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Why Dynamic Life Cycle Costing is Important for Your Mining Operation

AMT differs from most asset managements systems. One of the key differences is that AMT is based upon a Life Cycle Costing (LCC) methodology. Life cycle costing predicts the total costs, resources, utilisation and productivity for an asset over its entire life cycle. It is an excellent tool for assessing alternatives which has made it very common in the procurement of large assets.

LCC provides a rational framework to model equipment operation, taking account of all pertinent cash
flows for the life of the machine. It allows management to take a holistic view of physical assets, considering

the full impact of the operating environment. The LCC model can also be easily extended to evaluate not only the cost of operating equipment, but also the number and type of parts required as well as the hours of labour and expected equipment performance.
However, a common drawback of most life cycle models is that they are static. This means that the inputs are correct at the start of the equipment’s life, but deviate from this ideal model as the equipment begins to operate. The timing and cost of actual maintenance activities will always deviate from the model and so it quickly becomes out of date.

AMT addresses this by maintaining a dynamic life cycle cost model for each item of equipment. It unlocks the benefits of having this information live and available using inputs from your existing ERP. It puts a structure around work order costs and allows you to drill down and understand the major cost drivers and their impact on the life cycle cost. Most importantly it allows you to be proactive about asset management, control maintenance costs, reduce unplanned down time and understand the drivers of equipment performance.

The continuously updated life cycle cost models for all major equipment in your fleet allows you to understand the future position or Projected Cost Variance (PCV) between your budget and expected performance at some point in the future.
 

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