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."
Breaking Down Terotechnology
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 givenobject then proceeds to its installation or construction, commissioning, operations and upkeep. Terotechnology also accounts for the end of an object's useful life, such as its decommissioning or retirement, its dismantling, or its removal, sale or disposal. Terotechnology then will start the cycle again with the consideration of the object's replacement.
Terotechnology in Example
Take this example scenario: 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: 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 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.