To Cost an Elephant: An Exploratory Survey on Cost Estimating Practice in the Light of Product-Service-Systems

Abstract

Businesses now contracting for availability are regarded as part of a paradigm shift away from the familiar ‘product and support’ business model. The main difference being that such businesses eventually commit to provide a service outcome via product-service-system. The research presented in this article investigates how current cost estimating practice relates with the idea of having as the point of focus for the analysis a product-service-system delivering service outcomes, rather than a product. Since the topic is in its infancy, an exploratory survey was designed and circulated via the Internet among practitioners with the aim of looking for initial patterns, ideas, and hypotheses, rather than to confirm existing ones. The picture that seems to emerge is that respondents would not necessarily see the representation and modeling of a product-service-system as being a precondition to estimate the cost of the service it provides. In line with most academic literature, respondents would rather consider the cost of providing a service via product-service-system as conceptually equivalent to the cost of the in-service stage of a durable product. Although not allowing for generalization, this research reveals paths that may be worth exploring further.

Notes

1. The fable, titled “the blind men and the elephant,” can be found in Saxe, J. G. 1868. The Poems of John Godfrey Saxe. Boston: Ticknor and Fields, pp. 259–261 [digitalized by Google].

Additional information

Funding

The authors are appreciative of the support provided by the Department of Mechanical Engineering at the University of Bath, and gratefully acknowledge the Innovative electronics Manufacturing Research Centre (IeMRC), and the Engineering and Physical Sciences Research Council (EPSRC) for funding the research.

Notes on contributors

Ettore Settanni

Ettore Settanni at the time of writing this article was a post-doctoral researcher at the University of Bath and the lead researcher in the research project Costing for Avionic Through-Life Availability (CATA) working with Defence Equipment and Support (DE&S), GE Aviation and Military Air Information, BAE Systems. He provided inter-disciplinary methodological expertise for assessing and modeling the Through Life Costs of product-service-systems.

Nils E. Thenent

Nils E. Thenent has recently completed his Ph.D. at the University of Bath, UK in the field of cost estimation for integrated product-service offerings in aviation. He is an aerospace engineer with expertise in the fields of avionics maintenance and aircraft design. Nils has been working with major aerospace companies, such as Lufthansa Technik, Pratt & Whitney Canada, GE Aviation and BAE Systems, and has presented his research at national and international conferences. His interests include aircraft technology, aviation management, continuous improvement, and aviation safety.

Linda B. Newnes

Linda B. Newnes is Head of Costing Research in the Department of Mechanical Engineering, University of Bath. Her research focuses on through life costing from concept design through to the in-service/in-use phases and re-use/disposal. The sectors/application areas for her activities include for example; aerospace, defense, medical device design, oil and gas, water, green technologies, modeling uncertainty in through life costing, modeling in-service costs and trade-off analysis between specification and cost. She has published over 100-refereed papers, involved with consortium grants worth over £32M and individual projects of £4.5M. She has embedded her research into industry identifying over 63% in cost reduction, provides CPD and undergraduate courses on cost estimating.

Glenn Parry

Glenn Parry is an Associate Professor of Strategy and Operations Management at the University of the West of England, UK. His work aims to capture leading practice, moving companies forward through transformations based upon data driven analysis. He has been published in a number of international journals and has published the books, “Build to Order: The Road to the 5-day Car”, “Complex Engineering Service Systems” and “Service Design and Delivery”. His interests include value, business models, visibility and servitization.

Yee Mey Goh

Yee Mey Goh is a senior lecturer at the Wolfson School of Mechanical and Manufacturing Engineering, Loughborough University. Her main research interests lie in methods and techniques for identifying and managing uncertainties through life, for design, manufacture and operational support. Her research applications cover energy, aerospace and defense, automotive and railway sectors. She is on the scientific committees for leading international conferences (ASME IDETC/CIE, ICED and DESIGN). She has been an investigator on research programs worth over £6M. She has published widely in high quality academic journals and has experience in knowledge transfer activities.