Procedural preference costs

The term process preference costs denotes additional costs that arise from the fact that a good is manufactured in a very specific way.

root cause

Process preference costs arise in an organization or a state when particularly complex processes are preferred for the completion of tasks or for the manufacture of products, although less cost-intensive processes also exist. The aim is usually to ensure a particularly high quality standard when completing the task or when providing the products. Process preference costs are the additional costs that one is willing to bear in order to take important secondary goals or standards into account.

example

As an example of procedural preference costs, those additional costs of internal security can be cited, which arise from wanting a state police force instead of having this task done by cheaper private security companies. The goal that justifies the additional costs here is to ensure unrestricted control over the executive, and thus z. B. the prevention of abuse of power.