Generic Life Cycle Cost Model and Cost-effective Solutions

Abstract

Life cycle costing (LCC) practices are spreading from military and construction sectors to wider area of industries. Suppliers as well as customers are demanding comprehensive cost knowledge that includes all relevant cost elements through the life cycle of products. The problem of total cost visibility is being acknowledged and the performance of suppliers is evaluated not just by low acquisition costs of their products, but by total value provided through the life time of their offerings. The main purpose of this thesis is to provide better understanding of product cost structure to the case company. Moreover, comprehensive theoretical body serves as a guideline or methodology for further LCC process. Research includes the constructive analysis of LCC related concepts and features as well as overview of life cycle support services in manufacturing industry. The case study aims to review the existing LCC practices within the case company and provide suggestions for improvements. It includes identification of most relevant life cycle cost elements, development of cost breakdown structure and generic cost model for data collection. Moreover, certain cost-effective suggestions are provided as well. This research should support decision making processes, assessment of economic viability of products, financial planning, sales and other processes within the case company.