A comprehensive description of the Product-Service Systems’ cost estimation process: An integrative review

Abstract

The transition from the traditional product-centric approach to the offering of integrated product service solutions, such as Product-Service Systems (PSS), has represented a major managerial challenge for companies. A major contributor to such challenge has been the inability of the Cost Estimation Process to deal with the novelty and complexity of PSS solutions, where in particular, cost under-estimation has triggered inadequate contract decisions such as under-pricing. To this end, the academic literature has extensively investigated how the PSS context has modified the cost estimation process and how it has exacerbated cost unpredictability. However, research contributions are limited to specific elements within the estimation process, where a picture of the whole process has not been yet investigated. This paper presents a comprehensive description of the whole PSS Cost Estimation Process derived from an Integrative Review that summarizes and subsumes current empirical/theoretical advancements and methodological approaches in literature. This study evidences how the PSS Cost Estimation Process differs from traditional cost estimation frameworks such as Life Cycle Costing (LCC) at various degrees, and how it is related to other interdependent processes such as PSS Engineering and PSS Contract Design. Moreover, this work suggests that cost unpredictability represents an inherent property of the PSS context, and discusses how identified properties at the process-level help to better investigate cost uncertainty. Finally, this paper evidences research gaps that inform future research, and provides a set of recommendations that call for the development of new bespoke cost estimation frameworks for the PSS context.