What Is Terotechnology?
Terotechnology is a practice that leverages management, engineering, and financial expertise to optimize installation, operations, and upkeep of equipment. Terotechnology is derived from the Greek root word "tero" or "I care," which is used with the term "technology" to refer to the study of the costs associated with an asset throughout its life cycle from acquisition to disposal. The goals of this multidisciplinary approach are to reduce the different costs incurred at the various stages of an asset's life and to develop methods that will help extend its life span. The discipline of terotechnology may also be known as "life-cycle costing."
- Terotechnology is a practice that leverages management, engineering, and financial engineering to optimize installation, operations, and upkeep of equipment.
- It encompasses multiple aspects of an object or equipment's lifecycle, from design to installation to commissioning, operations, and upkeep.
- It was developed in the 1970s in the United Kingdom.
At the core of terotechnology is keeping assets maintained at an optimal level so as to perfectly manage the life-cycle costs of a physical asset. The discipline of terotechnology is primarily concerned with maintainability and reliability of physical assets. Terotechnology was developed in the 1970s in the United Kingdom. It may be applied to machines, equipment, plants, buildings, and structures and includes the revenues and expenses of the organization that acquires them.
The practice of terotechnology is a continuous cycle that covers the entire lifespan of an object. It starts with the design or selection of a given object and then proceeds to its installation or construction, commissioning, operation, and upkeep. Terotechnology also accounts for the end of an object's useful life, such as its decommissioning or retirement; dismantling; or removal, sale, or disposal. Terotechnology then will start the cycle again with the consideration of the object's replacement.
Example of Terotechnology
For example, an oil company is attempting to map out the costs of an offshore oil platform. They would use terotechnology to forecast the exact costs associated with assembly, transportation, maintenance, and dismantling of the platform and finally a calculation of salvage value.
The study and application of terotechnology is not an exact science, as there are many different variables that need to be estimated and approximated. However, a company that does not use this kind of study may be worse off than one that approaches an asset's life cycle in a more ad hoc manner.
Terotechnology in Practice
Terotechnology uses such financial analysis tools such as net present value (NPV), internal rate of return (IRR), and discounted cash flow (DCF) in an attempt to minimize the costs associated with the asset in the future. These costs can include engineering, maintenance, wages payable to operate the equipment, operating costs, and even disposal costs. Decisions related to each of these costs are taken in consideration with the twin objectives of optimizing the equipment's operations and costs associated with it.