The changing nature of a business' cost base
As summer draws to a close, we see business and economic leaders returning to work and we can all be grateful that the Paralympic Games are staving off the effects of potentially damaging post-Olympics blues. I suppose it is worth beginning with a question. Has anything changed over the summer.
The answer, of course, is “not much”. Britain derived a great spiritual boost from the outstanding success of the Olympic Games, and the Paralympic Games have gotten off to a flyer. However, look beyond these beacons of optimism and the same problems remain. Despite a small positive revision of the last quarterly GDP figures, growth continues to seem a far away prospect and the persisting lack of solutions is fuelling the in-fighting that inevitably comes halfway through a Parliament that has made little progress.
And more specifically for our industry, outsourcing is back under the spotlight, mostly in response to rising costs on major public sector contracts that have been mis-managed. I have seen numerous instances recently where procurement rules, increasing fees or profiteering have been cited as reasons for spiralling project costs.
The truth is that the issues that are repeatedly experienced could be prevented by thorough evaluation and agreement on desired project outcomes and timeframes, with all parties then working collectively to deliver them. It is this final point that seems to be missing from many public sector projects.
The situation becomes even more acute when we look at the way that business’ cost structures are changing. Previously, it was labour and capital costs that accounted for the majority of expenditure. Nowadays, third party costs have exceeded them several times over, so it is even more important that suppliers are managed proactively and collaboratively.
We are putting the finishing touches to a piece of research that contains some interesting findings on what the changing nature of a business’ cost base means for companies and how they can be managed most effectively. Be sure to subscribe to our monthly e-newsletter here to be notified when the research is published.
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As we move towards the final quarter of this extraordinary year, new challenges inevitably lie ahead. How do you think current public events, particularly in the UK, will impact business leaders', shareholders' and the public's perception of cost management within business today? What are your predictions for things-to-come over the final quarter of 2012?
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