Systematic approach to optimize cost drivers based on life cycle cost modeling

Year: 2017
Editor: Anja Maier, Stanko Škec, Harrison Kim, Michael Kokkolaras, Josef Oehmen, Georges Fadel, Filippo Salustri, Mike Van der Loos
Author: Johannknecht, Florian (1); Gatzen, Matthias (2); Lachmayer, Roland (1)
Series: ICED
Institution: 1: Leibniz Universität Hannover, Germany; 2: Baker Hughes Incorporated, United States of America
Section: Design for X, Design to X
Page(s): 121-130
ISBN: 978-1-904670-93-3
ISSN: 2220-4342


Optimizing cost drivers is one of the key success factors within product development. Approaches to develop cost-efficient products are deeply rooted in standard design methodology. However, in most instances manufacturing costs are in primary focus. Against the background of current trends in various industries, the life cycle of a product becomes more and more important, which results in the necessity of considering costs from the use phases as well. Designing a product with low life cycle costs poses a significant challenge. Various dependent influences lead to trade-off decisions with the involvement of subject matter experts. Focus on the most important cost influences in different life cycle phases is essential for a fast, efficient, and standardized process to optimize costs. This paper describes a holistic life cycle costing approach for cost management in product development. Based on cost modeling, a systematic way to optimize capital and operational cost drivers is explained. Relations and trade-offs between costs from different phases of the life cycle are presented. Also, a case study performed with an industry partner demonstrates the application of the model.

Keywords: Design costing, Design methodology, Product Lifecycle Management (PLM), Cost drivers

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