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Cost Management inAcademic Libraries

"It is an unusual business that cannot say how much it costs to deliver any of its products; and I do not believe we will continue to get

away with it."

(J. Stephen Town)

Roswitha PollUniversity and Regional Library Münster

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Reasons for Cost Management• General demand for transparency of costs• Justification of expenditure

• Dwindling resources• Rising prices• New tasks and products in libraries

• Allocation of resources• Outsourcing, insourcing• Enlarging, reducing, introducing services• Service-level agreements

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• What we could answer exactlyThe price of every document acquired or of

one PC bought

• What we cannot answerHow much for one issue?Or for one reference question answered?

How much does a student of philosophy cost per year?

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What we count by now • Income (from different sources)• Expenditure

– on collection building and maintenance– on automation– on the operating of the library– on staff

The new International Standard for Library Statistics (ISO FDIS 2789) contains many differentiations as to expenses, especially with regard to electronic media

But it is all "expenses", and that means items that appear on bills or staff payrolls

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"Costs" are another thing

The recources consumed for one product• can originate in different departments of the

library (document delivery)• can occur outside the library (central heating)• even outside the institution (regional office for

staff payrolls)• can stretch over several years (depreciation)

The consumption of resources to acquire, produce ormaintain goods or services within a defined period

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Occasions for analyzing costs

• Outsourcing services (binding)• Buying products (cataloguing)• Introducing new services (document delivery)

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Project: Cost Management for University Libraries

• Funds Deutsche Forschungsgemeinschaft• Partners Univ. and Regional Lib. Münster (chairing)

Univ. and Regional Lib. DüsseldorfUniv. Lib. Paderborn

• Time 4/1997 – 7/1999• Method Activity-based cost accounting• Product Handbook and Software

Ceynowa, Klaus / Coners, André:Kostenmanagement für Hochschulbibliotheken.Frankfurt a. M.: Klostermann 1999.

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Connection between Costs and Services

Services

Activities

Costs

Resources

...

Cau

se ..

.

.

.. C

ause

...

... n

eed

...

... Consume ... ... Consume ...

Library

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Cost Analysis inPublic Service Institutions

• Products are nonmaterial

• Capacity costs are predominant

• Many costs are fixed

Library

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Cost Analysis in Libraries

• Problems– Availability of Data

– Standards for Depreciation

– Staff Costs: Real or Standardized Costs?

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Model of cost analysis

Which RESOURCESWhich RESOURCES

are consumed WHEREare consumed WHERE

by which ACTIVITIESby which ACTIVITIES

/PROCESSES/PROCESSES

with what RESULT?with what RESULT?

RESOURCESRESOURCES

WHEREWHERE

ACTIVITIESACTIVITIES

RESULT?RESULT?

Cost TypeAccounting

Cost TypeAccounting

Cost CenterAccounting

Cost CenterAccounting

Activity-BasedAnalysis

Activity-BasedAnalysis

Cost UnitAccounting

Cost UnitAccounting

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Cost Analysis in Academic Libraries

• Cost Type Accounting: The ascertainment and calculation of all relevant cost factors of a library within an accounting period

• Cost Center Accounting: The calculation of the costs of the various sections or departments of the library

• Cost Unit Accounting: The calculation of a single unit or performance of the library´s products/services

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Cost Center 3Cost Center 2Cost Center 1

Cost accounting method

P1.1

P1.2

P1.3

P1.4

P2.1

P2.2

P3.1

P3.2

P3.3

Assigning to products

Product 1 Product 2

Processes Processes Processes

Cost types

Staff Collection Administr. Costs DepreciationsOperating Costs

Scanningdocuments

Deliveringdocuments Dealing with

claims

Settlingaccounts

Electronicdocumentdelivery

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Cost structure ULB Münster

66 %

4 %5 %4 %

21 %

Total 24.770.535,31

Staff costs 16.357.001,19Collection costs 5.126.907,43Administration Costs 911.288,96Operating Costs 1.384.577,58Depreciations 990.760,15

Staff costs16.357.001,19 DM

Collection costs5.126.907,43 DM

Adminstr. Costs911.288,96 DMOperating costs1.384.577,58 DMDepreciations990.760,15 DMTotal CostsTotal Costs

24.770.535,31 24.770.535,31 DMDM

Processes

CostCenters

CostCostTypesTypes

Products

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52Cost

Types

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Costs of service areas

11 %13 %

39 %

4 %3 %

3 %

16 %7 % 4 %

Subject librarians 2.711.426,05Book processing 3.284.062,58

Collection maintenance 635.936,12Services for departmental libraries 751.252,30Branch libraries 3.941.089,17General administration 1.856.416,09Data processing 1.033.175,81Total 24.770.535,31

User services 9.640.321,81Services as regional deposit library 916.855,38

Processes

CostTypes

CostCostCentersCenters

Products

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44Cost

Centers

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Cost Centers

10 ACQUISITION 20 CATALOGUING 30 USER/PUBLIC SERVICES

40 TECHNICAL SERVICES

50 CENTRAL RESPONSIBILITIES

60 OTHER 70 BRANCH LIBRARIES

11 Subjects 21 Author catalogue 31 Local lending 41 Purchasing and materials dept.

51 General admin. 61 Old stocks dept. 71 Branch library social sciences

12 Purchase:monographs, electr.media etc.

22 Retrospectivecataloguing

32 Interlibrary loan 42 Mail room 52 Data processing 62 Dept. HistoricalCollections Westphalia

72 Branch librarymedicine

13 Purchase:periodicals

23 Münster'speriodicals directory

33 Textbook coll. 43 Printing office 53 Centralized cata-loguing

63 Northrhine-Westphal. bibliography

14 Newspaper dept. 24 Subject catalogue 34 Reading rooms 44 Book preparation (binding unit, bindery, technical processes)

64 Preservation (incl. newspaper microfilming)

15 Integr. processingof deposit copies

35 Information 45 Stacks 65 Projects

16 Gift and exchangedept.

36 Entrancecontrol (foyer)

46 Janitor services

17 University publ.dept.

47 General traffic and technical areas

10 ACQUISITION 20 CATALOGUING 30 USER/PUBLIC SERVICES

40 TECHNICAL SERVICES

50 CENTRAL RESPONSIBILITIES

60 OTHER 70 BRANCH LIBRARIES

11 Subjects 21 Author catalogue 31 Local lending 41 Purchasing and materials dept.

51 General admin. 61 Old stocks dept. 71 Branch library social sciences

12 Purchase:monographs, electr.media etc.

22 Retrospectivecataloguing

32 Interlibrary loan 42 Mail room 52 Data processing 62 Dept. HistoricalCollections Westphalia

72 Branch librarymedicine

13 Purchase:periodicals

23 Münster'speriodicals directory

33 Textbook coll. 43 Printing office 53 Centralized cata-loguing

63 Northrhine-Westphal. bibliography

14 Newspaper dept. 24 Subject catalogue 34 Reading rooms 44 Book preparation (binding unit, bindery, technical processes)

64 Preservation (incl. newspaper microfilming)

15 Integr. processingof deposit copies

35 Information 45 Stacks 65 Projects

16 Gift and exchangedept.

36 Entrancecontrol (foyer)

46 Janitor services

17 University publ.dept.

47 General traffic and technical areas

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Analyzing the processes: Circulation

CostCenters

CostTypes

ProcessesProcesses

Products

CIRCULATION

Recording loansRecording loans

Cancelling loansCancelling loans

Issuing user cardsIssuing user cards

Monitoring loan periodsMonitoring loan periods

Account of finesAccount of fines

Delivery in electronic formDelivery in electronic form

etc.etc.

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442Processes

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Analyzing the processes: Subject librarians

CostCenters

CostTypes

ProcessesProcesses

Products

SUBJECT

LIBRARIANS

Process 1: Subject cataloguingProcess 1: Subject cataloguing

• Percent of staff time: 17,6 %• Process time: 3 man years• Process time: 4.467 hours• Process costs: 477.221 DM• Number of documents catalogued: 14.635• Unit costs: 32,60• Time per unit: 18 Min.

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Products: Examples

CostCenters

CostTypes

ProductsProducts

Processes SubjectreferenceSubject

reference

Internet-servicesInternet-services

CollectionBuilding

CollectionBuilding Undergraduate

LibraryUndergraduate

Library

Usereducation

Usereducation

ExhibitionsExhibitions

Collectionmaintenance

CollectionmaintenanceReference

ServiceReference

Service Service fordep. librariesService for

dep. libraries

Documentdelivery

Documentdelivery

CirculationCirculationOnline-

searchesOnline-

searches

Library ProductsLibrary Products

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55Products

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Product: Book processing legal deposit documents

CostCenters

CostTypes

ProductsProducts

Processes

Search for titles 44.573

Claiming 37.876

Inventory 37.645

Cataloguing 86.144

Subjectcataloguing

78.100

Technical proces-ses (binding...)

11.223

Shelving 5.308

Total:

300.869 DM

6.695 books

= 44,90 DM

per unit

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Managing costs by processes...

3,5man years

6.000units

3,5man years

7.500units

Capacity adjustment

2,5man years

6.000units

Optimizing processes

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Possible starting pointsfor process optimization

Differentmedia usedDuplicate

processes

Errorcorrection

Waitingtimes

UnnecessarycontrolsDetours

Muddled re-sponsibilities

Processestoo complexInterfaces

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Optimizing processes: Cataloguing

8. Controlling cataloguing 10,62% 0,52 57.336,689. E-mails in cooperative cataloguing 2,78% 0,14 14.992,28

Disposable

capacity

0,66 man years

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Rate of capacity utilization:Undergraduate Library

• maximal capacity?

• normal capacity?

• surplus cover?

Acquiredvolumes 5.8695.869 4.5644.564 7.2527.252 8.0518.051

Period 19941994 19951995 19961996 19971997

Staff capacity in the process „processing undergraduate books“: 4.689,29 Std.

8.0518.051

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•Gain in productivity without higher costs•Cost reduction without loss in productivity

To produce more/betterwith lower costs

= Efficiency

Optimizing processes results in...

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The use for management decisions• to justify claims for resources

(e.g. service level agreements)• to estimate costs

– For new or enlarged services– Gained by reduction or deletion of services– For taking fees

• benchmarking• decisions on outsourcing• process optimization, especially to adapt

capacity costs to output• comparing cost-efficiency and quality

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Good or cheap?• Example 1: Reference service

– Cost of 1 reference question 4,53 DM– Reference fill rate 60 %– Satisfaction rate 1,9

• Example 2: Subject cataloguing– Cost of 1 document 32,60 DM– Subject search success rate 87 %– Satisfication of partners in

cooperative cataloguing „Best quality“Subject librarian with full academic qualification.

Subject indexing department controlling.Subject librarian with full academic qualification.

Subject indexing department controlling.

Professional librarians from 800 to 1900Professional librarians from 800 to 1900

Is itworth-while?

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The price spoils the pleasure(French proverb)

... if money go before, all ways do lie open

(Shakespeare)

Penny and pennylaid up will be many

(English proverb)

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