UdZ 3-2012

39 Unternehmen der Zukunft 3/2012 UdZ FIR demonstrates competency in Life Cycle Costing In order to remain competitive in the rising pressure and uncertainty of today’s market econo- my, substantiated investment decisions are of significant importance. Many investment deci- sions are however still based on traditional cost-benefit analyses, which often solely consider the initial purchasing costs of an investment. This is often inappropriate and short-sighted since in various industry sectors a major part of the total investment costs is caused by the follow-up costs of the initial acquisition. In order to adequately choose among investment options, it is crucial to use a holistic costing perspective that considers the entirety of the arising costs. One widely acknowledged holistic costing approach is the Life Cycle Costing concept (LCC). The essence of the technique is to segregate investment into separate phases over their life-cycle and to identify cost drivers of each phase. Despite of the widely acknow- ledged significance of the LCC approach, there is still a lack of LCC usage due to implemen- tation complexity in industry environments, which is centred around the identification and calculation of potential cost drivers. To help industries understanding their complex costing structures over the whole life cycle of their products and services, the FIR has developed a methodology to make LCC applicable; such as the European railway industry. Practical case application within the railway industry Among other industries, European railway ope- rators of signalling systems have recognized the special need of Life Cycle Costing in their indus- try due to the fact that approximately 60-70 % of the total costs occur after the actual invest- ment (Result of an internal analysis within the European research project INESS). Additionally, the railway industries throughout Europe are exposed to an increasing competitive pressure caused by various less costly transportation and logistics modes. As part of its research and in cooperation with experts of the European rail- way industry, the FIR has developed a model to measure Life Cycle Costs in complex industries, whose practical application has enabled it to further hone its consulting know-how. DIN EN 60300-3-3 was taken as a methodological basis. Supported by FIR , the practical applica- tion of the generic Life Cycle Costing model was conducted with focus on railway signalling systems, taking into account all phases of their typical lifecycle. The application of the mo- del was split into the following three stages: Stage 1: Development of an industry-specific LCC model Stage 2: Implementation of a LCC Data Collection Stage 3: LCC Data Analysis Figure 1: Proportion of total life cycle costs of signalling systems with a time span of 25 years System Implementation Hardware System Implementation Labour Operations Labour Maintanance Labour Other All The first stage’s main objective was to provide the opportunity for merging all existing LCC data from participating railway partners into one LCC-database. The second stage was the LCC data collection process. This stage had two main objectives. On the one hand the ex- traction of LCC data from the local accounting department of every project partner and on the other hand a detailed description of all frame- work conditions related to the local signalling system project. Stage three was the analysis of all collected datasets. Potential objectives of the LCC were the identification of cost drivers through the classification of cost items towards product structure, the creation of transparency over the distribution of costs within the lifecycle and the measurement of the relation between Acquisition costs and the sum of costs of ow- nership and disposal costs. If the objective is the identification of cost drivers, as it is within the INESS project, cost items have to be clustered to the dimensions of the LCC model. Clustering should be made towards the different phases and sub-phases of the life cycle or towards the product structure. In this particular case, total costs, which are made up of investment costs and costs for operations and maintenance show an approximate distribution of 50-55 % for invest costs and 45-50 % for operations and maintenance costs. A further breakdown shows that investment costs consist of approx. FIR-Forschungsprojekte