TCO Evaluation in Physical Asset Management: Benefits and Limitations for Industrial Adoption

Abstract

Nowadays, the evaluation of the total cost of ownership (TCO) of an asset for supporting informed decision-making both for investments and managerial issues within the asset management framework is gaining increasing attention in industry. Nevertheless its application in practice is still limited. The aim of this paper is to analyze the benefits and limitations of the adoption of TCO evaluation in asset management. Based on a literature review, the paper defines a framework that categorizes the benefits and potential applications that a TCO model can have for different stakeholders. Together with that, industry related issues that influence its implementation are also considered. Finally, empirical evidences are analyzed through a multiple case study to understand if those benefits are recognized in practice and which are the limitations for the practical adoption of a TCO model that should allow exploiting such benefits. © IFIP International Federation for Information Processing 2014.