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Book ChapterDOI

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

TL;DR: In the field of modern production contexts, the complexity of processes combined with an increasingly dynamic competitive environment has created, in business management, the need to monitor and analyze, in terms of generation costs, not only the internal production phase but all stages both upstream and downstream in order to minimize the total cost of the product throughout the entire life cycle as mentioned in this paper.
Abstract: In the field of modern production contexts, the complexity of processes combined with an increasingly dynamic competitive environment has created, in business management, the need to monitor and analyze, in terms of generation costs, not only the internal production phase but all stages both upstream and downstream in order to minimize the total cost of the product throughout the entire life cycle. The approach of life-cycle cost analysis was used primarily as a tool to support investment decisions and complex projects in the field of defence, transportation, the construction sector and other applications where cost constitutes the strategic analysis of cost components of a project throughout its useful life. The analysis methodology of Life Cycle Costing (LCC) concerns the estimate of the cost in monetary terms, originated in all phases of the life of a work, i.e. construction, operation, maintenance and eventual disposal / recovery. The aim is to minimize the combined costs associated with each phase of the life cycle, appropriately discounted, thus providing economic benefits to both the producer and the end user. Life Cycle Costing (LCC) is a tool used in consolidated management accounting (Horngren, 2003, Atkinson et al., 2002), which aims to achieve a reduction in carbon dioxide. Whole life cost. This identifies, with reference to the system, the functional activities within the appropriate stages of design, production, use and disposal of waste, and appropriates a cost (Fabricky Blanchard, 1991) in order to clarify the causal relationship between resulting architecture of product design alternatives and cost estimates of fees, which will probably be supported by the various actors within the economic life of the product [Fixson, 2004]. Life Cycle Costing is an analytical tool and method which belongs to the set of life cycle approach. Traditionally, LCC was used to support purchasing decisions of products or capital equipment involving a large outlay of financial resources (Huppes et al., 2005). In the definition provided by Rebitzer & Hunkeler (2005) LCC incorporates all costs, both internal and external, associated with the life cycle of a product, and are directly related to one or more actors in the supply chain.

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Citations
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Journal ArticleDOI
TL;DR: An evaluation tool which combines life cycle assessment (LCA) and life cycle costing (LCC) to support the development of PSS for HECE is articulates.

53 citations

Proceedings Article
01 Jan 2007
TL;DR: Product Life Cycle Management addresses the full life cycles of products, from conception until disposal, because systems keep evolving to fit in the market and to benefit from technical capabilities.
Abstract: Product Life Cycle Management addresses the full life cycles of products, from conception until disposal. The creation of the product determines largely what can be done with the product in the later life cycle phases. From business perspective the installed base, all systems that are operational in the field, is an asset that provides many opportunities. From technical perspective the operational life of products is quite a challenge, because systems keep evolving to fit in the market and to benefit from technical capabilities. This creates a variety of operational configurations that have to be served. Distribution This article or presentation is written as part of the Gaudí project. The Gaudí project philosophy is to improve by obtaining frequent feedback. Frequent feedback is pursued by an open creation process. This document is published as intermediate or nearly mature version to get feedback. Further distribution is allowed as long as the document remains complete and unchanged. March 6, 2013 status: preliminary draft version: 0.2 R1 SW R1 HW R1 HW R2 SW R2 SW R2 HW R3 SW R3 HW initial delivery sw upgrade initial delivery sw upgrade R3 SW R2 HW initial delivery R3 SW R3 HW forklift upgrade How long are new functions compatible with older system configurations? When to break compatibility? When does the customer pay for an upgrade? When to retrofit? example Try to run Windows Vista on your 1GB computer from 2005... Figure Of

23 citations

Journal ArticleDOI
01 Nov 2021-Energies
TL;DR: In this paper, a review of the literature concerning the economic evaluation of the production of perennial crop biomass for energy use is presented, which is probably stimulated by the growing interest in sustainable development, particularly after 2015, when the United Nations declared 17 sustainable development goals.
Abstract: Biomass is widely used for the production of renewable energy, which calls for an economic evaluation of its generation. The aim of the present work was to review the literature concerning the economic evaluation of the production of perennial crop biomass for energy use. Statistical analysis of the bibliographic data was carried out, as well as an assessment of methods and values of economic indicators of the production of perennial crops for bioenergy. Most of the papers selected for the review were published in the years 2015–2019, which was probably stimulated by the growing interest in sustainable development, particularly after 2015, when the United Nations declared 17 sustainable development goals. The earliest articles concerned the economic analysis of plantations of short rotation coppice; the subsequent ones included the analysis of feedstock production in terms of the net present value and policy. The latest references also investigated transport and sustainability issues. The crops most commonly selected for production cost analysis were willow, poplar, and Miscanthus. The cost of production of willow and poplar were similar, 503 EUR ha−1 year−1 and 557 EUR ha−1 year−1, respectively, while the cost of Miscanthus production was significantly higher, 909 EUR ha−1 year−1 on average. By analogy, the distribution of revenue was similar for willow and poplar, at 236 EUR ha−1 year−1 and 181 EUR ha−1 year−1; Miscanthus production reached the value of 404 EUR ha−1 year−1. The economic conditions of perennial crop production differed in terms of geography; four areas were identified: Canada, the USA, southern Europe, and central and northern Europe.

10 citations

Journal ArticleDOI
TL;DR: In this article, the authors discuss the relevance of Life Cycle Costing (LCC) in public procurement in the European context after the publication of the Directive 2014/24/EU.
Abstract: The aim of this paper is to discuss the relevance of Life Cycle Costing (LCC) in public procurement in the European context after the publication of the Directive 2014/24/EU. After a description of the concept, the dimensions and main features of LCC, the contents of the Directive are briefly presented, focusing on the requirements related to life cycle costing. The main issues related to the assessment of LCC are then discussed, such as discounting and uncertainty of the data, but the paper mostly concentrates on a key-aspect of the methodology: the monetization of environmental externalities, since the Directive emphasizes that this aspect shall also be included in the LCC calculation. Moreover, in order to explore the relevance of LCC in public procurement, a survey to 119 public administrations of different countries has been carried out. The main findings of the survey, presented in our paper, show that the Life Cycle Costing approach is implemented by only a small part of public administrations, in spite of the fact that Green Public Procurement, normally considered as a driver for LCC, is very diffused among the same administrations

9 citations

References
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01 Sep 1995
TL;DR: The Dutch flower industry has responded to its environmental problems by developing a closed-loop system to reduce the risk of infestation, reducing the need for fertilizers and pesticides, and improving product quality as mentioned in this paper.
Abstract: The need for regulation to protect the environment gets widespread but grudging acceptance: widespread because everyone wants a livable planet, grudging because of the lingering belief that environmental regulations erode competitiveness. The prevailing view is that there is an inherent and fixed trade-off: ecology versus the economy. On one side of the trade-off are the social benefits that arise from strict environmental standards. On the other are industry's private costs for prevention and cleanup -- costs that lead to higher prices and reduced competitiveness. With the argument framed this way, progress on environmental quality has become a kind of arm-wrestling match. One side pushes for tougher standards; the other tries to roll them back. The balance of power shifts one way or the other depending on the prevailing political winds. This static view of environmental regulation, in which everything except regulation is held constant, is incorrect. If technology, products, processes, and customer needs were all fixed, the conclusion that regulation must raise costs would be inevitable. But companies operate in the real world of dynamic competition, not in the static world of much economic theory. They are constantly finding innovative solutions to pressures of all sorts -- from competitors, customers, and regulators. Properly designed environmental standards can trigger innovations that lower the total cost of a product or improve its value. Such innovations allow companies to use a range of inputs more productively -- from raw materials to energy to labor -- thus offsetting the costs of improving environmental impact and ending the stalemate. Ultimately, this enhanced resource productivity makes companies more competitive, not less. Consider how the Dutch flower industry has responded to its environmental problems. Intense cultivation of flowers in small areas was contaminating the soil and groundwater with pesticides, herbicides, and fertilizers. Facing increasingly strict regulation on the release of chemicals, the Dutch understood that the only effective way to address the problem would be to develop a closed-loop system. In advanced Dutch greenhouses, flowers now grow in water and rock wool, not in soil. This lowers the risk of infestation, reducing the need for fertilizers and pesticides, which are delivered in water that circulates and is reused. The tightly monitored closed-loop system also reduces variation in growing conditions, thus improving product quality. Handling costs have gone down because the flowers are cultivated on specially designed platforms. In addressing the environmental problem, then, the Dutch have innovated in ways that have raised the productivity with which they use many of the resources involved in growing flowers. The net result is not only dramatically lower environmental impact but also lower costs, better product quality, and enhanced global competitiveness. (See the insert "Innovating to Be Competitive: The Dutch Flower Industry.") This example illustrates why the debate about the relationship between competitiveness and the environment has been framed incorrectly. Policy makers, business leaders, and environmentalists have focused on the static cost impacts of environmental regulation and have ignored the more important offsetting productivity benefits from innovation. As a result, they have acted too often in ways that unnecessarily drive up costs and slow down progress on environmental issues. This static mind-set has thus created a self-fulfilling prophecy leading to ever more costly environmental regulation. Regulators tend to set regulations in ways that deter innovation. Companies, in turn, oppose and delay regulations instead of innovating to address them. The whole process has spawned an industry of litigators and consultants that drains resources away from real solutions. POLLUTION = INEFFICIENCY Are cases like the Dutch flower industry the exception rather than the rule? …

4,056 citations

Journal ArticleDOI
TL;DR: A review of recent developments of LCA methods, focusing on some areas where there has been an intense methodological development during the last years, and some of the emerging issues.

2,683 citations


"Life Cycle Costing, a View of Poten..." refers background in this paper

  • ...The comprehensive scope of LCA is useful in order to avoid problem-shifting, for example, from one phase of the life-cycle to another, from one region to another, or from one environmental problem to another (Finnveden et al 2009)....

    [...]

  • ...National or regional databases, which evolved from publicly funded projects, provide inventory data on a variety of products and basic services that are needed in every LCA, such as raw materials, electricity generation, transport processes, and waste services as well as sometimes complex products (Finnveden et al. 2009)....

    [...]

  • ...…which evolved from publicly funded projects, provide inventory data on a variety of products and basic services that are needed in every LCA, such as raw materials, electricity generation, transport processes, and waste services as well as sometimes complex products (Finnveden et al. 2009)....

    [...]

Journal ArticleDOI
TL;DR: In an attempt to improve the design of products and reduce design changes, cost, and time to market, concurrent engineering or life cycle engineering has emerged as an effective approach to addressing these issues in today's competitive global market as discussed by the authors.
Abstract: In an attempt to improve the design of products and reduce design changes, cost, and time to market, concurrent engineering or life cycle engineering has emerged as an effective approach to addressing these issues in today's competitive global market. As over 70% of the total life cycle cost of a product is committed at the early design stage, designers are in a position to substantially reduce the life cycle cost of the products they design, by giving due consideration to life cycle cost implications of their design decisions. Increasing recognition of cost competition has spurred the development of methodologies such as design for manufacturability, design for assembly (DFA), design for producibility, design for maintainability and design for quality, in the design for 'X' realm. Although these methodologies have for the most part proven successful in reducing cost, the design evaluation criterion in most of these methodologies is not cost. Therefore methodologies and tools are needed to directly provid...

637 citations


"Life Cycle Costing, a View of Poten..." refers background in this paper

  • ...From the perspective of the producer, calculations consist of the estimation of the costs of design, engineering, industrialization and production of a new product and in the analysis of these costs throughout the life cycle (Asiedu & Gu, 1998)....

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Posted Content
01 Jan 2000
TL;DR: In this paper, the authors outline the principles of eco-efficiency and present case studies of their application from a number of international companies, including 3M and the Dow Chemical Company, and argue that business must become more eco-efficient and that governments need to change the conditions under which business operates, including tax and regulatory regimes, to make them more conducive to ecoefficiency.
Abstract: The term "eco-efficiency" describes business activities that create economic value while reducing ecological impact and resource use. This book outlines the principles of eco-efficiency and presents case studies of their application from a number of international companies, including 3M and the Dow Chemical Company. It also discusses the value of partnerships--with other companies, business associations, communities, regulators, and environmental and other nongovernmental groups. In the conclusion, the authors argue that business must become more eco-efficient and that governments need to change the conditions under which business operates, including tax and regulatory regimes, to make them more conducive to eco-efficiency.

594 citations


"Life Cycle Costing, a View of Poten..." refers background in this paper

  • ...De Simone and Popp (2000), have classified the possible benefits of eco-efficiency into five categories: • Reduced operating costs due to poor environmental performance (eg....

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