Life cycle costing: a review of published case studies

Eric Korpi (Department of Industrial Engineering and Management, Helsinki University of Technology, Finland)
Timo Ala‐Risku (Department of Industrial Engineering and Management, Helsinki University of Technology, Finland)

Managerial Auditing Journal

ISSN: 0268-6902

Publication date: 21 March 2008

Abstract

Purpose

Despite existing life cycle costing (LCC) method descriptions and practicable suggestions for conducting LCC analyses, no systematic analyses on actual implementations of LCC methods exist. This paper aims to review reports on LCC applications to provide an overview of LCC uses and implementation feasibility.

Design/methodology/approach

A review of LCC cases reported in academic and practitioner literature. Case reports were compared against one another and against the defining articles in the field.

Findings

Most of the reported LCC applications were far from ideal. Compared to the methods suggested in the literature many of the case study applications: covered fewer parts of the whole life cycle, estimated the costs on a lower level of detail, used cost estimation methods based on expert opinion rather than statistical methods, and were content with deterministic estimates of life cycle costs instead of using sensitivity analyses.

Research limitations/implications

This review is limited to reported LCC applications only. Further research is encouraged in the form of a field‐based multiple‐case study to reveal context‐specific dimensions of LCC analysis and implementation challenges in more detail.

Practical implications

This review highlights the difficulty of conducting a reliable LCC analysis, and points out typical problems that should be carefully considered before drawing conclusions from the LCC analysis.

Originality/value

First systematic analysis of LCC applications that gives directions for further research on the LCC concept.

Keywords

Citation

Korpi, E. and Ala‐Risku, T. (2008), "Life cycle costing: a review of published case studies", Managerial Auditing Journal, Vol. 23 No. 3, pp. 240-261. https://doi.org/10.1108/02686900810857703

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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