Total Cost of Ownership (TCO) is a concept by which all costs associated with a capital purchase over a given time period are accounted for in the value assessment. It can also be thought of as the cost of owning and operating an existing asset at a given point in time. Both are useful in optimizing asset ownership.

After the decision is made to acquire a new asset, the TCO analysis kicks in as a way of arriving at the lowest total cost, or said another way, the best value between several alternatives. The main cost elements of TCO are first cost, installation cost, financing cost, commissioning cost, energy costs, repair costs and maintenance costs. Other costs that have a bearing on overall value are productivity costs, risk cost and disposal costs. There are tools available for engineers to use to calculate TCO. Trane's System Analyzer™ is one such tool.

Determining cost of ownership of an existing asset begins with an audit of the system or facility in question. This is the first step in deciding 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.

In going through a cost of ownership analysis, it is vitally important to understand the business owner's financial goals to arrive at an effective solution. Once opportunities for improvements are identified, the TCO process is then used to identify the alternative with the lowest total cost, or best value, based on the owner's needs. Hunton Trane Services has the knowledge and tools to do TCO analyses and to provide lowest total cost solutions.