Projects per year
The ability to take action, in particular related to cost reductions in service systems, is strongly infl uenced by the understanding of decision-support tools such as cost estimates. A managerial perspective on cost estimation that neglects the essential characteristics of service systems may drive a locally optimal behavior, but creates tension or failure at the level of the overall system. Cost-cutting decisions that are based on a flawed understanding of the situation can lead to counterproductive outcomes. This paper presents a rigorous link between the domains of cost estimation, systems theory, and accident investigation reveals fundamental epistemological limitations of commonly employed cost models when dealing with the characteristics of servitization systems.