Administrative costs are assessed on the basis of the average cost of the required administrative activity (Price) multiplied by the total number of activities performed per year (Quantity).
The cost will be generally estimated by multiplying a tariff (based on average labour cost per hour including prorated overheads) and the time required per action. Where appropriate, other types of costs such as outsourcing, equipment or supplies’ costs will be taken into account.
The quantity will be calculated as the frequency of required actions multiplied by the number of entities concerned.
The core equation of the SCM is as follows:
Σ P x Q
where P (for Price) = Tariff x Time and Q (for Quantity) = Number of businesses x Frequency)
The Standard Cost Model may be applied in different but equally valid ways. These differences often explain variation between EU baseline measurement and national baseline measurements. Factors leading to variation, which need to be taken into consideration for any interpretation of the data, are inter alia
The purpose of the SCM methodology is to produce estimates that allow an order of magnitude of the burdens in different regulatory areas. Considering the level of detail and the number of parameters concerned, it is not have cost-efficient to aim at statistically valid results.