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RTTC cost calculation: including capital costs?
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Hi Elisabeth and All!
Just a few general comments to this discussion.
I guess the calculation methods are quite clear, nothing too complex in it. The real issue for calculating costs for the RTTC is that you have to rely entirely on assumptions for all of the cost blocks.
In the RTTC, technologies are being developed in University labs, with some field testing or piloting in target countries at best. Developments are still far very from being mature for large-scale application, often it is quite basic research on new processes. So from this stage, until the large-scale application in a specific situation and country, there are still several steps to undertake in optimisation, adaptation, serial production and so on. It is simply not possible to calculate real life-cycle costs for a technology in its early stages of development.
To take the example of O&M costs being calculated as 10% of the capital costs yearly. As long as one has to rely on such a crude estimation for the most important cost bloc, it does not make much sense to discuss about inflation rates or if 5 or 6% of interest rate on capital should be applied.
Now, one could try to standardise the assumptions to be used in the hypothetic cost calculations in the RTTC, by giving a catalogue of standardised costs for energy, for manpower, for different construction materials, interest rates, etc.. This would hardly produce realistic absolute costs, but perhaps allow comparable cost calculations for technologies in development. But I think it would be very complicated to do this, in many cases too restrictive, and also not tweak-proof.
As we know, the 5c criterion itself is very arbitrary, 5c can be way too much, or too low, depending on the situation. So it’s probably best to accept this criterion as a strong indication to grantees that costs matter, but not be too over-ambitious in wanting to break that down in detailed and perfectly comparable calculations.
As for WASH-cost, I think this approach gives good advice on the cost blocs to consider and terminology to be used, but looking there for absolute values to be used for costing of different items of a research project does not make much sense in my opinion, it’s an entirely different level.
Best, Florian
Ps: I wrote this earlier to Elisabeth in an email-exchange on the topic
Just a few general comments to this discussion.
I guess the calculation methods are quite clear, nothing too complex in it. The real issue for calculating costs for the RTTC is that you have to rely entirely on assumptions for all of the cost blocks.
In the RTTC, technologies are being developed in University labs, with some field testing or piloting in target countries at best. Developments are still far very from being mature for large-scale application, often it is quite basic research on new processes. So from this stage, until the large-scale application in a specific situation and country, there are still several steps to undertake in optimisation, adaptation, serial production and so on. It is simply not possible to calculate real life-cycle costs for a technology in its early stages of development.
To take the example of O&M costs being calculated as 10% of the capital costs yearly. As long as one has to rely on such a crude estimation for the most important cost bloc, it does not make much sense to discuss about inflation rates or if 5 or 6% of interest rate on capital should be applied.
Now, one could try to standardise the assumptions to be used in the hypothetic cost calculations in the RTTC, by giving a catalogue of standardised costs for energy, for manpower, for different construction materials, interest rates, etc.. This would hardly produce realistic absolute costs, but perhaps allow comparable cost calculations for technologies in development. But I think it would be very complicated to do this, in many cases too restrictive, and also not tweak-proof.
As we know, the 5c criterion itself is very arbitrary, 5c can be way too much, or too low, depending on the situation. So it’s probably best to accept this criterion as a strong indication to grantees that costs matter, but not be too over-ambitious in wanting to break that down in detailed and perfectly comparable calculations.
As for WASH-cost, I think this approach gives good advice on the cost blocs to consider and terminology to be used, but looking there for absolute values to be used for costing of different items of a research project does not make much sense in my opinion, it’s an entirely different level.
Best, Florian
Ps: I wrote this earlier to Elisabeth in an email-exchange on the topic
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Hi,
I did some comparisons about operational costs.
I would like to point out two drastic examples.
a) UDDT double vault
Relation operational / investment 3%
CAPEX of total lifecycle cost about 50%
b) UDDT single vault service model – though very low investment costs
Relation operational / investment 60%
CAPEX of total lifecycle cost about 20%
These are very rough figures, but they highlight the problem of a general use of a percentage for solutions.
Yours
Christoph
I did some comparisons about operational costs.
I would like to point out two drastic examples.
a) UDDT double vault
Relation operational / investment 3%
CAPEX of total lifecycle cost about 50%
b) UDDT single vault service model – though very low investment costs
Relation operational / investment 60%
CAPEX of total lifecycle cost about 20%
These are very rough figures, but they highlight the problem of a general use of a percentage for solutions.
Yours
Christoph
- chrisully
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Hello all,
I have another take on a basic calculator for cost calculations. I agree that a standard format or approach would allow greater comparison between projects and technologies.
There are more inputs associated with this spreadsheet in comparison to others but I believe it would provide more accurate results rather than taking 'rule of thumb' costing assumptions.
The attached is intended as a draft to promote discussion. I would welcome comments or suggestions.
Chris Sullivan
Helmholtz Centre Environmental Research - UFZ
I have another take on a basic calculator for cost calculations. I agree that a standard format or approach would allow greater comparison between projects and technologies.
There are more inputs associated with this spreadsheet in comparison to others but I believe it would provide more accurate results rather than taking 'rule of thumb' costing assumptions.
The attached is intended as a draft to promote discussion. I would welcome comments or suggestions.
Chris Sullivan
Helmholtz Centre Environmental Research - UFZ
Chris Sullivan
Environmental Scientist / Engineer
Environmental Scientist / Engineer
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christoph wrote: Depending on the standpoint of view and method used the result ranges from 0,32 Cent/use to 5,81 Cent/use. Therefore again I would like to stress the importance of a clear explanation for the base used.
Hi Christoph,
thanks a lot for this good example. Illustrates very well the difficulty of the whole issue. Quite clearly, calculating costs in absolute terms makes only really sense on the level of an individual project setting. Even then it is often difficult enough (e.g. how to deal with time spent of users).
For comparing operating costs of research projects, perhaps it would be better to use a few criteria like energy consumption, labour time of users and external service providers, frequency of emtpying with vacuum trucks etc.
Reagards, Florian
chrisully wrote: I have another take on a basic calculator for cost calculations. I agree that a standard format or approach would allow greater comparison between projects and technologies.
Hi Chris,
that looks like a good example of cost estimation, e.g. for planning a project in the stage of a feasbility study.
The difficulty for generalisation, e.g. for the purpose of comparing projects of the RTTC would be the generalisation of unit costs. I don't think it's easy or even possible to come up with a single set of unit costs that makes sense for a large range of countries. e.g. labour costs vary hugely between different countries.
Best, Florian
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