Equipment Bids: Compare the Cost of Keeping Them Working

ISO 15686-5 covers life-cycle costing for buildings and their components over an agreed analysis period. Its scope explicitly distinguishes a partial-life study from one covering the entire asset life. [1]

OlbrichCo recommends using that discipline for one consequential equipment purchase, such as a cooling plant or pump package. First define the service: required capacity across the operating range, hours of use, environmental conditions, reliability, controls and maintainability. Have the engineer identify mandatory technical requirements before the commercial team ranks acceptable offers.

Reject a comparison between an installed, commissioned system and an equipment-only quotation. Give every bidder the same boundary, programme, responsibilities and evidence request. A lower cost cannot compensate for an unresolved safety or performance requirement. Keep technical eligibility, affordability and life-cycle cost as separate decisions, each with a named approver.

Choose one common study period and base date with the owner and operator. Explain why that period fits the ownership decision. Where alternatives have different expected lives, require consistent treatment of replacement and remaining value. Do not shorten the analysis to hide a replacement, or assume the owner will recover an unsupported resale value.

The European Commission’s life-cycle costing guidance includes acquisition-related costs, resource use, maintenance and end-of-life costs or residual value. Its procurement framework also makes the method and requested bidder data explicit before evaluation. [2]

Our proposed bid schedule has separate lines for purchase, delivery, installation interfaces, electrical and control changes, commissioning, training, consumables, planned service, major replacement, removal and disposal. Record the quantity, unit, timing, evidence reference and responsible payer for each line. Mark exclusions and unknowns explicitly; a blank cell is not a zero-cost commitment.

For procurement in Iran, ask suppliers to state the quotation currency and unit, validity date, payment milestones, delivery basis and exact package scope. Preserve the original offer beside the comparison. Have the commercial reviewer confirm conversion assumptions and the treatment of taxes and charges using applicable documents; this note supplies no Iranian price, exchange-rate or tax assumption.

Request current written terms for spares, specialist attendance, software access and service tools. Ask the operator to review maintenance tasks and the access needed to replace major components. Include costs borne outside the equipment contract where they differ between alternatives. Record any assumption that depends on a supplier promise which is not yet an enforceable commitment.

NIST’s 2025 Handbook 135 pairs constant-price cash flows with a real discount rate, and current-price cash flows with a nominal rate. Mixing the two bases invalidates the comparison. [3]

For the project worksheet, state the currency, base date, study period, price basis and approved discount convention on the first sheet. Obtain finance review before calculating present values. Keep cash-flow timing visible, including deposits, commissioning expenditure and later replacements. Use the same convention for every option; do not hide a favourable rate inside one supplier’s calculation.

If using constant prices, identify any assumed change in a particular cost relative to general inflation. If using current prices, show how escalation and currency assumptions enter each affected cost. Ask the reviewer to check that the same change is not counted twice. Preserve the original-currency evidence so another reviewer can reproduce the conversion.

Show both the evaluated life-cycle total and the expected annual funding requirement. A preferred long-term option still needs an affordable purchase and maintenance plan. Keep financing, tax and residual-value treatment explicit and consistent with the agreed decision boundary. Do not add financing charges mechanically to a calculation whose discount convention already accounts for them; have finance resolve the treatment.

DOE’s current life-cycle-cost tools page links the 2025 handbook and explains that its annual factors use FEMP discounting and energy projections for US regions, customer classes and fuels. Those defaults have a defined US context. [4]

OlbrichCo’s recommendation is to build an owner-controlled comparison from the project’s actual evidence, not to copy foreign factors into an Iranian tender. Obtain the applicable supply terms, recent site bills where available, operating schedule and engineering demand estimate. Label every entry as a quotation, measured record, design estimate or scenario assumption, with its date and owner.

Require consumption estimates at the intended duty and control sequence, with their calculation boundary and limitations. Ask what changes under the site’s actual ambient conditions, dust exposure, water quality or reduced occupancy where relevant. Do not treat a catalogue rating as an annual consumption prediction. Keep unverified assumptions visible until the responsible engineer accepts their use.

Test whether the maintenance plan is executable: who can attend, which parts are stocked, what the replenishment lead time is, and how the system operates while awaiting repair. Where connectivity is uncertain, retain a usable offline worksheet, quotations and operating instructions. Confirm software and support availability directly for the project rather than assuming that a public tool is accessible or suitable everywhere.

NIST describes sensitivity analysis as a way to test consequential input changes, not to establish their probabilities. [3]

Start with the uncertain inputs that distinguish the offers: operating hours, energy use, service cost, replacement timing and spare-part lead time. Vary one at a time within documented, credible bounds, then examine coherent combined scenarios. Keep the technical service requirement unchanged. Report which option is preferred in each case and where the ranking reverses.

As a qualitative example, compare a lower-priced unit with costly specialist servicing against a higher-priced unit supported by the site team. Ask whether the preference survives lower utilisation, an earlier component replacement or a service delay. This is an illustrative decision exercise, not a project result. Do not assign invented probabilities or a monetary downtime loss merely to make one bid win.

If a weakly supported assumption controls the decision, seek better evidence, a clearer service commitment or an alternative design before award. Where a reliable downtime cost cannot be established, report the exposure separately and apply the owner’s service-continuity requirement. Avoid double counting lost service in both a contingency allowance and a separate loss estimate. Record who accepts the remaining uncertainty.

The UK Construction Playbook advocates whole-life cost rather than lowest purchase price and scales cost-model detail to procurement complexity. This is a useful planning principle, not an Iranian procurement rule. [5]

Before evaluating offers, agree the calculation method, evidence requirements, technical gates and treatment of missing data in the tender documents. Retain an award record showing the eligible options, reconciled scope, assumptions, sensitivity results, unresolved risks and approval. Require independent checking of formulas and a sample of source entries. Keep the workbook version and a readable export with the owner.

Translate decision-critical claims into reviewed contract deliverables: specified performance evidence, commissioning tests, training, service scope, spare-part commitments and usable handover records. Have the commercial and technical teams agree remedies and responsibility. A favourable spreadsheet is not a performance guarantee; a later substitution must reopen both the technical review and affected cost assumptions.

After handover, compare actual consumption under recorded operating conditions, maintenance hours, service expenditure, parts availability and outages with the approved assumptions. Track quotation coverage, unresolved cost items and differences between forecast and actual costs, with reasons. Use the findings to improve the next purchase, not to claim unsupported savings. Applicable Iranian requirements, contracts, site conditions and competent local engineering and financial review govern implementation.