%. You may be surprised to see the cost of pumps represents only 4.1% of the total NPV and pump repair costs only 1.3% of the NPV.
Closing Comments
The above results should come as no surprise. It has long been known that energy costs dominate these types of calculations and that purchase price of the pumps is usually a small part of your overall cost of ownership. These important conclusions bear repeating for the benefit of those new to the industry or focused solely on the technical aspect of pump selections. Additionally, pump users should always be willing to pay a small premium for higher efficiency pumps and motors to reduce the largest cost over the pumps life. We hope readers will use the "Life Cycle Cost Analysis" expert calculator along with Barringer's LCC worksheet to evaluate pumps you are considering for future installations. These tools are your best means of convincing your managers which pumps should be selected based on economic merit.
Remember the old slogan: "You can pay me now or you can pay me later."
Robert Perez is the website editor for PumpCalcs.com. He has over 25 years of rotating equipment experience in the petrochemical industry and holds a BSME from Texas A&M University in College Station, a MSME degree from the University of Texas at Austin, and a Texas PE license. Mr. Perez is also an adjunct professor at Texas A&M University-Corpus Christi, where he teaches the Engineering Technology Rotating Equipment course.
Bill Stark is the Assistant Website Editor PumpCalcs.com. He has over 15 years of experience in electrical engineering and management in Petro-Chemical plant design and construction including grass roots plants, retro-fits, and expansion of existing facilities. He has provided electrical designs for systems from basic relay logic control to advanced process control and SIL 3 emergency shutdown systems. Additionally, he has designed low and medium voltage motor control centers, substations, and power distribution systems.
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