A framework for cost estimation in product-service systems: A systems thinking approach

Original Equipment Manufacturers (OEMs) are increasingly undergoing a transition into the offering of Product-Service System (PSS) solutions. This transition has proven to be a difficult challenge characterised by inadequate contract decisions due to cost under-estimations and performance overpromises. Despite the relevance of cost estimation for the OEM’s transition into the PSS scheme, little research attention has been received until recently for the development of cost estimation frameworks appropriate for the PSS context. To fill this gap, this paper proposes a framework for cost estimation in the PSS context based on the “systems-thinking” approach, composed of a set of iterative modules and methodological foundations that bring into discussion several properties relevant to the PSS context. A numerical control multi-axis machine centre PSS is illustrated to evidence the capability of the framework to analyse the cost impacts on both the customer and on the OEM side and to support the design and improvement of PSS configurations and associated contract mechanisms.