A Literature Review of Life Cycle Costing in the Product-Service System Context

Abstract

A transition from a product-selling to a Product-Service Systems (PSS) business model incurs a transition in costs from customer to provider. Due to this shift in cost ownership, Life Cycle Costing (LCC) is used by providers and customers to better understand the PSS costs spanning from design to end-of-life. Through a literature review the paper determines that there are similarities in the approach to LCC for specific types of PSS e.g. availability type, but further research needs to be undertaken to identify commonalities between different types of PSS.The review also discerned that the terminology for LCC is not consistent and sometimes it is used to identify only the costs incurred by a specific actor. Furthermore, the end-of-life stage and the implications of a second life for a remanufactured PSS in LCC are also yet to be fully understood. A number of challenges associated with obtaining quality data for costing within PSS were identified. These include the lack of availability, the relevancy due to use of pre-PSS data that does not reflect the redesign of products and services to fit in PSS and challenges associated with the design paradox. Finally, a lack of empirical studies is noted.