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What is Terotechnology?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 28 November 2016
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Terotechnology is a kind of applied science for measuring the operational values of physical assets. It is concerned with things such as the installation, maintenance and replacement of those assets. Professionals who are involved in terotechnology look at tangible assets of a company or business such as buildings, equipment and vehicles. They measure how these items will provide a net value for certain years until they need to be replaced.

Part of terotechnology is called life-cycle costing. Life-cycle costing can include attention to depreciation and other tax-related values. Generally, in life-cycle costing, one adds up all of the positive and negative values associated with a physical asset during a certain period of time to produce a net result. Companies use this net value to understand how ownership and use of a piece of equipment or other physical asset during that period of time will affect their bottom line.

A big part of terotechnology is in understanding the role of maintenance and the value of a warranty. Many larger pieces of equipment and other physical assets come with warranties offered by the manufacturer or vendor. In terotechnology, the way in which these warranties provide value relative to projected costs is examined.

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Professionals who are involved in terotechnology use what is called a bath-tub curve, which is used to indicate the failure rate for equipment or machines. In the beginning of its life cycle, an item might be relatively likely to fail for various reasons, such as manufacturing or installation errors. After becoming acclimated to its environment, the item will be less likely to fail until wear and age make the failure rate start to increase again. The shape of this projected failure rate when plotted on a graph resembles a bath tub, which is the reason for its name.

Terotechnology represents a differentiation between all of the physical assets that a business owns and other assets that are intangible and not associated with operating costs. Typically, businesses hold certain physical assets for production and focus their additional capital on the kinds of intangible assets that don’t generate more overhead costs. The science of evaluating physical items is, for many companies, a way to manage the inevitable and necessary ownership of physical equipment.

Vendors also apply terotechnology to their products. These are the same products that will become assets for buyers, so vendors also can benefit from the same observational science to know more about the value of their products in the hands of others. Overall, this kind of analysis is a way for businesses to keep tabs on the expenses involved in owning large machines or other gear, as well as office space and other physical parts of their business.

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