Designing a hybrid methodology for the Life Cycle Valuation of capital goods

• Published in: CIRP journal of manufacturing science and technology 2021-01, Vol.32, p.382-395
• Main Authors: Haanstra, W., Braaksma, A.J.J., van Dongen, L.A.M.
• Format: Article
• Language: English
• Subjects: Asset Management; Capital goods; Decision-making; ISO 55000; Life Cycle Assessment; Life Cycle Costing; Life Cycle Planning; Life Cycle Valuation; Physical assets
• ISSN: 1755-5817; 1878-0016
• DOI: 10.1016/j.cirpj.2021.01.017

•Changing industrial environments demand a strategic lifecycle-oriented perspective.•Life Cycle Costing, though widely adopted, is a limited decision-making instrument.•The guidelines and principles of LCA can be adapted for the evaluation of LCC.•A hybrid Life Cycle Valuation methodology is proposed for AM decision-making.•The proposed LCV methodology is successfully evaluated in AM practice. Decision-makers are increasingly required to assess the value created by complex physical systems over their entire life cycle. The commonly applied Life Cycle Costing approach fails to fully capture value, as it is primarily aimed at costs, takes a reductionist approach, and does not account for continuously changing industrial environments. To address these shortcomings, the Life Cycle Valuation methodology is proposed, designed as a hybrid of LCC and Life Cycle Assessment. LCV facilitates the assessment of costs and benefits from multiple complementary perspectives and can be tailored to specific decision contexts, as demonstrated by applying LCV during Asset Management decision-making.