Life cycle cost analysis with 4cost

The calculation of life cycle costs of industrial products is becoming increasingly important for companies. At a time when markets are becoming more dynamic, product life cycles are shorter and competitive pressure is increasing, a precise analysis of all costs incurred, from development to utilisation and disposal, guarantees clear competitive advantages. With a sound knowledge of life cycle costs, companies can not only better assess the economic efficiency and profitability of their investments, but also make more sustainable and resource-saving decisions. This can also lead to the development of completely new business models, such as the sale of availability, operating hours, mileage or service models. It is therefore essential to continuously optimise the processes involved in life cycle cost analysis and to rely on modern solutions.

Common problems of conventional calculation methods

Conventional methods for calculating life cycle costs, which are still used in many companies, quickly reach their limits in industrial practice. Cost analyses are often carried out manually in spreadsheet programs. The database is often fragmented and not centrally available. As a result, sources of error arise, such as inconsistencies, transmission errors or the overlooking of relevant cost items. In addition, these conventional tools lack the ability to transparently map or simulate complex relationships between the individual life cycle phases of a product.

Another weakness of traditional methods is their lack of flexibility and scalability. If projects become larger or the framework conditions change, Excel-based calculations or self-developed templates quickly reach their performance limits. Adjustments, such as the addition of new cost types, links to other elements or a quick update of assumptions, often mean a considerable amount of extra work. This not only makes efficient teamwork more difficult, but can also lead to important information being overlooked or not taken into account in time.

In addition, conventional calculation approaches usually allow no or only very limited access to current data. However, life cycle costs are dynamic and subject to numerous influencing factors, from market price changes to maintenance costs and legal requirements. Without an automated, regular update of the calculation basis, forecasts can quickly turn out to be inaccurate or outdated. This limits the informative value of the analysis and harbours the risk of bad investments or wrong strategic decisions—sometimes with serious consequences for profitability.

The solution: Parametric software for calculating and simulating life cycle costs

The parametric costing software 4cost-aces/LCC offers the solution to the challenges mentioned above. It is tailored precisely to the needs of the industry and enables all phases of the product life cycle to be covered holistically, precisely and transparently. The centralised management of all relevant data avoids isolated solutions and media disruptions, so that the information is always up-to-date and consistent. In this way, complex cost structures, changing influencing factors and various scenarios can be reliably mapped and tracked.

A key advantage of the 4cost software solution lies in the automation and standardisation of the entire calculation process. Users benefit from well thought-out workflows, predefined models and intuitive user interfaces that enable simple and low-error operation. Changes to individual parameters can be applied in real time without having to adjust the entire model manually. This not only minimises the potential for errors, but also significantly reduces the time required for recurring tasks. Teams can work together more efficiently and focus on analysing and optimising the results.

In addition, 4cost-aces/LCC offers extensive analysis and reporting functions. Customisable dashboards, visual evaluations and interactive models make it possible to create different scenarios and sensitivity analyses ‘at the touch of a button’. This gives companies a solid basis for decision-making, enables them to better assess risks and identify potential for cost optimisation in a targeted manner. This transparency not only promotes collaboration between different departments, but also enables external partners – such as suppliers or service providers – to be specifically included in the life cycle analysis.

Another plus point is the integration with existing IT systems. Costing software from 4cost offers interfaces to Product Data Management (PDM) and Enterprise Resource Planning (ERP) so that relevant data, such as maintenance costs, spare parts costs or runtime forecasts, can be imported. This not only ensures that calculations are always up to date, but also reduces the susceptibility to errors that can arise from manually transferring data.

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Successful costing with 4cost

Your path to optimised life cycle costs

Changes in the industry call for modern, efficient solutions for cost calculation. Take advantage of the possibilities offered by innovative costing software from 4cost: Increase your cost transparency, automate your costing processes and make informed, future-oriented decisions.

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Our international clients report on their success with 4cost

“The comparison of providers revealed, that 4cost achieved the highest score. We were particularly convinced by the fact that 4cost’s solutions can be used for all commodities, regardless of technology. Equally decisive was the enormous speed with which cost estimates are possible despite limited information.” Christian Ahrens Team leader of the Value Engineering department, Rheinmetall Landsysteme GmbH “A major advantage of the 4cost software is the seamless interlocking of the two costing approaches, top-down and bottom-up. This appeals to a wide variety of cost estimators and ensures a consistent cost view without losing information across all project phases.” Alexander Nordmeyer Value Engineer, Rheinmetall Landsysteme GmbH “The departments experience made with the costing software from 4cost are very positive and associated with high savings. By increasing transparency in the cost structures, a monetary benefit in the seven-digit range can already be recorded. We have made the right decision in our selection process and are very happy about our success!” Manfred Billes Department head of the EEPC team, MAN “From small start-ups to large corporations, costs must be constantly kept in view and controlled, especially in these difficult times. This succeeds very well with the 4cost software and I believe we can generate real added value for our companies.” Sarah Wörz Officer, Digitalisierungszentrum Ostwürttemberg “The consistent calculation method of the 4cost tools convinced us right from the start. Very quickly we realised, that this methodology supports our needs in calculation, value engineering, purchasing and engineering excellently.” Frank Hoffmann Head of Supply Chain Management, Rheinmetall Electronics GmbH “With 4cost's modern parametric calculation models it is possible to estimate good and valid costs already in phases with limited detail of knowledge. In order to establish this, we not only made use of 4cost's software solutions, but also using their expertise in value engineering.” Senior staff member Purchasing department, Rolls-Royce “The 4cost-aces interface is user-friendly and logically structured, especially when compared to other cost estimation tools. This makes it easier to use the tool even for occasional users.” Thomas Fiedler Head of Cost Architecture A30X, Future Projects & Costing Performance, Airbus Deutschland “We decided on 4cost because we see a significant added value for our calculation and value analysis in a consistent approach from quick cost estimates to detailed calculations. We focus now on the main cost drivers and identify areas with the greatest potential for cost optimization.” Werner Seifried Technical Director, Liebherr-Hydraulikbagger GmbH (2009) “With 4cost we have a partner with whom we are implementing our objective of a long-term partnership in the areas of cost estimation, value analysis and cost structure analysis. We will continue to establish 4cost's solutions and use them even more intensively in the future, because the added value is obvious.” Werner Seifried Technical Director, Liebherr-Hydraulikbagger GmbH (2009) “With the parametric cost estimate from 4cost-aces, we are fast and reliably in estimating new assemblies and examine scenarios.” “With the 4cost-structure calculation tool, we are tracking target costs and manage our projects, including history and versioning.” Peter Schmidt Value analysis department, Liebherr-Hydraulikbagger GmbH (2009) “The partnership-based cooperation with 4cost enables us to arrive at rapid cost estimates for our projects both in-house and directly at our customers site. I would not have expected a calculation of the costs at such an early stage in the product development process with such depth, consideration of variants and meaningfulness of the answers!” Matthias Miesbeck Project engineer, HOLZER Firmengruppe “We were enthusiastic about the speed and cost transparency during the 4cost workshops. We used the results from the workshops as a base for our business case analysis. We froze the cost target as cost reference for the subsequent development process and continuously referenced and checked on them.” Hinrik Weber Head of the optoelectronics business unit, Pepperl+Fuchs “The speed in which the costs are determined is impressive with this method. Elaborate work plans do not have to be predefined and evaluated, because the parametric approach of 4cost-aces is based on material and value-added approaches.” Ernst Tabel Project manager, Pepperl+Fuchs “With 4cost-aces we are able to arrive at valid cost statements very quickly. Compared to a bottom-up calculation that typically takes several weeks, we only need one to three days for the first cost assessment.” Gregor Schwab Head of Orders & Offers, Production, EADS Defence & Security “In addition to the drastic time advantage of this costing method, the workshops have another effect that should not be underestimated: all participants agree on a common costing basis during the meetings and evaluate it in detail. The acceptance of the calculated cost values is very high due to the involvement of all participants.” Gregor Schwab Head of Orders & Offers, Production, EADS Defence & Security “The workshop with the 4cost team was convincing both in terms of methodology and result. We were getting an idea of how the parametric approach of the 4cost-aces costing software works. Many new possibilities could now be approached in our daily work.” Stefan Buchwald Strategic buyer, BARD Engineering “The 4cost solutions enable us to become an extended workbench to the costing departments of companies in our region.” Peter Schmidt Head, Digitalisierungszentrum Ostwürttemberg “The early breakdown of product and project costs with 4cost-aces not only offers us a high level of cost transparency, but in particular shows us optimisation potential for development and design. On the one hand, we are thus able to forecast future manufacturing costs in the case of design changes and on the other hand, to independently check manufacturing costs of already existing designs.” Martin Klotz Product Cost Engineer, Liebherr-Werk Biberach GmbH “The simplicity and speed of creating and comparing different technical, location and quantity scenarios in 4cost-aces is impressive.” Andreas Müller Senior Operations and Procurement Manager, AutoFlight Europe “Thanks to the workshop with 4cost, we received meaningful and transparent results in a short time, which allows us to take measures at an early stage to secure the profitability of our products.” Andreas Müller Senior Operations and Procurement Manager, AutoFlight Europe “The use of 4cost-aces has led to a considerable improvement in our efficiency, as we calculate up to 75 % faster. Cost calculations that would otherwise take us several weeks to complete are done within a few days with 4cost-aces.” Hanno Pieles Director Business Unit Performance, newboxes “4cost-aces has become a valuable tool for our company because we use it to help our clients increase their cost transparency significantly and take their cost management to the next level.” Hanno Pieles Director Business Unit Performance, newboxes "Parametric costing enables us to create valid calculations in the early quotation phases with relatively little effort." Tim Wiedemann Systems Engineer, MT Aerospace AG “Thanks to 4cost-aces, we can plan and implement our projects more efficiently. The software has established itself as an indispensable tool in our development process and contributes significantly to the success of our projects.” Hannes Büttner Head of Projects & Value Analysis, BAUER Maschinen GmbH “The calculations using parametrics are incredibly fast compared to the bottom-up approach, which allows us to react quickly to new requirements and designs. The design-to-cost process is streamlined and requires fewer resources.” Hannes Büttner Head of Projects & Value Analysis, BAUER Maschinen GmbH “With the introduction of 4cost-aces, we have consistently enhanced our established processes. Following an intensive testing and implementation phase, nearly all cost estimates at MTG are now carried out using 4cost-aces.” Michael Rudius Head of Operations, MTG Marinetechnik GmbH “With 4cost-aces, we can now perform calculations even in areas where we previously had to rely on approximate values—such as for project management, documentation, software, and maintenance costs.” Michael Rudius Head of Operations, MTG Marinetechnik GmbH Rheinmetall MAN digiZ Rolls-Royce Airbus Liebherr Holzer Pepperl+Fuchs EADS BARD AutoFlight Europe GmbH newboxes GmbH MT Aerospace AG BAUER Maschinen GmbH MTG Marinetechnik GmbH