Cost Analysis
What is Cost Analysis?
It is clear to many of us that prevention programs are a sound investment in the health and well-being of children, and families, and the broader community. What’s less clear, however, is the actual economic impact of child abuse and neglect prevention. Cost analysis (CA) is used to accurately identify the full cost of providing a service, offering an opportunity to answer questions such as:
- What are the true costs of prevention programs, and the benefits?
- How do costs compare to other interventions with similar goals?
- What costs are we avoiding down the road by doing prevention work now?
In its simplest forms, CA provides an accurate estimate of the cost of delivering services, incorporating direct and indirect costs and a measure of the reach of the service, such as numbers of families served. More sophisticated analyses delve into cost avoidance and return on investment by comparing the cost of delivering services to the cost of not preventing undesirable outcomes such as child abuse and neglect.
CA results can assist in assessing program efficiency and guide strategic decision-making. In addition, CA can demonstrate a program’s value to the community and other stakeholders in economic terms and assist in advocating for continued or expanded funding.
Friends Resources in Cost Analysis:
In 2015, the University of Kansas Center for Public Partnerships and Research (KU-CPPR) interviewed ten Community-Based Child Abuse Prevention (CBCAP) state leads to better understand the use of CA in CBCAP programs. The substance of the interviews shed light on both the challenges and potential benefits of CA for CBCAP programs and served as a basis for the series of Practitioner’s Guides to Cost Analysis. Feedback from state leads revealed roadblocks that have kept them from diving deeper into CA. In order to speak to these specific challenges, The Practitioner’s Guide to Cost Analysis First Steps is designed to assist those preparing to implement a CA model and offer action steps to avoid common pitfalls associated with implementing CA.
A Three-Part Framework
This “First Steps” guide is divided into three essential focus areas. For each section we present an overview of considerations followed by suggestions for action steps. Companion briefs associated with each step of the framework are linked below.
Creating Stakeholder Buy-In is essential from the onset to ensure high-quality data. Education about CA as an evaluation tool is important in building the confidence of all stakeholders. In most cases, garnering support will involve alleviating concerns common to any new model requiring adjustments to reporting standards and methods, including impact on services, data usage, and resources required.
Data Collection and Processing can present a persistent challenge, especially if not well-planned. Use existing data sources and systems wherever possible, and make strategic choices regarding new data collection.
Communicating and Using Results is perhaps the most crucial piece of the puzzle. In addition to its utility as a messaging tool, CA has strong evaluative applications, particularly across programs. Effective communication of cost analysis results to legislators, public officials, executives, media, and the community is important for the advocacy of prevention programs.
In the spring of 2017, FRIENDS, in conjunction with KU-CPPR, released the Practitioner’s Guide to Cost Analysis, Part 2: Conducting your first cost analysis. This guide provides ideas on how to approach Cost Analysis for your program or agency based on the data you have available. The guide includes a readiness assessment to help you understand the steps that need to be taken and costing templates to help you collect and analyze your data to determine the cost per family to deliver services. There are two versions of the costing templates, and while both are the same in substance, they provide different formats to collect the data:
If you are a State Lead Agency for CBCAP and interested in implementing the framework or need technical assistance in using either Guide, contact your TA Coordinator.