I recently came across a post from a US Service provider that was really useful and very pertinent, especially when Facilities Managers have the fairly common situation of whether to replace or repair the chiller?

Facilities managers have to make decisions around whether to repair or replace a facility asset (Chiller, Boiler, AHU, etc.). Some of these decisions you might be authorised to make alone, but others had to go up the food chain for higher-level sign-off.

This information from Sapient Services tells the story and includes a really useful spreadsheet to help you understand the alternatives and allows you to input your own information.

Buy-Replace Analysis - v2
Calculations and constants sheet
Rate of Inflation2.50%
Number of years:17.15
Number of months in operation206
Early asset retirement penalty$ –
Number of months to use in equations206
Initial Cost to today’s value:$458,125.15
Current Monthly cost (straight-line depreciation) $2,226.69
New Asset Monthly Cost (SLD) $2,361.11
Adjustment for efficiency delta (if any) $(385.00)
Adjusted New Asset Monthly Cost (SLD) $1,976.11
Current Asset Lifetime Monthly Cost $2,470.82
Projected Asset Lifetime Monthly Cost w/repairs $2,739.70
New Asset Est. Lifetime Monthly Cost $2,225.83
New Asset Est. Lifetime Monthly Cost w/early penalty $2,225.83

Again, this is just one tool in the decision process, but hopefully it will help you quantify the buy/replace decisions you need to make in your own facility. Please leave a comment if you have any questions or thoughts about the process.

Related Post