7. Incorporate all costs incurred throughout a product’s lifetime
The Total Cost of Ownership (TCO) approach facilitates financial considerations throughout the life cycle of a product. This involves focusing not only on procurement costs but also on management costs, operating costs and maintenance costs, as well as on demolition costs, disposal costs, and the like.
A sustainable public procurement may involve higher procurement costs, due, for example, to the use of alternative materials or to the creation of a maintenance-free or low-energy design. This may be compensated for by lower running costs and maintenance costs, due, for example, to lower energy consumption or to the fact that the product or works in question have a longer service life. There may also be benefits in terms of end-of-life costs or demolition costs. If the procurement, maintenance and end-of-life budgets are combined and applied throughout the entire usage phase, this creates a more holistic picture of "price", which can usefully be incorporated into the mutual comparison of bids.
Total Cost of Ownership plays an important part in circular procurement.
Smart SPP and Procura+ have developed a life-cycle-cost tool that can help you obtain an impression of the total costs involved. This tool can be used to calculate the life cycle costs (LCC) and CO2 emissions of various products and services. You can use this tool when deciding about specific public procurements.