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Understanding Cost Effectiveness Analysis

Cost-effective analysis measures the benefits of a program against its costs to identify the most effective option for the lowest investment. Cost accounting analysis tracks expenses to determine unit costs and supports planning, controlling, and pricing of services. Cost analysis is used for calculating service costs, prioritizing resources, controlling expenses, raising funds, identifying cost-effective strategies, and revealing unexpected costs.

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Rutika Patil
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12 views7 pages

Understanding Cost Effectiveness Analysis

Cost-effective analysis measures the benefits of a program against its costs to identify the most effective option for the lowest investment. Cost accounting analysis tracks expenses to determine unit costs and supports planning, controlling, and pricing of services. Cost analysis is used for calculating service costs, prioritizing resources, controlling expenses, raising funds, identifying cost-effective strategies, and revealing unexpected costs.

Uploaded by

Rutika Patil
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

COST EFFECTIVE

analysis
It is a method in which the benefit or the outcome is
measured in terms of results achieved and compared with
the cost
Outcome of the programme is expressed in terms of results
achieved
Programme that is most effective for the lowest investment is
regarded as the best one
eg. by vaccination how many lives have you saved
COST ACCOUNTING
analysis
It is a simple method of keeping the cost of all the things in such a way that you can
determine the unit cost of the service. You can calculate the cost for each purpose
or activity and its sub component
The cost accounting method provides basic data on cost-structure of the
programme
Details of cost incurred for different purposes are kept
Cost-accounting has three purposes - Controlling cost; Planning and allocation of
human and financial resources and Pricing of cost reimbursement
e.g. to conduct a training, the expenses incurred will be travel allowance, food,
honorarium for resource persons, stationery and training material
USES OF
cost analysis
Calculating the cost of service

By keeping a record of the costs incurred and the number of people a project has served; the
cost for providing a service can be worked out

Settling priorities
The managers can use cost information in designing programmes and in budgeting and
allocating funds to get the most out of their resources

Cost controlling
If resources are limited, you can identify which activity is costing more and whether you can
reduce the cost of that activity or stop that activity without affecting the effectiveness of the
programme
Raising funds
With the estimated/actual data on cost incurred and the benefits/effectiveness of the
programme, a manager can convince the policy makers and funders to invest in a particular
project

Identifies a cost-effective programme


Which strategy is more cost-effective can be identified. For eg. whether having specialized
STI clinics for treatment of STI versus integrating in general services or involving private
practitioners

Reveals unexpected costs


Hiring a professional counseller may be more cost-effective than the community health
workers because of the cost involved in training, supervision and lower patient load per
worker

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