Learning by costing: Sharpening cost image through life cycle costing?

The purpose of this paper is to discuss life cycle cost management and highlight the practical challenges related to collecting adequate data and practicing long‐term cost management in an uncertain environment.

The paper reports a case study conducted in the Finnish Defence Forces. As part of the case study, a life cycle cost model for a case product was developed.

Activity‐based life cycle cost modeling can provide relevant information for varying product management needs at different stages in the life of a product. Quantification of uncertainty is one of the elements in the modeling that can improve the feasibility of LCC both for cost estimation and tracking purposes.

Only a few empirical studies on life cycle costing have been reported which focus on the defence sector. The paper contributes to our understanding of how LCC can be used in a continuous manner and depicts how LCC can produce a sharpened cost image of a particular product.