Description
In contrast with typical textbook models, these large-scale macroeconometric models used large amounts of data and based forecasts on past correlations instead of theoretical relations.
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Activity Based Costing in large scale research projects
1st Dorota Kuchta1, 2nd Aleksandra Niedzielska2
1,2
Faculty of Computer Science and Management, Wroclaw University of Technology, Poland
1
[email protected], 2 [email protected]
Abstract In this paper will be proposed Activity Based Costing model for one of the example of large scale research project - Large Hadron Collider (LHC). Authors would like to focus on the main problems with construction Activity Based Costing model for research projects. Firstly the main problem is scale of these kind of projects - budgets are counting in billions euro and the time of realization takes years. Apart from that it is difficult to define the final products, because it is always to a certain extent unknown what exactly will come out of the research, especially a research which is planned for 20-30 or even more years. It is also hard to identify every single activities and activity drivers, and especially their consumption and allocation rates. In this article Authors would like to answer the question: despite of these problems above is it worth to prepared Activity Based Costing model for large scale research project? Keywords: activity based costing, large scale research project
1. Introduction
In this paper will be proposed Activity Based Costing model for one of the example of a large scale research project - the Large Hadron Collider (LHC). Authors would like to focus on the main problems linked to the construction of Activity Based Costing model for research projects. The application of Activity Based Costing model in this case may be important, because in large scale research projects huge sums of money are spent and the donator would like to now for what. What is more, in such projects a part of money has to be “lost” – because a part of experiments do not succeed and a part of hypotheses turn out to be false. It should be possible to assess whether these losses are reasonable and justified. Further, in large scale projects there usually occur results which have not been expected – e.g. applications of the invented technology in other domains. It would also be useful to be able to identify these “byproducts” and cost them. Further, it would also be extremely useful to know the cost not only of final products, but also of activities - as similar activities may later be repeated in other products. In short, as large scale projects cost more than much, it seems normal to expect that their cost is adequately planned and controlled. Activity Based Costing is a tool which may help to do this.
292
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
2. Activity Based Costing Method
The basis of Activity Based Costing is the assumption that cost objects (products, projects, customers, divisions etc.) consume activities and activities consume resources. First resources are allocated to the activities (through so called resource cost drivers) and then to the cost objects, through so called activity cost drivers.
Figure 1. Illustrations of classical Activity Based Costing
It is widely assumed in the literature that the ABC allows to determine a much more exact cost of cost objects than any other approach. That’s why it is most advisable to use this method in case large amounts of money is involved. This is certainly the case of large scale research projects. In such projects huge amount of money is spent and it would be good to know what the results are and how much cost they have consumed. Normally ABC is applied to regular production or to non-research projects (?ada, Kozarkiewicz). The least problematic is the use of ABC in regular production. For this case the corresponding theory is the best developed, there are ready lists or activities, cost drivers etc. In case of regular production the model can be verified throughout several accounting periods and become relatively stable. In projects ABC is used very often for budgeting. There are some problems linked to this use of ABC, but in non research projects the activities and products are usually well defined and relatively stable.
3. Costing of Research Projects
In research projects, however, there is much more uncertainty than in nonresearch projects. Very often the products of the projects are only vaguely defined, sometimes the activities as well. In large research projects this variability and uncertainty is still larger – such projects go on for a very long period of time and their products, as well as activities actually performed, are often quite different than the initially planned ones. What is more, in such projects often are created 293
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
completely unexpected products, which can find application in completely different domains, and on the other hand some activities, some resources, often very expensive, are spent in vain – they do not lead to any result. It would be good to know how much various products of the project cost, but also it would be good to know how much money and which resources have been spent in vain. What is more, the problem of costing has not been solved even for small scale research projects. Authors (Ratnatunga i Waldmann, 2010, Souder 2004, Espinasse 2011) state that not exist well rounded method of planning and controlling costs of research and development projects. Large number of this kind of project generate loss from financial point of view. But this is not observable in accounting system at universities in report from realization of projects.(Espinasse, 2011). The big problem is with indirect costs. Well - known methods state that indirect costs is a percentage of direct costs. In this method indirect costs are counted in proportion to direct costs but there is usually no reasonable arguments for using it. For large research projects the solution of the costing problem will be still more complex than for smaller research projects, and a wrong costing may mean very false information – the same percentage of inaccuracy means much more inaccuracy in absolute sums. And no indication in the literature exists as to how to handle the problem. In the next section we present an attempt to do so.
4. A proposal of application of Activity Based Costing for a large scale research project
There exist no ready models for ABC in research projects and we would like to propose one for one case – a large research project, which has been going on. The following model will have to made precise for the project in question, what is more, for the various phases of its very long duration
Figure 2. Illustration of the ABC model for large scale research project for a period t
294
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Firstly, the problem is scale of these kind of projects - budgets are counted in billions euro and the time of realization takes years. Large Hadron Collider consist of large amount of different activities. Some activities are the same and do not change from the beginning to the end of projects. Some activities turn out to be performed in vain – they do not lead to any product. These kind of activities consume project’s resources too. Some resources may be even spent without being used for any sensible activity – these resources, spent in vain, do cost as well. What is more, if a product comes into being in period t, in large scale projects it may be the result of activities performed in the same or recent periods, but also of activities performed many periods ago. Secondly, there is a problem with product’s definition in large scale research project. One of the main product of Large Hadron Collider is laboratory (big infrastructure). It’s cost would be probably fairly easy to determined. The other main product is knowledge. But it is very hard to describe knowledge. And in fact it was knowledge which constituted the main goal of the project, not even the laboratory. Thus one of the main goals of a costing system for large scale research projects would to be asses the cost of knowledge geberated. The topic knowledge management is presented in research projects (Barthès i Tacla (2002), Jayawarnaa i Holtb 2009). It is launched orientation, which is crucial for research projects: methods of evaluation of knowledge generated by research projects. Sugiyama (2007) propose way of evaluation knowledge generated in one project in organization which is used by the other research projects in the same organization. However, he did it for small research projects, and organizational knowledge is certainly not the most important type of knowledge in large scale research projects. In such projects we can distinguish two types of knowledge. The first one is the knowledge that we have expected to obtain from the beginning of project. For example scientists believe that Large Hadron Collider will help to answer many fundamental questions in physics. The second one is the knowledge that we have not planned to obtain. For example the construction of big infrastructures leads to the invention of new kind of materials or new technology. We would like to be able to determine the cost of all the different products. Another problem connected with the implementation of activity based costing in large scale research project is the changeability and lack of stability of models like the one from Fig.2. In Large Hadron Collider project it is very hard to precise every resources, activities, activity drivers and products. What is more, these elements can change several times during project realization so it would be useful to prepare for the model form Fig.2, some kind of change management and verification system. We also have to remember that in large scale projects there will be different phases. Of course, each project is composed of phases, but in case of a large research projects this problem is especially acute. For each phase the approach to the costing might be completely different. Let us suppose the building phase of the project in question, thus the phase when the large laboratory was to be built. In this phase we can point out three main groups of resources: Buildings with equipment, People, Knowledge. Equipment is a resource which is fairly easy to cost and allocated to tangible products, like the laboratory. In this phase our project resembles a “normal” construction product and we can used costing techniques designed for 295
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
construction projects. Next resources is an extremely huge number of people involved in project: from members of project team to scientist and other specialist from different countries. In this aspect our project differs from a typical construction project, because the persons involved are not just technical and engineering staff, whose competences are fairly easy to measure and allocate to various construction activities, but above all scientists, who are a source of highly specialized knowledge we have thus the third important resource in this project: knowledge. Without people’s knowledge this project would have never existed. But knowledge is not a resource use in normal costing system. Generally it is assumed that the scientist salaries measure the knowledge, but in case of a large scale research project we would like to measure different types of expertise and allocate them to different types of activities and products. It is an unsolved problem how to do it. The main two groups of activities in this project phase are: a group of activities connected with procurement management and a group of activities connected with project management. In the first group we have activities connected with preparing all specifications of deliveries. Next is conducting a tenders (with choosing supplier, signed contracts). The next one, preparing all environment (service) connected with a delivery phase. Because of the scale of this project and a huge amount of different activities, we are not able and it is pointless to mention them all. So in Figure 3, we present only examples of activities. The main product at these stage is big infrastructure. Big infrastructure consist of components (like quadropole and dipol magnets, steel collars, networking infrastructures etc.), civil engineering work (like four cavers for detectors) and services that assembly every elements in one big infrastructure. As for the cost drivers, it would be necessary to make the project team fill in time sheet, so that the use of time of different person can be assigned to individual activities and products. The source of cost drivers will also be the documents (also time sheets) about the equipment usage. The resource knowledge would have to be categorized into various categories and then allocated to activities and products through time sheets or questionnaires.
296
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Figure 3. Illustration of the ABC model for project Large Hadron Collider
Resources spent in vain correspond to the cost of specialist who travel to contractors who take part in tender for technological audit. In big tenders representatives of project teams travel to every companies who take part in this tender to make technological audit. This activities occupy them a lot of time. Take into account that every tender won only one performer, traveling to other companies, which loose was activities in vain. In the same time this people who took part in these activities we can called resources in vain. Some tests during components assembly we can called activities performed for products in next periods because this activities can caused “birth of new knowledge” (one big step in direction to answer on the fundamental question in physics – the main goal of Large Hadron Collider). It is obvious that the model from Fig. 3 needs much more work to be implemented. However, it is worth noticing that it may deliver us very important information, e.g. what is the cost of the tender procedure. This kind of information would be easier to obtain that the cost of purely research activities, and yet this information may be useful to elaborate a good (thus not too expensive, and yet efficient) procurement system for the project (Niedzielska, Kuchta, 2011)
5. Conclusions
At the beginning of the present paper we formulated the question we wanted to try to answer here: is it worth to use Activity Based Costing in large research projects? At present, we do not feel authorized to answer the question. On one hand Activity Based Costing, at least in theory, is able to deliver us very important information: 297
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
about the resource usage, the cost of various activities and products etc. But there is only the question of the cost of getting this information. If the model has to be changed every year, if the measurement of the use of activities (which would have to be done by means of questionnaires, time sheets etc.) would be so annoying for the project team that they would stop taking it seriously, than probably it would not be worth it. On the other hand, in case where such amounts of money are spent, it seems completely illogical to avoid spending a relatively small portion of this money on a costing system. Using Activity Based Costing generate cost, and this cost may be too high for small project or small companies, but our hypothesis is it would be maybe even tiny with respect to total cost of a performing a large scale project. What is more, with this “tiny” cost we might be able, thanks to the information we would get, save not tiny sums of public money or spend them in a more reasonable way. As to the human resistance and annoyance linked to the problem of collecting data, we think it would be enough to explain to them the system and possible advantages of it. And also it would be useful to place the problem in the context of the European Union attitude – they are starting to require a full cost approach in research projects (Estermann 2011), which in short means that they want to control exactly what the public money is spent for. And there are universities who have implemented Activity Based Costing to measure all their cost and to use it (Fürstenbach 2011). The academic staff was at the beginning also annoyed, but finally a compromise has been found and all the university activities and products of university activities have their full cost, which is a valuable management tool. As for large research projects, the process of looking for a good costing (and as a result, a good budgeting and budget control) system has only begun. Our next step will be to try to verify the idea at the spot – thus together with the team members of the project itself. It is possible that it will turn out that it is not wise to try to elaborate an ABC system for the whole project, but only for parts of it – for those parts where it would be fairly easy to introduce such a system and where considerable amounts of money are spent. For example, we will start by introducing the ABC system for the procurement process in the project.
References
Barthès Jean-Paul i Tacla Cesar A. (2002) “Agent-supported portals and knowledge management in complex R&D projects” CNRS UMR 6599 HEUDIASYC, Computer Science Department, University of Technology of Compiègne, 60205 Compiègne, France Available online 4 March 2002. Estermann T. (2011), “Full costing and the financial sustainability of universities”, EUIMA – Full Costing Project – Country Workshop: Poland Universities Implementing Full Costing (workshop documentation), pp.9-11. Fürstenbach J. (2011), “Implementation of full costing in Sweden”, EUIMA – Full Costing Project – Country Workshop: Poland Universities Implementing Full Costing (workshop documentation), pp.15-17. Jayawarnaa Dilani i Holtb Robin (2009), “Knowledge and quality management: An R&D perspective” , 1, aMMU Business School, Aytoun Street, Manchester M1 3GH, UK The University of Liverpool Management School, Chatham Street, Liverpool L69 7ZH, UK
298
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Kuchta D., Niedzielska A. (2011), “Conception of fuzzy selection system supporting purchase in large scale project”. Article submitted to scientific notebooks University of Economics in Katowice. Sugiyama Kozo (2007), “Post-analysis of knowledge-creation processes in small research projects” International Journal of Information Technology & Decision Making, Vol. 6, No. 3 (2007) 541–557; Venkataraman Ray R., Pinto Jeffrey K. (2008), “Cost and Value Management in Projects”, pp.90-92.
The research was supported by the Polish National Center of Research and Development (NCBiR) in the framework of grant N R11 0022 06 “A method of costing for universities based on the Activity Based Costing”
299
doc_800384609.pdf
In contrast with typical textbook models, these large-scale macroeconometric models used large amounts of data and based forecasts on past correlations instead of theoretical relations.
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Activity Based Costing in large scale research projects
1st Dorota Kuchta1, 2nd Aleksandra Niedzielska2
1,2
Faculty of Computer Science and Management, Wroclaw University of Technology, Poland
1
[email protected], 2 [email protected]
Abstract In this paper will be proposed Activity Based Costing model for one of the example of large scale research project - Large Hadron Collider (LHC). Authors would like to focus on the main problems with construction Activity Based Costing model for research projects. Firstly the main problem is scale of these kind of projects - budgets are counting in billions euro and the time of realization takes years. Apart from that it is difficult to define the final products, because it is always to a certain extent unknown what exactly will come out of the research, especially a research which is planned for 20-30 or even more years. It is also hard to identify every single activities and activity drivers, and especially their consumption and allocation rates. In this article Authors would like to answer the question: despite of these problems above is it worth to prepared Activity Based Costing model for large scale research project? Keywords: activity based costing, large scale research project
1. Introduction
In this paper will be proposed Activity Based Costing model for one of the example of a large scale research project - the Large Hadron Collider (LHC). Authors would like to focus on the main problems linked to the construction of Activity Based Costing model for research projects. The application of Activity Based Costing model in this case may be important, because in large scale research projects huge sums of money are spent and the donator would like to now for what. What is more, in such projects a part of money has to be “lost” – because a part of experiments do not succeed and a part of hypotheses turn out to be false. It should be possible to assess whether these losses are reasonable and justified. Further, in large scale projects there usually occur results which have not been expected – e.g. applications of the invented technology in other domains. It would also be useful to be able to identify these “byproducts” and cost them. Further, it would also be extremely useful to know the cost not only of final products, but also of activities - as similar activities may later be repeated in other products. In short, as large scale projects cost more than much, it seems normal to expect that their cost is adequately planned and controlled. Activity Based Costing is a tool which may help to do this.
292
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
2. Activity Based Costing Method
The basis of Activity Based Costing is the assumption that cost objects (products, projects, customers, divisions etc.) consume activities and activities consume resources. First resources are allocated to the activities (through so called resource cost drivers) and then to the cost objects, through so called activity cost drivers.
Figure 1. Illustrations of classical Activity Based Costing
It is widely assumed in the literature that the ABC allows to determine a much more exact cost of cost objects than any other approach. That’s why it is most advisable to use this method in case large amounts of money is involved. This is certainly the case of large scale research projects. In such projects huge amount of money is spent and it would be good to know what the results are and how much cost they have consumed. Normally ABC is applied to regular production or to non-research projects (?ada, Kozarkiewicz). The least problematic is the use of ABC in regular production. For this case the corresponding theory is the best developed, there are ready lists or activities, cost drivers etc. In case of regular production the model can be verified throughout several accounting periods and become relatively stable. In projects ABC is used very often for budgeting. There are some problems linked to this use of ABC, but in non research projects the activities and products are usually well defined and relatively stable.
3. Costing of Research Projects
In research projects, however, there is much more uncertainty than in nonresearch projects. Very often the products of the projects are only vaguely defined, sometimes the activities as well. In large research projects this variability and uncertainty is still larger – such projects go on for a very long period of time and their products, as well as activities actually performed, are often quite different than the initially planned ones. What is more, in such projects often are created 293
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
completely unexpected products, which can find application in completely different domains, and on the other hand some activities, some resources, often very expensive, are spent in vain – they do not lead to any result. It would be good to know how much various products of the project cost, but also it would be good to know how much money and which resources have been spent in vain. What is more, the problem of costing has not been solved even for small scale research projects. Authors (Ratnatunga i Waldmann, 2010, Souder 2004, Espinasse 2011) state that not exist well rounded method of planning and controlling costs of research and development projects. Large number of this kind of project generate loss from financial point of view. But this is not observable in accounting system at universities in report from realization of projects.(Espinasse, 2011). The big problem is with indirect costs. Well - known methods state that indirect costs is a percentage of direct costs. In this method indirect costs are counted in proportion to direct costs but there is usually no reasonable arguments for using it. For large research projects the solution of the costing problem will be still more complex than for smaller research projects, and a wrong costing may mean very false information – the same percentage of inaccuracy means much more inaccuracy in absolute sums. And no indication in the literature exists as to how to handle the problem. In the next section we present an attempt to do so.
4. A proposal of application of Activity Based Costing for a large scale research project
There exist no ready models for ABC in research projects and we would like to propose one for one case – a large research project, which has been going on. The following model will have to made precise for the project in question, what is more, for the various phases of its very long duration
Figure 2. Illustration of the ABC model for large scale research project for a period t
294
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Firstly, the problem is scale of these kind of projects - budgets are counted in billions euro and the time of realization takes years. Large Hadron Collider consist of large amount of different activities. Some activities are the same and do not change from the beginning to the end of projects. Some activities turn out to be performed in vain – they do not lead to any product. These kind of activities consume project’s resources too. Some resources may be even spent without being used for any sensible activity – these resources, spent in vain, do cost as well. What is more, if a product comes into being in period t, in large scale projects it may be the result of activities performed in the same or recent periods, but also of activities performed many periods ago. Secondly, there is a problem with product’s definition in large scale research project. One of the main product of Large Hadron Collider is laboratory (big infrastructure). It’s cost would be probably fairly easy to determined. The other main product is knowledge. But it is very hard to describe knowledge. And in fact it was knowledge which constituted the main goal of the project, not even the laboratory. Thus one of the main goals of a costing system for large scale research projects would to be asses the cost of knowledge geberated. The topic knowledge management is presented in research projects (Barthès i Tacla (2002), Jayawarnaa i Holtb 2009). It is launched orientation, which is crucial for research projects: methods of evaluation of knowledge generated by research projects. Sugiyama (2007) propose way of evaluation knowledge generated in one project in organization which is used by the other research projects in the same organization. However, he did it for small research projects, and organizational knowledge is certainly not the most important type of knowledge in large scale research projects. In such projects we can distinguish two types of knowledge. The first one is the knowledge that we have expected to obtain from the beginning of project. For example scientists believe that Large Hadron Collider will help to answer many fundamental questions in physics. The second one is the knowledge that we have not planned to obtain. For example the construction of big infrastructures leads to the invention of new kind of materials or new technology. We would like to be able to determine the cost of all the different products. Another problem connected with the implementation of activity based costing in large scale research project is the changeability and lack of stability of models like the one from Fig.2. In Large Hadron Collider project it is very hard to precise every resources, activities, activity drivers and products. What is more, these elements can change several times during project realization so it would be useful to prepare for the model form Fig.2, some kind of change management and verification system. We also have to remember that in large scale projects there will be different phases. Of course, each project is composed of phases, but in case of a large research projects this problem is especially acute. For each phase the approach to the costing might be completely different. Let us suppose the building phase of the project in question, thus the phase when the large laboratory was to be built. In this phase we can point out three main groups of resources: Buildings with equipment, People, Knowledge. Equipment is a resource which is fairly easy to cost and allocated to tangible products, like the laboratory. In this phase our project resembles a “normal” construction product and we can used costing techniques designed for 295
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
construction projects. Next resources is an extremely huge number of people involved in project: from members of project team to scientist and other specialist from different countries. In this aspect our project differs from a typical construction project, because the persons involved are not just technical and engineering staff, whose competences are fairly easy to measure and allocate to various construction activities, but above all scientists, who are a source of highly specialized knowledge we have thus the third important resource in this project: knowledge. Without people’s knowledge this project would have never existed. But knowledge is not a resource use in normal costing system. Generally it is assumed that the scientist salaries measure the knowledge, but in case of a large scale research project we would like to measure different types of expertise and allocate them to different types of activities and products. It is an unsolved problem how to do it. The main two groups of activities in this project phase are: a group of activities connected with procurement management and a group of activities connected with project management. In the first group we have activities connected with preparing all specifications of deliveries. Next is conducting a tenders (with choosing supplier, signed contracts). The next one, preparing all environment (service) connected with a delivery phase. Because of the scale of this project and a huge amount of different activities, we are not able and it is pointless to mention them all. So in Figure 3, we present only examples of activities. The main product at these stage is big infrastructure. Big infrastructure consist of components (like quadropole and dipol magnets, steel collars, networking infrastructures etc.), civil engineering work (like four cavers for detectors) and services that assembly every elements in one big infrastructure. As for the cost drivers, it would be necessary to make the project team fill in time sheet, so that the use of time of different person can be assigned to individual activities and products. The source of cost drivers will also be the documents (also time sheets) about the equipment usage. The resource knowledge would have to be categorized into various categories and then allocated to activities and products through time sheets or questionnaires.
296
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Figure 3. Illustration of the ABC model for project Large Hadron Collider
Resources spent in vain correspond to the cost of specialist who travel to contractors who take part in tender for technological audit. In big tenders representatives of project teams travel to every companies who take part in this tender to make technological audit. This activities occupy them a lot of time. Take into account that every tender won only one performer, traveling to other companies, which loose was activities in vain. In the same time this people who took part in these activities we can called resources in vain. Some tests during components assembly we can called activities performed for products in next periods because this activities can caused “birth of new knowledge” (one big step in direction to answer on the fundamental question in physics – the main goal of Large Hadron Collider). It is obvious that the model from Fig. 3 needs much more work to be implemented. However, it is worth noticing that it may deliver us very important information, e.g. what is the cost of the tender procedure. This kind of information would be easier to obtain that the cost of purely research activities, and yet this information may be useful to elaborate a good (thus not too expensive, and yet efficient) procurement system for the project (Niedzielska, Kuchta, 2011)
5. Conclusions
At the beginning of the present paper we formulated the question we wanted to try to answer here: is it worth to use Activity Based Costing in large research projects? At present, we do not feel authorized to answer the question. On one hand Activity Based Costing, at least in theory, is able to deliver us very important information: 297
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
about the resource usage, the cost of various activities and products etc. But there is only the question of the cost of getting this information. If the model has to be changed every year, if the measurement of the use of activities (which would have to be done by means of questionnaires, time sheets etc.) would be so annoying for the project team that they would stop taking it seriously, than probably it would not be worth it. On the other hand, in case where such amounts of money are spent, it seems completely illogical to avoid spending a relatively small portion of this money on a costing system. Using Activity Based Costing generate cost, and this cost may be too high for small project or small companies, but our hypothesis is it would be maybe even tiny with respect to total cost of a performing a large scale project. What is more, with this “tiny” cost we might be able, thanks to the information we would get, save not tiny sums of public money or spend them in a more reasonable way. As to the human resistance and annoyance linked to the problem of collecting data, we think it would be enough to explain to them the system and possible advantages of it. And also it would be useful to place the problem in the context of the European Union attitude – they are starting to require a full cost approach in research projects (Estermann 2011), which in short means that they want to control exactly what the public money is spent for. And there are universities who have implemented Activity Based Costing to measure all their cost and to use it (Fürstenbach 2011). The academic staff was at the beginning also annoyed, but finally a compromise has been found and all the university activities and products of university activities have their full cost, which is a valuable management tool. As for large research projects, the process of looking for a good costing (and as a result, a good budgeting and budget control) system has only begun. Our next step will be to try to verify the idea at the spot – thus together with the team members of the project itself. It is possible that it will turn out that it is not wise to try to elaborate an ABC system for the whole project, but only for parts of it – for those parts where it would be fairly easy to introduce such a system and where considerable amounts of money are spent. For example, we will start by introducing the ABC system for the procurement process in the project.
References
Barthès Jean-Paul i Tacla Cesar A. (2002) “Agent-supported portals and knowledge management in complex R&D projects” CNRS UMR 6599 HEUDIASYC, Computer Science Department, University of Technology of Compiègne, 60205 Compiègne, France Available online 4 March 2002. Estermann T. (2011), “Full costing and the financial sustainability of universities”, EUIMA – Full Costing Project – Country Workshop: Poland Universities Implementing Full Costing (workshop documentation), pp.9-11. Fürstenbach J. (2011), “Implementation of full costing in Sweden”, EUIMA – Full Costing Project – Country Workshop: Poland Universities Implementing Full Costing (workshop documentation), pp.15-17. Jayawarnaa Dilani i Holtb Robin (2009), “Knowledge and quality management: An R&D perspective” , 1, aMMU Business School, Aytoun Street, Manchester M1 3GH, UK The University of Liverpool Management School, Chatham Street, Liverpool L69 7ZH, UK
298
8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011) 11-12 July 2011, Thassos Island, Greece
Kuchta D., Niedzielska A. (2011), “Conception of fuzzy selection system supporting purchase in large scale project”. Article submitted to scientific notebooks University of Economics in Katowice. Sugiyama Kozo (2007), “Post-analysis of knowledge-creation processes in small research projects” International Journal of Information Technology & Decision Making, Vol. 6, No. 3 (2007) 541–557; Venkataraman Ray R., Pinto Jeffrey K. (2008), “Cost and Value Management in Projects”, pp.90-92.
The research was supported by the Polish National Center of Research and Development (NCBiR) in the framework of grant N R11 0022 06 “A method of costing for universities based on the Activity Based Costing”
299
doc_800384609.pdf