scholarly journals Life Cycle Costing, a View of Potential Applications: from Cost Management Tool to Eco-Efficiency Measurement

10.5772/15332 ◽  
2011 ◽  
Author(s):  
Francesco Testa ◽  
Fabio Iraldo ◽  
Marco Frey ◽  
Ryan OConnor
Keyword(s):  
Life Cycle ◽  
Cost Management ◽  
Life Cycle Costing ◽  
Efficiency Measurement ◽  
Management Tool ◽  
Potential Applications

Product Life Cycle Costing

2015 ◽  
Vol 816 ◽  
pp. 547-554 ◽  
Author(s):  
Jaroslava Kádárová ◽  
Ján Kobulnický ◽  
Katarína Teplicka
Keyword(s):  
Life Cycle ◽  
Product Life Cycle ◽  
New Technologies ◽  
Cost Management ◽  
Life Cycle Costing ◽  
Management Tool ◽  
Start Up ◽  
Production Calculation ◽  
Whole Life Cycle ◽  
The Relationship

Successful performance of a company and its ability to handle growing competition is dependent on its capacity of implementing new technologies and making use of new methods of management. This report aims at cost management tool that enables controlling of costs through the whole life-cycle. Life Cycle Costing allows us to look at the start-up costs and the costs associated with the cessation of production, after-sales services costs and other expenses not taken into account in planned or operational calculation, see them as one unit and thereby evaluate the effectiveness of the product. Before establishing a production, calculation of the life-cycle costs is based on various factors which can be found in this article as well as the division of costs within the scope of calculation. It contains an example of calculation and accurate illustrations of process-based models of life-cycle costing from different points of view brought by various authors dealing with this topic, the usage of costing and the relationship with other calculations that are component parts of a company’s strategic cost management.

Value Creation and Cost Management by Use of the New ISO 15663 Life Cycle Costing Standard

2021 ◽  
Author(s):  
Endre Willmann ◽  
Runar Østebø ◽  
Eduardo H. R. Montalvao
Keyword(s):  
Life Cycle ◽  
Decision Support ◽  
Value Creation ◽  
Life Cycle Cost ◽  
Net Present Value ◽  
Oil And Gas ◽  
Cost Management ◽  
Life Cycle Costing ◽  
Cycle Phase ◽  
Life Cycle Phase

Abstract The new edition of the ISO 15663 standard has been developed during the recent years and will strengthen the industry cost management for business value creation. This paper shows how such standardization can be used to further enhance and promote adoption of a common and consistent approach to life cycle costing in the offshore oil and gas industry. The new ISO 15663 edition maintains key principles from previous editions, but does also introduce an improved and revised management methodology for application of life cycle costing. The purpose is to provide decision support for selecting between alternative options (e.g., projects, operational and technical subject matters) across life cycle phases, also aligned with overall corporate business objectives such as HSE and sustainability. It also provides the means of identifying cost drivers and a framework for value optimization over the entire life of an asset. The international standard is providing an essential set of normative requirements on how to implement and apply the life cycle costing methodology and the decision criteria, supported by an exhaustive part of recommended practices. This includes the identification of common and specific contractual considerations for operators, contractors and vendors (e.g., complementary metrics besides expenditure, such as systems availability guarantee and risk-sharing clauses). It also includes the application in the life cycle phases of an asset, the techniques and data input, examples of application, and assessment and lessons learnt. Capital expenditure (CAPEX), operating expenditure (OPEX), revenue and lost revenue (LOSTREV) factors are addressed. The standard includes an unambiguous definition of the economic objectives of a project and application of the same business criteria when making major engineering decisions. The life cycle costing methodology is applicable to all asset decisions in any life cycle phase, but should be applied only when expected to add value for decision-support. The required extent of planning and management of the appropriate life cycle costing is depending on the magnitude of the costs involved, the potential value that can be created and the life cycle phase. This paper demonstrates how the new ISO 15663 can be utilized by providing new examples of life cycle costing, to give all participants in the process — oil and gas operators, contractors and vendors — an up-to-date and streamlined set of requirements and guidance, encouraging a fit for purpose application. The paper does also present unique key economic evaluation measures such as life cycle cost (LCC) and net present value (NPV).

The adoption and benefits of life cycle costing

2018 ◽  
Vol 14 (2) ◽  
pp. 188-215 ◽  
Author(s):  
Thorsten Knauer ◽  
Katja Möslang
Keyword(s):  
Life Cycle ◽  
Cost Management ◽  
Life Cycle Costing ◽  
Theory And Practice ◽  
Future Research ◽  
Content Type ◽  
Starting Point ◽  
Warranty Costs ◽  
The Impact

Purpose Although life cycle costing (LCC) is well established in theory and practice, little is known about the conditions of its adoption and its impact on the achievement of cost-management goals. Therefore, this paper aims to analyze the adoption and benefits of LCC. Design/methodology/approach The analyses are based on questionnaires collected from a survey of German firms. Findings The results demonstrate that the extent of LCC adoption is positively associated with the extent of guarantee and warranty costs, voluntary upfront and follow-up costs for ecological sustainability and the extent of target costing adoption. In contrast, the extent of LCC adoption is negatively associated with the amount of precursors and/or intermediates that are purchased. The results also demonstrate that firms perceive LCC to be beneficial for various aspects of cost management. Firms report that the greatest benefit of LCC is related to the identification of cost drivers. Research limitations/implications This investigation provides a starting point for future studies of the conditions of LCC adoption and the benefits of LCC. This study is subject to limitations, particularly with respect to the operationalization of our independent variables, the number of contextual variables and the general limitations of survey research. Practical implications The results inform practitioners of the situations in which it is most appropriate to adopt LCC. In addition, this study identifies various cost-management goals that are supported by the use of LCC. Originality/value This study provides the first comprehensive analysis of the conditions of LCC adoption and advances the literature regarding the impact of LCC on the achievement of cost-management goals. Furthermore, this study provides a starting point for future research into the implementation of LCC and the effects of LCC on management accounting practices.

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