Question

8. What is the value of total cost of ownership systems and when should a buyer use the tool?

Answer 1

TCO means " Total Cost Of Ownership "

* the collective costs incurred on any asset purchased or owned from the date of its ownership until its end of life.

* this concept emphasizes that cost to company does not end with purchase cost alone butt includes many cost like

i. Installation

ii. Fixing cost

iii. Depreciation value

iv. Trial run costs

v. Repair charges etc.

* The complete value of any assert equals to benefit obtained from it - total cost incurred in relation to it.

* the main focus has to be shown on buyer in relation to TCO IS

? Budgeting and planning

* The companies duty does not end on mere purchase of any machinery / equipment. Infact it starts at that very point and required to incur many costs like

Installation charges , trial run costs , electricity bill etc

* Thus specifies plan and budgeting on all these aspects hasto be made in order to verify if its viable or not for a unit to purchase it or not.

? Prioritizing Capital proposal methods :

* The cost assessment is only the prior tool in order to prioritise what to buy and what not to install.

? Lease or buy decisions :

* If it is felt huge expenditure for unit to handle tgen it can opt for Lease instead purchase.

? vendor selection :

Always best to opt those vendors who provide additional benefits four same cost / quotes lesser price.

? Evaluating capital proposals :

Thus on the basis of cost benefit ratio a viability of any project is easily analysed.