Treatment of “Hard” and “Soft” Costs

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LCA recognizes that not all projected labor costs and savings are created equal.  “Hard” costs and savings are defined as those values that are automatically self-executing upon agreement, (such as wage increases, wage premium changes, benefit modifications, etc.).  “Soft” costs and savings require continual management discipline to achieve usually on a pay period-to-pay period basis (such as operational or scheduling adjustments). 

Consequently, since “hard” values are guaranteed to occur simply by executing one systemic change (e.g., programming a future wage increase into the payroll system), we believe that they should be segregated from “soft” values which need to be achieved over time with effective management discipline (e.g., constantly and consistently implementing a cost-saving scheduling change each and every week of the contract period).

LCA breaks out such differing types of values to enlighten clients as to what will be definitely achieved (i.e., “hard” values) and what can be potentially achieved (i.e., “soft” values).