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Study: Municipalities Fail to Compare Costs Accurately

Municipalities won't necessarily save money by soliciting more offers from competing businesses and outsourcing services. According to a fresh study carried out at the University of Tampere, many municipal decision-makers haven't grasped how to calculate and compare service costs accurately. Furthermore, hidden expenses often go unnoticed, and a seemingly inexpensive outsourced service can sometimes become very pricey. Researchers at the University of Tampere studied the costs of soliciting offers and of outsourcing municipal services. The study showed that municipalities often fail to detect hidden costs. Municipalities can neglect to account for the costs of soliciting offers, monitoring systems, renting spaces, and purchasing auxiliary services. For example, a young doctor just filling in for a fee could be more likely than an full-time experienced physician to send a patient to a specialist -- leading to an overall higher cost for the municipality. Municipalities Have Much to Learn University of Tampere researcher Tuija Rajala says many municipalities need to learn how to compare prices and draw up contracts. "It's important that decision-makers are able to assess the effects of their decisions, and not just pick the easiest and cheapest option," Rajala says. Handling municipal finances has become more complex and calls for knowledgeable decision-makers. This fact may also be on the minds of voters during this autumn's local elections. YLE

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