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.

  1. Asset Disposal Plan

    When infrastructure and other property are retired, an asset ...
  2. Straight Line Basis

    A straight line basis is a method of computing depreciation by ...
  3. Asset Condition Assessment

    An asset condition assessment is a report outlining how an organization ...
  4. Capital Asset

    A capital asset is a type of asset with a useful life longer ...
  5. Life-Cycle Fund

    Life-cycle funds are a type of asset-allocation mutual fund in ...
  6. Cost Accounting

    Cost accounting is an accounting method that aims to capture ...
Related Articles
  1. Investing

    Life-Cycle Funds: Can It Get Any Simpler?

    Discover a security that offers a way for you to put your retirement portfolio on autopilot.
  2. Insurance

    What Is the Best Age to Get Life Insurance?

    Learn about the optimal time for purchasing personal life insurance and why delaying the buying decision may have costly consequences.
  3. Investing

    Understanding Market and Full Risk Cycles

    Investor need to understand the four stages the markets tend to experience.
  4. Small Business

    Calculating IRR with Excel

    Find out how to calculate the internal rate of return on investments using Microsoft Excel, as illustrated in different investment scenarios.
  5. Small Business

    Valuing Startup Ventures

    Valuing a company is a difficult task, regardless of the size of the business - but these methods can help.
  6. Insurance

    How to Cover Your Assets With Life Insurance

    Here's why it's so important to cover your assets in case of an unexpected death—and how to do so.
  7. Insurance

    Life Insurance: Foundation to a Solid Portfolio

    Life insurance should be a foundation of an overall financial portfolio. Here's why.
  8. Investing

    DCF Valuation: The Stock Market Sanity Check

    Calculate whether the market is paying too much for a particular stock.
  1. How do current assets and fixed assets differ?

    Current assets are short-term assets that are used up within one year. Fixed assets are physical assets and have a life of ... Read Answer >>
  2. What are typical examples of capitalized costs within a company?

    Learn examples of capitalized costs such as expenses incurred to put fixed assets to use as well as software development ... Read Answer >>
  3. What's the difference between amortization and depreciation?

    Learn the difference between amortization, depreciation, and depletion and how companies use these accounting methods to ... Read Answer >>
  4. What are the types of costs in cost accounting?

    Cost accounting aids in decision-making by helping a company's management evaluate its costs. There are various types of ... Read Answer >>
Trading Center