COSTING AN OPERATIONAL PLAN Costing Concepts and Methodology

Transcription

1 COSTING AN OPERATIONAL PLAN Costing Concepts and Methodology Dr. Shadi Saleh Department of Health Policy and Management American University of Beirut 1

2 Presentation Outline Importance of costing in the different planning stages Understanding the concept and types of costs Costing methodology approach inputs outputs Interpreting costing results 2

3 Costing as a Planning Tool Alternative strategies assessment (financial impact and ability to finance alternatives) Alternative approaches to a strategy Sustainability of existing projects Budgeting Advocacy 3

4 Costing as a Concept Costing is allocating a value to the inputs of a program/project Financial vs. economic costs Cost perspective Societal Funding Agency Program Societal Funding agency Program Societal 4

5 Cost Types Types of costs: direct indirect fixed variable semi-variable average marginal total costs 5

6 Costing Methodology: Approaches Traditional cost accounting Backbone costing tool (BB): Health system scale up costing tool Opportunity costing 6

7 Costing Methodology: Approaches Activity-based costing Inputs as activities Defining activities that support output Defining the list of activity costs and cost allocation framework Estimating costs by cost item and activity using direct cost tracing and indirect cost allocation Aggregating itemized costs into an activity of total costs Defining links between activities and outputs for subsequent assessment of activity /output ratios and analysis of activity output patterns 7

8 Costing Methodology: ABC Examples: HIV school education Curriculum development Training Administration Delivery Evaluation Harm reduction Information, Education and Communication (IEC) material Development ent Distribution of IEC material Recruitment of peer educators Counseling Harm reduction activities (Syringe/needle exchange, condom distribution, etc.) Training Evaluation 8

9 Resource Costs (Staff, consumables, equipment) Step 3: Assign resource costs to activities Step 2: Identify activities Activities (Course delivery, admissions, reference library, creditor payments, estates management) Cost Drivers (Teaching contact hours, students, library usage, payments, space occupied) Step 4: Link activities to the cost objectives Step 1: Determine the cost objectives Cost Objectives (Courses, research, consultancy, catering) Step 5: Analyse and report results 9 Costing an operational plan. Julian Naidoo

10 Costing Methodology: Inputs Capital costs Building (rent or rent-equivalent) equivalent) + furnishing (e.g. 10% of annual rent) Equipment (depreciation [use of discount rate when considering economic costs]) Vehicles Recurrent costs Personnel Salaries & wages+ benefits Salaries vs. per-diem/service employee Supplies Travel Maintenance Short-term term consultations Misc. Administrative overhead 10

11 Costing Methodology: Outputs Process measures (e.g. cost per education session) Outcomes Intermediate (e.g. cost per person educated) Final (e.g. HIV infections averted, DALYs) 11

12 Things to Remember/Consider when Costing 12

13 Things to Consider/Remember in Costing Inflation (applies if extends beyond a year) Use of base year when estimating costs Double costing (e.g. catering as part of an event package and separate itemized cost for food) Miscellaneous cost item Process monitoring (e.g. condoms distributed) and variance analysis 13

14 Things to Consider/Remember in Costing In-kind contribution (cost sharing) Discounting if calculating economic costs Sensitivity analysis 14

15 Interpreting costing results 15

16 Acknowledgements Costing guidelines for HIV prevention strategies. UNAIDS. Available at: rat_op_plan/folder2.htm Costing an HIV/AIDS plan. UNDP. Available at: rat_op_plan/folder2/2.1%20costing%20an %20AIDS%20plan.pdf 16