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Generating low total cost of ownership

When Prime Minister David Cameron announced the “biggest modernisation of our railways since the Victorian era” back in July, in the form of the High Level Output Specification (HLOS), it became apparent that a major transformation of the current UK rail infrastructure was about to be seen. However, at a time when companies are still suffering from financial instability, many will be looking to reap the rewards of this activity by decreasing their spending and increasing profit margins.

Whilst this is a fair way of claiming back money lost during the recession, an all too common and frequent way that contractors look to reduce their costs on a project is by cutting the price of their plant and equipment.

Unfortunately, this often means sacrificing the quality and reliability of that equipment, which can have an adverse effect on the long term efficiency, and therefore overall cost, of a project.

Generators as an example

One area in which this is known to happen is in the selection and purchase of generators. These are essential pieces of plant for the majority of rail projects, but there is a risk that contractors will look to purchase cheaper products to reduce their budgets.

Rather than looking solely at purchase price, it is far better to take in to account total cost of ownership (TCO) as a benchmark when specifying new equipment. If one considers that the standard cost of a generator is generally less than 20% of its lifetime cost, it is easy to see how, in the long term, TCO is a more efficient way of saving money than cutting back on initial expenditure.

A number of elements factor in to TCO, including purchase price, performance, reliability and resale price. Making smarter purchasing decisions will reduce the total cost of ownership and ensure maximum profitability for long term projects.

One of the first things to be considered is reliability. It stands to reason that the more reliable a machine is, the less project downtime will be experienced due to breakdowns and other problems. Because many onsite generators work in a wide variety of locations, purchasers should look for a strong base frame, a reliable brand of engine and additional extras such as heavy- duty air filtration.

Specifying additional features, such as the cation electro-painting of canopies, to protect the machine from the weather and possible site handling damage will also help to provide durability and longevity of the equipment.

Maintenance and repair

As an extension of this, one should always try to ensure that repair costs can be kept to a minimum by purchasing a high quality machine with technical functions that monitor for potential issues – after all, it is better to catch a problem early than risk complete shutdown. For instance, some generators carry easily readable control panels with a digital display of warning lights that can alert operators to an issue before it becomes critical.

Additionally, generators can be equipped with self-protection devices to reduce the risk of breakdowns and lower TCO. Functions such as auto engine shutdown in the event of low oil pressure, high water temperature, insufficient charge or overspeed of engine also prevent more damage being done to a machine in the case of a malfunction.

Maintenance costs are the third consideration to be taken in to account when looking at TCO. All machines will need maintenance from time to time, but reducing the amount of time and effort required for maintenance will reduce costs considerably, and there are a number of generator features that can assist with this. Large side doors and panels are essential for easier servicing – the quicker it is to service, the cheaper the work is and the less time the machine spends out of commission and not earning money.

Another thing to consider is minimising transport costs. Generators are big, bulky pieces of plant, and it can be time consuming and expensive to transport them from one site to another – anything that makes this easier will reduce TCO. When choosing a new generator, look for fork pockets and central lifting points as key features that will make moving heavy generators much easier, and therefore cheaper.

Resale price

One of the final factors to realise is that buying strong, popular brand names will increase resale value if, or when, it is time to sell a generator. Arc- Gen Hilta often buys back its own machines when projects are finished so they can be refurbished and sold to other customers The company is confident that its brand of generators can stand the test of time. Whilst a cheaper brand will cost less initially, the return on investment will inevitably be lower when reselling than that of a high profile, reliable piece of kit that commands a higher second-hand price.

When purchasing a generator, or indeed any other piece of plant, for a rail project, the concept of total cost of ownership is often overlooked. However, by taking these factors in to consideration, a company can look to invest for the future with its plant and machinery, making smarter purchasing decisions and making their equipment work harder for them. And, with the beginning of David Cameron and Nick Clegg’s £9 billion package of investment in the rail industry, this will be essential to ensure constant operation and progression in the face of financial constraints.


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