i was very surprised when the time i firstly work with some people that think about every cost as only an expense.
i don’t know why they just check only payment on what they paid but never see the prevention of many events.
for many place i worked they try to limit the possibilities of unstable and unreliable factors.
they paid much on prevention, but many thai (oops) companies only see the cost.
and unhappy when i said you must make a prevention on this and that.
to make TOC for some companies you need to think around on what to lose and what to get.
i don’t know that why they didn’t see what they lose on the mis-operation.
so sad with them.
normal total operation cost calculate on
1. opportunity cost, cost that calculate on the chance what you lose when the operation cannot proceed by the possibility.
2. cost payment, all cost, what you paid.
the project should be proceed if opportunity cost x possibilities higher than the cost payment. and therefore normal ratio is opportunity/cost is about 10 times or more.