M4L7 (Whole Life Assessment Management)
STUDY GUIDE SUMMARISED RATED A.
Possible hidden costs with global sourcing
✔✔Admin costs of importing and item from a foreign supplier
Import duties
Trade restrictions
Delivery costs
International payments
Dealing with foreign suppliers
Country risk
Political risk
Foreign currency risk
✔✔Risk that if an asset is paid for in foreign currency the exchange rate
could more adversely over time
Hidden costs in extended supply chains
✔✔Overseeing the supply chain
Stockholding costs
Senior management support
✔✔Large acquisition decisions taken by senior management
Role of procurement function in preparing TCOs
✔✔Establish the procedures for preparing a TCO and identifying the types
and purchase cost of assets
,Also communicate these procedures to other departments
Cross functional support
✔✔Procurement
Finance
Operational function managers
Engineering
Safety and security
Why is cross functional support needed to prepare reliable estimates of a
TCO
✔✔Share common goal
Give priority requirements for cost estimates
Working as a team
Draw on help from external sources
The time should be shorter and effort is shorter
RACI
✔✔Responsible, Accountable, Consulted , Informed
Issues involved in disposing of long term assets
✔✔Formulating a policy for the disposal of different types of asset
Having an environmental policy for safe disposal of waste with minimum
damage to the environment
Having health and safety policy and procedures
,The selection of specialist firms to carry out decommissioning and disposal
work
Selection of specialist firms to carry out the decommissioning and disposal
work
Having a sufficient budget allowance to pay for the decommissioning and
disposal
Commissioning
✔✔Process of checking and obtaining assurance that all elements of
capital asset has been designed installed and tested to the satisfaction of
the buyer or owner
Also known as acceptance testing
decommissioning
✔✔Also known as asset retirement obligation involves all the procedures
and activities required to take an asset out of service dismantle it and
dispose of its parts
Two common features of decommissioning tasks
✔✔Very high cost
Environmental implication
Costs of decommissioning may include
✔✔Dismantling of all items of equipment and fixtures and fittings
Tank and vessel cleaning
Disposing of dangerous or toxic materials on site
Decontaminating or cleaning the site area
Dismantling a building
, Cost of transporting all waste
Removal and disposal processes
✔✔First stage is decontamination of structures any storage tasks to be
cleaned
Items inside should be dismantled
Building then to be demolished
Waste and toxic materials transported to disposal sites
Land itself may require decontamination
Materials from site may be recyclable
profit and loss on disposal
✔✔Difference between sales income from disposal minus any selling
costs and the accounting value of the asset at the date of its disposal
In the UK the gov specifies the following requirements
✔✔Keep waste to minimum by doing everything you can to prevent reuse
recycle or recover waste
Sort and store waste safely and securely
Complete waste transfer note
Check if your waste carrier is registered
Not allow your waste to be disposed of illegally
Hazardous waste
✔✔Asbestos
Chemicals
Batteries
STUDY GUIDE SUMMARISED RATED A.
Possible hidden costs with global sourcing
✔✔Admin costs of importing and item from a foreign supplier
Import duties
Trade restrictions
Delivery costs
International payments
Dealing with foreign suppliers
Country risk
Political risk
Foreign currency risk
✔✔Risk that if an asset is paid for in foreign currency the exchange rate
could more adversely over time
Hidden costs in extended supply chains
✔✔Overseeing the supply chain
Stockholding costs
Senior management support
✔✔Large acquisition decisions taken by senior management
Role of procurement function in preparing TCOs
✔✔Establish the procedures for preparing a TCO and identifying the types
and purchase cost of assets
,Also communicate these procedures to other departments
Cross functional support
✔✔Procurement
Finance
Operational function managers
Engineering
Safety and security
Why is cross functional support needed to prepare reliable estimates of a
TCO
✔✔Share common goal
Give priority requirements for cost estimates
Working as a team
Draw on help from external sources
The time should be shorter and effort is shorter
RACI
✔✔Responsible, Accountable, Consulted , Informed
Issues involved in disposing of long term assets
✔✔Formulating a policy for the disposal of different types of asset
Having an environmental policy for safe disposal of waste with minimum
damage to the environment
Having health and safety policy and procedures
,The selection of specialist firms to carry out decommissioning and disposal
work
Selection of specialist firms to carry out the decommissioning and disposal
work
Having a sufficient budget allowance to pay for the decommissioning and
disposal
Commissioning
✔✔Process of checking and obtaining assurance that all elements of
capital asset has been designed installed and tested to the satisfaction of
the buyer or owner
Also known as acceptance testing
decommissioning
✔✔Also known as asset retirement obligation involves all the procedures
and activities required to take an asset out of service dismantle it and
dispose of its parts
Two common features of decommissioning tasks
✔✔Very high cost
Environmental implication
Costs of decommissioning may include
✔✔Dismantling of all items of equipment and fixtures and fittings
Tank and vessel cleaning
Disposing of dangerous or toxic materials on site
Decontaminating or cleaning the site area
Dismantling a building
, Cost of transporting all waste
Removal and disposal processes
✔✔First stage is decontamination of structures any storage tasks to be
cleaned
Items inside should be dismantled
Building then to be demolished
Waste and toxic materials transported to disposal sites
Land itself may require decontamination
Materials from site may be recyclable
profit and loss on disposal
✔✔Difference between sales income from disposal minus any selling
costs and the accounting value of the asset at the date of its disposal
In the UK the gov specifies the following requirements
✔✔Keep waste to minimum by doing everything you can to prevent reuse
recycle or recover waste
Sort and store waste safely and securely
Complete waste transfer note
Check if your waste carrier is registered
Not allow your waste to be disposed of illegally
Hazardous waste
✔✔Asbestos
Chemicals
Batteries
