Procurement compares Capex. Engineering knows the better answer is TCO. The gap is where 'cheap' decisions become 'expensive' lifetimes. Here's the 5-line spreadsheet that translates engineering rigour into a finance-team win.
Four ideas to carry into the next specification conversation you have.
What the BOQ shows. What procurement compares. What gets approved by the finance committee.
Energy bill, replacement parts, maintenance labour, downtime. Usually 3-5× the Capex over a 10-year life.
The true cost of owning a fixture, switchgear, UPS, or any electrical asset over its useful life. Discounted to net present value if your finance team is sophisticated.
Lower energy, longer life, fewer replacements. Engineering's job: translate this into a one-page financial summary procurement can defend.
Same lumens. Two suppliers. One is 30% higher on Capex. Watch the math.
| Cost line | Budget LED | Premium LED |
|---|---|---|
| Capex (per fixture) | 200 SAR | 260 SAR |
| Wattage | 18 W | 12 W |
| Energy cost (10 yr, 4000 h/yr, 0.18 SAR/kWh) | 130 SAR | 86 SAR |
| Replacements (life 25k h vs 70k h) | 1.6 × 200 = 320 | 0.57 × 260 = 148 |
| Maintenance labour (replacements) | 100 SAR | 30 SAR |
| Disposal | 10 SAR | 5 SAR |
| 10-yr TCO per fixture | 760 SAR | 529 SAR |
| Savings per fixture × 500 units | 231 SAR | −115,500 SAR |
Five elements every Saudi project finance review expects.
An office building runs lighting 4,000 h/yr. A 24/7 warehouse runs 8,760 h/yr. A street pole runs 4,200 h/yr. Default assumptions get questioned; project-specific numbers don't.
Saudi SEC tariff varies by customer category, time of day, and demand band. A commercial customer pays 0.32 SAR/kWh in peak, 0.18 off-peak. Use the actual blended rate in your TCO calculations.
10 years of future Opex isn't worth its face value today. Apply a discount rate (Saudi WACC for commercial: 7-9%). Discounted TCO ≈ 75-80% of undiscounted. Finance teams trust NPV math.
TCO is comprehensive but abstract. Payback = 'this premium spec costs 60 SAR more, saves 100 SAR/yr in energy, payback = 7 months.' Procurement understands payback. Lead with it.
What if SEC raises tariffs 15% (likely)? What if the budget product's actual life is 18k h, not the claimed 25k? Show TCO ±20% scenarios. Conservative cases still favouring premium = strong argument.
Every NLC tender includes a per-fixture TCO breakdown using your project's operating hours and tariff. Procurement gets the math. Engineering wins the spec.
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