The link between costs and performances for total cost of ownership evaluation of physical asset: State of the art review

One main challenge in the physical asset management field is to improve the quantification process of costs to evaluate the total cost of a production system throughout its lifecycle (i.e. the Total Cost of Ownership (TCO)). This paper focuses on one main identified gap in literature: most of the currently proposed models neglect the performance of the system, and this brings significant limitations. In fact, the crucial point for the applicability of a TCO model in supporting asset management is that the evaluation criteria for the costs elements definition should encompass not only all incurring cost elements along the asset life cycle but also system performance characteristics like availability on which many of the costs depend. The paper analyses the state of art of the approaches that have been developed adopting ex-ante estimation solutions aiming at predicting total costs through the estimated behavior of asset over the life cycle. After the review the industrial relevance of TCO is discussed considering the perspective of different industries and by identifying the main stakeholders within those industries and the benefits they can rely on having a reliable TCO model.