Disclaimer

This content is provided for information only. The authors make no representation or warranty regarding the accuracy, completeness or currency of the content. No information in this whitepaper should be construed as medical advice. Readers should seek appropriate professional guidance before acting on any information contained in this document. The authors expressly disclaim all liability for any direct or indirect loss or damage arising from the use of or reliance on this information.

Introduction

This paper sets out a method for calculating the lifecycle cost of washer-disinfectors and steam sterilisers in Australian hospitals. It defines the capital, operating, maintenance, compliance, indirect and end-of-life cost elements, the regulatory requirements that drive them, and the criteria for replacement. A worked example applies the method to two steam sterilisers over 20 years. All values are illustrative, in Australian dollars at constant 2026 prices, excluding GST. Replace them with quoted prices, measured consumption and local tariffs.

Analysis Horizon and Method

Horizon: Use a 20-year analysis horizon. This covers two machine lives at a 10-year planning life, and allows comparison of replacement at year 10 with life extension by mid-life refurbishment. Plan a service life of 10 years for washer-disinfectors and sterilisers in high use, with a condition review from year 8. The Australian Taxation Office sets an effective life of 10 years for pre-vacuum sterilisers and instrument washers in hospitals. Effective life is a tax estimate, not a service life. Confirm the economic life of each machine from its repair and downtime record.

Price Basis: Express every cost in constant prices of the base year, excluding GST, and discount at a real rate. Apply escalation only to costs expected to change faster or slower than general inflation, such as a published tariff path. Do not combine nominal costs with a real discount rate.

Discount Rate: Use the rate set by the funding jurisdiction and test the result at the sensitivity rates it specifies. The Commonwealth Office of Impact Analysis specifies a real rate of 7 % for cost-benefit analysis, with sensitivity at 3 % and 10 %. NSW Treasury guide TPG23-08 sets a central real rate of 5 %, with sensitivity at 3 % and 7 %. The Victorian Department of Treasury and Finance sets 4 % real for core service projects such as hospitals. A cost incurred in year 10 has a present value of 68 % of its value at 4 %, 61 % at 5 % and 51 % at 7 %.

Calculation: List every cost by year. The discount factor for year t is 1 divided by (1 + r) raised to the power t, where r is the real discount rate. Multiply each cost by its discount factor and sum to obtain present value. Divide present value by the annuity factor, which is (1 minus the discount factor for year n) divided by r, to obtain the equivalent annual cost. At 5 %, the annuity factor is 7.722 for 10 years and 12.462 for 20 years. Divide equivalent annual cost by annual cycles to obtain lifecycle cost per cycle. Dividing present value by the undiscounted total of cycles understates cost per cycle by 38 % over 20 years at 5 %. Place purchase and installation at year 0, annual costs at the end of each year, and replacement and decommissioning at the end of each life.

Cost Breakdown Structure: IEC 60300-3-3:2017 provides a structured life cycle costing method. Group costs as follows. Acquisition: purchase, delivery, rigging, services connection, building works, IQ, OQ and PQ, training and changeover. Operation: water, wastewater, trade waste, treated water production, energy, HVAC load and consumables. Maintenance and compliance: planned maintenance, requalification, calibration, pressure equipment inspection, backflow device testing, water quality testing, breakdown repairs and mid-life components. Indirect: downtime, capacity shortfall and records administration. End of life: decommissioning, hazardous materials, disposal and trade-in. Retain costs that are equal across options, because they set the budget and the cost per cycle.

Procurement Basis: Paragraphs 4.5 and 4.6 of the Commonwealth Procurement Rules state that price is not the sole value for money factor, and list whole-of-life costs as purchase price, maintenance and operating costs, transition-out costs, licensing, the cost of additional features, consumables, and decommissioning, remediation and disposal. The Rules bind Commonwealth entities. State and territory health services apply their own procurement policies. Use the list as a checklist and evaluate tenders on lifecycle cost per cycle, not purchase price.

Capital and Installation Costs

Cost Elements: Include purchase price, delivery, rigging, building works, plumbing, drainage, electrical supply, steam connection or a dedicated steam generator, water treatment, ventilation and heat extraction, IQ, OQ and PQ, operator training, project management, and loan equipment or outsourced reprocessing during changeover. Record each element separately so that options with different services requirements are compared on equal scope.

Specification: AS 5369:2023 requires washer-disinfectors to conform to the applicable parts of ISO 15883, large steam sterilisers to EN 285 and ISO/TS 22421, and small steam sterilisers to EN 13060 and ISO/TS 22421. It requires reprocessing equipment to be included in the Australian Register of Therapeutic Goods (ARTG), services to be considered before acquisition, and water to be tested before installation. Advisory AS24/01 requires replacement equipment, including previously used equipment, to conform to the relevant standards. Equipment that cannot be validated to these requirements has no residual value to the facility.

Illustrative Capital Range: This paper uses A$60,000 to A$90,000, excluding GST and installation, as an illustrative purchase price range for a steam steriliser with a chamber of 250 to 430 L [66 to 114 US gal]. Price scales with chamber volume, door configuration, steam generation method and control options. Replace these values with quoted prices.

Capital Premiums: A higher purchase price is recovered within one machine life or not at all. Compare a premium with the present value of savings over the 10-year life, not over the 20-year horizon. At 5 %, a A$20,000 premium requires savings of at least A$2,590 per year over 10 years.

Tender Requirements: Include installation, IQ, OQ, PQ and operator training in the price. Specify the warranty period, a minimum spare parts and service support period of 10 years, and the use of non-proprietary components where available. Require each tenderer to state water, electricity and steam consumption per cycle at full load, standby consumption, idle water flows, cycle time, load capacity and the planned maintenance schedule with parts lists. Require the load, cycle type and test method for each stated consumption value.

Maintenance and Compliance Costs

Planned Maintenance: AS 5369:2023 requires planned preventive maintenance by a competent person to documented procedures, recalibration at intervals not exceeding 12 months, an annual electrical safety check and requalification at least annually. Budget for preventive maintenance visits, wear parts, calibration, annual requalification, water quality testing and testable backflow prevention device testing.

Service Cost Basis: Build service costs from labour hours, labour rate and parts. At an illustrative labour rate of A$150 per hour, a basic inspection visit of 1.5 to 6 h costs about A$225 to A$900. A full preventive maintenance service of 6 to 10 h costs A$900 to A$1,500 in labour plus A$600 to A$1,500 in parts, a total of about A$1,500 to A$3,000. Door gaskets cost about A$150 to A$350 each depending on door size and elastomer, so annual replacement over 20 years costs A$3,000 to A$7,000 in parts before labour for each door.

Annual Budget: The following illustrative budget for one steam steriliser uses a labour rate of A$150 per hour. Frequencies are budget assumptions. Set them from the instructions for use, AS 5369:2023 and AS/NZS 3788:2024.

A full preventive maintenance service and annual requalification alone cost A$3,700 per year at these rates. Add travel, after-hours rates and remote area loadings where they apply.

20-Year Maintenance: At A$5,800 per year, 20 years of planned maintenance and compliance totals A$116,000 nominal, or about A$72,300 in present value at 5 %. This is 129 % to 193 % of a A$60,000 to A$90,000 purchase price in nominal terms, and 80 % to 120 % in present value terms. Breakdown repairs are additional.

Breakdown Repair: Allow for unscheduled repairs, after-hours call-out rates and parts not covered by the service contract. Repair frequency and cost rise with age. Model annual repair cost as a first-year value rising at a fixed rate per year, and fit the rate to the facility's repair records. At A$500 in year 1 rising 30 % per year, repair cost reaches A$5,300 in year 10 and A$73,100 in year 20. Record each repair against the machine to establish the cost trend.

Mid-Life Components: Budget for replacement of major components at mid-life, such as vacuum pumps, steam generator heating elements and controller components. Include requalification after each replacement.

Pressure Equipment: Determine the hazard level of each steriliser pressure vessel and steam generator to AS 4343:2014. Under Schedule 5 of the model Work Health and Safety Regulations, pressure vessels of hazard level A, B or C require item registration, except gas cylinders, LP gas fuel vessels for automotive use, serially produced vessels and equipment excluded from the scope of AS/NZS 1200:2015. Boilers of hazard level A, B or C require item registration without these exemptions. Victoria applies the Occupational Health and Safety Regulations 2017, which have separate plant registration provisions. Inspect pressure equipment in service to AS/NZS 3788:2024 and test safety valves at the intervals it specifies. Include registration fees and inspection costs in the lifecycle cost.

Service Contracts: A fixed-price contract stabilises the maintenance budget. Compare contracts on scope, response time, parts coverage, calibration, requalification and pressure equipment inspection, not on annual fee alone.

Utilities and Consumables

Water Use: Calculate annual water use as litres per cycle multiplied by cycles per day and operating days. Each 100 L [26.4 US gal] per cycle at 16 cycles per day for 365 days is 584,000 L [154,300 US gal] per year. Measure water per cycle at full load, and add idle flows separately.

Steriliser Water: Steriliser water use is set mainly by the vacuum system and condensate tempering. The US Environmental Protection Agency gives 18.9 to 56.8 L/min [5 to 15 US gal/min] for conventional water ejectors during vacuum phases, and a reduction of about 75 % for liquid ring vacuum pumps. Conventional tempering systems run at 3.8 to 18.9 L/min [1 to 5 US gal/min], and some flow continuously when the machine is idle. A continuous flow of 3.8 L/min [1 US gal/min] is about 2.0 million L [525,600 US gal] per year. Specify vacuum and tempering systems that use water only during the cycle.

Tempering Demand: Trade wastewater acceptance standards limit discharge temperature, e.g. 38 deg C [100 deg F] for Sydney Water. Cooling condensate from 100 deg C [212 deg F] to 38 deg C [100 deg F] with mains water at 20 deg C [68 deg F] requires a cooling water to condensate ratio of about 3.4 by mass, from an energy balance. Cool condensate through a heat exchanger or recover its heat to reduce this demand.

Treated Water: Treated water for final rinse and steam generation draws more mains water than it delivers. Raw water demand equals treated water demand divided by the recovery ratio. At 60 % recovery, each 100 L [26.4 US gal] of RO product draws 167 L [44.1 US gal] of mains water and discharges 67 L [17.7 US gal] of reject. Include filters, softener salt, RO membranes, DI cartridges and the energy of the treatment plant.

Water Tariff: The marginal tariff is the water usage charge, plus the wastewater usage charge multiplied by the discharge factor, plus trade waste volume and load charges where they apply. Billing applies the discharge factor set for the property. Combined usage charges at three utilities for the 2026 to 2027 financial year, at a discharge factor of 100 %, are as follows. Charges are in A$ per kL, with A$ per 1,000 US gal in brackets.

Trade waste charges are additional, e.g. a volume charge of A$1.11 per kL [A$4.22 per 1,000 US gal] plus load charges at Yarra Valley Water. Obtain the local tariff before calculating.

Water Cost: At an illustrative A$5 per kL [A$18.93 per 1,000 US gal], a machine using 1,000 kL [264,200 US gal] per year accumulates A$100,000 in water and wastewater charges over 20 years, or about A$62,300 in present value at 5 %.

Energy: Calculate electricity and steam energy per cycle at full load and standby energy per idle hour. Heating feed water at 15 deg C [59 deg F] to dry saturated steam at 134 deg C [273 deg F] requires 2,662 kJ/kg [1,145 BTU/lb], or 0.74 kWh per kg [0.34 kWh per lb]. Divide by generator or boiler efficiency and multiply by the energy price to obtain the cost per kg of steam. At 95 % efficiency and A$0.25 per kWh, electrically generated steam costs about A$0.19 per kg [A$0.09 per lb], and a cycle using 10 kg [22 lb] of steam uses 7.8 kWh. For central steam, include distribution losses and the value of condensate returned.

Standby: Jacketed sterilisers, steam generators and heated tanks draw energy whenever they are held ready. A load of 1.5 kW [5,100 BTU/h] held for 6 h per day uses 2,340 kWh per year over 260 days. Meter standby consumption, specify standby and shutdown modes, and schedule cycles to minimise idle time.

Heat Rejection: Heat released into the room adds to the HVAC load. Each 1 kW [3,412 BTU/h] of continuous heat gain is 8,760 kWh per year, which requires about 2,920 kWh of electricity to remove at a cooling coefficient of performance of 3. Specify chamber and pipework insulation, and include equipment heat gain in the HVAC design.

Consumables: Include detergents and process chemicals, chemical indicators for every pack, air removal test packs for daily use, biological indicators at the frequency set by facility policy, printer media and packaging. Calculate cost per cycle as indicator cost per pack multiplied by packs per load, plus the daily air removal test divided by cycles per day, plus biological indicators, printer media and packaging per cycle. Concentrated chemicals reduce container handling and storage. Confirm that the dosing system is compatible with the specified chemicals.

Indirect Costs

Throughput: Calculate capacity per shift as shift minutes divided by the sum of cycle time and loading time, rounded down to whole loads, multiplied by trays per load. A 480 min shift with a 60 min cycle, 10 min loading and 8 trays per load gives 6 loads, or 48 trays. Size the department to meet peak demand with one machine of each type out of service. Insufficient capacity causes case delays, overtime and additional instrument inventory.

Downtime: Cost each day of downtime as the sum of deferred cases, loan equipment, outsourced reprocessing, overtime and additional instrument sets. Estimate expected downtime days per year from the failure record of each machine, and model the rise with age.

Redundancy: Compare the equivalent annual cost of redundant capacity, e.g. a standby machine or two smaller machines in place of one large machine, with the expected downtime cost it avoids. A standby steriliser at A$80,000 plus A$15,000 installation and A$2,000 decommissioning over 10 years at 5 %, with A$5,800 per year of planned maintenance and compliance, costs about A$18,300 per year. Where downtime starts at 1 day per year and rises 0.5 day per year, averaging 3.25 days per year over a 10-year life, it is justified on downtime cost alone only where each downtime day costs more than about A$5,600. Peak demand capacity is a separate criterion.

Training: AS 5369:2023 requires a formal orientation and training program with competency assessed at defined intervals. Include initial and refresher training hours for each operator.

Records and Compliance Administration: Equipment that exports cycle data electronically to the tracking system reduces manual record handling and audit preparation time.

Service Life and Replacement

Economic Life: The economic life is the retirement age at which equivalent annual cost is lowest. Calculate equivalent annual cost for each retirement age from purchase and installation cost, the age-dependent costs to that age and decommissioning. Planned maintenance, utilities and consumables are constant with age and do not change the result. The following table gives equivalent annual cost at 5 % for a A$80,000 steriliser with A$15,000 installation, A$2,000 decommissioning, a A$5,000 component replacement in year 6, repairs of A$500 in year 1 and 1 downtime day in year 1 at A$1,500 per day. Low escalation is repair cost rising 20 % per year and downtime 0.25 day per year. Base escalation is 30 % and 0.5 day. High escalation is 40 % and 1.0 day.

At base escalation, equivalent annual cost is within 2 % of its minimum from year 10 to year 13. Cost alone supports a 10-year life only where repair and downtime costs rise at the base rates or faster. Where they rise more slowly, compliance, parts support and reliability set the replacement date.

Crossover Point: Replace when the marginal annual cost of keeping the machine, including repairs, excess utilities and downtime, exceeds the equivalent annual cost of a new machine. For a A$60,000 machine using 375 L [99 US gal] per cycle at 2,600 cycles per year and A$5 per kL [A$18.93 per 1,000 US gal], with base escalation, the cost of keeping it, including planned maintenance, energy and consumables, is A$37,400 in year 11 and A$40,200 in year 12. A new A$80,000 machine using 135 L [36 US gal] per cycle, with equal energy, consumable and planned maintenance costs, has an equivalent annual cost of A$37,900. Replacement becomes the lower cost option in year 12. Track repair cost and downtime days per year for each machine to identify this point.

Refurbish or Replace: Compare the equivalent annual cost of refurbishment over the life it adds with the equivalent annual cost of a new machine over its life. Include requalification after refurbishment and the utility savings of the new machine. Refurbishing the A$60,000 machine at year 10 for A$15,000, restoring repair and downtime rates to those of year 4 and adding 5 years, gives an equivalent annual cost of A$32,500 against A$37,900 for the new machine. Refurbishment remains the lower cost option at A$30,000, or where it restores condition only to that of year 6. It applies only where the refurbished machine can be validated to current requirements and spare parts and service support cover the added life.

Replacement Criteria: Plan replacement when one or more of the following applies. Annual maintenance and repair cost exceeds the proportion of replacement cost set in the asset management plan, e.g. 10 %. Maintenance cost has risen sharply, e.g. doubled over 3 years. Unplanned failures exceed the threshold in the asset management plan. Critical spare parts or service support are no longer available. The machine cannot meet current requirements of AS 5369:2023 or the current editions of ISO 15883, EN 285 or EN 13060.

End of Life: Include decommissioning, disconnection, removal, disposal and any trade-in credit. Equipment manufactured before the 2003 Australian asbestos ban may contain asbestos insulation or gaskets. Arrange a hazardous materials inspection before removal. Allow for loan equipment or outsourced reprocessing during changeover and for validation of the replacement before use.

Worked Example

The following example compares two steam sterilisers of equal capacity over 20 years, with like-for-like replacement at year 10. Option A has a low purchase price and high water use. Option B has a high purchase price and low water use. All other costs are equal. Values are illustrative, at constant 2026 prices, excluding GST, and do not represent a specific machine.

Present values at 5 % over 20 years are as follows.

Cost Structure: Purchase price is 20 % of lifecycle present value for Option A and 27 % for Option B. Planned maintenance and compliance, energy, consumables, water and downtime each contribute 5 % to 15 %. Evaluation on purchase price alone omits 73 % to 80 % of lifecycle cost.

Comparison: Option B is about A$6,600 lower in present value, 1.4 % of lifecycle cost. Its A$20,000 premium is paid at year 0 and again at year 10, a combined present value of A$32,300. Its water saving of A$3,120 per year has a present value of A$38,900 over 20 years. Simple payback is 6.4 years and discounted payback at 5 % is 7.9 years, inside the 10-year life. Option B is lower wherever the combined tariff exceeds A$4.15 per kL [A$15.71 per 1,000 US gal].

Life Extension: If each machine instead runs 20 years without replacement, the premium is paid once, the break-even tariff falls to A$2.57 per kL [A$9.74 per 1,000 US gal] and Option B is A$18,900 lower. At the assumed repair and downtime escalation, a single 20-year life raises lifecycle cost by A$90,900 for Option B and A$103,200 for Option A.

Cost per Cycle: Equivalent annual cost divided by 2,600 cycles per year gives A$14.76 per cycle for Option A and A$14.56 for Option B. Dividing present value by the 52,000 undiscounted cycles gives A$9.20 and A$9.07, which understates cost per cycle.

Sensitivity

The following tables vary one input at a time for two steam sterilisers priced at A$60,000 and A$80,000, using 375 L [99 US gal] and 135 L [36 US gal] per cycle, with all other costs equal. Unless varied, operation is 10 cycles per day on 260 days per year, the combined tariff is A$5 per kL [A$18.93 per 1,000 US gal], the real discount rate is 5 % and each machine is replaced at year 10. The margin is the difference in present value over 20 years. Tariffs are in A$ per kL, with A$ per 1,000 US gal in brackets.

Option B is lower at the Commonwealth, NSW and Victorian central discount rates, and higher at 10 %. At 5 cycles per day it is lower only where the tariff exceeds A$8.30 per kL [A$31.42 per 1,000 US gal]. Assuming a 20-year life where the machine will be replaced at year 10 counts the premium once instead of twice and overstates the saving of Option B by about A$12,300. Repeat the calculation with quoted prices, measured consumption, local tariffs and the discount rate of the funding jurisdiction.

Regulatory Requirements

AS 5369:2023: Requires validation of every process by IQ, OQ and PQ, requalification at least annually, routine monitoring, traceability, planned preventive maintenance, calibration, water quality testing and controlled reprocessing environments.

NSQHS Standards: Hospitals and day procedure services are assessed against Action 3.17 of the National Safety and Quality Health Service Standards. It requires reprocessing consistent with relevant national and international standards, traceability of critical and semi-critical equipment to the patient and procedure, and planning for reprocessing demand.

Advisory AS24/01: Published by the Australian Commission on Safety and Quality in Health Care in November 2024, it replaces Advisory AS18/07. It requires a gap analysis against AS 5369:2023, updated by 30 June 2025, a compliance plan with timeframes, risk assessment and mitigation during implementation including water treatment, and conformity of replacement equipment to the relevant standards. It sets no fixed deadline for full implementation. An organisation with an implementation timeline longer than 3 years may apply to the Commission for an exemption from the assessment rating rules. Include the cost of closing identified gaps, including facility works for segregation, workflow and ventilation.

Equipment Standards: ISO 15883 for washer-disinfectors, EN 285 and EN 13060 for steam sterilisers, and ISO/TS 22421 for sterilisers. Machines that cannot be validated to current requirements must be upgraded or replaced.

Therapeutic Goods Administration: Reprocessing equipment must be included in the ARTG. Confirm the ARTG entry before purchase.

Work Health and Safety: Manage plant risks, register pressure equipment where required under the model Work Health and Safety Regulations or, in Victoria, the Occupational Health and Safety Regulations 2017, inspect pressure equipment to AS/NZS 3788:2024, and train operators in safe operation and emergency procedures.

Water Authorities: Test testable backflow prevention devices every 12 months, or at the interval set by the water authority, by an accredited tester and report results to the water authority. Discharge within the trade wastewater acceptance standards of the local authority, e.g. Sydney Water limits discharge temperature to 38 deg C [100 deg F] and pH to 7 to 10.

Recommendations

• Baseline: Record the age, condition, cycle count, repair cost, downtime and utility consumption of each machine. Calculate the current cost per cycle.
• Lifecycle Evaluation: Evaluate tenders on equivalent annual cost per cycle over a 20-year horizon, at constant prices and the real discount rate of the funding jurisdiction. Require stated consumption with test conditions, maintenance schedules, parts lists and a 10-year support period.
• Capital Premiums: Accept a higher purchase price only where its savings recover it within one machine life.
• Replacement Planning: Plan a 10-year service life in high use, review condition from year 8, and confirm the economic life from repair and downtime records.
• Capacity: Size for peak demand with one machine of each type out of service.
• Utilities: Meter water and energy by machine, including standby and idle flows, and act on rising consumption. Use the local tariff including wastewater and trade waste charges.
• Compliance: Budget annually for planned maintenance, requalification, calibration, water testing, pressure equipment inspection, backflow device testing and training.
• Sensitivity: Test tariff, utilisation, discount rate and service life before selecting an option.
• Stakeholders: Include CSSD, infection prevention, biomedical and facilities staff in specification and evaluation.

Sources

1. Standards Australia. AS 5369:2023 Reprocessing of reusable medical devices and other devices in health and non-health related facilities.
2. Australian Commission on Safety and Quality in Health Care. Advisory AS24/01 National Safety and Quality Health Service Standards requirements for reprocessing of reusable medical devices in health service organisations. November 2024.
3. Australian Commission on Safety and Quality in Health Care. National Safety and Quality Health Service Standards, second edition, Action 3.17.
4. Department of Finance. Commonwealth Procurement Rules, paragraphs 4.5 and 4.6.
5. Office of Impact Analysis. Cost-benefit analysis guidance note.
6. NSW Treasury. TPG23-08 NSW Government Guide to Cost-Benefit Analysis.
7. Department of Treasury and Finance Victoria. Economic Evaluation Technical Guide.
8. Australian Taxation Office. TR 2022/1 Income tax: effective life of depreciating assets, Health care and social assistance.
9. Safe Work Australia. Model Work Health and Safety Regulations, Schedule 5, Registration of plant and plant designs.
10. AS 4343:2014 Pressure equipment, Hazard levels.
11. AS/NZS 3788:2024 Pressure equipment, In-service inspection.
12. IEC 60300-3-3:2017 Dependability management, Part 3-3: Application guide, Life cycle costing.
13. US Environmental Protection Agency. WaterSense at Work, Best Management Practices for Commercial and Institutional Facilities, laboratory and medical equipment.
14. International Association for the Properties of Water and Steam. IAPWS-IF97 Industrial Formulation for the Thermodynamic Properties of Water and Steam.
15. Sydney Water. Business pricing, 2026 to 2027.
16. Sydney Water. Industrial acceptance standards and charging rates.
17. IPART. Maximum prices for water, wastewater and other services supplied by Central Coast Council from 1 July 2026.
18. Yarra Valley Water. Water and trade waste prices, 2026 to 2027.
19. Yarra Valley Water. Backflow prevention testing and reporting.