Activity-based life-cycle costing in long-range planning

Purpose – The aim of the paper is to present and illustrate a new approach for long-range planning. Design/methodology/approach – Building on well-tested frameworks such as activity-based costing (ABC), life-cycle costing (LCC) and Monte Carlo methods as well as earlier case studies, an approach is developed further and tested using a real-life case. Findings – The effectiveness of the approach is confirmed using a process-oriented framework (ABC) and introducing an LCC perspective. Monte Carlo methods are used to handle uncertainty and identify risks and critical success factors. Research limitation/implications – The presented research is a starting-point for developing a simple approach for budgeting that overcomes many of the problems with traditional budgeting. Practical implications – The paper shows how long-range planning can be performed in a realistic fashion without ending up in many of the traps of traditional budgeting. Originality/value – The paper presents an approach that can help corporations anticipate the future much more realistically than before.