A Guide To Family Intervention and Prevention Program Evaluation

Date of Publication: December 2000

Section 4: Cost Analysis

Key Points & Introduction

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Key Points

There are four components in a cost analysis. First, a list is made of all the ingredients required to produce a program. Second, the amount of each ingredient used is specified. Third, the unit cost of each ingredient is estimated. And finally, the total cost based on this information is calculated.
Cost analysis can greatly facilitate an organization's policy development and program planning and management. It also can help program administrators to improve operations and to develop more competitive proposals and funding requests.
Personnel usually account for 60 to 80 percent of direct-service delivery costs. Any system that seeks to allocate personnel costs across activities must capture the amount of time each staff person spends on various project components and activities.
Facilities and transportation are the most costly nonpersonnel items. Facilities include real estate (buildings, playgrounds, parking), utilities, maintenance, and insurance. Transportation includes vehicles, fuel, maintenance, and insurance.

Program managers and administrators can use the cost analysis methods described in this section to help them more effectively plan and provide prevention services to children and their families. This section on economic analysis draws heavily upon two previous publications that may be useful as additional sources of information: "Using Cost Analysis to Improve Early Childhood Programs" (Barnett, Frede, Cox, and Black, 1994) and "Economic Evaluation of Home Visiting Programs" (Barnett, 1993). The goals of Section Four are as follows:

To introduce cost analysis and its uses
To provide some basic tools for cost analysis
To provide a step-by-step method for gathering and analyzing cost data.
To show how cost data can be linked to outcome data in program evaluations.

Section Four is divided into six subsections. The first defines cost analysis and presents the key concepts. The second presents some of the advantages and uses of cost analysis. The third presents information on planning and implementing a system to gather cost data, analyzing cost data, and using the results and problems associated with analyzing program costs. Included throughout are sample forms for cost data gathering. The fourth subsection identifies potential problems and solutions in cost analysis. The fifth introduces approaches and issues in linking cost analysis outcome data for program evaluation. The six provides advice on using cost analysis to make and influence decisions. The section closes with suggestions on where to obtain information beyond what is presented in this section.

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