Financing of circular procurement

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

 

This GPP helpdesk webinar, held on 30 March 2022, focused on how to design tenders using the “MEAT” (Most Economically Advantageous Tender) award criterion. According to the EU Public Contracts Direc…

Publications about financing circular procurements

 

The European Commission is supporting pre-commercial procurement to help public procurers and suppliers develop innovative solutions to societal challenges. More information about what pre-commerical…

 

The second publication from the Interreg NSR project ProCirc discusses leasing as a replacement for the traditional ownership model. It contains interviews with users and a supplier.

 

The transition to a Circular Economy requires innovative business models that stimulate optimised use of repairable products, reusable components and recycling of materials. A Community of Practice (…

 

A state of the art report on LCC published by ICLEI

 

This report presents the findings of work which estimates the value of a range of consumer electronics products following their first sale, alongside the estimated cost of recovering those products a…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the user guide for the LCC tool for G…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the LCC tool for GPP of road lighting…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the user guide for the LCC for GPP fo…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the LCC tool for GPP for Indoor Light…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the user guide for the LCC tool for G…

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the LCC tool for GPP of computers and…

 

The European Commission have developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the users guide for the LCC tool for…

 

The European Commission have developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This the LCC tool for GPP of Imaging Equipme…

 

The European Commission developed a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the user guide to the LCC tool for GPP of …

 

The European Commission has developped a series of sector specific LCC calculation tools which aim to facilitate the use of LCC amongst public procurers. This is the LCC tool for the GPP of vending m…