Recovery Risk and Labor Costs in Public-Private Partnerships : Contractual Choice in the US Water industry

We use an ordered logistic model to empirically examine the factors that explain varying degrees of private involvement in the U.S. water sector through public-private partnerships. Our estimates suggest that a variety of factors help explain greater private participation in this sector. We find that the risk to private participants regarding cost recovery is an important driver of private participation. The relative cost of labor is also a key factor in determining the degree of private involvement in the contract choice. When public wages are high relative to private wages, private participation is viewed as a source of cost savings. We thus find two main drivers of greater private involvement: one encouraging private participation by reducing risk, and another encouraging government to seek out private participation in lowering costs.

Privatization, cooperation and costs of solid waste services in small towns

This paper analyzes the cost implications of privatization and cooperation in the provision of solid waste services for a sample of small municipalities. In conducting this empirical analysis, a survey is first designed and administered to municipalities in the Spanish region of Aragon, and then an estimation of the determinants of service costs is undertaken, considering the possible endogeneity of delivery choices. Our findings indicate that cooperation is more effective than privatization in saving costs. Both production forms can enable small municipalities to cut costs by exploiting scale economies. However, the fact that inter-municipal cooperation involves lower transaction costs and is less likely to be affected by competition problems would seem to account for the fact that it is a more effective way of reducing costs.

Comparison of electricity generation costs

The economical competitiveness of various power plant alternatives is compared. The comparison comprises merely electricity producing power plants. Combined heat and power (CHP) producing power will cover part of the future power deficit in Finland, but also condensing power plants for base load production will be needed. The following types of power plants are studied: nuclear power plant, combined cycle gas turbine plant, coal-fired condensing power plant, peat-fired condensing power plant, wood-fired condensing power plant and wind power plant. The calculations are carried out by using the annuity method with a real interest rate of 5 % per annum and with a fixed price level as of January 2008. With the annual peak load utilization time of 8000 hours (corresponding to a load factor of 91,3 %) the production costs would be for nuclear electricity 35,0 €/MWh, for gas based electricity 59,2 €/MWh and for coal based electricity 64,4 €/MWh, when using a price of 23 €/tonCO2 for the carbon dioxide emission trading. Without emission trading the production cost of gas electricity is 51,2 €/MWh and that of coal electricity 45,7 €/MWh and nuclear remains the same (35,0 €/MWh) In order to study the impact of changes in the input data, a sensitivity analysis has been carried out. It reveals that the advantage of the nuclear power is quite clear. E.g. the nuclear electricity is rather insensitive to the changes of nuclear fuel price, whereas for natural gas alternative the rising trend of gas price causes the greatest risk. Furthermore, increase of emission trading price improves the competitiveness of the nuclear alternative. The competitiveness and payback of the nuclear power investment is studied also as such by using various electricity market prices for determining the revenues generated by the investment. The profitability of the investment is excellent, if the market price of electricity is 50 €/MWh or more.

Life cycle costs in heating, ventilation and air-conditioning systems with drive

Energy consumption and energy efficiency have become an issue. Energy consumption is rising all over the world and because of that, and the climate change, energy is becoming more and more expensive. Buildings are major consumers of energy, and inside the buildings the major consumers are heating, ventilation and air-conditioning systems. They usually run at constant speed without efficient control. In most cases HVAC equipment is also oversized. Traditionally heating, ventilation and air-conditioning systems have been sized to meet conditions that rarely occur. The theory part in this thesis represents the basics of life cycle costs and calculations for the whole life cycle of a system. It also represents HVAC systems, equipment, systems controls and ways to save energy in these systems. The empirical part of this thesis represents life cycle cost calculations for HVAC systems. With these calculations it is possible to compute costs for the whole life cycle for the wanted variables. Life cycle costs make it possible to compare which variable causes most of the costs from the whole life point of view. Life cycle costs were studied through two real life cases which were focused on two different kinds of HVAC systems. In both of these cases the renovations were already made, so that the comparison between the old and the new, now existing system would be easier. The study indicates that energy can be saved in HVAC systems by using variable speed drive as a control method.

Warranty Practices and Costs in the Industry of Welding Machines Manufacturing

The objective of the master’s thesis is to define the warranty practices and costs in the welding machines manufacturing company and do a proposal for a warranty policy based on the practices and costs. The study include a disquisition of the warranty practices in the subsidiaries and distributor sales. The disquisition of the warranty practices introduces the information relates to warranty period, warranty costs, including repair, spare part and other costs, the practices with the replaced parts, the utilization rate of the eWarranty system and information relates to special arrangements in the warranties. The warranty costs are defined besides the group level also separately per regions and product families. From some product families the disquisition is done per products. In this study is also done a proposal for a warranty policy for the company. The proposal speaks out the length of warranty period, the compensation of the warranty costs, the practices with replaced parts and usage of eWarranty system.

Empirical analysis of solid management waste costs: Some evidence from Galicia, Spain

This paper analyses the factors that determine solid waste service costs. The empirical analysis is based on information derived from a survey conducted in a sample of Galician municipalities. The results reveal economies of scale in municipalities of fewer than 50,000 inhabitants, such that cooperation between these municipalities could lead to cost savings. It also appears that private delivery is not cheaper than public delivery. Finally, designating a larger proportion of the total waste volume to recycling does not imply greater costs.

Defining a framework model to determine total costs of managed desktops using ITIL best practices

In modern day organizations there are an increasing number of IT devices such as computers, mobile phones and printers. These devices can be located and maintained by using specialized IT management applications. Costs related to a single device accumulate from various sources and are normally categorized as direct costs like hardware costs and indirect costs such as labor costs. These costs can be saved in a configuration management database and presented to users using web based development tools such as ASP.NET. The overall costs of IT devices during their lifecycle can be ten times higher than the actual purchase price of the product and ability to define and reduce these costs can save organizations noticeable amount of money. This Master’s Thesis introduces the research field of IT management and defines a custom framework model based on Information Technology Infrastructure Library (ITIL) best practices which is designed to be implemented as part of an existing IT management application for defining and presenting IT costs.

Public and Private Production in a Mixed Delivery System: Regulation, Competition and Costs

Academics and policy makers are increasingly shifting the debate concerning the best form of public service provision beyond the traditional dilemma between pure public and pure private delivery modes, because, among other reasons, there is a growing body of evidence that casts doubt on the existence of systematic cost savings from privatization, while any competition seems to be eroded over time. In this paper we compare the relative merits of public and private delivery within a mixed delivery system. We study the role played by ownership, transaction costs, and competition on local public service delivery within the same jurisdiction. Using a stochastic cost frontier, we analyze the public-private urban bus system in the Barcelona Metropolitan Area. Our results suggest that private firms tendering the service have higher delivery costs than those incurred by the public firm, especially when transaction costs are taken into account. Tenders, therefore, do not help to reduce delivery costs. Our results suggest that under a mixed delivery scheme, which permits the co-existence of public and private production, the metropolitan government and the regulator can use private delivery to contain costs in the public firm and, at the same time, benefit from the greater flexibility of private firms for dealing with events not provided for under contract.

Driver costs in small firms: Empirical analysis for farms

The agricultural sector has always been characterized by a predominance of small firms. International competition and the consequent need for restraining costs are permanent challenges for farms. This paper performs an empirical investigation of cost behavior in agriculture using panel data analysis. Our results show that transactions caused by complexity influence farm costs with opposite effects for specific and indirect costs. While transactions allow economies of scale in specific costs, they significantly increase indirect costs. However, the main driver for farm costs is volume. In addition, important differences exist for small and big farms, since transactional variables significantly influence the former but not the latter. While sophisticated management tools, such ABC, could provide only limited complementary useful information but no essential allocation bases for farms, they seem inappropriate for small farms

Driver costs in small firms: Empirical analysis for farms

The agricultural sector has always been characterized by a predominance of small firms. International competition and the consequent need for restraining costs are permanent challenges for farms. This paper performs an empirical investigation of cost behavior in agriculture using panel data analysis. Our results show that transactions caused by complexity influence farm costs with opposite effects for specific and indirect costs. While transactions allow economies of scale in specific costs, they significantly increase indirect costs. However, the main driver for farm costs is volume. In addition, important differences exist for small and big farms, since transactional variables significantly influence the former but not the latter. While sophisticated management tools, such ABC, could provide only limited complementary useful information but no essential allocation bases for farms, they seem inappropriate for small farms

Mobile Subscription Acquisition and Retention Costs - An Actvity-Based Model

The objective of this master’s thesis was to develop a model for mobile subscription acquisition cost, SAC, and mobile subscription retention cost, SRC, by applying activity-based cost accounting principles. The thesis was conducted as a case study for a telecommunication company operating on the Finnish telecommunication market. In addition to activity-based cost accounting there were other theories studied and applied in order to establish a theory framework for this thesis. The concepts of acquisition and retention were explored in a broader context with the concepts of customer satisfaction, loyalty and profitability and eventually customer relationship management to understand the background and meaning of the theme of this thesis. The utilization of SAC and SRC information is discussed through the theories of decision making and activity-based management. Also, the present state and future needs of SAC and SRC information usage at the case company as well as the functions of the company were examined by interviewing some members of the company personnel. With the help of these theories and methods it was aimed at finding out both the theory-based and practical factors which affect the structure of the model. During the thesis study it was confirmed that the existing SAC and SRC model of the case company should be used as the basis in developing the activity-based model. As a result the indirect costs of the old model were transformed into activities and the direct costs were continued to be allocated directly to acquisition of new subscriptions and retention of old subscriptions. The refined model will enable managing the subscription acquisition, retention and the related costs better through the activity information. During the interviews it was found out that the SAC and SRC information is also used in performance measurement and operational and strategic planning. SAC and SRC are not fully absorbed costs and it was concluded that the model serves best as a source of indicative cost information. This thesis does not include calculating costs. Instead, the refined model together with both the theory-based and interview findings concerning the utilization of the information produced by the model will serve as a framework for the possible future development aiming at completing the model.

Cumulative Costs of Caries Prevention and Treatment in Children - with Special Reference to Work Division and Cohort Effect

Lapsen karieshoidon kustannuskertymän muutokset ja karieshoidon toimintakäytäntöjen yhteys kustannuksiin Tutkimuksen tavoitteena oli mitata terveyskeskuksessa hoidettavien lasten karieshoidon kumulatiivisia kustannuksia ja verrata niitä kahden erilaisen toimintatavan välillä. Lisäksi tarkasteltiin lasten hampaiden terveyttä. Tutkimus tehtiin julkisen palvelutuottajan näkökulmasta. Tutkimusaineisto kerättiin Kemin ja Tornion terveyskeskusten suun terveydenhuollon potilaskertomuksista. Kemin kohortit 1980, 1983 ja 1986 (n = 600) ja Tornion kohortit 1980 ja 1992 (n = 400) edustivat perinteistä ja Kemin kohortit 1989, 1992 ja 1995 (n = 600) uutta toimintatapaa työnjaon ja ehkäisyn ajoituksen suhteen. Kohortteja ja kaupunkeja verrattiin hampaiden terveyden (dmft/DMFT = 0 ja dmft ja DMFT keskiarvot 5 ja 12 vuoden iässä) ja voimavarojen käytön suhteen. Panoskäyttö johdettiin käyntimäärien avulla laskennallisen työajan kautta. Kustannuskertymät muodostettiin käyttämällä henkilöstömenoista laskettuja suorittajakohtaisia yksikkökustannuksia. Panoskäytön ja yksikkökustannusten kautta muodostettiin kustannuskertymät. Kustannusten ja terveysvaikutusten suhteita arvioitiin kustannus-vaikuttavuusanalyysissä. Suuhygienistien työpanosta hyödyntävällä varhaisen ehkäisyn toimintamallilla saavutettiin vähäisemmin kustannuksin alle kouluiässä parempi ja kouluiässä yhtä hyvä hammasterveys kuin perinteisellä, enemmän hammaslääkärien työpanokseen perustuvalla tavalla. Karieksen hoitoon liittyvien käyntien määrä oli nuorimmissa syntymävuosikohorteissa pienempi kuin vanhimmissa kohorteissa. Käynnit hammaslääkärissä vähenivät eniten. Toimintatavalla oli merkittävä vaikutus lapsen karieshoidon kokonaiskustannuksiin. Herkkyysanalyysin mukaan karieshoidon kustannukset olivat työnjakoa hyödyntämällä kolmanneksen pienemmät, kuin jos hoidon suorittajana olisi ollut ainoastaan hammaslääkäri-hoitaja työpari. Lasten karieshoidon kustannusvaikuttavuus kohentui molemmissa terveyskeskuksissa nuoremmissa kohorteissa vanhempiin verrattuna. Suun terveydenhuollon potilaskertomuksia olisi hyödynnettävä toiminnan kehittämisessä. Varhaisen ehkäisyn avulla voitaisiin kaikkien suun terveydenhuollon ammattihenkilöiden työpanos kohdentaa kustannustehokkaasti.

Local privatization, intermunicipal cooperation, transaction costs and political interests: Evidence from Spain

Several empirical studies have analyzed the factors that influence local privatization. Variables related to fiscal stress, cost reduction, political processes and ideological attitudes are the most common explanatory variables used in these studies. In this paper, we add to this literature by examining the influence of transaction costs and political factors on local governments’ choices through new variables. In addition to this, we consider the role of additional aspects, such as intermunicipal cooperation as a potential alternative to privatization in order to exploit scale economies or scope economies. We consider two relevant services: solid waste collection and water distribution. Results from our estimates show that privatization (that is, contracting out to a private firm) is less common for water distribution than for solid waste collection. Higher transaction costs in water distribution are consistent with this finding. Furthermore, we find that municipalities with a conservative ruling party privatize more often regardless of the ideological orientation of the constituency. This shows that those political interests able to influence local elections are more important in determining the form of delivery than is the basic ideological stance of the constituency. Finally, we find that intermunicipal cooperation is an alternative to local privatization.

Private micro-irrigation costs using reclaimed water

The cost of reusing water in micro-irrigation at the field level has not been studied in depth although the use of effluents in agriculture is a viable alternative in areas where water is scarce or there is intense competition for its use. The aim of the present study is to analyse the private costs of water reuse in micro-irrigation in an experimental plot. This analysis is intended to provide information about the decision a farmer would make when the choice to use conventional or reclaimed water is guided by cost criteria. The components of the total costs of different combinations of four types of filters and five emitters that can be installed in micro-irrigation systems using reclaimed water have been studied with the data obtained from an experimental plot in conditions similar to those of fruit orchards. Different scenarios that compared the costs of using conventional or reclaimed water in terms of water price and nutrient content were also studied. The results show that a proper combination of filters and emitters can save up to 33% in irrigation costs. Capital costs and maintenance costs were the most variable among the different combinations. Scenario analysis showed that the greater price of reclaimed water could be compensated by high nutrient contents, which would reduce fertilizer costs