Research On Electric Equipment Investment Decision-making Based On LCC Theory

Investment in electric power equipments is an important part of power enterprises in fixed assets, all input should be included in equipment investment from the planning, purchase, use up to the end-of-life of equipment.the success or failure of the investment decision-making is related to the efficiency in the use of corporate funds and cost, as well as competitiveness and viability of power enterprises in electricity market reform. At present, there are two methods of evaluation in the field of electric power equipment investment decision-making: traditional evaluation method and evaluation method based on modern decision theory, each method has its advantage, but it also has some deficiencies, such as the following aspects:In traditional evaluation method , the evaluating indicator system was not scientific enough; the quoted price index was over weighted; the cost of later stage was underestimated or neglected; Qualitative and quantitative analysis can not be combined well in the evaluation method based on modern decision theory, effects of subjective factors were great; the mechanism of effective message transfer and feedback was neglected in two methods, which failed to achieve the optimal of the system or the whole.In view of the present situation and the development request of the electric power equipment investment decision-making process, this paper introduces the life cycle cost (LCC) theory into this process, which has constructed the power equipment investment decision evaluation model based on the equipment reliability and the life of equipment cycle cost (LCC) so as to achieve scientific, reasonable and comprehensive evaluationThe main studies in this paper are the following: firstly, refining the life cycle cost of electric power equipment, building the power equipment life cycle cost breakdown structure (CBS). After careful analysis of the characteristics of the electrical equipment, the LCC model is built on the foundation of the theory of reliability growth models, statistics, econometrics and technical economics. Secondly, on the basis of analyzing the basic principles of the traditional investment decision-making methods and the main assessment indicators, , the investment decision-making of power dynamic evaluation model are constructed based on the equipment LCC which closely contacts with the reliability of the equipment taking into account the time value of money,. Thirdly, the interest rate and inflation rate is also introduced into the model, the stability of LCC model is studied by sensitivity analysis. Lastly, a related case study is given to demonstrate the steps of the method .The conclusion is as follows: The enterprise may be trapped by "Iceberg Effect" by traditional evaluation method, the equipment will be multi-stage objectives and achieved the optimal of system and whole by the evaluation method of LCC, so the method can help enterprise to keep comprehensive advantages of cost and efficiency in the medium/long term decision and market competition.