When choosing home or business HVAC equipment, the initial primary cost consists of the initial equipment and installation expense. This is a traditional method for determining what is often referred to as the first cost. However, heating and cooling equipment is not a static commodity. Bricks and mortar, a foundation, a roof are all static items that will require little, if any, additional costs or maintenance. With an HVAC investment, life cycle costs such as future fuel, maintenance, operating and replacement costs are expenses to be considered as well--in other words you have to keep investing in utilities, maintenance and repairs.
A life cycle cost provides a more accurate projection of what an HVAC system really ends up costing the owner. It is a complete estimate of the expense of owning and operating equipment over the lifespan of its existence. Relying solely on initial costs can be misleading because they are only a part of the equation. Often we find the initial costs are only 25-33% of the ultimate life cycle costs for an HVAC system. There are three essential ways to approach a life cycle cost estimate.
THREE WAYS TO APPROACH A LIFE CYCLE COST ESTIMATE
- Buy higher-cost, but more reliable equipment initially. The higher early costs can be offset by lower maintenance expense over the life of the system. Operational costs can also be deducted over the life of the system if it is a higher-efficiency model.
- Buy less expensive equipment. If the system operates adequately but not optimally, having higher maintenance and operational costs can be more easily spread out over the life of the equipment.
- Buy high-cost equipment that adds value to the building or business. This purchase may also have higher operational costs but adds value to the structure or increases the profitability of the business. This becomes more of an investment than an expense.
Looking at a life cycle cost in one of these three ways can give the owner more options in approaching an HVAC equipment purchase. Life cycle cost estimates should always include the estimated time the equipment will last or your time frame owning or living in the building.
If you would like more information on estimating the life cycle cost of equipment for a new construction, an upgrade or a residential life cycle cost, contact P. K. Wadsworth Heating and Cooling. We have services for commercial, industrial and residential applications.
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