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###### Versus

In this article, we will take a look at the business case for adding remote, wireless water level monitoring to your tanks. We hope that you will follow along and use your own numbers so the business case is relevant to you. In each step, we will also show you our calculations so you can verify them and build them yourself. If you have been considering a remote monitoring solution then you will be able to make a more informed decision armed with this information.

We will step through

In our example, we will use the following numbers. Feel free to use numbers appropriate to your business.

Distance (km)

Total round trip distance of your water run in km.

20 km

Duration (hours)

Total round trip time of your water run.

2 hours

Number of Tanks

Total number of tanks in your water run

4

Frequency WITHOUT Telemetry

How many water runs per month done without a remote water level monitoring system.

12 per month

Frequency WITH Telemetry

How many water runs per month you think you will do after you have a remote monitoring system installed. Generally we see the number of water runs halve after a system is installed.

6 per month

Vehicle Costs

Fuel, wear and tear on your vehicle.

\$1.00 per km

Labour Cost per Hour

Labour cost (driving) to check water tanks. Even though you may do this yourself, you should account for your time.

\$20 per hour

###### 1. Monthly Cost of Water Runs without Telemetry
1. Monthly Without

Monthly cost of water runs without telemetry

= Vehicle cost per month without telemetry + Labour cost per month without telemetry

Vehicle cost per month without telemetry

= Distance x Water runs without telemetry x Vehicle Cost

= 20 x 12 x \$1

= \$240

Labour cost per month

= Duration x Water runs without telemetry x Labour Cost

= 2 x 12 x \$20

= \$480

Monthly cost of water runs without telemetry

= \$240 + \$480

= \$720

###### 2. Monthly Cost of Water Runs with Telemetry
2. Monthly With

This calculation works out the running cost per month with telemetry. We repeat the same calculation as above but we use the adjusted number of water runs and we add any running costs for the telemetry system.

Additionally, the telemetry system will have a hardware and possibly an installation expense. We will add these capital expenses later, when comparing the total costs of with and without telemetry.

Cost of water runs with telemetry per month

= Vehicle cost per month with telemetry + Labour cost per month with telemetry + Telemetry operational cost per month

Vehicle cost per month with telemetry

= Distance x Water runs with telemetry x Vehicle Cost

= 20 x 6 x \$1

= \$140

Labour cost per month

= Duration x Water runs with telemetry x Labour Cost

= 2 x 6 x \$20

= \$240

Telemetry operational cost per month

= Number of tanks x Telemetry operational cost per month

= 4 x \$15

= \$60

Cost of water runs per month with telemetry

= \$140 + \$240 + \$60

= \$440

###### 3. The Capital Cost of a Telemetry System
3. Capital

This calculation works out the capital cost of purchasing and installation a telemetry system (and excludes the operational expenses we worked out in step 2). We are going to assume this is an upfront expense but you may be able to finance the expense and spread it over monthly payments. In that case, add the monthly expense to your monthly costs of running a telemetry system.

Capital Cost of a Telemetry System

= Number of Tanks x Telemetry Unit Capital Cost

= 4 x \$1700

= \$6,800

###### 4. Compare Total Cost over 5 Years
4. Compare 5 years

To compare total costs over 5 years we will compare the total cost of a telemetry system (Telemetry capital and operational expenses) and without a telemetry system (manual operational expenses) over a 5 year period.

5 Year cost without a Telemetry System

= Number of years x Monthly cost without Telemetry x 12 months

= 5 x \$720 x 12

= \$43,200

5 Year cost with a Telemetry System

= Number of years x Monthly cost with Telemetry x 12 months + Capital cost of a Telemetry System

= 5 x \$440 x 12 + \$6,800

= \$33,200

This example shows that, given the assumptions, a saving of \$10,000 over 5 years is achievable. This doesn't include the added benefits a remote monitoring system delivers such as earlier detection of leaks/blockages or other potential water security events.

In our next article we'll look at how to calculate the dollar of risk mitigation by a monitoring system.

###### 5. How long to break even?
5. Break Even

How long does it take to pay off the system? This is the break even time. It is the duration since purchase when the total costs of a telemetry system equals the total costs without the telemetry system.

Break even duration is when

Cost without a telemetry system = Cost with a telemetry system

Using our monthly cost formulas with 'months' as time in months

Monthly cost with Telemetry x months = Monthly cost without Telemetry x months + Capital cost of a telemetry system

\$720 x months = \$440 x months + \$6,800

(\$720 - \$440) months = \$6,800

\$280 months = \$6,800

months = \$6,600 / \$280

months = 23.5

Break even duration is 23.5 months, approximately 2 years.

So in this scenario, it takes approximately 2 years to break even and payoff the telemetry system. After that the system is saving the difference between the monthly operating costs each month. This is \$720 - \$440 which is \$280 each month.

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