DOE-2 Reference Manual Version 2.1 - DOE2.com

10. PLANT-COSTSThe PLANT-COSTS instruction specifies a number of parameters used by thePLANT program for calculation of plant equipment life-cycle costs. Additionalinformation required for life-cycle costing is entered via the PLANT-EQUIPMENTand the ENERGY-COST instructions.PLANT -COSTSDISCOUNT-RATELABOR-INFLTNThis command word informs the PDL Processor that the datato follow are related to life-cycle cost analysis.specifies the discount rate (in per cent), which is thefactor used in a present-value method of economic evaluationthat accounts for the time value of money. Itrepresents the "cost of capital" or "the opportunity toearn from normal investment activity," and is used todiscount future recurring costs and/or benefits to presentvalue in decision making. One way of understanding theconcept of present value and discount rate is to think of areduced sum of money being put aside today to cover futurecosts. The discount rate is the interest rate applied tothat sum, compounded each year, to yield in the future anamount exactly equal to the future cost. The same conceptis applied to future benefits, to find their present value.specifies the anticipated yearly percentage increase in thecost of labor, over and above the increase caused by generalinflation (i.e., this is a differential or relative costescalation).The present version of the PLANT program applies the laborinflation rate only to the calculation of maintenance costs,but applies the materials inflation rate (see below) to thecalculation of overhaul costs and replacement costs(including installation of the replacement unit).MATERIALS-INFLTNPROJECT-LIFEspecifies the anticipated yearly percentage increase in thecost of materials, over and above the increase caused bygeneral inflation (i.e., this is a differential or relativecost escalation).The program applies the materials inflation rate to thecalculation of cost for consumables and to the cost ofprocuring replacements. MATERIALS-INFLTN is also appliedto overhaul costs and replacement installation costs.is the period over which life-cycle costs are calculated.This entry should not include the initial construction orinstallation period.LABORspecifies the dollar cost per hour of maintenance labor.The plant program multiplies this value by the annualmaintenance hours (entered with the keyword MAINTENANCE,the PLANT-EQUIPMENT instruction) to obtain annualmaintenance costs.V.91 (Revi sed 5/81)in