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Extra info for A Practical Guide to Energy Management for Managers

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The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. For example, an organisation that invests money in acquiring a new asset instead of spending that money on maintaining its existing asset portfolio incurs the increased risk of failure of its existing assets. The opportunity cost of the decision to acquire a new asset is 48 Cost of Ownership the financial security that comes from the organization’s spending the money on maintaining its existing asset portfolio.

Uk. 1 Concept Total cost of ownership (TCO) is a financial estimate. Its purpose is to help consumers and enterprise managers determine direct and indirect costs of a product or system. It is a management accounting concept that can be used in full cost accounting or even ecological economics where it includes social costs. TCO when incorporated in any financial benefit analysis, provides a cost basis for determining the economic value of that investment. Examples include: return on investment, internal rate of return, economic value added, return on information technology, and rapid economic justification.

Awareness needs to build upon this general interest. Good publicity within the local 36 Energy Management community regarding the progress of the energy programme will also help enhance awareness. Place emphasis on how well the company is doing against government targets for reducing carbon emissions, or the Kyoto Protocol. 2 Long-term Measures As already stated in an earlier section, energy management is highly cost-effective but it is important to remember that it is not a one-off exercise, to be effective it must be an ongoing process.

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