Counting the Cost of Compliance
April 28, 2011
I just got a link to the Business Cost Calculator from Rob Dowler. This is what the MED's website has to say about it:
The Business Cost Calculator (BCC) is an IT-based tool that provides a framework for government officials to calculate the compliance costs for business associated with alternative regulatory proposals.
Compliance costs are the costs to businesses of performing activities associated with complying with government regulation.
The key purpose of the BCC is to support the preparation of quality policy advice and sound regulatory decision making processes.
The BCC is based on the Dutch Standard Costing Model and uses an activity based costing methodology. It works by providing a framework that enables the identification, categorisation, calculation and comparison of compliance costs associated with alternative regulatory interventions. It uses 9 compliance cost categories:
* Education
* Enforcement
* Notification
* Permission
* Procedural
* Publication and documentation
* Purchase cost
* Record keeping
* Other
The BCC was developed by the Australian Office of Best Practice Regulation (OBPU) for use by Australian government agencies in the preparation of regulatory impact analysis. The Ministry of Economic Development worked with the Australian government to adapt the BCC and make it available for use by New Zealand government agencies.
Commentary:
I did wonder briefly why the Australian calculator is public yet the NZ calculator is only available to public servants. A wee cultural difference there perhaps? I prefer Aussie openness, even if it is highly unlikely to be used by most private-sector managers.
At Chatswood, we have at various times modelled one-off and ongoing costs of compliance with the FAA for companies and also for advisers. Our approach combines three different sources of review:
- Understanding the law / regulations
- Understanding operations and activities affected
- Understanding the effects of the costs on the economics of the channels
We like to use visual modelling tools - dashboards - to enable rapid scenario development and sensitivity testing.
We think that scenario planning for activities and costs should be an integral part of the planning process for the business, and we have got new third-party resources to help us do that - but more on those people in another post.