Full cost Recovery...
DISC's response to...
Craig Dearden Philips on cost recovery
Dear Mr Cook
Craig Deardon-Phillips letter criticising the full cost recovery model of pricing that eschews profits sounds good in theory.
But in practice full cost recovery is about getting commissioners to pay basic management charges.
These charges cover all the services the commissioners want that don’t come out of the operating costs of programmes.
These services range from health and safety, quality, monitoring, IT and databases, to marketing, pay roll, financial and senior management, and project and policy development.
Management charges also cover the costs of bid-writing, another costly overhead in the world of competitive tendering.
In the current climate some commissioners only want to pay for staff salaries and phone bills and cut out the management charges completely.
This makes it difficult for the lean and dynamic charities that Craig Deardon-Phillips praises to actually survive, let alone fund innovative new services.
Yours sincerely
Steve Johnson
Chief Executive DISC (Developing Initiatives Supporting Communities)
Updated 04/11/09