10646.pdf
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Photo by Jean-Luc Ray for AKF
ISBN : 1-882839-06-04
Library of Congress Catalog Number: 92-75467
fl fl fl fl fl fl fl fl fl fl fl fl fl fl $ fl fl
Village life in Henan province, China, and a new communal
tap. An adequate supply of clean water is an essential
component of PHC
Dedicated to
Dr. Duane L. Smith (1939-1992),
Dr. William B. Steeler (1948-1992)
and all other health leaders, managers and workers
who follow their example in the effort to bring quality health
care to all in need.
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An AKF-sponsored pre-school in Zanzibar
Photo by Jean-Luc Ray for AKF
1
An overview of PHC MAP
The main purpose of the Primary Health Care Management Advance
ment Programme (PHC MAP) is to help PHC management teams collect,
process and analyse useful management information.
Initiated by the Aga Khan Foundation, PHC MAP is a collaborative programme of
the Aga Khan Health Network1 and PRICOR1
2. An experienced design team and
equally experienced PHC practitioner teams in several countries, including Bangladesh,
Chile, Colombia, the Dominican Republic, Guatemala, Haiti, India, Indonesia, Kenya, Pa
kistan, Senegal, Thailand and Zaire, have worked together to develop, test and refine the
PHC MAP materials to make sure that they are understandable, easy to use and helpful.
PHC MAP includes nine units called modules. These modules focus on essential in
formation that is needed in the traditional management cycle of planning-doing-evaluat
ing. The relationship between the modules and this cycle is illustrated below.
PHC MAP modules and the
planning-evaluation cycle
PHC MAP
MODULES
1. Information needs
2. Community needs
3. Work planning
I
4. Surveillance
5. Monitoring indicators
6. Service quality
7. Management quality
8. Cost analysis
9. Sustainability
1 The Aga Khan Health Network includes the Aga Khan Foundation, the Aga Khan Health Services,
and the Aga Khan University, all of which are involved in the strengthening of primary health care
2 Primary Health Care Operations Research is a worldwide project of the Center for Human Services,
funded by the United States Agency for International Development
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Managers can easily adapt these tools to fit local conditions.
Both new and
experienced programmers can use them. Government and NGO managers, man
agement teams, and communities can all use the modules to gather information
that fits their needs.
Each module explains how to collect, process and interpret
information that managers can use to improve planning and monitoring.
The
modules include user's guides, sample data collecting and data processing instru
ments, optional computer programs, and facilitator’s guides, for those who want to
hold training workshops.
The health and management services included in PHC MAP are listed below.
Health and management services
HEALTH SERVICES
GENERAL
PHC household visits
Health education
MATERNAL CARE
Antenatal care
Safe delivery
Postnatal care
Family planning
CHILD CARE
Breastfeeding
Growth monitoring
Nutrition education
Immunization
Acute respiratory infection
Diarrhoeal disease control
Oral rehydration therapy
OTHER HEALTH CARE
Water supply, hygiene and
sanitation
School health
Childhood disabilities
Accidents and injuries
Sexually transmitted diseases
HIV/AIDS
Malaria
Tuberculosis
Treatment of minor ailments
Chronic, non-communicable
diseases
Several manager’s guides supplement these modules.
MANAGEMENT
SERVICES
Planning
Personnel management
Training
Supervision
Financial management
Logistics management
Information management
Community organisation
These are: Better Manage
ment: 100 Tips, a helpful hints book that describes effective ways to help managers
improve what they do; Problem-solving, a guide to help managers deal with common
problems; Computers, a guidebook providing useful hints on buying and operating
computers, printers, other hardware and software; and The computerised PR/COR
thesaurus, a compendium of PHC indicators.
A health worker and a midwife in Costa Rica: lesson
on the use of a simple medical kit.
Photo by J. Littlewood for WHO
Ott
The Primary Health Care Management Advancement Pro
gramme has been funded by the Aga Khan Foundation
Canada, the Commission of the European Communities, the
Aga Khan Foundation U.S.A., the Aga Khan Foundation’s
head office in Geneva, the Rockefeller Foundation, the
Canadian International Development Agency, Alberta Aid,
and the United States Agency for International Develop
ment under two matching grants to AKF USA. The first of
these grants was "Strengthening the Management, Monitor
ing and Evaluation of PHC Programs in Selected Countries
of Asia and Africa" (cooperative agreement no. OTR-0158A-00-8161-00, 1988-1991); and the second was "Strength
ening the Effectiveness, Management and Sustainability of
PHC/Mother and Child Survival Programs in Asia and
Africa" (cooperative agreement no. PCD-0158-A-00-110200,1991-1994). The development of Modules 6 and 7 was
partially funded through in-kind contributions from the
Primary Health Care Operations Research project (PRICOR)
of the Center for Human Services under its cooperative
agreement with USAID (DSPE-6920-A-00-1048-00).
This support is gratefully acknowledged. The views and
opinions expressed in the PHC MAP materials are those of
the authors and do not necessarily reflect those of the
donors.
All PHC MAP material (written and computer, files) is in the
public domain and may be freely copied and distributed to
others.
Module 8: Cost analysis
Contents
QUICK START................................................................................................. 1
INTRODUCTION
What is cost analysis.................................................................................3
How cost analysis can help you............................................................... .4
An example................................................................................................ 5
Some limitations of cost analysis
Strengths of cost analysis........................................................................ 15
HOW TO USE THIS GUIDE
How much detail do you need: Levels 1, 2, 3.......................................17
Using the worksheets, dummy tables, computer files.......................... 18
What’s in the appendices......................................................................... 18
COST ANALYSIS PROCEDURES
Step 1: Specify the objectives of the cost analysis (manager)........... 20
Step 2: Decide what to cost (manager)................................................. 22
Step 3: Select the type(s) of tables and graphs to be produced
(manager)................................................................................................. 26
Step 4: Set up a cost coding system (analyst)..................................... 29
Step 5: Allocate and code revenue and expense data (analyst)....... 33
Step 6: Enter data and compute costs (analyst)................................. 40
Step 7: Analyse and interpret the revenue and cost data (analyst)... 45
Step 8: Present/report the cost analysis findings (analyst)............... 46
APPENDICES
A. Advanced features: concepts and procedures.............................. 47
B. Blank worksheets............................................................................. 55
C. General ledger item codes................................................................61
D. Dummy tables.................................................................................. 67
E. Data entry spreadsheets................................................................... 73
Module 8: Cost analysis
IB
F.
Data analysis templates..................................................................... .77
REFERENCES AND BIBLIOGRAPHY...................................................... 93
ACRONYMS AND ABBREVIATIONS........................................................94
GLOSSARY................................................................................._................. 95
Module 8: Cost analysis; contents
Acknowledgements
The first draft of this module was reviewed and field tested in 1991 by a number of
PHC specialists and field managers. The module was also reviewed and critiqued by
the PHC MAP Technical Advisory Committee at a meeting in Bangkok in September,
1991. The module was completely restructured and tested again. Feedback from those
tests led to two more revisions. The module was reviewed again by participants at the
International Conference on Management and Sustainability of PHC Programmes, held
in Bangkok in May, 1992. Minor changes resulted in this final version. Special thanks
are due to Paul Richardson, who participated in several field tests and summarised the
field test results, and Mary Millar, who developed the Facilitator’s Guide for the module,
which was very helpful in preparing this revised draft. All of these contributions were
invaluable and greatly appreciated.
Reviewers:
Donald Belcher ® Veterans administration, Seattle, WA, USA
Margaret Phillip • London School of Hygiene and Tropical Medicine, London,
England
William Reinke ° Johns Hopkins School of Hygiene and Public Health, Baltimore,
MD, USA
Dennis Martin ° URC Haiti
Field tests:
Countries
Participating organisations, field test facilitators
Bangladesh
The Asia Foundation (TAF) and 9 subgrantees; the Aga
Khan Community Health Programme (AKCHP); the Social
Marketing Company (SMC); Facilitator: Barkat-e-Khuda,
Pakistan
URC Bangladesh
Aga Khan University, Karachi; Northern Pakistan PHC
Project, Gilgit; Aga Khan Health Service, Karachi; Facilitator:
Thailand
Khatidja Husein, Aga Khan University
Ministry of Public Health, Srisaket; Somboon Vacharotai
Foundation (SVF); ASEAN Institute for Health Develop
ment (AIHD); Health and Population Research Corporation
(HPRC); Facilitator: Peerasit Kamnuansilpa, HPRC
India
Junagadh PHC Project; Sidhpur Sustainable Health System
Project, Gujarat; Aga Khan Health Service, India; URMUL
Trust’s PHC Project, Bajju; Facilitators: Neeraj Kak, URC;
Vijay Moses, Aga Khan Health Service, India (AKHSI);
Sanjoy Ghose, URMUL; Arvind Ojha, URMUL
Kenya
Mombasa PHC Project; Kisumu PHC Project; Facilitators:
Paul Richardson, URC; Esther Sempebwa, Mombasa PHC
Project; Matthew Onduru, Kisumu PHC Project
Module 8: Cost analysis
A community health nurse counsels a mother in an
urban PHC project in Karachi, Pakistan.
Photo by Aga Khan University
ka
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Quick start
Basic cost analysis
-1
Use this model if you want to do a quick analysis of your programmes revenues and
expenditures. You can do two types of cost analysis. The first lets you compare actual to
budgeted revenues and expenditures for the most current period. The second lets you look
at trends in revenues and expenditures over the last 5 years. Of course, you can do both, if
you wish. You can do these analyses by hand or you can use the computer program that comes
with this module. If you want to use the computer program, load this file in Lotus 1-2-3 or
Quattro Pro (M0D8 QS).
Current year: Actual vs. budgeted revenues and expenditures
You will need to enter the budgeted and actual revenues and expenditures for the past 12
months (or latest year) in the following table. You can enter up to 3 revenue sources and up
to 6 expenditure categories. Examples are shown in the table. Use your own categories, enter
their names, and then enter the amounts.
If you are using the computer program, it will automatically calculate the differences, the
percentages, and produce a graph. If you are doing this manually, just fill in the blanks.
If you want to make a graph (which we encourage), you can make one by hand that looks
like the example.
Total project revenues and expenditures: Last 12 months
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REVENUES
Actual
Budget
Variance
Government
4,500.00
4,500.00
0.00
Donors
3,000.00
3,000.00
0.00
0
Fees
890.00
1,250.00
(360.00)
-40
8,390.00
8,750.00
(360.00)
-0.40
Personnel
2,345.60
2,245.00
100.60
4.3
Consultants
456.00
500.00
(44.00)
-9.6
Travel
654.00
450.00
204.00
31.2
Supplies
332.00
280.00
52.00
15.7
Equipment
1,032.00
900.00
132.00
12.8
Other
2,345.00
2,456.00
(111.00)
-4.7
Subtotal
7,164.60
6,831.00
333.60
0.50
REV-EXP
1,225.40
1,919.00
Percent
14.6
21.9
Subtotal
Percent
0
EXPENDITURES
Five year trend: Revenues and expenditures
The procedures are very similar, except that you don’t enter budget data, but you enter
revenue and expenditure data for several years. This model is set up for 5 years but it can be
longer or shorter, depending on your objectives.
Enter your most recent revenue and expenditure data in the following table. If you are
using the computer program, it will calculate the differences between revenues and expendi
tures, the percent differences, and construct a graph.
Module 8: Cost analysis; quick start
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Actual vs. budgeted revenues
Actual vs. budgeted expenditures
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£
Jul
(Thousands)
This graph is named
This graph is named
|lQ Actual ^Budget|
REV-BUDG
EXPBUDG.
r=
..
i
^^^*1
To display a graph in Quattro, press / Graph, Name, Display, then select REV-BUDG or
EXP-BUDG and press Enter.
Total project revenues and expenditures: Last 5 years
Year 1
Year 2
Years
Year 4
Years
Government
4,500
5,000
5,500
5,450
6,210
REVENUES
Donors
3,000
3,500
4,000
4,000
3,850
Fees
890
1,125
1,509
2,167
2,000
Subtotal
8,390
9,625
11,009
11,617
12,060
EXPENDITURES
Personnel
2.346
2,466
2,900
3,218
3,345
Consultants
456
567
678
987
1,200
Travel
654
798
890
889
786
765
Supplies
332
456
543
566
Equipment
1,032
987
1,032
1,100
897
Other
2,345
2,700
3,211
3,546
4,321
Subtotal
7,165
7,974
9,254
10,306
11,314
REV-EXP
1,225
1,651
1,755
1,311
Percent
14.6
17.2
15.9
11.3
746
_________ 6.2
Revenues and expenditures: 5 Years
This graph is named TREND. To display it
in Quattro, press Graph, Name, Display then
select TREND and press Enter
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Module 8: Cost analysis; quick start
3
Introduction
What is cost analysis?
Cost analysis is the examination of expenditures to de
termine how resources have been spent. It should (but often
does not) include an analysis of revenue sources and
amounts.
Managers, their supervisors, and donors are the people
who need this information most. Cost analysis can help
them to understand (and explain) how funds have been used,
and why expenses are so high (or low). Cost analysis (CA)
can also help them to identify areas where expenses can be
reduced, where further analysis is needed, and where in
creased funds are justified. Revenue analysis can help them
to identify where their primary support comes from, and
whether each source is increasing or decreasing.
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In Primary Health Care (PHC) we usually want to know
• the amount that has been spent on the PHC project, and
the revenue that has been received;
• how that compares with the budget;
• the distribution of costs by "line items" (usually called
general ledger items (GLI): personnel, travel, supplies, etc.);
• the distribution of costs by facility or location (how
much has been spent in each health centre or district);
• the distribution of costs by PHC service or activity
(how much has been spent on antenatal care, immunization, training, etc.);
• the average costs of providing a service (e.g., the cost of
immunizing a child); and
Module 8: Cost analysis; introduction
4
• the trends in costs and revenues over time.
How cost analysis can help you
Monitoring
Efficiency
Planning
This is the most common use of cost analysis — to monitor
expenditures (and revenues) in order to make necessary
adjustments. This type of analysis usually involves compar
ing actual expenditures with a budget and is frequently
conducted to identify problems before they become serious.
Managers may want a more detailed analysis than board
members and donors, but the general purpose is the same
— to ensure that expenditures are under control and that
revenues are coming in as planned.
A cost analysis can help a manager to identify areas of
potential savings. If services can be provided at reduced
costs while maintaining the same quality, then the project
can be made more efficient. This type of analysis usually
requires comparisons among subprojects (or locations or
over time) to see if there are lessons that can be learned from
one experience and applied to another, either to reduce costs
or to increase revenues.
Managers can also use cost data to make projections of
future costs and to estimate what it would cost to replicate
a programme or service in another area. In addition, analysis
can be used to estimate what it would cost to continue a
programme or service at the same, expanded, or reduced
level - that is, what it would cost to sustain it.1
There is no single type of cost analysis and no standard
purpose that fits all programmes. Like most other manage
ment activities, it all depends on what the user(s) wants from
the analysis. Since most PHC projects have a number of
potential users (managers, boards, donors, communities, for
example), it is possible that each user could have a different
objective in mind. Therefore, you need to clarify the
objectives of each user to make sure that the cost analysis
fit his needs.
1 See module 9 : Sustainability analysis
Module 8: Cost analysis; introduction
5
An example
Let’s look at the type of information a cost analysis can
produce. Usually, managers want to know: a) total costs and
revenues; b) comparisons with budgets and projections; c)
distribution of those costs and revenues (by general ledger
codes, locations, services, etc.); d) trends over time; and e)
unit costs (what it costs to serve one person or immunize
one child). This module shows how to produce all of that
information. Here are a few examples.
Table 1 illustrates the first, most basic, piece of informa
tion: the total amount of project revenues and expenditures
for the period. The accompanying graph displays the same
information.
Table 1: Total project revenues & expenditures
Revenues
9,055.00
Expenditures
8,524.60
Difference
Module 8: Cost analysis; introduction
530.40
6
Table 2 and Figure 2 provide the same information
compared with project budgets for anticipated revenues and
expenditures.
Table 2: Project revenues & expenditures, actual vs. budget
Description
Revenues
Expenditures
Actual
9,055.00
8,524.60
Budget
9,100.00
8,695.00
Difference
(45.00)
(170.40)
Percent
0.5%
-2.0%
Table 3 and Figure 3 show the distribution of expendi
tures by (General ledger) items. Almost half of the expen
ditures were for Personnel costs. The next highest item was
Other direct costs, a miscellaneous category that might
include such items as utilities, maintenance, postage, and
rent.
’.WA
□
Table 3: PHC programme expenditures by line item
Description
Personnel
Amount
Percent
2,345.00
49.9
Travel
345.00
7.3
Equipment
456.00
9.7
Supplies
332.00
7.1
Other direct costs
876.00
18.6
Indirect costs
345.00
7.3
Total costs
4,699.00
100.0
Figure 3:
•a
As you can see, each table is accompanied by a graph, as
it is often easier to understand amounts if they are presented
in such a way. But after looking at a graph, most people
also want to see the figures. This module has been designed
to produce both. The simple computer files that are included
in the module can be edited easily to display your cost and
revenue data. These files will provide both the tables and
graphs automatically. And when you change a figure in the
table, the graph also changes to reflect the new figures.
Module 8: Cost analysis; introduction
8
Table 4 and Figure 4 illustrate the general ledger "line
item" costs of two project locations. The analysis shows that
there were significant differences in several lines, especially
travel. Personnel costs were higher than the budget by 2,990
(31.8 %). But the overall difference between total costs was
only 3.9 %.
fT-
Table 4: Costs for two PHC subprojects by line item
North
Central
Variance’
Personnel
9,410
12,400
-2,990
-31.8
Travel
1,294
2,232
-938
■72.9
Description
Percent
Equipment
350
Supplies
5,680
4,324
1,356
23.9
Other direct costs
3,300
2,382
918
27.8
Indirect costs
4,214
3,862
352
8.4
Total costs
24,248
25,200
-952
-3.9
Ej
350
' Variance = North - Central
Figure 4 shows how a bar chart can portray this information.
KU-
Figure 4:
North and
Central PHC
expenditures
n Central
° North
pt
Module 8: Cost analysis; introduction
9
Managers may also want to know what each PHC service
costs. Table 5 and Figures 5A and 5B provide an example
of this kind of analysis.
Table 5: Costs of selected PHC services and activities
Antenatal care
Family Planning
Immunization
Training
Personnel
19,310
2,400
15,430
6,886
Travel
6,884
1,532
8,555
7,090
4,790
2,587
Description
Equipment
950
Supplies
2,380
724
6,523
1,165
Other direct costs
3,300
1,382
3,484
2,224
Indirect costs
2,214
1,822
3,667
2,210
42,449
22,162
Total costs
35,038
7,860
* Variance = North - Central
Figure 5A: Selected PHC service/activity costs
PHC Service/Activity
Financial people often calculate "average costs" or "unit
costs," as shown above. These are estimates of the cost of
producing one unit of a product or service. They may want
to know how much it costs to immunize one child, how much
it costs to install a well, or how much it costs to train a
Community Health Worker (CHW). This type of cost anal
ysis involves a measure of output as well as of cost.
Module 8: Cost analysis; introduction
10
The total cost of the service is divided by the total units
of service. Two examples:
Cost of immunization component
42,449.
Number of children immunized
22,343
Total cost of training programme
22,162
Number people trained
1,580
= 1.90 per child immunized
= 14.03 per trainee
Figure 5B:
Average
(unit) costs
LT
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These types of ratios are also used in cost-effectiveness
analysis, where alternative approaches to achieving the
same objective are compared to see which one can achieve
the most with the same level of resources.1 This module
does not deal with cost-effectiveness or cost-benefit analy
ses, which are more complicated, and which are described
in another publication.1
2
Sometimes managers and policy makers want to look at
costs over time, that is, they want to look at trends. Table
6 and Figure 6 illustrate a trend analysis of costs by GLI.
1 It can also be looked at the other way, that is, which approach can achieve
the same level of output for the least expenditure of resources.
2 See, for example, Jack Reynolds and K. Celeste Gaspari,
Cost-efjectiueness analysis. PRICOR Monograph Series: Methods Paper 2.
Bethesda: Center for Human Services, 1985.
Module 8: Cost analysis; introduction
Uj Ui
PHC Service/Activity
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Table 6: Trend analysis of PHC costs 1986-1989
Description
3
3
"3
3
3
3
1986
1987
1988
1989
Personnel
9,410
12,400
14,600
16,896
Travel
1,294
2,232
3,456
2,890
Equipment
350
Supplies
5,680
Other direct costs
Indirect costs
Total costs
1,290
587
4,324
4,653
4,125
3,300
2,382
2,234
3,124
4,214
3,862
3,467
3,210
24,248
25,200
29,700
30,832
Change from
+952
+4,500
+1,132
previous year
+3.9%
+17.9%
+3.8%
These figures show that costs have increased each year,
especially in 1988 when they increased by almost 18 percent
over the previous year. Each line item can also be analysed
this way to spot the cause of the increases. Figure 6 shows
graphically the trend in total and personnel costs using the
data from Table 6.
3
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3
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-3
3
3
3
3
Sometimes managers want to make projections of future
costs. The analysis would look the same as in the last table
Module 8: Cost analysis; introduction
12
and figure, only with projected dates. This type of analysis
is described in Module 9; Sustainability analysis.
Managers and donors are usually very interested in rev
enues, especially the sources of funds. Table 7 illustrates a
hypothetical "trend" analysis of revenue spanning four years
(1988-1991). Figure 7 is a graph showing the distribution of
revenues by source for these same years.
Table 7: Trend analysis of PHC revenues 1988-1991
1988
1989
1990
1991
Federal
5,310
6,500
9,000
9,500
State
4,294
4,500
5,000
5,500
USAID
3,500
3,500
3,500
3,500
AKF
5,680
6,500
7,000
6,500
CIDA
3,500
3,500
3,500
3,500
Service fees
1,214
1,458
2,500
2,800
Contributions
500
875
1,256
1,580
23,998
26,833
31,756
32,880
Total
Change from
+2,835
+4,923
+1,124
previous year
+11.8%
+18.3%
+3.5%
Figure 7:
Module 8: Cost analysis; introduction
13
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The table shows that total revenue has increased steadily
each year. Government support (federal and state) has
increased while donor support (USAID, AKF, CIDA) re
mained fairly steady. Service fees and contributions have
increased each year, accounting for a small proportion of
overall revenues. The graph shows the differences in fund
ing between the first and last years (1988 and 1991).
The final table (Table 8) compares revenues and expen
ditures for the past four years. This is often called a
"break-even analysis." The table and graph show that ex
penditures exceeded revenues slightly in 1989 but that the
project "broke even" the following year. Although both
revenues and costs have increased each year, the project has
also made a small corresponding surplus.
Table 8: PHC programme break-even analysis
1988-1991
1988
1989
1990
1991
Revenues
23,998
26,833
31,756
32,880
Expenditures
Source
24,248
25,200
29,700
30,832
Variance (amount)
-2,50
+1,633
+2,056
+2,048
Percent difference
-1.0%
+6.5%
+6.9%
+6.6%
"3
Year
Module 8: Cost analysis; introduction
Allocation of costs; often very difficult. The most
critical.step in cost analysis is allocating (or distributing) the
cost of an item across several cost categories. For example,
the Project Director usually doesn’t spend much time on
direct services. How do you split that persons costs among
the projects services, locations, etc.? A vehicle is used for
many activities. How are its costs distributed fairly among
those activities?
This may not be a problem if the costing system has been
set up to keep track of these distributions. But most systems
1 Warner, K & Luce, BL Cost -benefit and cost-effectiveness analysis in
healthcare. Ann Anbor. MI; Health Administration Press, 1982, p. 44.
Module 8: Cost analysis; introduction
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Accounting
costs
It’s difficult to estimate "true costs." This module
deals with a specific type of cost, what economists would
call "financial" or "accounting" costs rather than "economic"
costs. Economic costs include in-kind contributions, make
adjustments for subsidies, donated labour, etc. To econo
mists, "the true cost of an activity is the value of the
alternative endeavour that might have been undertaken with
the same resources."1 Measuring the true cost of PHC is
very difficult. It would require, among other things, estimat
ing the cost to the client of attending a clinic session, the
cost of donated labour and materials, and the true cost of
subsidised supplies. This module uses a practical approxi
mation of true costs, which are financial costs. The module
uses actual monetary expenditures and revenues,
which is the type of information that appears in financial
reports. However, suggestions are included in the module
for estimating the cojt of some important and typical items
that do not have a monetary cost attached. For example,
CHWs are often unpaid volunteers. It would be important
in most cost analyses to include an estimate of the market
value of their labour.
f
l fl f
l
Some limitations of cost analysis
f
l f
l f
l f
l f
l
Module 9 picks up where this analysis ends. It enables
managers to make a number of projections of future reve
nues and expenditures, based on different assumptions of
health needs, service mixes, costs, and resources.
R f| fi
14
15
have not done that. In that case, the analyst will have to
take the figures from the accounting report and reallocate
them to various services. Several approaches for making
estimates and allocating costs are described in this Guide.
But the manager must accept that these are estimates
and, therefore, may not be completely accurate.
These and other common problems are discussed in the
module and suggestions are made for dealing with them. In
many cases, financial staff are familiar with these issues and
can take them into account when conducting the cost
analysis. The manager and policy maker should, however,
also be aware of the effects these limitations can have on the
results.
Strengths of cost analysis
Even with these limitations, cost analysis can be a very
useful tool for the manager and policy maker. First of all,
keeping track of costs is just good management. Most
accounting systems do not produce the type of analysis that
managers need to monitor and plan programme activities.
Thus, some special effort is required. As the examples show,
the analysis does not have to be complicated to be informa
tive and useful. Secondly, in the absence of certainty, even
approximations can help improve decision-making. Finally,
given the strains on most PHC budgets, as well as the
pressure from boards and donors to become self-sustaining,
cost analysis will become an essential part of every
managers tool kit.
Module 8: Cost analysis; introduction
Only
estimates
16
y-iUJL
juL
pel
A tea plantation in Sri Lanka where maternity facilities
are at the disposal of female workers.
Photo by J. Mohr for WHO
17
How to use this guide
3
This guide provides instructions for carrying out a cost
analysis. By following the instructions and using the work
sheets and optional computer files, you should be able to
carry out an analysis. That analysis can be simple or
detailed, depending on the level of detail you select.
3
How much detail do you need: Levels 1,2 and 3
■3
The module offers three levels of detail. Level 1: Basic
cost analysis is the easiest and quickest to do. You follow
3
a few simple steps, use the financial data from your account
ing system, and enter those data into standard tables that
the Module provides. Then you analyse the results.
Level 2: Selective cost analysis allows you to make
changes in any or all of the steps in Level 1. There are 8
steps in all, and you have the option to change the assump-
3
Steps in a cost analysis
'-3
3
■3
•3
-3
3
3
Step 1: Specify the objectives of the cost analysis
Step 2: Decide what to cost
Step 3: Select the types of table(s) and graphs to be produced
Step 4: Set up a cost coding system
Step 5: Allocate and code revenue and expense data
Step 6: Enter data and compute costs
Step 7: Analyse and interpret the revenue and cost data
Step 8: Present /report the cost analysis findings
Module 8: Cost analysis; how to
18
tions, increase the level of detail, reclassify and recode cost
data, and expand the scope and amount of analysis. The
core instructional material is contained in Level 2.
For those who want to conduct a more accurate or
sophisticated cost analysis, Level 3: Detailed cost anal
ysis provides guidelines for doing so. Level 3 would be used
by those who are willing to recode and re-enter all financial
data to make very accurate cost estimates. It also describes
how to compute unit costs and to make adjustments for
in-kind contributions, subsidies, etc.
Using the worksheets, dummy tables, com
puter files
Computer
program
This Guide includes worksheets with each step to help
you summarise and record your analysis plan. There is a set
of dummy tables that you can consult for ideas, or use as is,
just by changing the headings and inserting your own data.
For those who want to enter their data into computers, there
are copies of these tables on the Module 8 disk. There is
also a simple data entry program that you can use with Lotus
1-2-3. This program allows you to enter summaries (e.g.,
monthly subtotals) or individual transactions. It will also sort
your data into the categories you choose so that they can
be easily transferred to the analysis tables.
What’s in the appendices
The appendices include additional information for ad
vanced users, lists of helpful reference materials, including
other cost analysis manuals and programs that you might
find useful, blank worksheets, a glossary of key terms, and
print-outs of the computerised data entry and analysis
programs included on the diskette.
Module 8: Cost analysis; how to
19
Cost analysis procedures
This User’s guide shows managers and finance staff how
to carry out a cost analysis in eight steps. The first three
steps direct the manager in telling the finance staff which
type of analysis to conduct. The next five steps describe
how the finance staff should set up the procedures and carry
out the analysis.
The following section describes the procedures for
designing and carrying out a cost analysis. More detailed
explanations of some concepts are found in the appendices,
along with some "tools" to help the manager and finance
staff carry out the analysis. These tools include checklists, ■"
computer programs for entering and analysing the cost data,
Helpful
and suggested procedures for allocating costs to various
tools
categories.
In many cases, especially among more sophisticated
private PHC programmes, the finance staff will be able to
carry out the cost analysis as soon as the managers have
clarified what they want analysed and how they want the
data presented. The finance staff would probably be able to
set up a coding system, classify the cost data, and prepare
the required tables without referring to the steps in this
guide. In some cases, especially among public sector pro
grammes that do not normally track expenditures, the
managers may have to call on a member of the planning
staff to set up a cost analysis from scratch. Those program
mers may find the steps and the "tools" particularly helpful
and time-saving.
Module 8: Cost analysis; procedures
20
In any case, the user of this module should consider it a
guide that can be adapted and modified to fit each local
situation.
Step 1: Specify the objectives of the cost
analysis (manager)
User
purpose
scope
There are three things the manager needs to specify: 1)
the USER; 2) the PURPOSE; and 3) the SCOPE of the
analysis. The following checklist can guide the manager in
doing that.
First, who will be the user of the cost analysis? This
question should be answered first, because the user should
decide what the purpose and scope of the analysis should
be. The manager is the most likely user, but the others listed
in the worksheet could also be interested in the analysis. If
so, it will be important that each one clarify its desired
purpose and scope. It’s quite possible that they will be
different.
Second, what is the purpose of the analysis? The three
purposes, described in the introduction are: monitoring,
efficiency, and planning. It would help to write out the
specific purpose, or purposes, as any one user could have
several purposes in mind.
Finally, how broad should the scope of this analysis be?
What geographic area will it cover (the entire country, a
region, a city, several rural sites)? Some projects operate in
multiple sites. Will they all be included in the analysis?
’ How much programmatic detail is desired? Is it suffi
cient to look at the PHC programme overall, or does the
user want to break the costs down further: by project; by
subproject; by outreach and clinical services; by specific
PHC component (immunization, ORT, growth monitoring,
training, supervision, etc.)? Is there a special component
that the user wants to examine? In Kenya, for example,
a donor wanted to know how much each PHC service and
activity cost. Most accounting systems are not set up to
produce that type of breakdown, and it may require a ma
jor effort to do so.
IB
Module 8: Cost analysis; procedures
J
21
WORKSHEET FOR SPECIFYING OBJECTIVES
User/audience:
—Manager
___ Board of directors
Central directorate
Donors
Other
Purpose:
Monitoring
Efficiency
Planning
3
Other
Scope:
-Geographic area
Programme/project/aclivity
Time/duration
Prospective or retrospective ?
Expenditures and/or revenues
a
T3
*
'■4
'J
J
4
d*
• What time frame should the analysis cover: the past year,
the past five years, the next six months, the next three
years?
• Will this analysis rely on data that has already been
collected (retrospective), or will costs be compiled and
coded in the future (prospective)? This is an important
decision. If this is a prospective analysis (to be done in the
future), then the financial staff will need to set up proce
dures to make sure that all expenses and revenues are
coded as they occur. See Steps 4 and 5 for more informa
tion about what this would involve.
• Should revenues as well as costs be analysed? Or only
revenues? Only costs?
It would be helpful to write out the objective(s) in narra
tive form and to prepare a separate statement for each user,
since each user is likely to have different objectives that will
require different cost data.
Module 8: Cost analysis; procedures
22
Step 2: Decide what to cost (manager)
Here the manager needs to get specific regarding the level
of detail desired. Obviously, the more detail requested, the
more time, effort, and expense will be involved. The simplest
analysis would be of the PHC programme overall, that is,
the total cost of the PHC programme without any break
down. That is important, but not very informative. A cost
analysis should include some kind of breakdown of costs.
This Module provides three options:
Level 1:
Analysis of general ledger items
Level 2:
Analysis of locations/facilities
Level 3:
Analysis of PHC services/activilies
• Level 1: Analysis of general ledger items
Almost all accounting systems keep track of costs by "line
items" (e.g., personnel, travel, supplies, etc.). These categories
of costs are usually summarised in a "chart of accounts," and
are often called "general ledger items." It is fairly simple to
use these data for a basic cost analysis. Let us call this level
of detail Level 1.
Below are examples of general ledger items from two
PHC programmes.
Kenya
Thailand
Personnel
Consultant services
Personnel
Fringe benefits
Training/ workshops
PHC service supplies
Welfare, compensation
Evaluation
Supplies
Travel and transportation
Commodities, capital equipment
Administration
Utilities
Equipment
Income
Travel per diem
Motor vehicles
If your programme does not have a chart of accounts, you
can find an example of a detailed list in the Appendices.
Module 8; Cost analysis; procedures
23
The user needs to determine how much detail is needed.
The general ledger accounts could be collapsed into a small
number, as above, or some could be expanded, as
3
Supplies:
Drugs, medicines
Office supplies
Health education supplies
□
J
’3
■J
-3
-1
Other commodities
• Level 2: Analysis of locations/facilities
For some small projects Level 1 analysis will be sufficient.
But many PHC programmes are made up of two or more
"projects," "subprojects," "locations" or "sites," and the user
may want to have a separate analysis of each of these. Let
us call that Level 2.
For example, the Aga Khan University Urban PHC
Project in Karachi consists of seven subprojects or sites. An
analysis of each of those, plus the overall project, would
require eight separate cost analyses.
AKU urban PHC project
I
Subprojects
Orangi
Essa
Nagri
Grax
Chanesar
Azam
Baba
Goth
Basti
Island
3
• Level 3: Analysis of PHC services/activities
Each PHC project (or subproject) usually offers an array
of PHC services (immunization, ORT, etc.). The projects also
include management activities that support these services
(planning, training, etc.). The user may want to cost some
or all of these PHC services and activities. Let us call that
J
Level 3.
Module 8: Cost analysis; procedures
Karimabad
24
Typical services are shown below.
GENERAL
CHILDCARE
CURATIVE CARE
PHC household visits
Breast feeding
Treatment of minor ailments
School health
Growth monitoring
Malaria
Health education
Nutrition education
Tuberculosis
Drug supply
Immunization
Sexually transmitted diseases
Acute respiratory infection
HIV/AIDS
MATERNAL CARE
Diarrhoeal disease control
Disabilities
Antenatal care
Oral rehydration therapy
Night blindness
Anaemia
Safe delivery
Postnatal care
COMMUNITY HEALTH
Family planning
Water supply
Iodine deficiency
Sanitation and hygiene
In addition to these health services, the user may want
to know the costs of certain support activities, such as:
Training
Logistics
Research
Supervision
Financial management
Community organisation
Planning
Monitoring/evaluation
The Kisumu PHC project in Kenya consists of three
"locations," each of which carries out 11 PHC services and
related activities. If all three Kisumu locations and all 11
PHC services were to be costed, that would be 33 cost
analyses. Some users may not want that much detail. An
alternative would be to select one or two services that are
really important or to group the services, e.g., health centre
services, MCH services, and community-based services.
We call this Level 3 because it is the most detailed and
because most projects do not keep track of cost data by PHC
service, lb do so requires that each expenditure be allocated
to one or more services. This is often difficult and time-con
suming. If you are thinking of a Level 3 analysis, please read
Steps 3-5 first. They will give you an idea of what would be
required.
Module 8: Cost analysis; procedures
25
Kisumu PHC Project
Locations
I
I
Central
North
Kajulu
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Community process
Health education
Intersectoral collaboration
CHW/TBA/leaders training
School health
Childhood immunization
Nutrition and growth monitoring
Water source development
Ante/postnatal care
Communicable disease control
Income generating activities
I
WORKSHEET FOR DECIDING WHAT TO COST
Level 1: PHC programme (total costs)
Level 1: General ledger items
Level 2: Projects, subprojects, locations, sites, etc.
Level 3: PHC service components or management components
Module 8; Cost analysis; procedures
26
The Introduction to this Module described seven types of
cost analyses that could be performed. Those are
summarised in the following worksheet. The (LI), (L2), (L3)
symbols indicate the level of detail from the previous step.
You need to select those that are needed for your analysis.
WORKSHEET FOR SPECIFYING TYPES OF ANALYSES NEEDED
1.
The total amount of revenues received and resources spent (L1)
2.
Revenues and expenditures compared with budgets (L1)
3.
The distribution of revenues and costs by general ledger line item (L1)
4.
Trends in revenues and costs over time (L1)
5.
The distribution of revenues and costs by location or facility (L2)
6.
The distribution of revenues and costs by service or activity (L3)
7.
Average costs (unit costs) (L3)
It can be very helpful to set up "dummy tables" and graphs
at this point, since that will make clear to the analyst what
is expected and ensure that the information that the user
desires is produced. Examples of two dummy tables are
shown below with illustrative data. The first, Table 1A
Table 1A : Total programme
Amount
Total revenues
12,045,655
Total expenditures
11,876,634
Difference
169,021
Percent
1.42%
Module 8: Cost analysis; procedures
W
l
Step 3: Select the type(s) of tables and
graphs to be produced (manager)
fl R R fl f) fl fl f l fl fl fl fl fl f l f) fl fl fl
This worksheet can be used to specify the level of detail
wanted for the cost analysis. Remember that if there are
several users of the analysis, each user may need to fill
out a separate sheet. Since the list can get very detailed
very quickly, it is worth asking whether each additional
breakdown is necessary to meet the objectives of the cost
analysis.
27
shows total revenues and expenses for the project for a given
year. It also shows the difference between the two in actual
amount and percentage.
The second, Table 3A, shows the distribution of the
revenues and expenses by general ledger line item. The
amounts usually can be taken from the projects regular
financial reports and annual budget. The analyst then
computes the variance (difference between the budgeted and
actual amounts) and the percentages.
Table 3A: PHC project revenues and expenditures: 19
Actual vs. budgeted by general ledger line item
Description
Actual
Budget
Variance’
Percent’
REVENUES
0
Federal
1,500.00
1,500.00
0
State
1,250.00
1,250.00
0
0
Donor
1,500.00
1,000.00
500.00
50.0
Service fees
366.50
500.00
-143.50
-28.7
Contributions
125.00
500.00
-375.00
-75.0
4,741,50
4,750.00
-18.50
-0.4
Total
EXPENDITURES
2,345.60
2,200.00
145.6
106.6
Travel
345.00
245.00
100.00
140.8
Equipment
456.00
500.00
-44.00
-91.2
Supplies
332.00
400.00
-68.00
-83.0
Other direct costs
876.00
700.00
176.00
125.1
Personnel
Indirect costs
Total
345.00
350.00
5.00
98.6
4,699.60
4,395.00
304.60
106.9
* Variance = Budget minus actual
A complete set of dummy tables is found in Appendix D.
Each table includes a brief description of its purpose, a
summary of the data needed, and a statement of the output
it will produce. The tables include illustrative data so that
you can see what they will look like when completed. To
use them, simply insert your own headings, labels, and
figures.
These tables are also included in the Module 8 computer
disk. Data can be entered directly into those tables and the
calculations will be made automatically. Several of the
Module 8: Cost analysis; procedures
28
tables also include graphs that can be generated automati
cally, as well.
The following worksheet summarises the standard tables
available in the Appendix. Use it to check off the tables you
want produced. Note that there are separate tables for single
periods of analysis (such as those shown above) and for
multiple periods (i.e., several years). Thus, if you want to do
trend analyses, pick tables from the right-hand column. If
you don’t find what you need here, make up your own
dummy tables.
WORKSHEET FOR SPECIFYING TABLES AND GRAPHS NEEDED
(See Appendix D for examples of these tables)
Single period
Multiple
period
(Trends)
LEVEL 1 TABLES: ANALYSIS BY GENERAL LEDGER ITEM
___ 1.
The total amount of resources spent & revenues received
1A
1B
___ 2.
Total revenues & expenditures compared with budgets
2A
2B
3B
4A1
___ 3.
Distribution of costs & revenues by general ledger line item
3A
__ 4.
GLI revenues & expenditures compared with budgets
4A
LEVEL 2 TABLES: ANALYSIS BY PHC LOCATION OR FACILITY
___5.
Total revenues & costs by location/facility
1B1
2
1B1'2
___ 6.
Total revenues & expenditures compared with budgets
2B2
2B1’2
___ 7.
Distribution of revenues & costs by general ledger item
3B2
3B12
___8
GLI revenues & expenditures compared with budgets
4A2'3
4A1'3
The distribution of costs by PHC service/activity
5A
3B2
___ 10. Average costs (unit costs) of each service/activity
6A1
___ 11. Total service/activity revenues & expend, compared with budgets
6A
2B3
___ 12. Distribution of service/activity revenues & costs by GLI
3B3
3B1,3
___ 13. GLI rev. & expend, of each serv/activ. compared with budgets
4A45
4A1,4
___14. Distribution of revenues & costs by location & service
3B3,5
3B1'3
LEVEL 3 TABLES: ANALYSIS BY PHC SERVICE OR ACTIVITY
___ 9.
2B1,3
1. Prepare separate table for each time period.
2. Change headings and labels (e.g.. from "Year 1" to "Central HC", or "ANC").
3. Prepare separate table for each location or facility.
4. Prepare separate table for each PHC service or activity.
5. Change labels in vertical axis to GLI names, change labels in horizontal axis to services/activities.
Module 8: Cost analysis; procedures
29
Please notice that there are only six basic dummy tables.
Several of the tables can be used for different purposes merely
by changing the headings and labels on horizontal axis. For
example, Table 3B can modified as follows :
Table 38 : Trend analysis of PHC costs: 1986-1989
Description
1986
1987
1988
1989
Personnel
9,410
12,400
14,600
16,896
Travel
1,294
2,232
3,456
2,890
1,290
587
Equipment
350
Table 3B : PHC costs by health centre: 1990
Description
Central
North
Kajulu
Total
Personnel
9,410
12,400
14,600
36,410
Travel
1,294
2,232
3,456
6,982
1,290
1,340
Equipment
350
Table 3B PHC costs by service: 1990
Description
ANC
H. ed.
Child, imm.
NutJGM
Personnel
9,410
12,400
14,600
16,896
Travel
1,294
2,232
3,456
2,890
1,290
587
Equipment
350
Again, each of these analyses requires time and effort to
produce, especially if the cost analysis will involve several
levels of detail over several years. The users should limit
their requests to those analyses that are needed to meet the
cost analysis objectives.
Step 4: Set up a cost coding system
(analyst)
At this point the finance staff can take over. The next
step would be to develop or adapt a coding system for the
items to be costed. This is needed so that the same kinds of
expenditures (and revenues) can be grouped together and
then totalled. For example, all personnel costs could be
coded F) all supply costs S, and so forth.
Module 8: Cost analysis; procedures
30
Assume that the Kisumu PHC project manager decides
to analyse costs as shown below, by general ledger items
foreach of the projects three locations, and by 11 PHC
services and related activities.
X
Level 1:
Analysis of general ledger items
X
Level 2:
Analysis of locations/facilities
X
Level 3:
Analysis of PHC services/activities
The finance staff (or analyst) could then develop codes
for each general ledger line item, for each project location,
and for each service category.
For example, the general ledger, location, and service
codes could be as follows:
General ledger items
Locations
Services/activities
Revenues
N = N. Nyakach
CP = Community process
F = Service fees
C = C. Nyakach
HE = Health education
D = Donor support
K= Kajulu
IC = Intersectoral collaboration
N = Other income
LT = CHW/TBA/leaders training
Expenditures
Cl = Childhood immunization
P = Personnel
NG = Nutrition and growth monitoring
SH = School health
C = Consultants
WS= Water source development
T = Training
AN = Ante/postnatal care
S = Supplies
CD = Communicable disease control
E = Evaluation
IN = Income generating activities
R= Transport
A= Administration
Q= Equipment
V = Vehicles
If the project already has a coding system, that should be
used or adapted, if at all possible. If new codes have to be
developed, they should be simple and easy to remember.
The above example only requires 12 GL1 codes, 3 location
codes, and 11 service/activity codes. Numbers can be used
instead of letters or in combination with letters. Numbers
Module 8: Cost analysis; procedures
31
are not as easy to remember, however. It might also be easier
to remember the codes in a different sequence: location,
service, GLI.
For the period under study (say one year), each revenue
and expenditure transaction would then be given a threeletter code, where the first letter stands for the project
location, the second for the service category, and the third
for the GLI. Examples:
K-CP-P
N-SH-T
C-CI-F
Kajulu/community process/personnel costs
N. Nyakach/school health/training costs
C. Nyakach/childhood immunization/service fees
It’s important that the codes are used in the same se
quence, since N can mean other income as well as North
Nyakach, depending on where it is placed.
These multiple codes make it possible to generate sub
totals of various categories for analysis. For example, all
Kajulu costs begin with K, all Kajulu community process
costs begin with KCF) and so on.
32
The following worksheet can be used to list the categories
to be coded and subsequently to assign codes. This sheet
could then be used as the guide for coding each transaction.
CODING WORKSHEET
Level 1: PHC programme (total costs)
Level 1: General ledger items
Code Description
Code
Code
Description
Code
Description
Description
Level 2: Projects, subprojects, locations, sites, etc.
Code
Description
Code
Description
Level 3: PHC service components or management components
Code
Description
Code
Description
Code
Description
For those who do not have a chart of accounts or codes
for their genera! ledger items, Appendix C includes a check
list of common categories and illustrative codes - both letter
and digit. The appendix also explains how to develop a
coding system.
Module 8: Cost analysis; procedures
33
=3
■3
Step 5: Allocate and code revenue and ex
pense data (analyst)
There are actually two steps that are carried out simul
taneously. The first is used to allocate the revenues and
costs to one or more categories, and the second is to apply.
the proper code or codes.
You may be able to skip this step. Read the following to
find out.
Level 1: In Level 1 analysis you only need to allocate total project
revenues and costs to each general ledger item. Most project accounting
systems already do that. If yours does, this step is not required. Skip to
Step 6.
~3
Level 2: If your project accounting system already allocates costs to
each project location, you can skip to Step 6. But check the "Advanced
features" below first.
Level 3: if your project accounting system already allocates costs to
each PHC service and activity (which is rare), you can skip to Step 6.
But check the "Advanced features" below first.
3
Advanced features
Levels 2 and 3 only. See Appendix A for the following:
• Indirect costs.
If your accounting system includes "Indirect costs" (fringe benefits,
overhead, general and administrative costs, management fees) and you want
to include them in your analysis, see Appendix A for a discussion of indirect
costs and how to compute and allocate them to locations and PHC services.
3
3
3
31
° Depreciation.
If you want to include "Capital costs" (equipment, vehicles, buildings, etc.)
in your analysis, you need to allocate the cost of these items across their
years of useful life. See Appendix A
for a discussion of capital costs and
Advanced features
depreciation, and guidelines for how
(Check if to be included)
to allocate these costs over time.
Indirect costs
3
• Non-monetary costs.
H
If your project includes "in-kind
contributions" (donated land, space,
33
3
Module 8: Cost analysis ; procedures
Depreciation
Non-monetary costs
Foreign exchange
33
33
Z3
33
33
Step 5: Allocate and code revenue and ex
pense data (analyst)
There are actually two steps that are carried out simul
taneously. The first is used to allocate the revenues and
costs to one or more categories, and the second is to apply
the proper code or codes.
You may be able to skip this step. Read the following to
find out.
Level 1: In Level 1 analysis you only need to allocate total project
revenues and costs to each general ledger item. Most project accounting
systems already do that. If yours does, this step is not required. Skip to
Step 6.
33
33
Level 2: If your project accounting system already allocates costs to
each project location, you can skip to Step 6. But check the "Advanced
features" below first.
^3
Level 3: If your project accounting system already allocates costs to
each PHC service and activity (which is rare), you can skip to Step 6.
But check the "Advanced features" below first.
33
Advanced features
33
3
3
U
3
Levels 2 and 3 only. See Appendix A for the following:
• Indirect costs.
If your accounting system includes "Indirect costs" (fringe benefits,
overhead, general and administrative costs, management fees) and you want
to include them in your analysis, see Appendix A for a discussion of indirect
costs and how to compute and allocate them to locations and PHC services.
• Depreciation.
If you want to include "Capital costs" (equipment, vehicles, buildings, etc.)
in your analysis, you need to allocate the cost of these items across their
years of useful life. See Appendix A
for a discussion of capital costs and
Advanced features
depreciation, and guidelines for how
(Check if to be included)
to allocate these costs over time.
Indirect costs
• Non-monetary costs.
If your project includes "in-kind
contributions" (donated land, space,
H
3
Module 8: Cost analysis ; procedures
Depreciation
Non-monetary costs
Foreign exchange
34
supplies; volunteer workers; free advertising, etc.) and you want to make
your analysis more accurate by including those costs, then see Appendix
A for a discussion of non-monetary costs and how to compute them.
• Foreign exchange.
Some projects use imported items that are paid for with foreign ex
change. If yours does and you want to make your analysis more accurate
by adjusting for the real cost of these imported goods, then see Appendix
A. It includes a brief discussion of foreign exchange and how to adjust for
artificial exchange rates and import duties.
Allocation of costs
To allocate costs means to assign them to one or more cost categories.
Costs may be assigned to a single category or they may be spread across
several. The first procedure we will call "direct allocation" and the second
"indirect allocation."
Cost allocations
• Direct allocation
When costs can be clearly attributed to
a single category, then the coding is
straightforward. Examples are vaccines
___ Direct allocation
__ .Indirect allocation
for the immunization component at the
_ __ Equal allocation
Kajulu health centre; safe motherhood
___ Proportional allocation
booklets for the antenatal clinic in Central
Nyakach; and Salter scales for the growth
Costs to be allocated
monitoring component in North Nyakach.
___ Personnel costs
If you are doing a Level 1 analysis, then
___ Supply costs
all of these costs would come under the
___ Facility costs
___ Equipment costs
GLI code for "supplies," (or commodities,
___ Vehicle costs
or the like).
If you are doing a Level 2 analysis, you
would determine the amount of these
supplies sent to each location and charge that amount to the "supply" code
for each location. If you are doing a Level 3 analysis, you would allocate
the vaccine costs to the immunization component, contraceptive costs to
family planning, and the costs of the scales to growth monitoring at each
location.
The examples below show how these costs would be coded for each level
of analysis. Assume that we are using the codes developed for the Kisumu
project. The GLI code for supplies is S, the location code for North Nyakach
is N, Central is C, and Kajulu is K. The codes for the PHC services are CI
(Check if to be included)
Module 8: Cost analysis; procedures
J
-3
-3
ru
r— ■ „
-±s
-3
3
=3
23
35
(child immunization), AN (ante/postnatal care), and NG (nutrition and
growth monitoring).
• Indirect allocation
Some costs have to be allocated to two or more categories. Typical
examples are buildings, vehicles, equipment, and staff time. There are two
principal ways to allocate these costs: 1) equally among the cost categories,
or 2) proportionately. It is easiest to do the calculations in percentages.
That is, determine the percentage of the total cost that should be allocated
to each cost category.
CATEGORY
CODE
Level 1: GLI
Vaccines
Supplies
S
Booklets
Supplies
S
Salter scales
Supplies
S
Vaccines
Kajulu/supplies
KS
Booklets
C. Nyakach/supplies
cs
Salter scales
N. Nyakach/supplies
NS
Vaccines
Imm/supplies
CIS
Booklets
ANC/supplies
ANS
Salter scales
Growth mon/supplies
NGS
ITEM
Level 2: GLI & location
Level 3: GLI & PHC service
=3
-3
GLI, location & PHC service
-3
^3
Vaccines
Kajulu/lmm/supplies
KCIS
Booklets
C Nyakach/ANC/supplies
CANS
Sailer scales
N. Nyakach/growth mon/supplies
NNGS
• Equal allocation.
-3
3
3
The total costs are divided equally among the cost categories. For
example, if there were three health centres, 1/3 of the costs would be
allocated equally to each of them. Thus, if personnel costs were 3,500, they
would be divided equally among the three health centres (1,166.67 each).
Although this approach is easy, it is usually not accurate, unless the
locations and services are similar.
• Proportional allocation.
Costs are allocated according to the unit of measure that is typically
sj
Module 8: Cost analysis; procedures
SJwE
36
associated with the cost category.*1
Units of measure for allocating costs
4U.
Item
Unit of measure
Example
Personnel
Time worked
60% time on immunization x salary
Supplies
Weight used
30% of vaccines x total cost of vaccines
g
Volume used
Units used
Facilities
15% of clinic floor space x rent
Space used
Time used
Equipment
Time used
20% of lab equipment x annual depreciation
Vehicles
Distance travelled
40% of total Km driven x vehicle operating costs
E2.
Time used
• Personnel
Staff time. Example: proportion of staff time spent at each health centre
or in each PHC activity. For example, if the Kajulu Project Coordinator
spends 70% of her time on ANC, 20% on immunization, and 10% on health
education, then her costs (salary plus benefits = 14,900.80) would be
allocated to those three categories as follows:
L;
[5
E4 ■
Services
Time (%)
Salary
Code*
ANC
70
10,430.56
KANP
Immunization
20
2,980.16
KCIP
KHEP
Health education
10
1,490.08
Total
100
14,900.80
' The first letter Is the location, the next two tellers are the PHC service code, the fourth is the GLI code for personnel.
£14.
L
Li
Li-
• Supplies
Weight, volume, or number of units. Example: proportion of total ORS
packets shipped to each health centre. Suppose that 4,000 packets were
1 See Estimating costs for cost-effectiueness analysis: Guidelines for managers of diarrhoeal diseases control
programmes. CDD/SER/88.3 Geneva World Health Organization: 1988, pp. 23-26.
Module 8: Cost analysis; procedures
BE
37
=3
'3
sent to N. Nyakach, 8,000 to C. Nyakach, and 12,000 to Kajulu. If the total
cost of the packets, including shipping, was 14,500 then the costs would be
allocated as follows:
'3
Location
•3
Units (%)
Cost
N. Nyakach
16.7
2,421.50
NCDS
C. Nyakach
33.3
4,828.50
CCDS
KCDS
Kajulu
50.0
7,250.00
Total
100.0
14,500.00
Code*
' The first code is the location, the second is the service (communicable disease control) and the third is the GU code for supplies.
• Facilities
Space or time. Example: proportion of health centre space used for PHC;
proportion of time the facility is used for immunization services. Suppose
the Kajulu Health Centre has 30 square metres of floor space and the rent
is 23,500. Assume that ANC uses half the space and the rest is equally
divided among leader training and immunization.
Services
Space (%)
Rent
Code*
ANC
50
11,750.00
ANA
Immunization
25
5,875.00
KCIA
Leader training
25
5,875.00
KLTA
Total
100
23,500.00
' The first code Is the location, the second the service, the third the GLI code (A for administration).
• Equipment
■1
Time. Example: proportion of time audio-visual equipment is used for
PHC. Assume the C. Nyakach location uses the AV equipment 40% of the
time. The other locations use it the rest of the time. Also assume that the
equipment originally cost 3,500 and was expected to last 5 years. The
annual (pro-rated) cost would be 700 (3,500/5 years). C. Nyakach’s 40%
share would be 280 (700 ’ 40%). Now suppose that the equipment was
used equally on only two services: community process and health education.
The cost allocation would be as follows:
4
&
Module 8: Cost analysis; procedures
38
Code*
Time (%)
Cost
Leader train.
50
140
CLTQ
Health ed
50
140
CHEQ
Total
100
280
Services
* First code is location, second is service/activity, the third is the GLI code lor equipment.
• Vehicles
Distance or time. Example: proportion of total mileage used for out
reach; proportion of time vehicle is used for water source development
Vehicle costs usually include depreciation, as in the above example of
equipment. Assume that is 8,000/year. Other costs would include oper
ating costs (fuel, etc.), maintenance (repairs), insurance, and a driver.
Assume that the total of all of those costs is 14,000 for a vehicle in N.
Nyakach. Assume that the vehicle is used only for water source develop
ment, income generating, and community process activities. Assume
records have been kept of kilometres driven: 32,000 for WS, 13,000 for IN,
and 46,000 for CP The allocation would be as follows:
Services
Km (%)
Cost
Code
Water source development
35.2
4,928.00
NWSV
Income generating
14.3
2,002.00
NINV
Community process
50.5
7,070.00
NCPV
Total
100
14,000.00
Allocation techniques
These allocation formulas require good records. Information must have
been kept on how much time each staff person spent on each activity,
which supplies were used for which activity in which location, how many
kilometres were driven, and so forth. This level of detail will give you very
accurate estimates of costs, though it is time consuming.
If the cost analysis is done prospectively, then the financial accounting
system can be set up to record all of this information routinely. At the end
of the year you will have very detailed and accurate data for your analysis.
If you plan to carry out a routine cost analysis, we urge you to set up your
bookkeeping system to produce this information. Surprisingly, once the
Module 8: Cost analysis; procedures
39
system is set up, it will probably not take any more effort to use than your
current system. Most cost analyses are done retrospectively. If you are
doing a Level 2 or 3 analysis, you will have to go back to your records
and reclassify the costs. There are three ways to do this.
• Recode all transactions.
This is the most time-consuming approach. It involves going back
through all of the financial records to reallocate (and recode) past financial
data. In one of our field tests, for example, a two-person team spent 3
weeks recoding the financial data for a three-year period. Some large blocks
of costs were easy to allocate (vaccines, water pipes). Some categories
required going back to the original vouchers and receipts (supplies, consul
tant charges). Even then, some categories (staff time, vehicle use) had to
be estimated.
• Use "expert" judgement.
This is probably the quickest and most common approach. The experts
are usually the managers and staff, who make educated guesses about the
amount of time they spend on each PHC service, the proportion of supplies
used in each location, and so on. Sometimes these estimates are relatively
accurate, sometimes they are quite inaccurate. For example, staff members
who have a set schedule and only 2-3 activities can usually accurately
estimate how they use their time. Those who have multiple responsibilities
and no set schedule have a difficult time making such estimates.
• Take a sample of selected costs.
A "prospective" cost allocation and coding exercise could be carried out
for a month or so. Staff could be asked to keep track of their time, vehicle
logs could be kept, logs could be kept for equipment used, and so forth.
The results could then be used to develop some of the allocation percent
ages discussed above.
Our recommendation is to use a combination of these approaches.
Reclassify and recode those major items that are easy to reclassify (e.g.,
purchases of contraceptives and cold chain boxes). Get estimates from staff,
supervisors, and managers for those cost items that they know well (such
as time spent on scheduled activities and use of space). Then take a sample
of the rest, especially the larger cost items (personnel, vehicles, and travel).
Module 3 (Work planning) includes suggestions and forms for estimating
how staff spend their time.
Module 8: Cost analysis; procedures
40
Step 6: Enter data and compute costs (an
alyst)
The data can now be entered into a journal, worksheet,
or computer for processing. In a prospective cost analysis,
the coding and data entry will usually be done simulta
neously. But if the data are being taken from past records
and recoded, then they will probably need to be retabulated.
We can suggest three procedures for this step:
• reclassify total costs;
• reclassify monthly or quarterly costs; or
• reclassify individual transactions for the entire period.
Reclassify total costs.
If you are reclassifying total costs for the period being
analysed (e.g., annual costs), then this step can be done fairly
quickly.
The following example shows how one project in
Bangladesh allocated its annual costs across three services:
Family planning, Immunization, and Other. After deciding
on the allocation procedures, the staff took the total annual
cost of each line item and distributed it across the three
services. For example, 70% of the Co-ordinator’s salary was
allocated to family planning, 20% to immunization, and 10%
to other activities.
Co-ordinator salary = 14,900.80 :
FP
70%
=
10,430.56
IMM
20%
=
2,980.16
Other
10%
=
1,490.08
"Scabies"
health action
in school;
Kisumu,
Kenya.
Photo by
Jean-Luc Ray for
AKF
Module 8: Cost analysis; procedures
41
Exhibit 1: Cost allocation, AKCHP Bangladesh
SL Designation
Salary + 60%
•FP
%
Amount
IMM
%
Amount
Other
%
Amount
No Personnel
1
Co-ordinator
14,900.80
70
10,430.56
20
2,980.16
10
1,490.08
1
Supervisor (a)
13,781.60
75
9,781.20
15
1,956.24
10
1,304.16
1
Supervisor (b)
11,550.40
75
8,662.80
15
1,732.56
10
1,155.04
1
Supervisor (c)
10,155.20
75
7,616.40
15
1,523.28
10
1,015.52
8
Field worker(a)
71,091.20
80
56,872.96
15
10,663.68
5
3,554.56
3
Field worker(b)
23,856.00
80
19,084.80
15
3,578.40
5
1,192.80
2
Field worker(c)
14,124.80
80
11,299.84
15
2,118.72
5
706.24
1
Field worker(d)
6,480.00
80
5,184.00
15
972.00
5
324.00
1
Paramedic (a)
11,424.00
60
6,854.40
20
2,284.80
20
2,284.80
1
Aya (b)
4,249.60
80
3,399.68
10
424.96
10
424.96
1
Poon (a)
4,460.80
80
3,568.64
10
446.08
10
21 Subtotal
185,334.40
446.08
13,898.24
28,680.88
142,755.28
Establishment
Unit Rent
14,000.00
70
9,800.00
20
2,800.00
10
Utilities
1,344.86
70
941.40
10
268.97
10
Subtotal:
15,344.86
10,741.40
1,400.00
134.49
1,534.49
3,068.97
Supplies
Stationery
710.70
' 70
497.49
20
142.49
10
71.07
Printing
1,527.00
85
1,297.95
10
152.70
5
76.35
Postage
67.20
85
57.12
5
3.36
10
6.72
Office & F.S.
620.85
80
496.68
10
62.08
10
62.08
237.00
75
177.75
25
59.25
-
Con. non-phar.
Subtotal
3,162.75
2,526.99
-
216.22
419.54
Transportation
F&M
Collec. of sup.
Subtotal
1,380.00
50
690.00
35
483.00
15
680.10
70
476.07
15
102.02
15
2,060.10
Module 8: Cost analysis; procedures
1,166.07
585.02
207.00
102.01
309.01
&
42
A second example from Kenya illustrates another format
Two tables were used. The first table (Exhibit 2) summarises
the results of Step 5. The percentage distributions of each
GLI were entered into a table. For example, 10% of person
nel costs were allocated to CP (community process), 5% to
HE (health education), and so on. The second table (Exhibit
3) shows the results of allocating the total cost of each GLI
across each service. For example, the total cost of personnel
for the period was 715. That is multiplied by the percentage
distribution of personnel costs from the first table. Thus, the
personnel costs for CP are 71.5 (715 * 10%), and 36 for HE
(715 * 5%). The table also shows the total costs of each PHC
service (425 for CF’ 316 for HE, and so on).
CP
HE
IC
LT
SH
Cl
NG
WS
AN
CD IG
(E:
JEZ
E
(iul
E
Exhibit 2: Cost allocation, Mombasa, Kenya
Percentage allocation of costs by PHC service
PHC service/
S3
til
Total
gi
activity
Personnel
.10
.05
.15
.07
.10
.10
.09
.13
.12
.05 .04
1.00
Consultants
.00
.00
.00
.00
.00
.00
.50
.00
.50
.00 .00
1.00
Training
.05
.08
.09
.10
.18
.10
.20
.05
.10
.00 .05
1.00
Supplies
.07
.05
.18
.10
.12
.20
.08
.12
.05
.00 .03
1.00
Evaluation
.03
.00
.12
.20
15
.12
.04
.09
.08
.05 .12
1.00
Transport
.10
.05
.15
.07
.10
.10
.09
.13
.12
.05 .04
1.00
Administration
.08
.08
.08
.08
.08
.10
.10
.10
.10
.10 .10
1.00
Equipment
.05
.08
.09
.10
.18
.10
.20
.05
.10
.00 .05
1.00
Vehicles
.07
.05
.18
10
.12
.20
.08
.12
.05
.00 .03
1.00
1.’
gL
Lai
E
E
E
Health messages
are frequently
carried by word
of mouth, such
as in this village
square in Portu
gal.
Photo by
Jean-Luc Ray
for AKF
IB
iSL
Module 8: Cost analysis; procedures
43
Exhibit 3: Cost allocation, Mombasa, Kenya
Allocation of expenditures by PHC service
PHC service/
activity
CP
HE
IC
LT
SH
Cl
Personnel
71.5
36
107
50
75
75
Consultants
0.0
0
0
0
0
0
NG
WS
64.4
93
1404
0
AN
CD
IG
85.8
36
29
715
0
0
2807
1404
Tot
Training
11.8
19
21
24
42
24
47
12
23.5
0
12
235
Supplies
210
150
540
300
360
600
240
360
150
0
90
3001
165
124
99
33
74
65.9
41
99
824
12
12
11.1
16
14.8
6.2
4.9 123
Evaluation
24.7
0
99
Transport
12.3
6.2
18
8.6
Administration
43.4
43
43
43
43
54
54.3
54
54.3
54
54
543
Equipment
28.4
45
51
57
102
57
114
28
56.8
0
28
568
Vehicles
23
16
59
33
39
66
26.3
39
16.5
0
9.9 329
Reclassify monthly or quarterly costs.
If you reclassify your financial data each month or quar
ter, you will need to summarise this information. You can
do this manually or with a computer. An example is shown
below.
Quarterly summaries of costs for Kajulu
Date
Description
Code
Amount
31/3/91
Salaries: ANC
KANP
23,000
30/6/91
Salaries: ANC
KANP
23,000
30/9/91
Salaries: ANC
KANP
23,000
31/12/91
Salaries: ANC
KANP
23,000
Subtotal
92,000
31/3/91
Salaries: ANC
CANP
23,000
30/6/91
Salaries: ANC
CANP
23,000
30/9/91
Salaries: ANC
CANP
23,000
31/12/91
Salaries: ANC
CANP
23,000
92,000
Module 8; Cost analysis; procedures
IB
44
Reclassify individual transactions.
If you are going to enter individual transactions, you will
probably want to use a computer. Use the program included
with this module (M0D8DATA.WK1 - see Appendix E for
an illustration and instructions) or set up your own. The
advantage of a computer program is that you can sort the
entries by codes and compute subtotals. You can also do
this manually, but it takes longer.
An excerpt of the computer program is shown below.
This same format can be used for manual entries. Simply
enter the date of the transaction, the check number (or
invoice, SI, etc.), description, code, and amount. After you
have entered all of your data, you can sort the data and
produce subtotals of each cost category. See Appendix E
for an illustration of the program.
Date
Cheque
Description
Code
Amount
07/02/90
#373
Office expenses
KCS
185.38
29/03/90
#376
Staff salaries
KOP
2,520.34
05/04/90
#380
Telephone & fax
KOD
170.18
06/05/90
#381
Staff salaries
KCP
2,990.63
13/05/90
#385
Photocopy
KCD
43.52
21/05/90
#387
Mail and postage
KCD
17.50
21/05/90
#387
Mail and postage
KOD
8.50
Subtotal
There are two ways to do this by hand. The first is to
copy all of the transactions onto separate sheets — one for
each cost code. Then add up the subtotals for each sheet.
The second is to add all of the transactions that have the
same code, checking them off the transaction sheet as you
enter them into a calculator. Then write the subtotal for
each code on a separate piece of paper. Be sure to use a
calculator with a tape so that you can double-check your
addition.
Module 8: Cost analysis; procedures
45
Step 7: Analyse and interpret the revenue
and cost data (analyst)
Assuming that the dummy tables and graphs were se
lected in Step 3, the analysis should be straightforward. Just
transfer the totals from Step 6 into the appropriate tables.
The Introduction illustrated several different cost analysis
procedures that include tables and graphs. The computer
files for the dummy tables also include pre-designed graphs
and instructions for displaying them. These templates can
be copied or modified so that analysts can substitute other
cost data for those illustrated.
Analysis should also include interpretation. What do
the data mean? The following guidelines may help you
interpret and explain the data in each table.
• Which GLI is the most expensive? Why? What accounts
for it? (You can often answer this question by looking at the
detailed subcategories of the GLI. For example, supply costs
may be high because a large shipment of vaccines was just
purchased.) Has the cost been increasing, remaining stable,
decreasing? Why? Is the item over or under budget? Is the
budget too low, too high? What could be done to reduce
costs in this category?
• Which GLI is the least expensive? Ask the same questions:
why, what accounts for it, what is the trend, how does it
compare with the budget, is the budget too low or too high,
what can be done to reduce these costs?
• Ask these same questions about each location and each
PHC service/activity.
jjj
• Look at revenues. What is the major source of revenue?
Has it been increasing, remaining stable, decreasing? Why?
Is it likely to change? Why? Is the actual amount received
more or less than projected in the budget? Why? Are the
projections too high or too low? What can be done to
increase revenue from this source?
8 Ask the same questions about each source of revenue.
jj
• Compare revenues with expenses. Overall, how is the
project doing? Are revenues meeting expenses? Sum
iif
Module 8: Cost analysis; procedures
Analysis
guidelines
The last step is to report the findings to the user(s). The
tables and graphs included in this Guide, and the templates
included in the computer disk, can be copied and modified
to display the findings in a simple, clear manner. Here are
some hints for presenting reports:
• If you present a written report, keep it short (10 pages),
simple, and include graphs. Include a one-page "Executive
summary" that clearly states the major findings, conclusions,
and recommendations.
IB]
IB!
• Use an overhead projector to display your key findings and
graphs. Hand out paper copies of your transparencies so
that people can follow along during your presentation, make
notes, and refer to them later.
1$
• Allow time for questions and discussion. Encourage dis
cussion. Encourage action.
1$
• Keep your presentation simple. Do not try to present too
much information either in the report or in each
table/graph. Limit your presentation to 20-30 minutes.
If)
• Stick to the objectives of the cost analysis. Answer the
major questions first. Don’t save them to the last.
ft
Reporting
hints
i||
Step 8: Present/report the cost analysis
findings (analyst)
f? If|
marise your findings to explain why they are or aren’t. What
are the trends? Are they likely to change? What are your
major conclusions about revenues and expenditures: for the
past, for the future.
$
46
Module 8: Cost analysis; procedures
47
Appendix A: Advanced features —
Concepts and procedures
Concepts and procedures you should know for each level of analysis
Level
Concept
1
2
3
Module 92
Direct costs
Indirect costs
X
X
X
X
X
X
X
Capital costs
Recurrent costs
Depreciation
x1
x’
X
x1
X
x1
X
X
X
X
X
X
X
X
X
Average (unit) costs
Marginal costs
X
X
Fixed costs
Variable costs
Non - monetary costs
Foreign exchange
Inflation
Present value
X
X
X
X
X
X
Only if capital expenditures are included in the analysis.
These Hems are an included in Module 9.
This appendix describes some of the financial concepts and procedures
needed to carry out a Level 2 or Level 3 cost analysis. Specifically, the
sections that follow describe:
• Types of costs (direct and indirect, capital and recurrent, fixed and
variable, average).
• How to compute indirect costs.
• How to compute depreciation of capital costs.
• Monetary and non-monetary cost estimates, foreign exchange, and
shadow pricing.
Types of costs
Economists make certain distinctions in types of costs so that they can
calculate true costs more accurately. For Levels 1 and 2 you only need to
know about a few of those and how to compute them. For Level 3 analysis
you need to know a few more.
For Level 1 you really only need to know about direct costs, unless your
financial system includes indirect cost categories or unless analysis is
Module 8: Cost analysis; appendix A
48
going to include capital costs. Generally, for Levels 1 and 2 it should be
enough to know direct and indirect costs; capital and recurrent costs;
and depreciation.
For Level 3 you should also know what average or unit costs are and
how to compute them, as well as how to adjust for nonmonetary costs
and foreign exchange fluctuations.
Type of Cost
Relationship to the PHC service
Life expectancy
0 Direct
» Indirect
° Capital/development
» Recurrent/operating
Direct and indirect costs
The first way to classify costs is as direct or indirect. Direct costs can
be directly attributable to the service. For example, the direct costs of
expanding a primary health care programme to include an ORT component
may consist of personnel salaries, volunteer time, ORT salt packets, and
transportation. Indirect costs include fringe benefits for employees,
overhead, general and administrative costs, and management fees. These
may pay for such "indirect" services as office rent, utilities, the library, and
coffee for the staff.
Separate direct and indirect costs
If you want to include indirect costs in your analysis, you need to separate
your project’s total costs into direct and indirect categories.1 Table A-l
illustrates one way to do that. All the costs that are directly related to
provision of PHC services are listed on the left, all those that are not are
listed on the right. Total costs are the sum of the direct and indirect costs.
How to compute the indirect cost rate
If you are doing a Level 2 or 3 analysis you will want to allocate your
indirect costs to the various locations and services. A common way of doing
that is to compute the indirect cost rate, which is a percentage of the direct
costs.
1- It is important to keep in mind that each project will have to determine which costs it classifies ,>s direct
and indirect. There are no rigid rules as to which costs fall into each category.
Module 8: Cost analysis: appendix A
49
Table A-l
Direct costs
Amount
Indirect costs
Amount
Community nurses
Community health workers
Travel, outreach
Vaccines
Weighing scales
2,000
3,500
1,245
250
144
Accountant
MIS specialist
Property taxes
Insurance
Utilities
500
800
345
125
367
Total
7,139
Total indirect
2,137
Total costs 9,276
2,137/7,139 = .29934
The computation in the lower right-hand corner of Table A-l shows that
indirect costs are about 30% (29.934) of direct costs. That proportion can
be used to: 1) allocate indirect costs by adding a proportion of indirect costs
to each direct cost item; and 2) estimate future indirect costs when preparing
budgets, assuming that there will be no significant change in the categories
or amounts. This figure of 30% is sometimes called the "indirect cost rate."
Table A-2 shows one way to allocate the indirect costs (2,137) to each
of three locations. Just multiply the direct costs of each health centre by
30 percent and add that amount to each health centres direct costs, as
shown below.
Table A-2
Category
Amount
Direct
Indirect
7,139
2,137
Total
9,276
Percent
N. Nyakach
C. Nyakach
Kajulu
29.934
3,200
958
2,131
638
1,808
541
4,769
2,769
2,349
The indirect costs can be allocated in other ways, as well. They could
be allocated equally to all locations, or in proportion to the size, number of
staff, and number of clients of each location. However, the method shown
above is the recommended approach.
Module 8: Cost analysis; appendix A
50
Capital and recurrent costs
Costs can also be classified as capital (or development) and recurrent (or
operating). The distinction between the two types is based on life expec
tancy. Those resources that have a life expectancy of 1 year or more are
called capital costs. They may include buildings, cars, trucks, beds, and'
medical equipment. Those resources that are purchased and used (or
replaced) within 1 year’s time are recurrent costs. They include such
items as personnel salaries, medicine and supplies, gasoline, electricity,
drugs, and food.
The distinction between capital and recurrent costs is important in PHC
cost analyses because:
» These costs are calculated in different ways (this will be described in a
later section.)
• Some donors limit their contributions to capital costs and expect the host
country to be responsible for the recurrent costs. This is why many
economists focus their attention on recurrent costs.
’ In many countries there is one budgeting and accounting process for
recurrent costs and another for capital costs.
Depreciation
In cost analysis the practical reason for making this distinction is to
disperse the capital costs across several years. It would be inappropriate,
for example, to charge the full cost of a new vehicle to the project in the
year it was purchased. The vehicle has a useful life of 10 years or so.
Therefore, its cost should be spread out over that 10-year period. That is
called "depreciation." Each year the value of the vehicle declines (depreci
ates) by a certain amount until at the end of 10 years its value is zero.
The simplest way to compute depreciation is to divide the original cost
by the item’s useful life. If the vehicle cost $15,000, its annual depreciation
would be $1,500 ($15,000/10 years). In allocating costs, $1,500 would be
allocated each year for 10 years.
A more precise way is to use a depreciation table (see Table A-3). Find
the useful life of the item in the left column and the corresponding factor
in the appropriate interest rate column. This is the current rate that you
would pay to borrow money. Multiply the factor by the original purchase
price. For example, if the interest rate is 10% the factor for 10 years of
useful life is 0.1627. Multiply that by $15,000 to get $2,440.50. That is the
amount of the cost that should be allocated each year. If your interest rate
is different from those shown in the table, you can extrapolate. For example,
if the rate is 12%, calculate a figure 2/5 between the 10% and 15% rates.
Module & Cost analysis; appendix A
51
Table A-3
Annualisation1 factors for determining annual cost of facilities and equipment
for different periods of depreciation and interest rates
Interest rates (r)
Lifetime of
assets
(n)
5%
10%
15%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0.5378
0.3672
0.2820
0.2310
0.1970
0.1728
0.1547
0.1407
0.1295
0.1204
0.1128
0.1065
0.1010
0.0963
0.0923
0.0887
0.0855
0.0827
0.0802
0.0780
0.0760
0.0741
0.0725
0.0710
0.0696
0.0683
0.0671
0.0660
0.0651
0.5762
0.4021
0.3155
0.2638
0.2296
0.2054
0.1874
0.1736
0.1627
0.1540
0.1468
0.1408
0.1357
0.1315
0.1278
0.1247
0.1219
0.1195
0.1175
0.1156
0.1140
0.1126
0.1113
0.1102
0.1092
0.1083
0.1075
0.1067
0.1061
0.6151
0.4380
0.3503
0.2983
0.2642
0.2403
0.2229
0.2096
0.1993
0.1911
0.1849
0.1791
0.1747
0.1710
0.1679
0.1654
0.1632
0.1613
0.1598
0.1584
0.1573
0.1563
0.1554
0.1547
0.1541
0.1535
0.1531
0.1527
0.1523
Source: Levin, HM. Cost-Effectiveness:A Primer. (Beverly Hills: Sage Publications, 1983),
1 Annualisation formula:
a(r,n) = [r(1 + r)n]
1(1+0"-1]
where r = interest rate and n= lifetime of asset for depreciation.
Example; an item costs 12,000, the interest rate is 15%, and the usel
years. Annual depreciation is .2403 ’ 12,000 = 2,883.60.
Module 8: Cost analysis; appendix A
OHC - (00
52
&
Average costs (unit costs)
This procedure is only used for Level 3 analysis of PHC services. The
average (or per unit) cost is the total cost of a programme divided by the
total number of units of outcome. An example would be the total cost of
an immunization component of a primary health care programme (e.g.
S10,000) divided by the number of children immunized (e.g. 5,000), which
would produce the average cost per child immunized ($2).
• If the project includes similar material or services that have been
purchased in the market, apply these prices to the donated materials or
services.
• If no value can be assigned in this way, calculate the monetary value that
would have been paid for the material or service in an alternative project.
For example, if paid employees perform tasks similar to those carried
out by volunteers, then the wage rate of the paid employee can be used to
estimate the value of the volunteer’s time. The value of donated equipment
should be calculated similarly. If no monetary figure is available, then use
the market price for similar equipment.
Criteria for estimating costs of non-monetary
contributions
f
i
Criteria
Current labour rate
Current cost/unit
Price square metre
Current cost/unit
Current cost/unit
Module 8: Cost analysis; appendix A
i
f
i
Item
Personnel
Supplies
Facilities
Equipment
Vehicles
f
i f
i f
i f
i f
if
i
Many PHC programmes receive contributions of space, supplies, trans
portation, advertising, and so forth. Volunteers are often a major resource
for PHC programmes and vaccines for immunizations are often donated to
PHC programmes. Although these are usually thought of as "free" dona
tions, they are not. Someone has paid for them. Even "volunteered" time
has a value. Without volunteers the programme would have had to pay for
workers. Thus in calculating the cost of PHC services, the analyst should
include an adjustment for nonmonetary items.
Economists use "shadow prices" to make these adjustments. Shadow
prices are estimates of the true costs of goods or services and can be
computed in one of two ways:
m fi $ fi
Non-monetary cost estimates and shadow pricing
53
Foreign exchange
All costs should be calculated in the currency of the host country.
However, if the programme relies on imported items that must be paid for
with foreign exchange, then this presents two problems. First, the official
exchange rate may be artificial, and shadow prices will have to be used to
compute the actual costs of imported goods. For example, one Asian
country recently had an "official" exchange rate of 6:1 and a "black market"
exchange rate of 76:1. Calculating the cost of imported items under the
official exchange rate would result in a cost 11 times less than the real costs.
In effect, the governments official exchange rate subsidises the health
programme and should be added to the project cost. The cost of items
should be calculated according to the shadow price of foreign exchange.
The second problem is that duties are often levied on foreign imports.
But certain items may be "duty free." This is a government subsidy of those
items. If PHC programme equipment, supplies, etc. are imported duty free,
their price is artificially low. The real cost should include an adjustment for
duties.
Module 8: Cost analysis; appendix A
55
Appendix B: Blank worksheets
WORKSHEET FOR SPECIFYING OBJECTIVES
User/audience:
Manager
Board of directors
Central directorate
Donors
Other:
Purpose:
Monitoring
Efficiency
Planning
Other:
Scope:
Geographic area
Programme/project/activity
Time/duration
Prospective or retrospective?
Expenditures and/or revenues
Other:
Module 8: Cost analysis; appendix B
______________
____
__________
56
WORKSHEET FOR DECIDING WHAT TO COST
Level 1: PHC programme (total costs)
Level 1: General ledger items
Level 2: Projects, subprojects, locations, sites, etc.
Level 3: PHC service components or management components
Module 8: Cost analysis; appendix B
57
WORKSHEET FOR SPECIFYING TYPES
OF ANALYSES NEEDED
The total amount of revenues received and resources spent
(LI)
2. Revenues and expenditures compared with budgets (LI)
3. The distribution of revenues and costs by general ledger
line item (LI)
4. Trends in revenues and costs over time (LI)
5. The distribution of revenues and costs by location or
facility (L2)
6. The distribution of revenues and costs by PHC service or
activity (L3)
7. Average costs (unit costs) (L3)
1.
CODING WORKSHEET
Level 1: General ledger items of PHC programme (total costs)
Code Description
Code Description
Code Description
Level 2: Projects, subprojects, locations, sites, etc.
Code Description
Code Description
Code Description
Level 3: PHC service components or management components
Code Description
Code Description
Module 8: Cost analysis; appendix B
Code Description
58
WORKSHEET FOR SPECIFYING TABLES
AND GRAPHS NEEDED
(see Appendix D for examples of these tables)
Tables
Single
Multiple
period
periods
(Trends)
Level 1 tables: Analysis by general ledger item
1A
__ 1. The total amount of resources spent & revenues received
____ 2. Total revenues & expenditures compared with budgets
2B
3A
4A1
3B
4A
1B2
1B1,2
2B2
2B1.2
____ 3. Distribution of costs & revenues by general ledger line item
____ 4. GLI revenues & expenditures compared with budgets
1B
2A
Level 2 tables: Analysis by PHC location or facility
____ 5. Total revenues & costs by location/facility
____ 6. Total revenues & expenditures compared with budgets
3B2
____ 7. Distribution of revenues & costs by general ledger item
____ 8. GLI revenues & expenditures compared with budgets
4A2,3
3B1,2
4A1,3
Level 3 tables: Analysis by PHC service or activity
____ 9. The distribution of costs by PHC service/activity
5A
3B2
____ 10. Average costs (unit costs) of each service/activity
6A
2B3
6A’
____ 11. Total service/activity revenues & expend, compared with budgets
____ 12. Distribution of service/activity revenues & costs by GLI
3B3
3B1,3
____ 13. GLI rev. & expend, of each serv/activ. compared with budgets
4A4
4A1’4
____ 14. Distribution of revenues & costs by location & service
3B3,5
2B1'3
3BU
NOTES:
1. Prepare separate table for each time period.
2. Change headings and labels (e.g., from “Year 1 ’ to "Central HC, or “ANC”.)
3. Prepare separate table for each location or facility.
4. Prepare separate table for each PHC service or activity.
--------
5. Change labels in vertical axis to GLI names, change labels in horizontal axis to services/activities.
Module 8: Cost analysis; appendix B
59
Advanced Features
(Check if to be included)
Indirect costs
Depreciation
Non-monetary costs
Foreign exchange
Cost Allocations
(Check if to be included)
Costs to be allocated
____ Direct allocation
____ Indirect allocation
____ Equal allocation
____ Proportional allocation
____ Personnel costs
____ Supply costs
____ Facility costs
____ Equipment costs
____ Vehicle costs
Module 8: Cost analysis; appendix B
61
Appendix C: General ledger item codes
Instructions:
Determine the level of detail you want for your cost analysis. You may
need to have codes for up to four levels so that you can analyse costs (and
income) for: a) the overall PHC Programme; b) each project, subproject,
location or site; c) PHC service component or activity; and d) general ledger
accounts.
In general, the more detail you want, the greater the amount of work
required to code each expenditure. The following example shows a rela
tively simple coding system that requires only three letters or digits for each
expenditure.
Coding examples
Account categories
Programme:
Alphabetic
Numeric
NPPHC'
Subprojects:
Chitral
Gilgit
C
G
100
200
Activities:
Outreach
Clinical
Management
0
C
M
10
20
30
Ledger accounts
Personnel
Travel & per diem
Commodities
Other direct costs
Indirect costs
P
T
C
0
1
2
3
4
5
Examples:
I
Chitral, outreach, travel
Gilgit, management, indirect costs
= COT (or 112)
= GMI (or 235)
’ Code for NPPHC not necessary as there is only one PHC Programme.
The system illustrated above will enable you to compute total project
costs; costs for each location (Chitral and Gilgit); costs of each major activity
for the overall project and by location; and cost of each major ledger item
(personnel, etc.), again for the overall project, for each location, and for each
activity.
Module 8: Cost analysis; appendix C
62
Use this format or the examples on the following pages to construct your
own coding system. Then print it out and use it as a reference for coding
your transactions.
P
100
PORT
PGMN
PIMM
PMC
PFP
PHE
PWS
PCS
PTB
PMAL
PARI
101
102
103
104
105
106
107
108
109
110
111
Management support services
M
200
MPL
MTR
MSUP
MFI
MIN
MORG
MPER
MRES
201
202
203
204
205
206
207
208
Income
I
300
Service fees
Sales of goods
Donor contributions
Contributions
Expenses (indirect)
IF
IG
ID
IC
E
301
302
303
304
Personnel
Wages & salaries
Fringe benefits
Consultants
Temporary labour
EP
EPW
EPF
EPC
EPT
Planning
Training
Supervision
Financial
Information management
Community organisation
Personnel management
Research
Examples
104-301 Maternal care fees
202-403 Training consultants
107-432 W&S vehicles
IE)
PHC services
Oral rehydration therapy
Growth monitoring/nutrit.
Immunization
Maternal care (ANC+del)
Family planning
Health education
Water & sanitation
Curative services
Tuberculosis
Malaria
Acute respiratory infect.
IE)
Digit
Ip]
Letter
Activities
Ip)
The following is a checklist of common PHC activities and General
Ledger accounts with suggested codes. You can also use digits or make up
your own coding scheme, of course.
® III 15 IE] Ip) 1)
Detailed activity and ledger account coding options
IS]
IE|
Ip]
400
ipi
Ledger accounts
Modulue & Cost analysis; appendix C
Ef]
401
402
403
404
63
=3
'73
‘-*^3
-3
Commodities
EC
410
ECD
ECS
ECH
ECO
411
412
413
414
ET
420
Local travel
International
Per diem
ETL
ETI
ETP
421
422
423
Capital expenditures
ECAP
430
ECAPB
ECAPV
ECAPM
ECAPAV
ECAPOF
431
432
433
434
435
EO
440 450 460
EOA
EOBANK
EOBOOK
EOCON
EODATA
EODEP
EOEQ
EOFR
EOINS
EOINTM
EO1NTO
EOLAUN
EOLEG
EOMOV
EOPARK
EOTR
EOPH
EOPOST
EOPRN
EOREC
EORENT
EOREP
EOSEC
EOST1P
EOTAX
EOTEL
EOUTIL
441
442
443
444
445
446
447
448
449
450
451
452
453
454
455
456
457
458
459
460
461
462
463
464
465
466
467
Drugs, medicines
Office supplies
Health supplies
Other commodities
Travel
-J
—---- -
-J
Z3
3
3
■3
-j3
73
-~r2
L.___
3
b—--y
-=a
_JQ
~~4
■3
Buildings
Vehicles
Medical equipment
Audio-visual
Office equipment
Other direct costs
Advertising
Bank charges
Books, subscriptions, dues
Conferences
Data processing
Depreciation
Equipment rental
Freight
Insurance
Interest - mortgage
Interest - other
Laundry & cleaning
Legal & accounting
Moving & storage
Parking
Participant training
Photocopying
Postage, courier
Printing
Recruiting & relocation
Rent
Repairs & maintenance
Security
Stipends
Taxes
Telephone, fax
Utilities
Module 8: Cost analysis; appendix C
64
Vehicle fuel, maintenance
Videotaping
Subcontracts
(Name:
)
Indirect Costs
EOV
EOVID
468
469
ESUB
500
El
600
Indirect costs will need to be determined for each project. Some PHC
projects may not have indirect costs, others could have a duplicate of the
direct cost codes, i.e., personnel, commodities, travel, etc. An example of
"typical” indirect costs is shown below.
Personnel
EIP
610
EIPW
EIPF
El PC
EIPT
611
612
613
614
EIC
620
EICO
EICC
621
622
E1T
630
Local travel
International
Per diem
E1TL
EIT1
EITP
631
632
633
Capital expenditures
EICAP
640
Buildings
Vehicles
Office equipment
EICAPB
EICAPV
EICAPO
641
642
643
EIO
650 660 670
EIOAD
EIOBANK
EIOBOOK
EIOCON
EIODATA
EIODEP
E1OEQ
EIOFR
E1OINS
EIOINTM
EIOINTO
651
652
653
654
655
656
657
658
659
660
661
Wages & salaries
Fringe benefits
Consultants
Temporary labour
Commodities
Office supplies
Other commodities
Travel
Other indirect costs
Advertising
Bank charges
Books, subscriptions,dues
Conferences
Data processing
Depreciation
Equipment rental
Freight
Insurance
Interest - mortgage
Interest - other
Modulue 8: Cost analysis; appendix C
65
-53
53
■
“3
EIOLAUN
EIOLEG
E10M0V
EIOPARK
EIOTR
E1OPH
EIOPOST
E1OPRN
EIOREC
EIORENT
E1OREP
EIOSEC
EIOSTIP
E10TAX
E1OTEL
EIOUT1L
EIOV
EIOVID
662
663
664
665
666
667
668
669
670
671
672
673
674
675
676
677
678
679
i
k
l i
L
l
U
_13
—
Laundry & cleaning
Legal & accounting
Moving & storage
Parking
Participant training
Photocopying
Postage, courier
Printing
Recruiting & relocation
Rent
Repairs & maintenance
Security
Stipends
Taxes
Telephone, fax
Utilities
Vehicle fuel, maintenance
Videotaping
Module 8: Cost analysis; appendix C
if
67
Appendix D: Dummy tables
WORKSHEET FOR SPECIFYING TABLES
AND GRAPHS NEEDED
Tables
Single
period
Multiple
periods
(Trends)
Level 1 Tables : Analysis by general ledger item
_____ 1. The total amount of resources spent and revenues received
1A
_____ 2. Total revenues & expenditures compared with budgets 2A
_____ 3. Distribution of costs & revenues by general ledger line item
1B
2B
3A
3B
4A1
_____ 4. GLI revenues & expenditures compared with budgets 4A
Level 2 Tables : Analysis by PHC location or facility
_____ 5. Total revenues & costs by location/facility
_____ 6. Total revenues & expenditures compared with budgets2B2
1B2
_____ 7. Distribution of revenues & costs by general ledger Item
___ __ 8. GLI revenues & expenditures compared with budgets 4A2,3
3B2
1B1'2
2b’.2
3B1’2
4A1'3
Level 3 Tables : Analysis by PHC service or activity
5A
3B2
6A
_____ 11. Total service/activity revenues & expend, compared with budgets 2B3
6A1
_____ 9. The distribution of costs by PHC service/activity
_ ____10. Average costs (unit costs) of each service/activity
2B1'3
_____ 12. Distribution of service/activity revenues & costs by GLI
3B3
3B1'3
_____ 13. GLI rev. & expend, of each serv/activ. compared with budgets
4A4
4A1’4
_____ 14. Distribution of revenues & costs by location & service
3B3,5
3B1’3
NOTES:
1. Prepare separate table for each time period.
2. Change headings and labels (e.g., from “Year 1' to "Central HC‘ or ‘ANC’).
3. Prepare separate table for each location or facility.
4. Prepare separate table for each PHC service or activity.
5. Change labels in vertical axis to GLI names, change labels in horizontal axis to services/activities.
Module 8: Cost analysis; appendix D
68
The dummy tables presented in this appendix include illustrative data
so that you can see what the final products will look like. Use these tables
as guides, but if you wish, you can enter your data directly into the computer
file that comes with this module (MOD8_L1A, MOD8_LIB, and
MOD8__L3.WQ1). The instructions for entering data, viewing pre-set
graphs, and printing out the tables are included in the computer files. They
are also reproduced below.
There are three sets of dummy tables in this appendix (and on the disk).
The first, Level 1 analysis of one period (usually one year), is the most basic.
This is called "Level 1A - Single Period." The second set is also for Level 1
analysis, but of several periods. The tables are set up for 5 periods (years,
quarters, months) of data. Both of these sets of tables are limited to analysis
of data by General Ledger Items. However, most of them can be adapted
to other levels simply by changing the headings and labels.
Two special dummy tables are included here for Level 2 and 3 analysis,
especially two tables for average (unit) cost calculations.
Module 8: Cost analysis; appendix D
69
Dummy tables for
Level 1A - Single period
Table 1A
Table 2A
Total project revenues & expenditures
Revenues
Expenditures
Difference
Percent
9,055.00
8,524.60
530.40
5.9%
Project revenues & expenditures
General ledger items
Amount
4,500.00
3,000.00
Fees
890.00
Contribution
540.00
Other
125.00
Total
9,055.00
100.0%
EXPENDITURES
Personnel
2,345.60
Fringe benefits
876.00
Percent
49.7%
33.1%
9.8%
6.0%
1.4%
456.00
Equipment
654.00
332.00
1,032.00
7.7%
3.9%
12.1%
Utilities
Evaluation
Vehicles
221.00
709.00
678.00
876.00
2.6%
8.3%
8.0%
10.3%
8,524.60
100.0%
Other costs
Total
Revenues
Expenditures
9,055.00
9,100.00
(45.00)
-0.5%
8,524.60
8,695.00
(170.40)
-2.0%
Total revenues & expenditures
Actual vs. budget: 19__
REVENUES
Government
Donors
Fees
Contributions
Other
Total
Actual
4,500.00
3,000.00
890.00
540.00
125.00
9,055.00
Budget
4,500.00
3,000.00
1,250.00
250.00
100.00
9,100.00
Variance
0.00
0.00
(360.00)
290.00
25.00
(45.00)
Percent
0%
0%
-40%
54%
20%
-0%
2,245.00
800.00
500.00
450.00
280.00
900.00
220.00
1,000.00
800.00
1,000.00
500.00
8,695.00
100.60
4.3%
8.7%
-9.6%
31.2%
15.7%
12.8%
0.5%
-41.0%
-18.0%
■14.2%
■44.9%
-2.0%
EXPENDITURES
27.5%
10.3%
5.3%
Con sultan Is
Travel/perdiem
Supplies
Actual
Budget
Difference
Percent
Table 4A
Table 3A
REVENUES
Government
Donors
Project revenues & expenditures
Actual vs. budget
Module 8: Cost analysis; appendix D
Personnel
2,345.60
Fringe benefits
876.00
Consultants
456.00
Travel/perdiem 654.00
Supplies
332.00
Equipment
1,032.00
Utilities
221.00
Evaluation
709.00
Vehicles
678.00
Other costs
876.00
Indirect costs
345.00
Total
8,524.60
76.00
(44.00)
204.00
52.00
132.00
1.00
(291.00)
(122.00)
(124.00)
(155.00)
(170.40)
70
Dummy tables for Level IB - Multiple periods
Table IB
Year 1
9,055.00
8,524.60
530.40
5.9%
Year 5
Year 2
9,100.00
8,695.00
Year 3
10,361.00
9,956.00
Year 4
10,775.00
10,308.001
11,784.00
0,159.00
405.00
4.5%
405.00
3.9%
467.00
4.3%
1,625.00
13.8%
ii
Revenues
Expenditures
Difference
Percent
u
Total project revenues & expenditures
iff
Table 2B
Project revenues & expenditures
Actual vs. budget
Yearl
Revenues
Year 2
Expend. Revenues
Expend.
Year 3
Revenues
Year 4
Expend. Revenues Expend.
Year 5
Revenues Expend.
Actual
Budget
Difference
9,055
9,100
(45)
8,524 10,361
9,956 11,784 10,159 12,604 11,405 13,196 11,532
8,695 10,775 10,308 12,000 10,130 12,279 11,550 12,990 12,175
(170)
(414)
(352)
(216)
29
325
(145)
206
(643)
Percent
-0.5%
-2.0%
-1.8%
0.3%
2.6%
-1.3%
1.6%
-5.6%
1
^
1
-3.5%
ip} ijq
-4.0%
Module 8: Cost analysis; appendix D
U'Jl,
71
Table 3B.1
Project revenues & expenditures : General ledger items
REVENUES
Government
Donors
Fees
Contributions
Other
Total
Year 1
4,500
3,000
890
540
125
9,055
Year 2
5,000
3,500
1,125
500
236
10,361
Year 3
5,500
4,000
1,509
450
325
11,784
Year 4
5,450
4,000
2,167
540
447
12,604
Years
6,210
3,850
2,000
569
567
13,196
EXPENDITURES
Personnel
Fringe benefits
Consultants
Travel/perdiem
Supplies
Equipment
Utilities
Evaluation
Vehicle
Other costs
Indirect costs
Total
2,346
876
456
654
332
1,032
221
709
678
876
345
8,525
2,466
950
567
798
456
987
345
600
990
1,254
543
9,956
2,900
1,187
678
890
543
1,032
221
709
678
976
345
10,159
3,218
1,259
987
889
566
1,100
345
709
888
988
456
11,405
3,345
1,354
1,200
786
765
897
387
899
678
876
345
11,532
Table 3B.2
Project revenues & expenditures : General ledger items
Year 5
Year 1
Year 2
Year 3
Year 4
REVENUES
Amount
Percent Amount Percent Amount Percent Amount Percent Amount Percent
49.7%
46.7%
6,210
47.1%
48.3%
5,500
5,450
43.2%
4,500
5,000
Government
4,000
31.7%
3,850
29.2%
3,000
33.1%
3,500
33.8%
4,000
33.9%
Donors
2,000
10.9%
12.8%
2,167
17.2%
15.2%
890
9.8%
1,125
1,509
Fees
569
4.3%
450
4.8%
3.8%
540
4.3%
Contributions
540
6.0%
500
567
447
4.3%
1.4%
236
2.3%
325
2.8%
3.5%
Other
125
100.0%
10,361 100.0% 11,784 100.0% 12,604 100.0% 13,196 100.0%
9,055
Total
EXPENDITURES
24.8%
3,218
28.2%
3,345 29.0%
27.5%
2,466
2,900
28.5%
Personnel
2,346
11.7%
1,187
1,354
9.5%
11.7%
1,259
11.0%
Fringe benefits
876
10.3%
950
1,200
10.4%
678
6.7%
987
8.7%
567
5.7%
456
5.3%
Consultants
786
6.8%
890
798
8.0%
8.8%
889
7.8%
7.7%
Travel/perdiem
654
6.6%
566
5.0%
765
456
4.6%
543
5.3%
332
3.9%
Supplies
897
7.8%
10.2%
1,100
9.6%
987
9.9%
1,032
12.1%
1,032
Equipment
387
3.4%
3.0%
2.2%
345
3.5%
221
2.6%
345
221
Utilities
7.8%
6.2%
600
709
709
899
6.0%
7.0%
8.3%
709
Evaluation
678
5.9%
6.7%
888
7.8%
9.9%
678
990
678
8.0%
Vehicles
8.7%
876
7.6%
1,254
12.6%
976
9.6%
988
10.3%
Other costs
876
9,956 100.0% 10,159 100.0% 11,405 100.0% 11,532 100.0%
100.0%
Total
8,525
Module 8; Cost analysis; appendix D
72
Dummy table for Level 3 : Services & activities
Table 6A
Table 5A
PHC services & activity
costs
MANAGEMENT ACTIVITIES
Amount
Training
1,254.00
Supervision
899.00
Community org 1,432.00
MIS
554.00
Evaluation
366.00
Total
4,505 00
Percent
27.8%
20.0%
31.8%
12.3%
8.1%
100.0%
PHC SERVICES
ANC/TT
2,345.60
Family plan.
876.00
Growth mon/nutrit. 456.00
ORT/CDC
654.00
Child immun.
1,254.00
Water supply
2,278.00
Sanitation
221.00
Health ed.
709.00
Drug supply
336.00
Curative
1,548.00
Total
11,022.60
21.3%
7.9%
4.1%
5.9%
11.4%
20.7%
2.0%
6.4%
3.0%
14.0%
100.0%
Unit costs of PHC
services & activities
MANAGEMENT ACTIVITIES
Actual
Units Cost/Unit
Training
1,254.00
126.0
9.95
Supervision
899.00
45.0 19.98
Community org 1,432.00
16.0 89.50
MIS
554.00
14.0 39.57
Evaluation
366.00
2.0 183.00
Total
4,505.00 203.0 22.19
PHC SERVICES
ANC/TT
2,345.60
45.0 52.12
Family plan.
876.00
128.0
6.84
Growth mon/nut. 456.00 252.0
1.81
ORT/CDC
654.00
155.0
4.22
Child immun.
1,254.00 215.0
5.83
Water supply
2,278.00
6.0 379.67
Sanitation
221.00
5.0 44.20
Health ed.
709.00 588.0
1.21
Drug supply
336.00
25.0 13.44
Curative
1,548.00 876.0
1.77
Income Gen
345.00
15.0 23.00
Total
11,022.60 2,310.0
4.77
Module 8: Cost analysis; appendix D
73
Appendix E: Data entry spreadsheets
The disk that comes with this module includes a simple data entry
spreadsheet that runs on Lotus 1-2-3 or Quattro Pro. The file is
MOD8.WK1 for Lotus and MOD8.WQ1 for Quattro. If you have either
of these programs, simply load it into your computer and follow the
instructions. There are two screens of instructions, which are reproduced
below. There is also a data entry screen with illustrative expenditure entries.
That is also reproduced on the next page. The instructions describe how
to enter your data and how to sort and tabulate subtotals. The result of
the sorting and tabulations is also shown.
This is the first screen:
MODULE 8: Cost analysis worksheet (For Lotus 1-2-3)
Press Ctrl + — to go to the worksheet (to the right).
This is a simplified worksheet for entering income and expense data. It contains no macros
and is very easy to use.
Simply enter the date, check number (or cash, deposit, etc.), a description of the transaction,
the account code, and the amount.
Date
02/07/90
Check
#373
Description
Office expenses
Code
KCS
Amount
$185.38
Subtotal
After all of the data are entered, you can sort them by code and date. Simply press /, Data,
Sort, Go. After that, use the @SUM formula to add up subtotals for each code (e.g., travel,
personnel, etc). Or use a calculator to get the totals.
(PRESS Page Down for more)
Module 8: Cost analysis; appendix E
74
This is the second screen:
Use the worksheet at the right to enter your data. Simply type over the example or erase the
sample entries first. When you are done, save the worksheet under a different name.
HINT: Save your worksheet BEFORE you sort. That way you can keep your entries in
chronological order. After sorting, save the sorted file under a different name, or copy the
subtotals down to insert in the dummy tables (Appendix D).
You can also resort the data back to the original order, if you want. Simply change the sort
order: / Data, Sort, 1 st Key (change this to DATE), Ascending, 2nd Key (change this to CODE),
Ascending, Go.
NOTE: The 'Date' column in the worksheet must be formatted for dates. It is only formatted
to cell I57. Use the/, Range, Format, Date command to format more cells.
Module 8: Cost analysis; appendix E
75
41
This is a segment of the data entry worksheet (to the right of the instructions).
MODULE 8. Press HOME to go to the instructions.
Income & expense transactions 02-Feb-92 - KAJULU PHC: Clinic and outreach services
Account Codes used in this example:
1
3d
1U
□a
4
-S9
:3j
4
43
K - Kajulu
C = Clinical services 0 = Outreach
P = Personnel S = Supplies
1 = Income
D = Donor grants
T = Travel
Date
Check
Description
Code
Amount
02/07/90
#373
Office expenses
KCS
185.38
03/29/90
#376
Staff salaries
KOP
2,520.34
04/05/90
#380
Telephone and fax
KOD
170.18
05/06/90
#381
Staff salaries
KCP
2,990.63
05/13/90
#385
Photocopy
KCD
43.52
05/21/90
#387
Mail and postage
KCD
17.50
05/21/90
#387
Mail and postage
KOD
8.50
05/23/90
#391
Field worker travel
KOT
25.00
06/25/90
#393
MIS Software
KOD
140.17
06/25/90
#392
Mail and postage
KOD
10.60
07/18/90
#394
Mail and postage
KCD
6.30
07/18/90
#396
Medical supplies
KCS
127.00
07/18/90
#391
Fax
KCS
62.74
07/30/90
#398
Telephone
KOD
46.52
08/08/90
#399
Gasoline for motorbikes
KOT
26.02
09/24/90
#307
Mail and poslage
KCD
40.00
09/24/90
#307
Mail and postage
KOD
25.00
09/24/90
#395
Vehicle repair
KOT
3,996.97
10/11/90
#309
Telephone
KCD
15.00
10/13/90
#313
Office supplies
KOD
27.40
11/17/90
#314
Field worker travel
KOT
119.09
11/18/90
#311
Medicines
KCS
176.46
S = Service fees
D = Other direct costs
11/20/90
#317
Mail and postage
KCD
22.25
11/20/90
#316
Office supplies
KCS
32.24
12/04/90
#320
Gasoline for motorbikes
KOT
71.97
12/12/90
#321
Computer repair
KCD
145.78
12/14/90
#301
Service fees
IS
3,000.00
12/20/90
#115
AKF grant payment
ID
25,000.00
12/21/90
#302
Radio Shack supplies
KCS
01/17/91
#323
MCI Mail Dec
KCD
87.75
4fi
01/19/91
#325
Mail and poslage
KCD
49.40
01/19/91
#326
Computer purchase
KOD
2,543.29
^S
:Sj
01/20/91
#327
Telephone and fax
KOD
90 01
Jfi
27.01
Subtotal
76
This is the same worksheet after it has been sorted by CODES and subtotal calculated.
MODULE 8. Press HOME to go to the instructions.
Income & expense transactions 02-Feb-92 - KAJULU PHC: Clinic and outreach services
Account Codes used in this example:
K = Kajulu
C = Clinical services O = Outreach
P = Personnel S = Supplies
1 = Income
D = Donor grants
T = Travel
Date
Check
Description
Code
12/20/90
#115
AKF grant payment
ID
25,000.00
01/24/91
#133
CIDA grant payment
ID
15,000.00
12/14/90
#301
Service fees
IS
3,000.00
05/13/90
#385
Photocopy
KCD
43.52
05/21/90
#387
Mail and postage
KCD
17.50
07/18/90
#394
Mail and postage
KCD
6.30
09/24/90
#307
Mail and postage
KCD
40.00
10/11/90
#309
Telephone
KCD
15.00
20/11/90
#317
Mail and postage
KCD
22.25
S = Service fees
D = Other direct costs
Amount
12/12/90
#321
Computer repair
KCD
145.78
01/17/91
#323
MCI Mail Dec
KCD
87.75
01/19/91
#325
Mail and postage
KCD
49.40
05/06/90
#381
Staff salaries
KCP
2,990.63
02/18/91
#345
Mail and postage
KCP
2,456.00
02/07/90
#373
Office expenses
KCS
185.38
07/18/90
#396
Medical supplies
KCS
127.00
07/18/90
#391
Fax
KCS
62.74
11/18/90
#311
Medicines
KCS
176.46
11/20/90
#316
Office supplies
KCS
32.24
12/21/90
#302
Radio Shack supplies
KCS
27.01
02/15/91
#343
Medicines
KCS
184.50
04/05/90
#380
Telephone and fax
KOD
170.18
05/21/90
#387
Mail and postage
KOD
8.50
06/25/90
#393
MIS software
KOD
140.17
06/25/90
#392
Mail and postage
KOD
10.60
07/30/90
#398
Telephone
KOD
46.52
09/24/90
#307
Mail and postage
KOD
25.00
10/13/90
#313
Office supplies
KOD
27.40
01/19/91
#326
Computer purchase
KOD
2,543.29
01/20/91
#327
Telephone and fax
KOD
90.01
03/29/90
#376
Staff salaries
KOP
2,520.34
02/18/91
#344
Staff salaries
KOP
2,300.00
05/23/90
#391
Field worker travel
KOT
25.00
Subtotal
43,000.00
427.50
5,446.63
795.33
3,061.67
4,820.34
Module 8: Cost analysis; appendix E
77
Appendix F: Data analysis templates
The disk that comes with this module also includes several cost analysis
templates. These are dummy tables that are set up to produce various types
of analyses. All you have to do is enter your revenue and/or expenditure
data in one of these tables and the computer will instantly produce a variety
of tables and graphs. These are illustrated on the following pages. There
are three computer files, one for each level of analysis: MOD8 L1A,
MOD8 LIB, and MOD8 L3.. The diskette includes both Lotus 1-2-3
and Quattro Pro versions of the templates. The contents of these files are
all displayed in this appendix. Instructions for using the templates are given
on the following page and within each template.
Module 8 : Cost analysis ; appendix F
if
Level 1A cost analysis procedures
FILE: LEVEL 1A.WQ1
This program will produce a series of tables and graphs. All you need
to do is fill in three types of information in the table below:
1) the names of up to 5 revenue categories and up to 10 expense categories;
2) the actual revenues and expenses for each item; arid 3) the budgeted
amounts for each item.
The table includes illustrative names and figures to give you an idea of
what is needed. Just type over them to enter your own names and figures.
Some cells include formulas and are “protected” so that they are not written
over accidentally.
The information you provide will be transferred automatically to four
tables, which are located underneath the “input” table. To see the results,
just press Page Down. Each table includes instructions for viewing one or
more graphs, as well. Just follow the instructions to view the graphs.
m u « n w n n r? n rr
78
it m
PAGE DOWN TO ENTER INPUT DATA
A
B
C
GL Items
Actual
Budget
Government
4,500.00
4,500,00
Donors
3,000.00
3,000.00
umn A, actual expenses in
Fees
890.00
1,250.00
column B and budgeted
REVENUES
540.00
250.00
amounts in column C.
125.00
100.00
That's all you need to do.
Total
9,055.00
9,100.00
After entering the data,
EXPENDITURES
press Page Down to see the
results.
Personnel
345.60
2,245.00
Fringe benefits
876.00
800.00
Follow the instructions Io
Consultants
456.00
500.00
view graphs of the data.
Travel/per diem
654.00
450.00
To print the tables, press /,
Supplies
332.00
280.00
Print, Range, LEVEL1 (the
Equipment
1,032.00
900.00
name of the area to be
printed), Go.
Utilities
221.00
220.00
Evaluation
709.00
1,000.00
Vehicles
678.00
800.00
Other costs
876.00
1,000.00
Indirect costs
Total
if
345.00
500.00
8,524.60
8,695.00
Module 8: Cost analysis; appendix F
w
i
Contributions
Other
a n w n? ffl « ffl ir fi
Enter category names in col-
79
Table 1A : Total project revenues & expenditures
Revenues
9,055.00
Expenditures
8,524.60
Difference
530.40
Percent
5.9
To view the graph press: /, Graph, Name, Use, 1A
Module 8; Cost analysis; appendix F
80
Table 2A : Project revenues & expenditures, actual vs. budget
Revenues
Expenditures
Actual
9,055.00
8,524.60
Budget
9,100.00
8,695.00
Difference
(45.00)
(170.40)
Percent
-0.5
-2.0
To view graph: /, Graph, Name, Use, 2A
Module 8: Cost analysis; appendix F
81
Table 3A: Project revenues & expenditure, general ledger items
Project revenues by source
A
B
C
Amount
Percent
Government
4,500.00
49.7
Donors
3,000.00
33.1
Fees
890.00
9.8
Contributions
540.00
6.0
Other
125.00
1.4
Total
9,055.00
100.0
2,345.60
27.5
10.3
REVENUES
Project expenditures by category
EXPENDITURES
Personnel
Fringe benefits
876.00
Consultants
456.00
5.3
Travel/per diem
654.00
7.7
Supplies
332.00
3.9
Equipment
1,032.00
12.1
Utilities
221.00
2.6
Evaluation
709.00'
8.3
Vehicles
678.00
8.0
Other costs
876.00
10.3
8,524.60
1000
27.5%
Total
(Thousands)
To view graphs: /, Graph, Name, Use, (and then the following names)
For distribution of revenues : REV SOURCE
For distribution of expenditures : EXP CATEGORY
Module 8: Cost analysis; appendix F
82
Table 4A: Total project revenues & expenditures
Actual vs. budget: 19
REVENUES
Actual
Budget
Variance
Government
4,500.00
4,500.00
0.00
0
Donors
3,000.00
3,000.00
0.00
0
Percent
Fees
890.00
1,250.00
(360.00)
-40
Contributions
540.00
250.00
290.00
54
Other
125.00
100.00
25.00
20
Total
9,055.00
9,100.00
(45.00)
-0
4.3
EXPENDITURES
Personnel
2,345.60
2,245.00
100.60
Fringe benefits
876.00
800.00
76 00
8.7
Consultants
456.00
500.00
(44.00)
-9.6
Travei/per diem
654.00
450.00
204.00
31.2
Supplies
332.00
280.00
52.00
15.7
Equipment
1,032.00
900.00
132.00
12.8
Utilities
221.00
220.00
1.00
0.5
Evaluation
709.00
1,000.00
(291.00)
■41.0
Vehicles
678.00
800.00
(122.00)
■18.0
Other costs
876.00
1,000.00
(124.00)
-14.2
Indirect costs
345.00
500.00
(155.00)
-44.9
8,524.60
8,695.00
(170.40)
-2.0
Total
Actual vs. budgeted revenues
Actual vs. budgeted revenues
345 00
| 500.00
| 876 00
| 1.000.00
| 678.00
Vehicles
| 800.00
| 709.00
Evaluation
] 1,000 00
__ 1 221.00
Utilities
1 220.00
| 1.032.00
Equipment
] 900 00
___ J 332.00
Supplies
| 280.00
654 00
Travel/per diem
I 450 00
.......... 1 <56 00
Consultants
| 600.00
| 876 00
Fringe benefits
] 800 00
Indirect costs
Other costs
12,345.60
.......[2.245 00
Personnel
|Budget |
| AcIibI
(Thousands)
budget |
| Actual
Module 8: Cost analysis; appendix F
83
For graphs: press /, Graph, Name, Use, (then select one or more of the
following: REV_BUDG to compare actual and projected revenues.
EXP_BUDG to compare actual and projected expenditures.
Level IB cost analysis procedures — multiple periods
FILE: LEVEL1B.WQ1
This program will produce a series of tables and graphs. All you need
to do is fill in three types of information in the table p. 84:1) the names of
up to 5 revenue categories and up to 10 expense categories; 2) the actual
revenues and expenses for each item; and 3) budgeted amounts for each
item.
The table includes illustrative names and figures to give you an idea of
what is needed. Just type over them to enter your own names and figures.
Some cells include formulas and are "protected" so that they will not be
written over and erased accidentally.
The information you provide will be transferred automatically to four
tables, which are located underneath the "input table". To see the results
just press Page Down. Each table includes instructions for viewing graphs
that have been attached. Many of the graphs are inserted in the
spreadsheet. If you are using Quattro Pro, they should be visible. Other
wise, press F10 or follow the instructions to display them.
Enter data on the following table.
Module 8: Cost analysis; appendix F
1
co
4^
Module 8: Cost analysis; appendix F
«i>
teri
J
A
B
C
16
Gen ledger items
Year 1
17
REVENUES
Actual
Budget
Actual
Budget
Actual
Budget
Actual
Budget
Actual
Budget
18
Government
4,500.00
4.500.00
5.000.00
5,000.00
5,500.00
5,500.00
5,450.00
5,479.00
6,210.00
5,800.00
19
Donors
3,000.00
3,000.00
3,500.00
3,500.00
4,000.00
4,000.00
4,000.00
4,000.00
3,850.00
3,850.00
20
Fees
890.00
1,250.00
1,125.00
1,350.00
1,509.00
1,500.00
2,167.00
1,600.00
2,000.00
2,190.00
21
Contributions
540.00
250.00
500.00
600.00
450.00
600.00
540.00
600.00
569.00
600.00
22
Other
125.00
100.00
236.00
325.00
325.00
400.00
447.00
600.00
567.00
550.00
23
Total
9,055.00
9,100.00
10,361.00
10,775.00
11,784.00
12,000.00
12,604.00
12,279.00
13,196.00
12,990.00
D
E
F
Year 2
G
H
Year 3
1
Year 4
K
L
Year 5
24
EXPENDITURES
25
Personnel
2,345.60
2,245.00
2,466.00
2,678.00
2,900.00
3,200.00
3,218.00
3,300.00
3,345.00
3,400.00
26
Fringe benefits
876.00
800.00
950.00
900.00
1,187.00
800.00
1,259.00
1,300.00
1,354.00
1,500.00
27
Consultants
456.00
500.00
567.00
800.00
678.00
500.00
987.00
700.00
1,200.00
1,100.00
28
Travel/per diem
654.00
450.00
798.00
800.00
890.00
500.00
889.00
950.00
786.00
900.00
29
Supplies
332.00
280.00
456.00
600.00
543.00
280.00
566.00
600.00
765.00
600.00
30
Equipment
1,032.00
900.00
987.00
1,250.00
1,032.00
1,100.00
1,100.00
1,100.00
897.00
1,200.00
31
Utilities
221.00
220.00
345.00
280.00
221.00
450.00
345.00
300.00
387.00
400.00
32
Evaluation
709.00
1,000.00
600.00
800.00
709.00
1,000.00
709.00
800.00
899.00
675.00
888.00
800.00
678.00
900.00
1,000.00
33
Vehicles
678.00
800.00
990.00
700.00
678.00
800.00
34
Other costs
876.00
1,000.00
1,254.00
1,000.00
976.00
1,000.00
988.00
1,200.00
876.00
35
Indirect costs
345.00
500.00
543.00
500.00
345.00
500.00
456.00
500.00
345.00
500.00
36
Total
8,524.60
8,695.00
9,956.00
10,308.00
10,159.00
10,130.00
11,405.00
11,550.00
11,532.00
12,175.00
iSi
Jtl
n TT
o
F5>
/eJI
rai $ $ $
<t u’
□' a? x? j;
85
Table IB: Total project revenues & expenditures
Year 1
Year 2
Year 3
Year 4
Revenues
9,055.00
9,100.00
10,361.00
10,775.00
11,784.00
Expenditures
8,524.60
8,695.00
9,956.00
10,308.00
10,159.00
Difference
530.40
405.00
405.00
467.00
1,625.00
Percent
5.9%
4.5%
3.9%
4.3%
13.8%
Year 5
Project revenue & expenditure trends
Year 1 - Year 5
Revenues
Expenditures
To view the graph press: /, Graph, Name, Use, IB
Module 8: Cost analysis; appendix F
Budget
Difference
Percent
Year 4
Year 3
Year 5
Year 1
Year 2
9,055.00
10,361.00
11,784.00
12,604.00
13,196.00
9,100.00
10,775.00
12,000.00
12,279.00
12,990.00
-45.00
-414.00
-216.00
325.00
206.00
-0.5%
■4.0%
-1.8%
2.6%
1.6%
EXPENDITURES
Actual
8,524.60
9,956.00
10,159.00
11,405.00
11,532.00
Budget
8,695.00
10,130.00
11,550.00
12,175.00
Difference
-170.40
10,308.00
-352.00
29.00
-145.00
-643.00
-2.0%
■3.5%
0.3%
-1.3%
-5.6%
Percent
Project revenue & expenditure trends
-» REV-ACT
REV-BUDG -h- EXP-ACT
EXP-BUDG
To view graph: /, Graph, Name, Use, 2B.1
Module 8: Cost analysis; appendix F
$ 'll fl fl 0 fl ft
REVENUES
Actual
T
T
Table 2B: Project revenues & expenditures
Actual vs. budget
fl fl fl T*
86
87
Table 3B.1: Project revenues & expenditures
General ledger items
REVENUES
Government
Year 1
Donors
3,000
Fees
890
Contributions
54g
4 50q
Year 2
Year 3
Year 4
5,000
5,500
5,450
6,210
3,500
4,000
4,000
3,850
1,125
1,509
2,167
2,000
500
450
540
569
Year 5
Other
125
236
325
447
Total
q ncc
567
10,361
11,784
12,604
13,196
Personnel
Fringe benefits
2 346
g7g
2,466
2,900
3,218
3,345
950
1,187
1,259
1,354
Consultants
45g
567
678
987
1,200
Travel/per diem
g54
798
890
889
786
Supplies
332
456
543
566
765
Equipment
1,032
987
1,032
1,100
897
Utilities
221
345
221
345
387
Evaluation
709
600
709
709
899
Vehicles
57g
990
678
888
678
Other costs
37g
1,254
976
988
876
Indirect costs
345
543
345
456
345
8,525
9,956
10,159
11,405
11,532
EXPENDITURES
Total
Project expenditures by line item
Selected categories: Year 1 - Year 5
ns,aff
[
[
I, ,| Supplies
| Travel
] Fringes
[
| Consult
[_J Equip
lb view graph: /, Graph, Name, Use, 3B.1 (Revenues) or 3B.2 (Expenditures)
Module 8: Cost analysis; appendix F
Table 3B.2: Project revenues & expenditures
General ledger items
Year 5
Year 4
Year 3
Year 2
Year 1
Percent
REVENUES
Amount
Percent
Amount
Percent
Amount
Percent'
Amount
Percent
Amount
Government
4,500
49.7%
5,000
48.3%
5,500
46.7%
5,450
43.2%
6,210
47.1%
4,000
33.9%
4,000
31.7%
3,850
29.2%
15.2%
Donors
3,000
33.1%
3,500
33.8%
Fees
890
9.8%
1,125
10.9%
1,509
12.8%
2,167
17.2%
2,000
Contributions
540
6.0%
500
4.8%
450
3.8%
540
4.3%
569
4.3%
325
2.8%
447
3.5%
567
4.3%
125
1.4%
236
2.3%
Total
EXPENDITURES
9,055
100.0%
10,361
100.0%
11,784
100.0%
12,604
100.0%
13,196
100.0%
Personnel
29.0%
Other
2,346
27.5%
2,466
24.8%
2,900
28.5%
3,218
28.2%
3,345
Fringe benefits
876
10.3%
950
9.5%
1,187
11.7%
1.259
11.0%
1,354
11.7%
Consultants
456
5.3%
567
5.7%
678
6.7%
987
8.7%
1,200
10.4%
Travel/per diem
654
7.7%
798
8.0%
890
8.8%
889
7.8%
786
6.8%
Supplies
332
3.9%
456
4.6%
543
5.3%
566
5.0%
765
6.6%
Equipment
7.8%
Module 8: Cost analysis; appendix F
1,032
12.1%
987
9.9%
1,032
10.2%
1,100
9.6%
897
Utilities
221
2.6%
345
3.5%
221
2.2%
345
3.0%
387
3.4%
Evaluation
709
8.3%
600
6.0%
7.0%
709
6.2%
899
7.8%
Vehicles
678
8.0%
990
9.9%
709
678
6.7%
888
7.8%
678
5.9%
Other costs
876
10.3%
1,254
12.6%
976
9.6%
988
8.7%
876
7.6%
8,525
100.0%
9,956
100.0%
10,159
100.0%
11,405
100.0%
11,532
100.0%
Total
f| fi fi fi fi fi fl f] f] ® fl p
fi n fi fi fi .fi $ fi p
89
Level 3 Cost analysis procedures: Services/activities
FILE: LEVEL3.WQ1
This program will produce a series of tables and graphs. All you need
to do is fill in three types of information in the table below: 1) the names
of up to five management activities and up to ten PHC services; 2) the
actual expenses for each item; and 3) the number of "units" produced by
each activity and service.
The table includes illustrative names and figures to give you an idea of
what is needed. Just type over them to enter your own names and figures.
Some cells include formulas and are "protected" so that they are not written
over accidentally.
The information you provide will be transferred automatically to four
tables, which are located underneath the "input" table. To see the results,
just press Page Down. Each table includes instructions for viewing one or
more graphs, as well. Just follow the instructions to view the graphs.
PAGE DOWN TO ENTER INPUT DATA
A
B
C
Actual
Units
Training
1,254.00
126.0
Suprvsn
899.00
450
Com org
1,432.00
16.0
MIS
554.00
14.0
Eval
366.00
2.0
Enter category names in column
Total
4,505.00
203.0
A, actual expenses in column B,
ANC/TT
2,345.60
45.0
Fam plan
876.00
128.0
GM/nut
456.00
252.0
ORT/CDC
654.00
155.0
Child imm
Page Down to see the results. Fol
1,254.00
215.0
Water
low the instructions to view graphs
2,278.00
6.0
Sanitatn
221.00
5.0
Hlth ed
709.00
588.0
Drug supply
336.00
25.0
1,548.00
876.0
MGMT ACTIVITIES
PHC SERVICES
Curative
Income gen
Total
and units produced in column C.
345.00
15.0
11,022.60
2,310.0
Module 8: Cost analysis; appendix F
That's all you need to do.
After entering the data, press
of the data.
To print the tables, press /, Print,
Range, LEVEL1 (the name of the
area to be printed), Go.
90
Table 5A: PHC service & activity costs
Percent
MGMT ACTIVITIES
Amount
Percent
of Total
Training
1,254.00
27.8
8.1
Suprvsn
899.00
20.0
5.8
Com org
1,432.00
31.8
9.2
554.00
12.3
3.6
MIS
Eval
366.00
8.1
2.4
Total
4,505.00
100.0
29.0
ANC/TT
2,345.60
21.3
15.1
Fam plan
876.00
7.9
5.6
GM/nut
456.00
4.1
2.9
4.2
PHC SERVICES
ORT/CDC
654.00
5.9
Child imm
1,254.00
11.4
8.1
Water
2,278.00
20.7
14.7
Sanitatn
221.00
2.0
1.4
Hlth ed
709.00
6.4
4.6
Drug supply
Curative
336.00
3.0
2.2
1,548.00
14.0
10.0
Income gen
Total
GRAND TOTAL
345.00
3.1
2.2
11,022.60
100.0
71.0
__________ 15 527 SO
Management services
Eval
MIS
12.3%
31 8%
20.0%
Training
0
PHC services
8.1%
Com org
Suprvsn
___ino_
27.8%
(Thousands)
2
To view graphs: /, Graph, Name,
Use, (and then the following names)
For distribution of management costs: MGMT
For distribution of PHC service costs: PHC
Module 8: Cost analysis; appendix F
91
Table 6A: Unit costs of PHC services & activities
MGMT ACTIVITIES
Training
Actual
Units
1,254.00
126.0
Suprvsn
9.95
899.00
45.0
Com org
19.98
1,432.00
16.0
89.50
554.00
14.0
39.57
Eval
366.00
2.0
183.00
Total
4,505.00
203.0
22.19
MIS
Cost/unit
PHC SERVICES
ANC/TT
2,345.60
45.0
52.12
Fam plan
876.00
128.0
6.84
GM/nut
456.00
252.0
1.81
ORT/CDC
654.00
155.0
4.22
Child imm
1,254.00
215.0
Water
2,278.00
6.0
5.83
379.67
Sanitatn
221.00
5.0
44.20
Hlth ed
709.00
Drug supply
336.00
588.0
25.0
13.44
1,548.00
876.0
1.77
345.00
15.0
23.00
11,022.60
2,310.0
4.77
Curative
Income gen
Total
Unit costs: Management
1.21
Unit costs: PHC services
Total
Income gen
Curative
Drug supply
Hlth ed
Sanitatn
Water
Child imm
ORT/CDC
GM/nut
Fam plan
ANC/TT
0
200
Cost/unit
To view graphs: /, Graph, Name, Use, (and then the following names)
For distribution of management unit costs: M UNIT
For distribution of PHC unit costs: P UNIT
Module 8: Cost analysis; appendix F
400
93
References and bibliography
Articles
• Berman, PA., Cost analysis as a management tool for improving the
efficiency of primary care: Some examples from Java. International
Journal of Health Planning and Management. 1986.
• Levin, HM.. Cost-effectiveness: A primer. Beverly Hills: Sage Publications,
1983.
• Nelson, SL., Keeping the books: An income and expense recorder. Lotus,
May, 1990, pp. 52-55.
• Segall, M. Health sector planning led by management of recurrent
expenditures: An agenda for action research. International Journal of
Health Planning and Management, 1991, Vol. 6, pp. 37-75.
• Shepard, DS & Thompson, MS. First principles of cost-effectiveness
analysis in health, Public Health Reports, November-December, 1979.
• Thompson, MS. & Fortess, EE Cost-effectiveness analysis in program
evaluation. Evaluation Review, Vol. 4, No. 4, August, 1980.
• Warner, KE. & Luce, BL. Cost-benefit and cost-effectiveness analysis in
health care. Ann Arbor, MI: Health Administration Press, 1982.
Manuals and computer programs on cost analysis in PHC
• Creese, A & Parker, D (eds.). Costanalysisinprimaryhealthcare:A training
manual for programme managers. WHO/SHS/NHP/90. Geneva: World
Health Organization. 1990.
• WHO, EPICost, Geneva. The Expanded Programme on Immunization.
April, 1989.
• Reynolds, J & Gaspari, KC. Cost-effectiveness analysis. PRICOR mono
graph series: Methods paper 2. Bethesda: Center for Human Services,
1985.
• WHO, Estimating costs for cost-effectiveness analysis: Guidelines for man
agers of diarrheal diseases control programmes. CDD/SER/88.3 Geneva:
World Health Organization. 1988.
Module 8; Cost analysis; references
J
94
i
Acronyms and abbreviations
AIDS
AKCHP
AKF
AKHN
AKHS
AKU
ANC
ARI
CBR
CDR
CHW
CIDA
CMR
EPI
FP
GM
IEC
IMR
KAP
MIS
MMR
MOH
NGO
ORS
ORT
PHC
PHC MAP
PNC
PRICOR
SSS
STD
TB
TBA
TT
UNICEF
URC
WHO
Acquired immune deficiency syndrome
Aga Khan Community Health Programme
Aga Khan Foundation
Aga Khan Health Network
Aga Khan Health Services
Aga Khan University
Antenatal care
Acute respiratory infections
Crude birth rate
Crude death rate
Community health worker
Canadian International Development Agency
Child mortality rate
Expanded programme for immunization
Family planning
Growth monitoring
Information, education, communication
Infant mortality rate
Knowledge, attitudes, practice (behaviour)
Management information system
Maternal mortality rate
Ministry of health
Non-governmental organisation
Oral rehydration salts
Oral rehydration therapy
Primary health care
Primary Health Care Management Advancement Programme
Postnatal care
Primary Health Care Operations Research Project
Salt-sugar solution for diarrhoea
Sexually transmitted diseases
Tuberculosis
Traditional birth attendant
Tetanus toxoid
United Nations Children’s Fund
University Research Corporation
United States Agency for International Development
World Health Organization
□
£
s
B
3
D-
&'
V-
ii-.
ft'
fti-
ft'
ft".
Module 8: Cost analysis; acronyms
95
Glossary
Catchment (area): The geographic area surrounding one or more health
facilities. It refers to the population residing in that area, which includes
the programme’s target populations.
Community health worker (CHW): A person indigenous to the com
munity who provides selected basic and limited health services to members
of the community. Includes village health workers, health guides, and other
terms.
Cost analysis: The examination of expenditures to determine how
resources have been spent.
Costs(s): The value of a good or service, which is conceptually defined as
the value that could be gained by using the resource in a different way. For
example, the cost of drugs could be seen as the value of using the resources
to purchase some other commodity or service.
Average cost(s): The mean cost per unit of outcome, computed by
dividing the total cost by the number of units of outcome, also called
unit cost.
Capital cost(s): Costs of items which have a life expectancy of 1 year
or more, usually land, buildings, vehicles, and equipment. Also called
"Development Costs."
Development cost(s): See "Capital Costs".
Direct cost(s): Costs that are directly attributable to a programme,
project, product, or activity, such as the cost of gasoline used by project
vehicles for project work.
Economic cost(s): The "true" costs of a product or service, which is
the value of an alternative endeavour that might have been undertaken
with the same resources.
Financial cost(s): See "Monetary Cost(s)."
Fixed cost(s): Costs that do not vary with minor changes in pro
gramme size, such as those of a building, permanent staff, and medical
equipment.
Indirect cost(s): Costs that are not directly attributable to a pro
gramme, project, product or activity, but which are incurred in support
of those direct activities. Overhead, fringe benefits, general and admin
istrative expenses are typical indirect cost categories.
Monetary cost(s): Financial expenditures incurred in purchasing a
product or service.
Module 8: Cost analysis; glossary
96
Non-monetary cost(s): Resources (or inputs) to the programme that
do not have a monetary value. Examples are volunteer time, donated
space, and time and effort spent by clients to come to service sites.
Operating costs: See "Recurrent Cost(s)."
Recurrent cost(s): Costs of items that are purchased and used (or
replaced) within a period of 1 year or less, such as personnel salaries,
medicine and supplies, gasoline, and utilities. Also called Operating
Cost(s)."
True costs: See "Economic Cost(s)."
Unit costs: See "Average Cost(s)."
Variable cost(s): Costs that vary with programme size, such as drugs,
gasoline, and vehicle maintenance.
Coverage: The proportion of a target group that has received a service or
is protected from a disease or health problem.
Depreciation: The loss in value of an item over time, due to wear and
tear, obsolescence, or other reasons. Depreciation is usually computed on
an annual basis as Initial Cost/Years of Useful Life.
Effectiveness: The degree to which objectives (desired outcomes) are
achieved. For example, if a programme’s objective is to reach 10,000
women, it would be 90 percent effective if it reached 9,000 women.
Efficiency: The achievement of objectives without wasting resources; the
relationship of output to input. For example, in two programmes that use
the same amount of resources, programme A, which screens 10 moth
ers/day, is more efficient than programme B, which screens 5 mothers/day.
Expenditures: The amount of money, time, or effort spent.
Goals: The impact your programme hopes to have on health. Goal
statements specify improvement desired, target group, amount of change
expected and date for achievement.
Income: Funds received from contributions, donations, allotments, and/or
sales of products and services. Sometimes called "revenue."
Indicator: An indirect measure of an event or condition. For example, a
baby’s weight for age is an indicator of the baby’s nutritional status.
Inputs: Resources (human, materials and supplies, equipment and facilities,
information and money)
Management: The art and science of getting things done through people.
Objectives: The output and/or effect your PHC programme hopes to
have.
Outcomes: Results of your PFIC programme, including outputs, effects
and impacts.
Outputs: Products and services provided by a PHC programme.
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Effects: Changes in knowledge, skills, attitude, and behaviour (including
coverage) as a result of a PHC programme.
Impacts: Changes in health status, (mortality, morbidity, disability, fertility)
as a result of a PHC programme.
Primary health care: Essential health care, accessible at affordable cost
to the community and the country, based on practical, scientifically sound
and socially acceptable methods. It includes at least eight components:
health education, proper nutrition, basic sanitation, maternal and child
health care, immunizations, control of common diseases and injuries,
prevention of local endemic diseases, and essential drugs.
Processes: Activities or tasks carried out through the PHC programme.
Revenue: Money received. See "Income."
Shadow pricing: Estimates of the true costs of goods and services that
are not paid for. For example, subsidised and discounted products and
services, donated time and equipment, and other goods and services whose
true value is not the same as the listed value.
System: A set of discrete, but interdependent, components designed to
achieve one or more objectives.
Target group: Specific groups of people designated to receive a PHC
service, such as children under age 3.
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Module 8: Cost analysis; glossary
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PHC MAP MANAGEMENT COMMITTEE
Dr. Ronald Wilson • Aga Khan Foundation, Switzerland (Co-Chair)
Dr. Jack Bryant • Aga Khan University, Pakistan (Co-Chair)
Dr. William Steeler • Secretariat of His Highness the Aga Khan, France (Co-Chair)
Dr. Jack Reynolds • Center for Human Services, USA (PHC MAP Director)
Dr. David Nicholas • Center for Human Services, USA
Dr. Duane Smith • Aga Khan Foundation, Switzerland
Dr. Pierre Claquin • Aga Khan Foundation, Switzerland
Mr. Aziz Currimbhoy • Aga Khan Health Service, Pakistan
Mr. Kabir Mitha • Aga Khan Health Service, India
Dr. Nizar Verjee • Aga Khan Health Service, Kenya
Ms. Khatidja Husein • Aga Khan University, Pakistan
Dr. Sadia Chowdhury • Aga Khan Community Health Programme, Bangladesh
Dr. Mizan Siddiqi • Aga Khan Community Health Programme, Bangladesh
Dr. Krasae Chanawongse • ASEAN Institute for Health Development, Thailand
Dr. Yawarat Porapakkham • ASEAN Institute for Health Development, Thailand
Dr. Jumroon Mikhanorn • Somboon Vacharotai Foundation, Thailand
Dr. Nirmala Murthy • Foundation for Research in Health Systems, India
PHC MAP TECHNICAL ADVISORY COMMITTEE
Dr. Nirmala Murthy » Foundation for Research in Health Systems, India (Chair)
Dr. Krasae Chanawongse • ASEAN Institute for Health Development, Thailand
Dr. Al Henn • African Medical and Research Foundation (AMREF), formerly of
the Harvard Institute for International Development
Dr. Siraj-ul Haque Mahmud • Ministry of Planning, Pakistan
Dr. Peter Tugwell • Faculty of Medicine, University of Ottawa, Canada
Dr. Dan Kaseje • Christian Medical Commission, Switzerland, formerly of the
University of Nairobi, Kenya
KEY PHC MAP STAFF AT THE CENTER FOR HUMAN SERVICES
Dr. Jack Reynolds (PHC MAP Director)
Dr. Paul Richardson
Dr. David Nicholas
Dr. Wayne Stinson
Ms. Maria Francisco
Dr. Neeraj Kak
Ms. Lori DiPrete Brown
Ms. Pam Homan
Dr. Lynne Miller Franco
Ms. Mary Millar
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