AnM.9: "CERN" model for supplier utilities

AnM.9: "CERN" model for supplier utilities

Relevance:
The "CERN" model is used in FenRIAM to estimate the utilities in monetary terms, which a RI creates through purchasing contracts for its high-tech suppliers.

Description:
Since the first study on the economic impacts of CERN (1975) it is well known that in particular manufacturers in high-tech sectors of the econ¬omy can have huge economic utilities from contracts and collabo-ra¬tions with RIs. In the case of CERN (1975, 1984) the increase in the turnover achieved by firms as a conse¬quence of their contracts with CERN amounted to four to six times the contract value, depending on the industrial sector. The most important mechanisms described for the creation of such impacts are the penetration in new markets, more marketing success, and new or improved products due to significant techno¬logical progress made as a consequence of the high perform-ance requirements defined by the RI for the supplies. In cases of com-pa¬ra¬ble supplier relationships, equally high impacts of an RI on its high-tech suppliers may be assumed in order to assess the order of magnitude of the achieved utilities.
Note that the model can only provide a rough estimate, which allows illustrating the order of magnitude of this effect.

Procedure:

  • Verify the applicability of the "CERN" model for the RI under investigation and, if applicable, explain the motivations
  • Identify or estimate the (expected) volume of high-tech contracts for the different phases of the RI project. For the operation phase this may be e.g. an annual average or a total volume over the (estimated) facility lifetime.
  • Calculate the supplier utilities as four to six times the (estimated) volume of high-tech contracts as suggested by the CERN study.
  • Report the results.

Data sources:

  • Interviews with internal experts (e.g. procurement managers, project coordinator)
  • Analysis of internal documents (e.g. procurement documents and databases, financial project documents)

Definitions:
None.

References:
CERN 1975, Schmidt H., A study of economic utility resulting from CERN contracts, Geneva: CERN Directorate General
CERN 1984, Bianchi-Streit M, Blackburn N., Budde R., Reitz H., Sagnell B., Schmied H., and Schorr B., Economic utility resulting from CERN contracts, Geneva: CERN Scientific Information Service