Expenditure estimations

Berndt, Cockburn, and Grepin (2005) employ the number of medical indications to measure pharmaceutical innovation. A substantial share of industry research and development expenditures, estimated at between 25% and 30% (p. 45), is directed toward finding new indications for existing products. Berndt et al. use the term incremental innovation to describe these efforts. For the three therapeutic areas they examined, the number of FDA approvals for new indications increased substantially in the past decade (p. 27). In addition, the greater number of approved indications has led to increased utilizations of the drugs concerned (p. 41). On that basis, they maintain that reported declines in pharmaceutical research productivity are overstated. 

DiMasi et al.,1991 Industry-level 1970-82 (projects entering human testing) studies R D expenditure profile built for sample of 93 self-originated NCEs, not all successful. NCE sample and 231 million R D project expenditures from 12-firm survey. 1987 9% Estimates from reported preclinical and clinical period expenditures. Estimated success rate by phase for sample NC ES. 

Wong, W. W Butte, N. F., Garza, C., and Klein, P. D. (1990). Comparison of energy expenditure estimated in healthy infants using the doubly labelled water and energy balance methods. Eur. J. Clin. Nutr. 44, 175-184. 

If expensive utilities of heat or cold are used in the columns, for example, at low-temperature separation, then the above-described way of expenditures estimation is not good. In this case, the temperature at which heat should be brought in in the reboilers and withdrawn in the condensers acquires great importance. The total energy expenditures on separation can be estimated by the value of energy of separation that depends on the amount of heat brought in and withdrawn, and on the temperatures at which this heat is brought in or withdrawn (see Chapter 4) ... 

The type and number of wells required for development will influence the surface facilities design and have a significant impact on the cost of development. Typically the drilling expenditure for a project is between 20 and 40% of the total capex. A reasonable estimate of the number of wells required is therefore important. 

As discussed in Sections 13.0 and 14.0, the management of operating expenditure (opex) is a major issue, since initial estimates of opex are often far exceeded in reality, and may threaten the profitability of a project. Within the FDP, it is therefore useful to specify the system which will be used to measure the opex. Without measuring opex, there is no chance of managing it. This will involve the joint effort of production operations, finance and accounting, and the development managers. 

The capital cost estimates are generated by the Engineering function, often based on 50/50 estimates (equal probability of cost overrun and underrun). It is recommended that the operating expenditure is estimated based on the specific activities estimated during the field lifetime (e.g. number of workovers, number of replacement items, cost of forecast manpower requirements). In the absence of this detail it is common, though often inaccurate, to assume that the opex will be composed of two elements fixed opex and variable opex. 

Types and Accuracy of Estimates Capital-cost estimates may be required for a variety of reasons, among others to enable feasibility studies to be carried out, to enable a manufacturing company to select from alternative investments, to assist in selection from alternative designs, to provide information for planning the appropriation of capital, and to enable a contractor to bid on a new project. It is therefore essential to achieve the greatest accuracy of estimation with a minimum expenditure of time and money. 

Greater accuracy of estimation may be achieved, within limits, by the expenditure of more time and money. The greater the accuracy required, the greater the time and effort needed to obtain the design and cost data prior to making the estimate. 

Project Control Having made a good estimate of the capital cost and the expected construc tion time, it is essential to introduce an effective system for controlling expenditure of time and money during construction. Good capital-cost control can cut down expenditures even when the definitive estimate is not veiy accurate. It is most important for management to receive early warnings if overruns in expenditure or time are likely to occur. 

Cost reports should be brief but informative, preferably in sum-maiy form. They should report expenditures and commitments, estimated costs to complete, and expected overruns or underruns of the authorized budget for each important item of cost. Brief notes should emphasize significant deviations from predicted cost. Any large, persistent overrun should have already been investigated and reported to the project and construc tion managers for immediate attention. If an expected overrun cannot be avoided, the current summaiy cost report should serve as justification for a request for additional funds. 

Although extremelv useful, tracer experiments require considerable capital expenditures and personnel. In addition to the difficulties and uncertainty in making estimates of various parameters, especially cr, one of the fficulties in interpreting tracer studies is relating the atmospheric conditions under which the study was conducted to the entire spectrum of atmospheric conditions. For example, trying to interpret a series of tracer... 

Safety Systems. Major expenditures here include the flare system (the flare structures and large lines extending throughout the plant) and the iirevvater system (high-capacity pumps and extensive piping). Safety systems, fortunately, are usually given particular attention. At this study phase, the main thrust should be to check the completeness of licensor equipment lists for cost estimation purposes. 

Kosten, /.pi. costa, expenses, charges, -an-schlag, m. estimate (of cost), -aufwand, m. expenditure. 

Estimate the cash-flow profile for each alternative. The cash-flow profile should include the costs and revenues if they differ, for the alternative being considered during each period in the planning horizon. For public projects, revenues may be replaced by estimates of benefits for the public as a whole. If revenues can be assumed to be constant for all alternatives, only costs in each period are estimated. Cash-flow profiles should be specific to each alternative. We shall denote revenues for an alternative x in period t as B (t,x), and costs as C (t,x). By convention, cash flows are usually assumed to occur at the end of the time period, and initial expenditures to occur at the beginning of the planning horizon, that IS, m year 0. 

Estimates of Selected Energy-Related Federal Tax Expenditures, FY 1999-2QQ3... 

To provide a sense of the value of some of these deviations from neutral taxation. Table 2 reports cumulative estimates over five years of selected energy-related tax expenditures. The Congressional Budget and Impoundment Control Act defines a tax expenditure as a revenue loss attributable to a special inclusion, exemption, or deduction from gross income or a special credit, preferential tax rate, or deferral of tax. 

Joint Committee on Taxation, U.S. Congress. (1998). Estimates of Federal Tax Expenditures for Fiscal Years 1999-2003. Washington, DC U.S. Government Printing Office. 

Maintenance is estimated to represent more than one third of all building expenditure, which underlines its significance in the economic lifecycle of any building, the vital importance of designing for it and skillfully managing its execution. 

The budgets will also require estimates of expenditure upon equipment of a capital nature in the plan periods. This expenditure will normally fall into the following categories ... 

Large and complex projects will be monitored as the expenditure proceeds while smaller outlays will be looked at after completion. The purpose of such monitoring is to provide a comparison of actual expenditure with that estimated when the project was sanctioned. The accounting or internal audit departments will normally carry this out. However, for a sensible comparison to be achieved it is essential that the planned expenditure demonstrated in the project be classified in the same way that the actual expenditure will be analyzed. While somewhat obvious, this is an area where very great difficulty is often met in practice, especially where large projects are involved. 

The expenditure, and potential savings estimated by the UK Committee on Corrosion for a variety of industries are shown in Table 9.1. The savings shown are those which could be made by better use of available knowledge, and do not include the potential benefit of future research and development. The costs referred to are mainly those arising in the industries concerned, or, in certain cases, sustained by users of the products because of the need for protection, maintenance and replacement of the materials of construction. In the oil and chemical industries the costs of using corrosion resistant... 

Table 9.1 Expenditure and estimated potential savings in various industries in 1971 ...

The study of Anderson and Mitchell (1997) examined whether the AIDS-specific home and community-based waiver program, which was implemented in Florida in 1990 as an alternative to institutional care, was effective in reducing Medicaid expenditures per beneficiary during its first 2 years of operation. Therefore, the authors used Medicaid claims data and country information to estimate the effect of the waiver on expenditures controlling for nonrandom program selection. Their results indicate that persons with AIDS who used waiver services incurred monthly expenditures that were on average 22-27% lower than otherwise similar nonparticipants. The authors concluded that home and community-based care for AIDS patients resulted in lower expenditures per beneficiary. 

Kyriopoulos et al. (1995) compared different estimates of HIV/AIDS healthcare expenditure in Greece based on study years 1987-1993. Average annual cost per... 

Bozette et al. (2001) examined expenditures for the care of adult HIV-infected patients since the introduction of highly active antiretroviral therapy. They interviewed a representative random sample of 2,864 patients in early 1996 and followed them for up to 36 months. They estimated the average expenditure per patient per month on the basis of self-reported information. According to their calculations, the mean expenditure was US 1,792 per patient per month at base hne in early 1996, but it decbned to US 1,359 for survivors in 1997, since the increases in pharmaceutical expenditures were smaller than the reductions in hospital costs. After adjustments for the interview date, clinical status, and deaths, the estimated annual expenditure declined from US 20,300 per patient (1996) to US 18,300 (1998). 

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