How to build a TCO model step by step
Training objectives
Key benefits of training
Workshop participants learn a practical methodology for building a Total Cost of Ownership (TCO) model that reflects business requirements, stakeholder needs, and the way the model can be applied to support everyday procurement decisions.
A practical approach to identifying all relevant cost elements, defining evaluation criteria, and incorporating supplier performance, risk, quality, delivery performance, and the time value of money into the TCO model.
A field tested approach to building Total Cost of Ownership (TCO) models for services, materials, and capital investments, integrating ESG considerations and enabling more informed, value driven procurement decisions.
Description of training
During the workshop, participants will build a Total Cost of Ownership (TCO) model step by step that can be used to support procurement decisions and supplier selection. The training covers the entire model development process from defining the purchasing category and identifying relevant cost drivers and evaluation criteria to applying the completed model in organizational decision-making. Participants will also learn how TCO models differ for services, materials, and capital investments, and how to tailor the methodology to the specific characteristics of each category.
An important part of the training focuses on working with stakeholders and defining the satisfaction criteria and performance indicators that should be reflected in the TCO model. Participants will learn how to distinguish between cost elements that can be measured precisely and those that need to be estimated. They will also learn how to incorporate quality, delivery performance, cost, technology, innovation, ESG, and supplier relationship factors into a comprehensive evaluation of supplier proposals.
Working through a practical case study, participants will learn how to apply a TCO model to support procurement decisions, develop sourcing recommendations, and create transparent supplier evaluation scorecards aligned with Controlling and Finance requirements.
Key Programme Topics
Learn the fundamentals of the Total Cost of Ownership (TCO) model and discover when it delivers the greatest value in procurement. Assess whether your organization is ready to make purchasing decisions based on total cost rather than purchase price alone. You will also explore the different approaches to building TCO models for services, materials, and capital investments.
Take a practical approach to building a Total Cost of Ownership (TCO) model. A well designed model clearly demonstrates its impact on the income statement, balance sheet, and cash flow, making it far more likely to gain support from Finance and the CFO. Our methodology guides participants through every step of the process: from identifying cost elements and understanding stakeholder requirements to defining success criteria, selecting the right data, and building a complete, decision-ready TCO model.
Learn how to incorporate supplier evaluation criteria (including quality, delivery performance, cost, technology, innovation, and risk) into a Total Cost of Ownership (TCO) model. Participants will explore how to combine measurable data with estimated values to build a robust TCO model and use it effectively to support procurement decisions.
Learn how to use IRR (Internal Rate of Return) and NPV (Net Present Value) to evaluate procurement projects and quantify savings. Through dedicated business case studies based on real life scenarios, participants will apply the TCO model as a practical tool for supplier selection and informed procurement decision making.
MSUES 2.0 certification.
FAQ
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Our pricing policy provides discounts for group registrations of a minimum of 4 people. Please contact us directly if you would like to register 4 or more participants for a training course.
The final choice of location depends on the geographical mix of registered participants. Most often, the final location is announced 30 days before the open training date.
21 years of experience in project and strategic procurement. For 11 years he has been co-owner of Eveneum, a company specialising in consultancy and training for procurement in industries requiring relationship building and trust between partners. His speciality is supporting clients in project procurement and early engagement of suppliers and the procurement department in development work. He carries out projects such as contract negotiations, supplier searches and negotiating terms and conditions on behalf of clients. Speaker at national and international procurement conferences. Lecturer of the procurement faculty at the Jagiellonian University.
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