INTRODUCTION
This paper reports the results of a cost study carried out in Technical Assistance Services (SAT) offered in western Nicaragua, financed by the Foundation for Technological Development of Agriculture and Forestry of Nicaragua (FUNICA) and the Fund of Technical Assistance (FAT).
cost-studies-in-servicesThe different stages of the projects in their development over time have been object of improvements in instruments, criteria and strategies to facilitate the design and execution of projects and with it, the achievement of the objectives of the SAT and the purposes of your lawsuit. In this context of improvement, this study emerges, which was carried out with the objectives of:
- Establish a real cost structure that allows comparing the estimated costs of service providers, considering their types of services. Differentiate cost levels for services offered and their qualities. Describe and identify the real causes of variability.
The results of the study should facilitate both FUNICA staff and beneficiaries to manage the different stages of the projects according to the policies and criteria established in this regard.
To carry out this study, there was access to the extensive documentation of project planning and execution, in the archives of printed documents, and in the computerized databases found in the FUNICA-León offices.
The methodology for an interactive meeting lasting 2 to 3 hours, carried out in the territory itself and with the beneficiaries of 9 projects taken as a model by FUNICA-León1 was also designed. In this meeting, an interview was carried out (focus group type), developing in parallel a training concentrate on topics on the importance of transformation with added value, focus on customers and competition in the practice of marketing, vision towards exports and emphasis on the importance of quality in all processes and services.
Based on the analysis applied to the indicated sources, the contributions of the cost components were characterized. These descriptions are related to the economic values of each element of the cost and their variability, which will provide input in decision-making for the stages of development of the SAT, which will result in improved planning, execution and monitoring of the SAT, without losing the perspective of increasing productivity and improving the quality of life of producers and their families.
1 The territories considered have been in Chinandega: San Francisco del Norte, Los Encuentros region and Cayanlipe town; in León: El Sauce and in Managua: San Francisco Libre, with producers working in the various productive activities; Noni, Pig breeding of breed animals, Beekeeping, Coffee, Livestock, Vegetables and Vermiculture.
STRATEGY AND METHODOLOGY
The search for variability and its sources in different components, such as cost factors, budgets, milestone plans and their execution, was considered important as an operational strategy. Once the presence of variability has been established, its contribution to the level of achievement of project results is determined and its causes are characterized. The reason for seeking variability is that it is indicated in the bibliography on processes and the quality of their results that is inevitably present in them and may be under statistical control or out of control; in the second case, it constitutes an indicator of the presence of difficulties in the process, which deserves its correction, improvement and corresponding learning.
Regarding the study methodology for meetings with producers, we decided to support ourselves based on questions, the topics being the following:
- Contribution of Technical Assistance in improving income. Willingness to pay producers a part of the amount requested to finance the SAT. Appreciations on increasing, maintaining or decreasing the amounts of financing in each of the types of SAT. Level of satisfaction with the amount of production you obtain. Technification level (in all your processes and with a company vision). Incidence of training received in improving production. Considerations on the market (internal and external), customers and competition. Considerations on the abilities to work in a business manner. Availability, recognition and access to sources of information on the behavior of the environment and the market, considering: Prices, Taxes, Transportation Costs, Regulations on packaging, packaging and labeling,Laboratory analysis
For the analysis of the documents, we proposed:
- Search the documents containing financial information: budgets, milestone plans, execution reports, to create databases, in electronic spreadsheets (HDCE).Interes us in the total data contained in the databases on costs already existing in FUNICA- León. For the visit, make a selection covering 1 to 3 projects for each of the 3 territories that were defined to visit. Prepare the interview questionnaire (or focus groups). Conduct the meetings, recording on audio tapes, the development of the same, for use as support in the generation of data and learning for the final report. Apply descriptive statistics (average, range, standard deviation) in the financial data, as well as graphic tools (stock chart, histogram,line graph) for data processing Generate criteria for:
1. Propose an applicable Cost Structure for the SAT design, its execution and monitoring. This structure contains Operational Specifications of Cost Factors and its utility is oriented towards the valuation of:
to. Costs estimated by the bidders.
b. Administrative expenses: Claimants vs. FUNICA amounts.
2. Categorization and identification of cost levels according to SAT type.
to. Willingness to pay for claimants.
b. Example of study of the behavior of SAT items in the milestone plan.
3. Description and Identification of the causes of Variability.
to. Variability analysis
b. Distribution of the budget by FUNICA based on general items and limits.
To transform the different data into information, different matrices or tables were constructed using HDCE, distributions, trends and variabilities were plotted, in addition to applying instruments that identify the factors with the greatest contribution, based on the 80:20 or Pareto criteria., from which graphs can also be produced.
Variability has been studied by obtaining maximum and minimum values from data groups, as well as averages, taking this information to the so-called "stock charts", which visually allow us to appreciate items affected more or less by variability. Confidence Intervals (X mean ± 3 * Standard Deviation) were also used to study trends at lower and upper limits by the financing data by budget items for current projects.
To emphasize the presence of variability, additional criteria were applied, such as criterion 80:20 or the Pareto Rule, which allows recognizing the so-called “few vitals” or the few elements with the highest frequency of components or actions, as well as with greater “consumption” of financing, so its contribution is critical both in the evaluation of project budgets and in the justification of actions during its execution. This is an instrument that will be useful to incorporate it more decisively into the work routine both by the financier, as well as by SAT applicants and suppliers.
These tools are part of the so-called basic Quality Control tools, with some bibliographic references being the following:
- http://www.aiteco.com/herramie.htm Quality Methods and Toolshttp: //www.gestiopolis.com/recursos/documentos/fulldocs/ger/herbassolprob.htmBasic Tools for Problem Solving
RESULTS
Contribution of Technical Assistance in improving income
As a starting point, we address what this first point indicates. In the territories visited, this topic was addressed based on the question: Has the received Technical Assistance Service been useful to you? The following is a concentrated2 of the answers:
Much
Since they have learned:
Formulation of agro-industrial products (mixtures to be made in each production), making different presentations of Noni, of which they have the capacity to prepare 4 products (juice, extract, capsule and tea).
Good Manufacturing Practices, working: on manufacturing and hygiene (adequate period of cutting and cutting of fruits, washing and its procedures, storage, processing).
Yes
They link what they have been learning about the beekeeping in the productive (sesame cultivation) and organizational. They have been farmers for about 15 years. In the beekeeping part several have around 14 years of experience.
Not totally
- In the coffee sector, there are complaints and discomfort due to:
Disbursements delivered in lesser amounts and with delays. The incidence of income improvement is not felt, given the state of arrears. Production has been maintained, more by delivery of the facilitator, than by compliance with payments. In beekeeping, important issues were developed and executed, such as artificial feeding at critical times, which affects the non-emigration of bees; They also learned how to make substitutes for bee feeding. Ranchers have given themselves more to strengthening the market; however the project has not been done yet; the efforts they are applying are their own. There are lags between budgeting and execution.
The above, rather than showing imperfections in the SAT, is a sample of variability due to many factors (organizational, operational, procedural, cultural, etc.) that concur in the execution of the projects and allows to reveal, the importance of the SAT to Although 2 shows a sample of the different responses. There are 3 groups that coincide with the "If" imperfections may occur in some cases. With these elements, it is appropriate to move on to consider the topic of "Willingness to pay producers a part of the amount requested to finance the SAT."
Proposal for a Cost Structure
In practice there is the issue of the costs applied in the SAT, it is a fairly complex topic to address, there are gaps in the specialized literature on this matter, however the issue of Cost Structure, is very characterized in the accounting literature and Therefore, in this work we set out to take advantage of the data that has been stored in FUNICA's experience to, together with the information collected in the visits and taking up the elements raised in the Cost literature, to reach the proposal of a Structure of Costs, applicable in the field of Technical Assistance Services.
The importance of this proposal is to provide elements for an analysis throughout a process that we call negotiation based on specifications.
to. Approach to Cost Factors and their Operational Specifications from projects in execution
To do this approach, project documentation was used, looking for variations between budgets and budget execution plans (or milestone plans). It was found for the different projects reviewed, the existence of variation between the components of budgets and milestone plans, observing a greater number of elements or activities in the Milestone Plans, which is a practical indicator of impact on costs by having to distribute budget contents on the fly in actions not considered during budget design.
Tables and graphs were created that combine both financing plans. Data graphs of projects currently under development are presented.
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