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Chapter: Civil : Engineering Economics and Cost analysis : Cost And Break Even Analyses

Full cost pricing(FCP)

The Full Cost Pricing (FCP) Policy applies to SBAs2 that are not government-owned corporations(GOCs) and fully commercialised business units (CBUs) in accordance with the Commercialisation of Government Business Activities in Queensland Policy Framework.


Full cost pricing

 

The Full Cost Pricing (FCP) Policy applies to SBAs2 that are not government-owned corporations(GOCs) and fully commercialised business units (CBUs) in accordance with the Commercialisation of Government Business Activities in Queensland Policy Framework.

 

The FCP Policy is incorporated by reference into the Queensland Government's Financial Performance and Management Standard 2009 (FPMS). The FPMS requires that relevant SBAs andCBUs must apply the Policy.

 

The FPMS is subordinate legislation under the Financial Accountability Act 2009. Accordingly,while the FCP Policy itself does not have any legislative status, the FPMS imposes a statutoryobligation upon SBAs and CBUs to comply with the Policy.

 

 

Components of a full cost pricing policy and how they are valued.

 

In the private sector, prices are usually set so that as a whole across the enterprise, they recoverthe full cost of the provision of all goods and services, taxes and similar charges plus a suitablereturn on the owners' investment.This concept is incorporated in this Policy through the establishment of a cost benchmark foreach SBA or CBU. The benchmark must take into account all costs incurred in producing anddelivering the goods and services, as well as taxes and other Government charges faced by theprivate sector competitor or equivalent business. Prices must incorporate this benchmark plus areturn on investment similar to that required by the owners of the private sector competitors orequivalent businesses.Each SBA or CBU to which this Policy applies is to be examined separately to set the benchmark,and each SBA or CBU must price commercially. The rate of return must be achieved over the medium term. This will allow the relevant SBAs or CBUs to establish the required commercial structures.


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Civil : Engineering Economics and Cost analysis : Cost And Break Even Analyses : Full cost pricing(FCP) |


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