ECONOMIC EFFICIENCY OF IMPLEMENTATION OF THE PRODUCT LIFECYCLE BUSINESS MODEL IN MACHINE BUILDING

Abstract

Despite the active development of the product lifecycle concept in the real sector of economy, Russian companies in the engineering industry are just beginning experiments with this business model and product lifecycle contracts (or performance-based lifecycle product support). Probably, one of the reasons is that enterprises cannot objectively assess the economic efficiency of this business model: sometimes the sources of economic efficiency and possible economic risks are not obvious to them. Moreover, enterprises do not have a basic economic model that would help to assess the potential financial result of a project fulfilled in a lifecycle business model.

In this regard, it is important to analyze and explain the reasons for the economic efficiency of lifecycle contracts with using of global practical experience, as well as international research of this topic. As a result, it is necessary to formulate a principled approach to assessing the effectiveness of such projects in comparison with projects implemented within the classic product business model.

In the article, the authors analyze the sources of economic efficiency of projects fulfilled in the product lifecycle model in mechanical engineering industry. The authors point out the potential risks, which can affect the economic result of the project. The article also presents a principled formula for assessing the cost of a lifecycle contract and an example of calculating the economic efficiency of such a contract in aircraft engine project.