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.
Directive 2014/24/EU allows to use Life Cycle Cost (LCC) to determine the most economically advantageous tender. This LCC can consist of the Total Cost of Ownership (TCO), cost for externalities, or a combination of both. It is important to indicate in the quotation which data must be supplied by the bidders. These must be provided with reasonable effort. It must also be indicated which method will be used to calculate the LCC based on this data. This calculation must be based on objectively verifiable and non-discriminatory criteria. The cost model must be available to the bidder free of charge.
A Total Cost of Ownership analysis (TCO) often gives a completely different picture than a comparison on investment cost alone. TCO also maps out all costs during the useful life. The acquisition cost, operating costs (such as energy consumption and other resources), maintenance and repair costs, taxes, and the costs or revenues associated with end-of-use.
Life Cycle Cost (LCC) can also include environmental and social costs (externalities) related to the product, service or work during the life cycle. These are, for example, the costs of greenhouse gas emissions and toxic substances. The European Commission developed an LCC tool for five products.
Rethinking the need is a first part of the business case for circular procurement. For example, internal sharing can mean that less has to be purchased, but as-a-service models can also provide a different financial picture.
Charge any residual value at the end of use. The buy-back can be specified in the contract.
Also see if you can appeal to other budgets within your organization. For example, by including maintenance costs in the circular purchase.
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.
Webinars about financing circular procurement projects