Governments worldwide face the challenge of reducing administrative burdens to enhance efficiency and foster a business-friendly environment. Administrative burdens refer to the regulatory compliance costs that businesses and individuals incur when adhering to government policies and procedures. These burdens can stifle innovation, reduce productivity, and create barriers to market entry. As such, measuring administrative burdens accurately is essential for implementing effective reforms.

I have extensive experience implementing the Standard Cost Model to identify and measure the most burdensome administrative procedures and regulations.

The Standard Cost Model (SCM)

One of the most widely adopted methods for measuring administrative burdens is the Standard Cost Model (SCM). Originating in the Netherlands in the early 2000s, the SCM provides a systematic approach to quantify the compliance costs associated with regulatory requirements. The model identifies the administrative activities businesses must perform to comply with regulations, such as filling out forms, reporting, and maintaining records. These activities are then translated into monetary values by calculating the time and costs involved. The key components of the Standard Cost Model are:

• Identification of Information Obligations: The first step in SCM is to identify the specific information obligations imposed by regulations. These obligations may include data collection, reporting, and record-keeping requirements.
• Activity Analysis: Once the information obligations are identified, the next step is to analyze the administrative activities required to fulfill these obligations. This includes understanding the time and resources needed for each activity.
• Cost Calculation: The final step involves translating the time and resources into monetary values. This is done by multiplying the time taken to complete each activity by the hourly wage rate of the personnel involved and adding any additional costs such as materials, overhead expenses or external services.

Gathering Data for the SCM

There are two complimentary ways that governments can capture the data for the SCM for a regulation or government program.

Representative case studies with journey mapping

Analysts within the government develop a case study by mapping the journey of a standard citizen or business through all of the administrative steps of a government program or regulation. Each step is in then quantified in terms of time and materials. Governments may engage directly with a a small number of stakeholders to help establish the relevant steps and the time, costs and materials at each step.

Surveys and questionnaires

Surveys and questionnaires are another common method used to measure administrative burdens. These tools can be distributed to a wide range of businesses and individuals to collect data on the time and costs associated with regulatory compliance or government programs. Surveys can be designed to capture both quantitative and qualitative data, providing a holistic view of administrative burdens. Surveys are more costly than case studies but they provide a broader range of experiences and will be more representative than using a single representative case study.

Contact Eric to learn more about using the SCM to reduce administrative burdens.