Total Cost of Ownership

When making a capital expenditure for an HVAC system it’s important consider more than just the cost of purchase. Without factoring in such issues as installation costs, operating costs, service requirements and the expense of borrowing money, it’s impossible to make a correct determination of the best system to choose and the best way to buy it. Not to mention the importance of understanding a business owner's financial goals in choosing to buy equipment.

Trane’s Total Cost of Ownership (TCO) analysis takes into account all of the costs associated with a capital purchase over a given time period. This information is used to assess all possibilities and identify the alternative with the lowest total cost, or best value, based on the owner's needs.

The main cost elements considered in a Total Cost of Ownership analysis are:

  • first cost,
  • installation cost,
  • financing cost,
  • commissioning cost,
  • energy costs,
  • repair costs
  • maintenance costs.

Other costs that have a bearing on overall value are productivity costs, risk cost and disposal costs.

The TCO analysis of an existing asset begins with an audit of the system or facility in question to decide whether and where opportunities exist for reducing owning costs. The audit identifies areas of potential savings by comparing actual costs against accepted benchmarks.

Though not a substitute for a comprehensive audit, a useful starting point is the EPA's Energy Star® Building benchmarking tool. This online tool allows building owners to rate their buildings on a scale of from 0 to 100. Ratings of 75 or greater are considered good, while those below 75 indicate an opportunity. While energy plays a big part in the score, indoor comfort is also taken into account, so that comfort is not sacrificed for operating cost.

Trane’s System Analyzer™ is another tool for engineers to use to calculate TCO.

Trane district offices have the knowledge and tools to do TCO analyses and to provide lowest total cost solutions.

Contact us to learn more about Total Cost of Ownership Assessments.