If you want to make a business case for a circular procurement project, the costs and benefits must be weighed up in the longer term.
Rethinking the need is a first part of the business case for circular procurement. Internal sharing, for example, can reduce the need to purchase.
A Total Cost of Ownership analysis (TCO) often gives a very different picture than comparisons on the costs of the initial investment alone. TCO also identifies all the costs over the useful life, such as acquisition costs, operating costs (energy consumption and other resources, among others), maintenance and repair costs, taxes and the costs or revenues associated with end-of-use. With TCO, the real costs of different scenarios over the lifespan can be compared. Try to base your TCO calculations on the available real data as much as possible, but sometimes you may have to make an estimate.
Life Cycle Cost (LCC) can also include environmental and social costs related to the product, service or work during the life cycle. These could include, for example, the costs of greenhouse gas emissions and toxic substances. The European Commission has developed an LCC tool for five products.
Take into account any residual value at the end of use. The buyback can be included in the contract.
Consider alternatives to ownership, such as as-a-service models,and check if you can use other budgets within your organisation. One possibility is including maintenance costs in the circular procurement.
Publications about financing circular procurements