PhD Final Thesis April 2013.pdf - Anglia Ruskin Research Online

Thesis Keith Gale 20138.4 Comparison of transaction and production costs between discrete andframework agreements – source and standard of base dataAs access has been given by the client organisation to detailed costs that arenormally difficult to obtain, an examination is made through this case study oftransaction and production costs to detect if a difference exists between discrete andframework agreement projects. Respectful of the difficulties prevalent in such datahighlighted through published research, the following standards are applied toprovide reliability for all projects contained in this case study:1 All fees for transaction costs are benchmarked against a standard cost base. Withinthe organisations’ internal accounting system resources are costed using timesheetapportionment and valued at hourly rates. As a ‘pseudo trading’ situation existsbetween departments, all costs are allocated against capital projects and these costsare verified through the extensive and transparent financial systems employed by theauthority. Time sheet input is vetted on a monthly basis by project managers andsupervisors. The accuracy and transparency of recording methods used by the casestudy provides complete contrast to earlier research on transaction costs where noreliable time sheet information could be found to support data (Hughes et al, 2006,page 47).2 Variance between production costs is established through a difference between thequantity surveyors’ pre tender estimate and the accepted tender for a project. Thismethod of comparison acknowledges the difficulty of benchmarking civilengineering construction projects. Unlike elemental cost planning techniques usedfor building projects, civil engineering costs do not readily relate to a single unit ofmeasurement such as cost per square metre of internal gross floor area (RICS, 2012).It is therefore proposed that a standard form of entity cost analysis is used bycalculating pre-tender estimates from principle components (Martin, 2012). Standardrates are applied to estimated quantities of components. This resolves the variabilityof components between projects because the benchmarking process involvesapplication of rate rather than quantity. Guidance provided by Standard Form ofCivil Engineering Cost Analysis (BCIS, 2011) provides application of this method:• The pre-tender estimate is compiled from components relevant andrepresentative of civil engineering projects of the type included within the171