Search results

This chapter demonstrates how the ‘golden rule’ can be applied by operators of flexible transport services to improve investment and pricing decisions.

The chapter explains why an appropriate decision making framework is particularly important for operators of flexible transport services and compares the traditional economic framework of fixed versus variable costs to the decision-oriented approach that analyses the activities of a firm in terms of costs that are avoidable (i.e. specific to a particular activity) and costs that are shared amongst a number of activities. The chapter introduces the ‘golden rule’ of decision making and discusses issues in implementing the rule.

An economic framework for decision making is particularly important for smaller scale transport operations (such as flexible transport services) because ‘lumpy’ investment costs are more significant than for larger operators. The traditional economic approach divides costs into fixed costs and those which vary by patronage. A better framework for decision making divides costs into those which are specific to a particular activity and, therefore, avoidable if that activity ceases, and those costs which are common to more than one activity.

Using this framework allows operators to apply the ‘golden rule’ in pricing their services so that the avoidable costs of each activity are recovered and the enterprise covers its shared costs overall.

This chapter will be useful to operators of flexible transport services who are new to the industry or are reacting to changes in the funding environment.

The total or integrated approach to physical distribution places an emphasis upon integrating those activities which are involved either directly or indirectly with the provision of customer service. As such, it contrasts with the traditional approach to physical distribution which emphasises the separate individual activities and the cost minimisation of such individual activities, while ignoring the interaction between the activities and their impact on revenue. While the total distribution concept has seemingly gained wide acceptance, Ray, Gattorna and Allen claim that the reason why it is rarely implemented is “lack of adequate cost data”. This view is shared by Shirley who states “particularly needed are new ways of thinking about distribution costs; to consider their interdependence and contribution to profit”. This monograph attempts to respond to this need by providing a consideration of the Mission Approach to Physical Distribution, and how physical distribution accounting systems may utilise this approach to provide information not only on the costs but also on the revenue aspects of providing varying levels of customer service.

In Australia, Government Business Enterprises (GBEs) are in the process of review so that they may eventually be run on commercial lines in a competitive environment. Some of the services that are provided, particularly by the monopolistic utilities, are non‐commercial but are required under various governments’ social policies. The GBEs that can identify and cost these community service obligations can be recompensed from the budget. The problems and benefits of the identification, costing and funding processes are discussed as well as some concerns raised by the corporatisation process.

This paper aims to provide an estimation of the costs of the coronavirus (COVID-19) pandemic with a special focus on Spain. Costs include macroeconomic costs of foregone gross domestic product (GDP) attributable to the pandemic and the direct and indirect costs of prevention, treatment and lost productivity. This study also analyzes the cost-effectiveness of the test-tracking-quarantine (TTQ) strategy in Spain.

The macroeconomic costs of foregone GDP attributable to the pandemic are estimated for different countries and areas by comparing the present GDP forecasts for 2020 and 2021 with counterfactuals estimated before the COVID-19 crisis aftermath. The total cost of the COVID-19 for Spain in 2020 was obtained using the cost of illness approach with a bottom-up process. A cost-effectiveness analysis of the TTQ strategy in Spain is based on the estimation of the total costs of TTQ and the health gains and avoided health-care costs associated with the TTQ strategy. A sensitivity analysis explores the consequences of uncertainty in key parameters.

The GDP cost of the COVID-19 is by far larger than all the other components of the cost. The global cost of the Covid-19 crisis in 2020–2021 is estimated at 14% of 2019 GDP (around 12,206 mm$). In the specific case of Spain, it amounts to 24% of the 2019 GDP; which is 397.3 m €. Spain is and will be by far the European country most economically affected by the pandemic. In Spain 2020, the GDP cost accounts for 94.7% of the total cost of the COVID-19 and health-care direct costs are only 2.14%. TTQ is a dominant strategy in Spain. For each euro spent on it, 7 euros will be recovered only in terms of saved health-care resources.

Given the large degree of uncertainty and the fast-evolving nature of the epidemic, a number of assumptions are required to arrive at the estimates provided in this study. The results were found to be robust to the assumptions applied.

TTQ is a key strategy for the contention of the epidemy and it is justified from the economic perspective.

This is the first estimation of the cost of the COVID-19 and the cost-effectiveness of the TTQ strategy for Spain.

Customer Profitability Analysis (CPA) is a technique for assessing the real profitability of customers and markets and is currently the subject of growing interest. The Marketing Accounting Research Centre at the Cranfield School of Management recently conducted a study involving four diverse companies, the purpose of which was to review the concepts and approaches that could be used to implement a system of customer profitability accounting.

Philip Kotler identified the term “marketing” with two different but related processes; the first dealing with “the search for and stimulation of buyers” and the second with “the physical distribution of goods”. The reason for superior international marketing performance by certain companies may be the result of a small number of correct strategic decisions, or of being in the right industry at the right time and being able to meet market demands. Continual high international marketing performance, however, is more likely to be the result of exceptional management control to overcome the problems of both the search and stimulation of overseas markets and the growing commitment successfully to feed those markets with the goods through a planned physical distribution pattern. International physical distribution management is not merely a marketing support system, but it is an integral part of the marketing mix which helps create and develop the international marketing process. Even though physical distribution does not portray the glamour associated with international marketing, it should not be forgotten as a part of the marketing mix. However, in the future, international marketing success may depend more and more upon the efficiency and practices employed to ensure economic physical distribution of goods especially as competition intensifies from developed and developing nations.

Preface The functions of business divide into several areas and the general focus of this book is on one of the most important although least understood of these—DISTRIBUTION. The particular focus is on reviewing current practice in distribution costing and on attempting to push the frontiers back a little by suggesting some new approaches to overcome previously defined shortcomings.

The apparent failure on the part of companies to evolve a satisfactory costing scheme for their physical distribution (PD) systems is now giving way before a sustained attempt to rationalise PD costs. The author reviews the legislative and economic changes which have led to a recognition of the need for change, and he suggests that the “Total Distribution” (TD) approach to a solution is the one to be explored. The distinctive nature of the different accounting schemes in use, and their informational requirements, are discussed. The complex nature of PD involves the use of both operational research and statistical techniques. In fact, the need for improved information for PD management is not yet being met, and this hampers decision‐making. The monograph looks at the shortfalls in financial accounting for PD, and at the complex and ambiguous relations between PD and the formal company financial statement. Finally, the profit‐analysis approach may be the answer, and this can be incorporated within the framework of a missions approach. The author concludes that, so far, neither orthodox accounting procedures nor experimental approaches have yet provided a complete answer for PD cost analysis.

The purpose of this study is to test whether the realization rate on audit engagements increases with auditor tenure in competitive markets, suggesting the presence of initial audit lowballing.

Using regression analysis, we test this hypothesis with fee- and cost-related data from a sample of local governments audited by a single audit firm. Based on representations of the firm, we classify the audit market for the 127 cities, counties and school districts in our sample as competitive and the audit market for the 93 special district audits as non-competitive.

As hypothesized, we find that in the competitive market, the realization rate on audit engagements increases with auditor tenure but does not do so in the non-competitive audit market.

We cannot identify the specific engagements which were subject to a competitive bidding process, so we rely on the auditor’s representation of competitiveness by entity type.

To our knowledge, the central prediction of audit pricing models that the auditor’s realization rate increases with auditor tenure has not been tested in real audit markets because proprietary cost data are rarely available. Testing this prediction is the primary contribution of this paper.

Cost overrun in infrastructure projects is a constant concern, with a need for a proper solution. The current estimation practice needs improvement to reduce cost overruns. This study aimed to find possible statistical modelling techniques that could be used to develop cost models to produce more reliable cost estimates.

A bibliographic literature review was conducted using a two-stage selection method to compile the relevant publications from Scopus. Then, Visualisation of Similarities (VOS)-Viewer was used to develop the visualisation maps for co-occurrence keyword analysis and yearly trends in research topics.

The study found seven primary techniques used as cost models in construction projects: regression analysis (RA), artificial neural network (ANN), case-based reasoning (CBR), fuzzy logic, Monte-Carlo simulation (MCS), support vector machine (SVM) and reference class forecasting (RCF). RA, ANN and CBR were the most researched techniques. Furthermore, it was observed that the model's performance could be improved by combining two or more techniques into one model.

The research was limited to the findings from the bibliometric literature review.

The findings provided an assessment of statistical techniques that the industry can adopt to improve the traditional estimation practice of infrastructure projects.

This study mapped the research carried out on cost-modelling techniques and analysed the trends. It also reviewed the performance of the models developed for infrastructure projects. The findings could be used to further research to develop more reliable cost models using statistical modelling techniques with better performance.