conducting meaningful cost analysis · best you can do the back of envelope approach your own back...
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Conducting Meaningful Cost AnalysisMichael T. Braun, Ph.D. Satomi Wakita, Ph.D.
Children and Family Research Center, School of Social Work at the University of Illinois at Urbana-Champaign
2017 CQI Conference
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Purpose
Ø reviewwhatstepsareneededtoperformacostanalysis,inparticularfocusingonthe“ingredients”ofdata.
Ø talkaboutthebarriersforcalculatingcostsandconductingtheanalysis.
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1.CQIandcostanalysis2.Ingredientsofcost3.Ourproject4.Barriersforcalculatingcosts
5.Whatwelearned6.Questionsanddiscussion
Outline“Costanalysisisathoroughdescriptionofthetypeandamountofallresourcesusedtoproduceprogramservices.”
Source: Yates, B. T., Delany, P. J., & Dillard, D. L. (2001). Using cost " procedure " process "outcome analysis. In Bruce A. Thyer (Ed.), the Handbook of Social Work Research Methods(pp. 207-238). Thousand Oaks, CA: Sage.
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1.Identifyand
understandtheproblem
2.Researchthesolution
3.Developthetheoryofchange
4.Adaptordevelopthe
solution
5.Implementthesolution
6.Monitorandassess
thesolution
Source: CQI Training Academy. (2014). CQI cycle of learning and improvement tip guide.
Figure 1. CQI Cycle of Learning and Improvement
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Strategiesforcalculatingcosts
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Personnel (salaries and benefits)
Materials and supplies
Depreciation costs of durable equipment
Facilities / office space
Travel Utilities
1. Itemize resources used to implement the program.
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2. Collect data on resource costs.
Direct costq Employee salariesq Employee benefitsq Initial service costsq Costs associated with
servicesq Costs of out-of-home
placement
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Direct cost(continued) q Time the worker spent
on the - Assessment- Interview- Communication
(e.g., email, phone call, etc.)
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Indirect costq Administrativeq Management
§ Training§ Accounting§ HR
q Infrastructure costs§ IT
q Facilities
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3. Collect data on resource allocation.
Category ActivityServicestoenrolledfamilies Parentgroupmeeting
• Proportion of salaries/fringe benefits for the caseworker
• Value of any volunteer labor• Educational materials• Client support materials• Cars• Computers/laptops• Office supplies• Office space
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4. Estimate the value of direct and indirect costs.
5. Create an estimate of total costs.
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6.Estimatecostsofindividualprogramcomponentsoractivities.
7.Estimatecostsperparticipant.
8.Conductanalysesandexaminecostvariation.
Source:Calculating the Costs of Child Welfare Services Workgroup. (2013). Cost analysis in program evaluation: A guide for child welfare researchers and service providers. Washington, DC: Children’s Bureau, Administration for Children and Families, U.S. Department of Health and Human Services.
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üFamiliarizeoneselfwiththeinterventionsthatwillbeevaluated:Whatarethegoals?
üDecidewhetheracostanalysisisworthdoing.üRecognizetheaudience.Whataretheirneeds? Whatprogramorservicewillbeanalyzed?
üWhatdaterangewillbecovered?üWhatcomparisonswillwemake?
Checklist for establishing a cost analysis
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Ø Costevaluationwasoneoftheoutcomesintheevaluationproject.
Ø Totestthetheorythatanewprogramwouldproducehighercostsduringtheinitial assessmentandlowerthecostsduringthefollow-up period.
Cost analysis for our evaluation project
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Initialcaseandfollow-upserviceperiodsforthecostanalysis
Initial Report Date Assessment Close Date
365 Days after Initial Report Date
Initial Case Period Follow-up Period
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Analysisdesign(unit=family)Treatment Group
Comparison Group
Total cost
Total cost
Selectrandomly
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ØFirst,weasked:Whatdowecareabout?ØWecareaboutpiecesthatchangewiththeNewProgram
ØWedon’tcareaboutanythingthatisthesamebetweenBusinessasUsualandtheNewProgram
ØForexample,nonewfacilitiesareneeded,nonewsupplies
Cost Types
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ØSoaskyourself,WhatdoIcareabout?ØDoIcareaboutcoststostarttheprogramFROMSCRATCHsomewhereelse?
ØOrarethesecostsmoreaboutsmallchangestoBusinessasUsual?
ØForexample,let’ssaytheprogramisaboutmotivationalinterviewing
Cost Types
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ØSecond,weasked:OfthethingsweDOcareabout,whatcanweaccess?ØStatelevelevaluationsmeanlotsofdifferentsystemsandlotsofdifferentgatekeepers
ØForexample,wecouldn’tgetinformationaboutexactemployeesalary
Cost Types
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ØSoaskyourself,WhatcanIgetaccessto?ØIdeally… Butofcourse,wedon’tliveinanidealworld!
ØForexample,howmuchburdencanweputonworkers?
Cost Types
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ØThird,weasked:Howaccuratecanourcostcategorymeasuresbe?ØOfthethingswedocareaboutandcangetaccessto,howaccurateistheinformationwehave?
ØForexample,workertimespentwithfamilies
Cost Types
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ØSoaskyourself,HowaccuratecanIgetwithoutgoingcrazy?ØDoyouwanttotaketheAccountantApproach,theBackofEnvelopeApproach,orsomethinginbetween?
Cost Types
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ØAccountforeverypossiblecostineverypossibleway!
ØYoumightneedthisapproach!
The Accountant Approach
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ØQuickanddirtyØThismightbethebestyoucando
The Back of Envelope Approach
Your own back of envelope calculations are unlikely to involve geometry.
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ØMostlikely,youwillchooseacombinationofthetwo
ØSomecategoriesallowexactcalculationsØOthersrequireroughapproximationsØThat’sokay,aslongasyounoteyourcertaintyaboutallcategories
Or somewhere in between
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ØBacktoourexperience…ØWorkertimewithfamilieswasalistofworkercontactswithfamiliesØButwecouldnotknowA)howlongthecontacttook,B)ifthecontactwasfacetofaceorviasomeothermethod,andC)ifworkersreliablyusedthesamecontacttypeforsimilarcontacts
Cost Types
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ØSowhattodo?ØFindthemostcommoncontacttypesØUsean“expertpanel”andaskthemfortheirbestestimates!
ØAveragetheirestimatesforanaveragetimeforeachcontacttype
Cost Types
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ØThisresultedinacostanalysiscontainingthisdata:
1. Workercontactswithfamilies*averagetimepercontact*averageworkersalary=Costofworkertime(forinitialandfollow-upperiods)
2. Servicecostsperfamily(forinitialandfollow-upperiods)
The Result
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ØAndwhatdidwefind?1. Workersdidspendmoretimewithfamiliesin
thenewprogram2. Thismeantthenewprogramcostmoreinthe
beginning3. Butalsonoevidencethatnewprogram
reducedcostsinthefollow-upperiod
The Result
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ØThiswasthehardestquestiontoanswerØAfewthoughts…1. Peopleunderstandcostmoreintuitivelythan
othermeasures2. ButweKNOWthatthisisonlyarough
estimateoftruecost3. Sowehavetobecautiousinanyconclusions
weoffer
Is this useful at all?
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What we learned
ØGarbageIn/GarbageOut(GIGO)ØWatchoutforwaysinwhichvarianceiscapped
ØAndwatchoutfortimesvarianceishuge!ØConsiderthereasonsyoumay(ormaynot)wanttoconvertallunitsintodollarsandcentsØOryoumightsay,MakeyourcostanalysisunitsDollarsand(Common)Sense
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ThankYou!Whatquestionsdoyouhave?
Otherquestionstothinkabout/discuss:1. Whatistheroleofcostanalysisinyour
organization?2. Whataresomebarriersinconductingcost
analyses?3. Anythoughtsonmakingyourcostanalysis
moremeaningful?
Michael [email protected]
Satomi [email protected]
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ReferencesØ CalculatingtheCostsofChildWelfareServices
Workgroup.(2013).Costanalysisinprogramevaluation:Aguideforchildwelfareresearchersandserviceproviders.Washington,DC:Children’sBureau,AdministrationforChildrenandFamilies,U.S.DepartmentofHealthandHumanServices.
Ø Levin,H.M.&McEwanP.J.(2001).Cost-effectivenessanalysis:Methodsandapplications(2nd ed.).ThousandOaks,CA:Sage.