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Turning Totex from Theory to Practice

Totex is a neat term, and an even neater theory: Invest pro-actively in the lifecycle of a process, rather than just buying equipment with the lowest-possible capital price tag. The result should be more cost-efficient operation, in which maintenance and engineering costs are measured, monitored and optimised.

 

Totex is a neat term, and an even neater theory:   Invest pro-actively in the lifecycle of a process, rather than just buying equipment with the lowest-possible capital price tag.  The result should be more cost-efficient operation, in which maintenance and engineering costs are measured, monitored and optimised.

It was a privilege to be on the panel for the WWT Round Table debate on Totex and its Implications for the Water Industry, featured in the pages of this month’s issue; I found it immensely encouraging and I learned a great deal.   

The debate certainly convinced me that the idea of totex is being enthusiastically embraced – but realising it will be an entirely different matter.   Because totex is precisely that: an idea – albeit a good idea that can aid the transition to new ways of working.  

As the equipment supplier representative, my priority was to ask:  “How does a water company define the whole life value of an asset? What is the actual desired life cycle period and how is it defined? What are the operator’s requirements for life expectancy and availability? How can these expectations be built into models to finance asset lifecycle costs?  How far could such approaches be standardised across the industry?

In the old world of capex and opex, procuring equipment for the lowest price is straightforward with the lowered cost seen as a saving:  But how much has that initial saving cost you in the long-run?  How much more will have been spent to maintain and power that asset after 5, 10, 20 or even 50 years?  There is little data to tell us, and so the change from ‘lowest cost supply’ up front to ‘best cost supply’ under Totex represents a very significant challenge.

If our industry can truly work through these questions then we will open the door to innovation and for new technologies that deliver better operating performance and energy savings.   If we develop financing and procurement models that foster innovation, we can deliver consumer value.   If we combine this with better planned maintenance, and condition monitoring – so we can really measure what the savings are - then we will have made progress. 

It’s a big ask and finding practical methods to reverse the capex trend will require some joined-up, collective thinking across the whole industry. I hope the Round Table will be the start of a true industry collaboration that outputs a practical roadmap for change.

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