A Cost-Engineering Method for Product-Service Systems Based on Stochastic Process Modelling: Bergamo's Bike-Sharing PSS

Cost-determination in Product-Service Systems (PSS) presents a broad set of impacts across managerial and design decision-making processes. Most of the effort within PSS-costing literature is focused mainly on the development of techniques that address challenges regarding data availability, lifecycle representation, and uncertainty modelling. Less effort concentrates on the understanding of the PSS-cost nature and its differentiation from the traditional perspective of product-cost and service-cost. In that sense, the purpose of the paper is to provide a description of the PSS-cost nature, and construct a Cost-Engineering method aligned to such definition. This paper proposes a systems thinking approach in which the PSS-cost is observed as an emergent attribute that the PSS, as a complex system, exhibits when is operating. In order to capture the proposed PSS cost nature as an emergent attribute and derive useful managerial insights, a cost-engineering method based on Stochastic Process modelling, has been devised. The data output of the method represents all PSS-cost unrealized potential outcomes with their associated occurrence probability conditioned by a defined performance or/and functionality level. An empirical case study, the Bergamo's Bike-Sharing PSS, has been carried out in order to visualize the proposed method and its managerial implications. © 2017 The Authors.