Replacement Analysis - Reasons

8 important questions on Replacement Analysis - Reasons

What is augmenting capacity or capability of an existing asset?

Increasing capacity or capabillity.

When making the decision whether to replace an asset what is meant with;
  • Defender
  • Challenger

Defender
Existing (old) asset.

Challenger
One or more alternative (new) assets.

What are [4] reasons for replacement analyses?

  1. Physical Impairment (Deterioration)
  2. Altered Requirements
  3. Technology
  4. Financing
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What is obsolescence and what [2] reasons would fit in this category?

Outdated
Altered requirements and technologies

What are various types of lives for an asset? [4]

  1. Economic life
  2. Ownership life
  3. Physical life
  4. Useful life

  • What is economic life?
  • What is assumed? 

The period of time (years) that results in the minimum equivalent uniform annual cost (EUAC) of owning and operating an asset.

Assumed
Good asset management | economic life should coincide with the period of time extending from the date of acquisition to the date of abandonment, demotion or replacement from the primary intended service.

What is ownership life?

The period between the date of acquisition and the date of disposal by a specific owner.

What is physical life?

The period between original acquisition and final disposal of an asset over its succession of owners.

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