THE PHC MAP SERIES OF MODULES, GUIDES AND REFERENCE MATERIALS Each module includes: a User's guide a Facilitator's guide computer programs Module 1 Assessing information needs Module 2 Assessing community health needs and coverage Module 3 Planning and assessing health worker activities Module 4 Surveillance of morbidity and mortality Module 5 Monitoring and evaluating programmes Module 6 Assessing the quality of service Module 7 Assessing the quality of management Module 8 Cost analysis Module 9 Sustainability analysis Manager's guides and references Better management: 100 tips Problem-solving Computers The computerised PRICOR thesaurus Production Managers: Ronald Wilson, Aga Khan Foundation, Geneva, and Thongchai Sapanuchart, Somboon Vacharotai Foundation, Bangkok Design & Layout: Helene Sackstein, France Desktop Publishing: Margaret M. Growe, Byte Type Services, 212 E. Rosemary Street, Chapel Hill, North Carolina, USA; Michael S. Sunggiardi, Batutulis Computer, Bogor, Indonesia, Somboon Vacharotai Foundation, Bangkok, Thailand Printing: Thai Wattana Panich, Bangkok, Thailand Published in 1993 by the Aga Khan Foundation USA, Suite 700, 1901 L Street N.W., Washington DC and the Aga Khan Foundation, P.O. Box 435, 1211 Geneva 6, Switzerland. Additional copies are available at the Aga Khan Foundation Canada in Toronto; Aga Khan Foundation United Kingdom in London; and AKF offices in Dhaka, Bangladesh; Delhi, India; Nairobi, Kenya; Karachi, Pakistan; Lisbon, Portugal; and Dar-es-Salaam, Tanzania; the Aga Khan University Faculty of Health Science in Karachi, Pakistan; the Somboon Vacharotai Foundation and the ASEAN Institute for Health Development in Thailand Cover photo: Cost analysis can help indentify the relative costs of the potential benefits of various interventions: here a young child in the Kisumu PHC Project area draws clean water from a protected spring in Kenya. Cover Photo by Jean-Luc Ray for AKF MODULE 8 COST ANALYSIS Jack Reynolds University Research Corporation ISBN : 1-882839-06-04 Library of Congress Catalog Number : 92-75467 Village life in Henan province, China, and a new communal tap. An adequate supply of clean water is an essential component of PHC Photo by Jean-Luc Ray for AKF 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. An AKF-sponsored pre-school in Zanzibar Photo by Jean-Luc Ray for AKF An overview of PHC MAP The main purpose of the Primary Health Care Management Advancement 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 Network<$FThe Aga Khan Health Network includes the Aga Khan Foundation, the Aga Khan Health Services, and the Aga Khan University, all of which are involved in the strengthening of primary health care.> and PRICOR<$FPrimary Health Care Operations Research is a worldwide project of the Center for Human Services, funded by the United States Agency for International Development.>. 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, Pakistan, 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 information that is needed in the traditional management cycle of planning-doing-evaluating. The relationship between the modules and this cycle is illustrated below. PHC MAP modules and the planning-evaluation cycle Managers can easily adapt these tools to fit local conditions. Both new and experienced programmers can use them. Government and NGO managers, management 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 instruments, 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. 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 HEALTH SERVICES Planning Personnel management Training Supervision Financial management Logistics management Information management Community organisation MANAGEMENT SERVICES Health and management 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 Several manager's guides supplement these modules. These are: Better Management: 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 PRICOR 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 The Primary Health Care Management Advancement Programme 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 Development under two matching grants to AKF USA. The first of these grants was "Strengthening the Management, Monitoring and Evaluation of PHC Programs in Selected Countries of Asia and Africa" (cooperative agreement no. OTR-0158-A-00-8161-00, 1988-1991); and the second was "Strengthening the Effectiveness, Management and Sustainability of PHC/Mother and Child Survival Programs in Asia and Africa" (cooperative agreement no. PCD-0158-A-00-1102-00, 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. 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 14 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 F. Data analysis templates 77 REFERENCES AND BIBLIOGRAPHY 93 ACRONYMS AND ABBREVIATIONS 94 GLOSSARY 95 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 BangladeshThe Asia Foundation (TAF) and 9 subgrantees; the Aga Khan Community Health Programme (AKCHP); the Social Marketing Company (SMC); Facilitator: Barkat-e-Khuda, URC Bangladesh Pakistan Aga Khan University, Karachi; Northern Pakistan PHC Project, Gilgit; Aga Khan Health Service, Karachi; Facilitator: Khatidja Husein, Aga Khan University Thailand Ministry of Public Health, Srisaket; Somboon Vacharotai Foundation (SVF); ASEAN Institute for Health Development (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 A community health nurse counsels a mother in an urban PHC project in Karachi, Pakistan. Photo by Aga Khan University Quick start Basic cost analysis Use this model if you want to do a quick analysis of your programme's 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 (MOD8_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. REVENUES, Actual, Budget, Variance, Percent Government, 4,500.00, 4,500.00, 0.00, 0 Donors, 3,000.00, 3,000.00, 0.00, 0 Fees, 890.00, 1,250.00, (360.00), -40 Subtotal, 8,390.00, 8,750.00, (360.00), -0.40 EXPENDITURES, , , , 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, , Total project revenues and expenditures: Last 12 months 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 expenditures, the percent differences, and construct a graph. This graph is named REV-BUDG. This graph is named EXP-BUDG. Total project revenues and expenditures: Last 5 years REVENUES, Year 1, Year 2, Year 3, Year 4, Year 5 Government, 4,500, 5,000, 5,500, 5,450, 6,210 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 Supplies, 332, 456, 543, 566, 765 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, 746 Percent, 14.6, 17.2, 15.9, 11.3, 6.2 To display a graph in Quattro, press / Graph, Name, Display, then select REV-BUDG or EXP-BUDG and press Enter. 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 Introduction What is cost analysis? Cost analysis is the examination of expenditures to determine 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 increased funds are justified. Revenue analysis can help them to identify where their primary support comes from, and whether each source is increasing or decreasing. 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 the trends in costs and revenues over time. How cost analysis can help you Monitoring 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 comparing 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. Efficiency 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. Planning 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. There is no single type of cost analysis and no standard purpose that fits all programmes. Like most other management 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. 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 information: the total amount of project revenues and expenditures for the period. The accompanying graph displays the same information. Table 1: Total project revenues & expenditures Figure 1: Total revenues & expenditures Revenues , 9,055.00 Expenditures, 8,524.60 Difference, 530.40 Percent , 5.9% 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 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 Figure 2: Total revenues & expenditures Actual vs. budget Description, Amount, Percent Personnel, 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 Table 3 and Figure 3 show the distribution of expenditures by (General ledger) items. Almost half of the expenditures 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. Table 3: PHC programme expenditures by line item Figure 3: PHC programme expenditures Desciption, North, Central, Variance*, Percent Personnel, 9,410, 12,400, -2,990, -31.8 Travel, 1,294, 2,232, -938, -72.9 Equipment, 350, , 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 * Variance = North - Central 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. 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 %. Table 4: Costs for two PHC subprojects by line item Figure 4 shows how a bar chart can portray this information. Figure 4: North and Central PHC expenditures Description, Antenatal care, Family Planning, Immunization, Training Personnel, 19,310, 2,400, 15,430, 6,886 Travel, 6,884, 1,532, 8,555, 7,090 Equipment, 950, , 4,790, 2,587 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 Total costs, 35,038, 7,860, 42,449, 22,162 * Variance = North - Central 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 Figure 5A: Selected PHC service/activity costs Cost of immunization component, 42,449, 1.90 per child immunized Number of children immunized, 22,343, cost of training programme, 22,162, = 14.03 per trainee Number people trained, 1,580, Figure 5B: Average (unit) costs 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 analysis involves a measure of output as well as of cost. The total cost of the service is divided by the total units of service. Two examples: 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. <$FIt can also be looked at the other way, that is, which approach can achieve the same level of output for the least expenditure of resources.> This module does not deal with cost-effectiveness or cost-benefit analyses, which are more complicated, and which are described in another publication. <$FSee, for example, Jack Reynolds and K. Celeste Gaspari, Cost-effectiveness analysis. PRICOR Monograph Series: Methods Paper 2. Bethesda: Center for Human Services, 1985.> 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. Table 6: 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 Equipment, 350, , 1,290, 587 Supplies, 5,680, 4,324, 4,653, 4,125 Other direct costs, 3,300, 2,382, 2,234, 3,124 Indirect costs, 4,214, 3,862, 3,467, 3,210 Total costs, 24,248, 25,200, 29,700, 30,832 Change from, , +952, +4,500, +1,132 previous year, , +3.9%, +17.9%, +3.8% * Variance = North - Central Figure 6: 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. Sometimes managers want to make projections of future costs. The analysis would look the same as in the last table 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 revenues, 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 PHC expenditures 1986 - 1989 , 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 Total, 23,998, 26,833, 31,756, 32,880 Change from, , +2,835, +4,923, +1,12 previous year , , +11.8%, +18.3%, +3.5% * Variance = North - Central Figure 7: PHC revenues by source 1988 - 1991Source, 1988, 1989, 1990, 1991 The table shows that total revenue has increased steadily each year. Government support (federal and state) has increased while donor support (USAID, AKF, CIDA) remained fairly steady. Service fees and contributions have increased each year, accounting for a small proportion of overall revenues. The graph shows the differences in funding between the first and last years (1988 and 1991). The final table (Table 8) compares revenues and expenditures for the past four years. This is often called a "break-even analysis." The table and graph show that expenditures exceeded revenues slightly in 1988 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 Revenues, 23,998, 26,833, 31,756, 32,880 Expenditures, 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% Figure 8: Break-even analysis 1988 - 1991 Figure 8 : Break-even analysis 1988 - 1991 Module 9 picks up where this analysis ends. It enables managers to make a number of projections of future revenues and expenditures, based on different assumptions of health needs, service mixes, costs, and resources. Some limitations of cost analysis 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 economists, the true cost of an activity is the value of the alternative endeavour that might have been undertaken with the same resources.<$FWarner, K & Luce, BL. Cost -benefit and cost-effectiveness analysis in health care. Ann Anbor, MI; Health Administration Press, 1982, p. 44.> Measuring the true cost of PHC is very difficult. It would require, among other things, estimating 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 approximation 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 cost 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. 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 person's costs among the project's 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 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 informative 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 manager's tool kit. A tea plantation in Sri Lanka where maternity facilities are at the disposal of female workers. Photo by J. Mohr for WHO1 How to use this guide This guide provides instructions for carrying out a cost analysis. By following the instructions and using the worksheets 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. How much detail do you need: Levels 1, 2 and 3 The module offers three levels of detail. Level 1: Basic cost analysis is the easiest and quickest to do. You follow a few simple steps, use the financial data from your accounting 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 assumptions, 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. Steps in a cost analysis 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 For those who want to conduct a more accurate or sophisticated cost analysis, Level 3: Detailed cost analysis 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, computer files 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 advanced 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. 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, and suggested procedures for allocating costs to various 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 programmes 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 programmers may find the steps and the "tools" particularly helpful and time-saving. 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) 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 sufficient 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 major effort to do so. 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_________________________________ 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 procedures to make sure that all expenses and revenues are coded as they occur. See Steps 4 and 5 for more information 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 narrative 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. 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 breakdown. 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/activities 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 Personnel Consultant services Fringe benefits Training/workshops Welfare, compensation PHC service supplies Travel per diem Evaluation Supplies Travel and transportation Commodities, capital equipment Administration Utilities Equipment Income Motor vehicles If your programme does not have a chart of accounts, you can find an example of a detailed list in the Appendices. 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 Supplies: Drugs, medicines Office supplies Health education supplies 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 Subprojects Orangi Essa Nagri Grax Azam Basti Chanesar Goth Baba Island Karimabad 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 Level 3. Typical services are shown below. GENERAL PHC household visits School health Health education Drug supply MATERNAL CARE Antenatal care Safe delivery Postnatal care Family planning CHILD CARE Breast feeding Growth monitoring Nutrition education Immunization Acute respiratory infection Diarrhoeal disease control Oral rehydration therapy COMMUNITY HEALTH Water supply Sanitation and hygiene CURATIVE CARE Treatment of minor ailments Malaria Tuberculosis Sexually transmitted diseases HIV/AIDS Disabilities Night blindness Anaemia Iodine deficiency 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. To do so requires that each expenditure be allocated to one or more services. This is often difficult and time-consuming. 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. Kisumu PHC Project Central North Kajulu Community process X X X Health education X X X Intersectoral collaboration X X X CHW/TBA/leaders training X X X School health X X X Childhood immunization X X X Nutrition and growth monitoring X X X Water source development X X X Ante/postnatal care X X X Communicable disease control X X X Income generating activities X X X 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 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. Step 3: Select the type(s) of tables and graphs to be produced (manager) The Introduction to this Module described seven types of cost analyses that could be performed. Those are summarised in the following worksheet. The (L1), (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 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 project's regular financial reports and annual budget. The analyst then computes the variance (difference between the budgeted and actual amounts) and the percentages. Table 1A : Total programme revenues and costs: 19__ Amount Total revenues 12,045,655 Total expenditures 11,876,634 Difference 169,021 Percent 1.42% Table 3A: PHC project revenues and expenditures: 19__ Actual vs. budgeted by general ledger line item REVENUES, Actual, Budget, Variance, Percent Federal, 1,500.00, 1,500.00, 0, 0 State, 1,250.00, 1,250.00, 0, 0 Donor, 1,500.00, 1,000.00, 500, 50 Service Fee, 366.50, 500.00, -143.50, -28.7 Contributions, 125.0, 500.00, -375.00, -75.0 Total, 4741.50, 4,750.00, -18.50, -0.4 EXPENDITURES, , , , Personnel, 2,345.60, 2,200.00, 145.6, 106.6 Travel, 345.00, 245.00, 100.00, 140.8 Supplies, 332.00, 400.00, -68.00, -83.0 Equipment, 456.00, 500.00, -44.00, -91.2 Other direct costs, 876.00, 700.00, 176.00, 125.1 Indirect costs, 345.00, 245.00, 100.00, 140.8 Total 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 tables also include graphs that can be generated automatically, 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 ___3. Distribution of costs & revenues by general ledger line item , 3A, 3B ___4. GLI revenues & expenditures compared with budgets , 4A, 4A1 LEVEL 2 TABLES: ANALYSIS BY PHC LOCATION OR FACILITY, , ___5. Total revenues & costs by location/facility 1B2, 1B1,2 ___6. Total revenues & expenditures compared with budgets, 2B2, 2B1,2 ___7. Distribution of revenues & costs by general ledger item, 3B2, 3B1,2 ___8. GLI revenues & expenditures compared with budgets , 4A2,3, 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, 6A1 ___11. Total service/activity revenues & expend. compared with budgets, 2B3, 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 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. 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 3B : 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 Equipment 350 1,290 587 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 Equipment 350 1,290 1,340 Table 3B : PHC costs by service: 1990 Description ANC H. ed. Child. imm. Nut./GM Personnel 9,410 12,400 14,600 16,896 Travel 1,294 2,232 3,456 2,890 Equipment 350 1,290 587 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 P, all supply costs S, and so forth. Assume that the Kisumu PHC project manager decides to analyse costs as shown below, by general ledger items foreach of the project's 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 SH = School health Expenditures CI = Childhood immunization P= Personnel NG = Nutrition and growth monitoring C= Consultants WS = Water source development T= Training AN = Ante/postnatal care S= Supplies CD = Communicable disease control E= Evaluation IN = Income generating activities T = 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 GLI codes, 3 location codes, and 11 service/activity codes. Numbers can be used instead of letters or in combination with letters. Numbers 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 three-letter 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 Kajulu/community process/personnel costs N-SH-T N. Nyakach/school health/training costs C-CI-F C. Nyakach/childhood immunization/service fees It is important that the codes are used in the same sequence, 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 KCP, and so on. A health education game created by the Aga Khan Foundation Canada. Photo by AKF 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 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 Code Description ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ For those who do not have a chart of accounts or codes for their general ledger items, Appendix C includes a checklist of common categories and illustrative codes - both letter and digit. The appendix also explains how to develop a coding system. Step 5: Allocate and code revenue and expense data (analyst) There are actually two steps that are carried out simultaneously. 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. 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. 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. 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 depreciation, and guidelines for how to allocate these costs over time. Non-monetary costs. If your project includes "in-kind contributions" (donated land, space, 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. Advanced features (Check if to be included) ___Indirect costs ___Depreciation ___Non-monetary costs ___Foreign exchange Foreign exchange. Some projects use imported items that are paid for with foreign exchange. 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 (Check if to be included) Direct allocation Indirect allocation Equal allocation Proportional allocation Costs to be allocated Personnel costs Supply costs Facility costs Equipment costs Vehicle costs Direct allocation When costs can be clearly attributed to a single category, then the coding is straightforward. Examples are vaccines for the immunization component at the Kajulu health centre; safe motherhood booklets for the antenatal clinic in Central Nyakach; and Salter scales for the growth monitoring component in North Nyakach. If you are doing a Level 1 analysis, then all of these costs would come under the GLI code for "supplies," (or commodities, 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 (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. ITEM CATEGORY CODE Level 1: GLI Vaccines Supplies S Booklets Supplies S Salter scales Supplies S Level 2: GLI & location Vaccines Kajulu/supplies KS Booklets C. Nyakach/supplies CS Salter scales N. Nyakach/supplies NS Level 3: GLI & PHC service Vaccines Imm/supplies CIS Booklets ANC/supplies ANS Salter scales Growth mon/supplies NGS GLI, location & PHC service Vaccines Kajulu/Imm/supplies KCIS Booklets C. Nyakach/ANC/supplies CANS Salter scales N. Nyakach/growthmon/supplies NNGS Equal allocation. 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 associated with the cost category. Estimating costs for cost-effectiveness analysis: Guidelines for managers of diarrhoeal diseases control programmes. CDD/SER/88.3 Geneva. World Health Organization: 1988, pp. 23-26.> Units of measure for allocating costs 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 Volume used Units used Facilities Space used 15% of clinic floor space x rent Time used Equipment Time used 20% of lab equipment x annual depreciation Vehicles Distance travelled 40% of total Km driven x vehicle operating costs 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: Services Time (%) Salary Code* ANC 70 10,430.56 KANP Immunization 20 2,980.16 KCIP Health education 10 1,490.08 KHEP Total 100 14,900.80 * The first letter is the location, the next two letters are the PHC service code, the fourth is the GLI code for personnel. Supplies Weight, volume, or number of units. Example: proportion of total ORS packets shipped to each health centre. Suppose that 4,000 packets were 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: Location Units (%) Cost Code* N. Nyakach 16.7 2,421.50 NCDS C. Nyakach 33.3 4,828.50 CCDS Kajulu 50.0 7,250.00 KCDS Total 100.0 14,500.00 * The first code is the location, the second is the service (communicable disease control) and the third is the GLI 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 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: 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 Services Time (%) Cost Code* Leader train. 50 140 CLTQ Health ed 50 140 CHEQ Total 100 280 * First code is location, second is service/activity, the third is the GLI code for equipment. Vehicles Distance or time. Example: proportion of total mileage used for outreach; 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 operating 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 development, 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: 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 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, consultant 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 percentages 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. Step 6: Enter data and compute costs (analyst) 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 simultaneously. 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 Other10%= 1,490.08 "Scabies" health action in school; Kisumu, Kenya. Photo by Jean-Luc Ray for AKF 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 10 446.08 21 Subtotal 185,334.40 142,755.28 28,680.88 13,898.24 Establishment Unit Rent 14,000.00 70 9,800.00 20 2,800.00 10 1,400.00 Utilities 1,344.86 70 941.40 10 268.97 10 134.49 Subtotal: 15,344.86 10,741.40 3,068.97 1,534.49 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 Con. non-phar. 237.00 75 177.75 25 59.25 - Subtotal 3,162.75 2,526.99 419.54 216.22 Transportation F & M 1,380.00 50 690.00 35 483.00 15 207.00 Collec. of sup. 680.10 70 476.07 15 102.02 15 102.01 Subtotal 2,060.10 1,166.07 585.02 309.01 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 personnel 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 CP, 316 for HE, and so on). Exhibit 2: Cost allocation, Mombasa, Kenya Percentage allocation of costs by PHC service PHC service/ CP HE IC LT SH CI NG WS AN CD IG Total 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 Health messages are frequently carried by word of mouth, such as in this village square in Portugal. Photo by Jean-Luc Ray for AKF Exhibit 3: Cost allocation, Mombasa, Kenya Allocation of expenditures by PHC service PHC service/activity , CP, HE, IC, LT, SH, CI, NG, WS, AN, CD, IG, Tot Personnel, 71.5, 36, 107, 50, 75, 75, 64.4, 93, 85.8, 36, 29, 715 Consultants, 0.0, 0, 0, 0, 0, 0, 1404, 0, 1404, 0, 0, 2807 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 Evaluation, 24.7, 0, 99, 165, 124, 99, 33, 74, 65.9, 41, 99, 824 Transport, 12.3, 6.2, 18, 8.6, 12, 12, 11.1, 16, 14.8, 6.2, 4.9, 123 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 quarter, 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 Subtotal 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 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 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 (MOD8DATA.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 Subtotal 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 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. Step 7: Analyse and interpret the revenue and cost data (analyst) Assuming that the dummy tables and graphs were selected 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. 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? Ask the same questions about each source of revenue. Compare revenues with expenses. Overall, how is the <%4>project doing? Are revenues meeting expenses? Summarise 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. Step 8: Present/report the cost analysis findings (analyst) 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: Stick to the objectives of the cost analysis. Answer the major questions first. Don't save them to the last. 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. Allow time for questions and discussion. Encourage discussion. Encourage action. 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. 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. Appendix A: Advanced features Concepts and procedures Concepts and procedures you should know for each level of analysis Level Concept 1 2 3 Module 9 Direct cost Indirect cost Capital cost Recurrent cost Depreciation Average (Unit) cost Marginal cost Fixed cost Variable cost Non-monetary cost Foreign exchange Inflation Present value Only it Capital expenditures are included in the analysis These items are all inclued 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 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 Direct Capital/development Indirect 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.Table A-1 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. It is important to keep in mind that each project will have to determine which costs it classifies as direct and indirect. There are no rigid rules as to which costs fall into each category. 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. TABLE A-1 Direct costs Amount Indirect cost Amount Community nurses 2,000 Accountant 500 Community health workers 3,500 MIS specialist 800 Travel, outreach 1,245 Property taxes 345 Vaccines 250 Insurance 125 Weighing scales 144 Utilities 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-1 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 centre's direct costs, as shown below. TABLE A-2 Category Amount Percent N.Nyakach C.Nyakach Kajulu Direct 7,139 3,200 2,131 1,808 Indirect 2,137 29,934 958 638 541 Total 9,276 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. 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 expectancy. 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 (depreciates) 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. TABLE A-3 Annualisation factors for detemining annual cost of facilities and equipment for different periods fo depreciation and interest rates Lifetime of assets (n) 5% 10% 15% 1 2 0.5378 0.5762 0.6151 3 0.3672 0.4021 0.4380 4 0.2820 0.3155 0.3503 5 0.2310 0.2296 0.2642 6 0.1970 0.2296 0.2643 7 0.1728 0.2054 0.2403 8 0.1547 0.1874 0.2229 9 0.1407 0.1736 0.2096 10 0.1295 0.1627 0.1993 11 0.1204 0.1540 0.1911 12 0.1128 0.1468 0.1849 13 0.1065 0.1408 0.1791 14 0.1010 0.1357 0.1747 15 0.0963 0.1315 0.1710 16 0.0923 0.1278 0.1679 17 0.0887 0.1247 0.1654 18 0.0855 0.1219 0.1632 19 0.0827 0.1195 0.1613 20 0.0802 0.1175 0.1598 21 0.0780 0.1156 0.1584 22 0.0760 0.1140 0.1573 23 0.0741 0.1126 0.1563 24 0.0725 0.1113 0.1554 25 0.0710 0.1102 0.1547 26 0.0696 0.1092 0.1541 27 0.0683 0.1083 0.1535 28 0.0671 0.1075 0.1531 29 0.0660 0.1067 0.1527 30 0.0651 0.1061 0.1523 Source : Levin, HM. Cost-Effectiveness : A Primer. (Beverly Hills: Sage Publication, 1983), p. 70 Annualisation formula where r = interest rate and n = lifetime of asset for depraciation. Wxample: an item costs 12,000, the interest rate is 15%, and the useful life is 7 years. Annual depreciation is. 2403 * 12,000 = 2,883.60 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. $10,000) divided by the number of children immunized (e.g. 5,000), which would produce the average cost per child immunized ($2). Non-monetary cost estimates and shadow pricing Many PHC programmes receive contributions of space, supplies, transportation, 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" donations, 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: 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. Criter for estomating cost of non-monetary contributions Item Criteria Personnel Current labour rate Supplies Current cost/unit Facilities Price square metre Equipment Current cost/unit Vehicles Current cost/unit 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 government's 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. Appendix B: Blank worksheets WORKSHEET FOR SPECIFYING OBJECTIVES User/audience: Manager Board of directors Central dorectors Donors Other: Purpose: Monitoring Efficiency Planning Other: Scope: Geographic area Programme/project/activity Time/duration Prospective or retrospective? Expenditues and or revenues Other: WORKSHEET FOR DECIDING WHAT TO COST Level 1: PHC programme (total cost) Level 1: Generral ledger items Level 2: Projects, sibprojects, lacations, sites, etc. level 3: PHC service component or management components WORKSHEET FOR SPECIFYING TYPES OF ANALYSES NEEDED 1. The tatal amount of revenues received and resources spent (L1) 2. Revenues and expenditures compared with budgets (L1) 3. The distribution of revenues and cost by general ledger line item (l1) 4. trends in revenues and cost over time (L1) 5. The distribution of revenues and cost by location or facility (L2) 6. The distribution of revenues and cost by PHC servoce or activity (L3) 7. Average cost (unit cost) (L3) CODING WORKSHEET Level 1: General Ledger items of PHC programme (total cost) code Description code Description code Description Level 2: Projects, subprojects, locatons, sites, etc. code Description code Description code Description Level 3: PHC service components or management components code Description code Description code Description WORKSHEET FOR SPECIFYING TABLES AND GRAPHS NEEDED (see Appendix D for examples of these tables) 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 ___3. Distribution of costs & revenues by general ledger line item , 3A, 3B ___4. GLI revenues & expenditures compared with budgets , 4A, 4A1 LEVEL 2 TABLES: ANALYSIS BY PHC LOCATION OR FACILITY, , ___5. Total revenues & costs by location/facility 1B2, 1B1,2 ___6. Total revenues & expenditures compared with budgets, 2B2, 2B1,2 ___7. Distribution of revenues & costs by general ledger item, 3B2, 3B1,2 ___8. GLI revenues & expenditures compared with budgets , 4A2,3, 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, 6A1 ___11. Total service/activity revenues & expend. compared with budgets, 2B3, 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 Advanced Features (Check if to be included) Indirect costs Depreciation Non-monetary costs Foreign exchange Cost Allocations (Check if to be included) (Costs be allocated) Direct allocation Personnel costs Indirect allocation Supply costs Equal allocation Facility costs Proportional allocation Equipment cost Vehicle costs Appendix C: General ledger item codes Instructions: Determine the level of detail you want your codt 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 projext, subproject, lacotion or site; c) PHC service componnent or activity; and d) general ledger accounts. In general, the more detail you, the greater the amount of work required to code each expenditure. The following example shows a relatively somple coding system that requires only three letters or digits for each expenditure. Account categories Coding examples Programme: NPPHC* Alphabetic Numeric Subprojects: Chitral C 100 Gigit G 200 Activities: Outreach O 10 Clinical C 20 Management M 30 Ledger accounts Personnel P 1 Travel & Per diem T 2 Commodities C 3 Other direct costs O 4 Indirect costs I 5 Examples: Chitral, outreach, travel =COT (or 112) Gilgit, management, indirect costs = (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. 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. Detailed activity and ledger account coding options 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. Activities Letter Digit PHC services P 100 Oral rehydration therapy PORT 101 Growth monitoring/nutrit. PGMN 102 Immunization PIMM 103 Maternal care (ANC+del) PMC 104 Family planning PFP 105 Health education PHE 106 Water & sanitation PWS 107 Curative services PCS 108 Tuberculosis PTB 109 Malaria PMAL 110 Acute respiratory infect. PARI 111 Management support services M 200 Planning MPL 201 Training MTR 202 Supervision MSUP 203 Financial MFI 204 Information management MIN 205 Community organisation MORG 206 Personnel management MPER 207 Research MRES 208 Ledger accounts Income I 300 Service fees IF 301 Sales of goods IG 302 Donor contributions ID 303 Contributions IC 304 Expenses (indirect)  E  400 Personnel EP Wages & salaries EPW 401 Fringe benefits EPF 402 Consultants EPC 403 Temporary labour EPT 404 Commodities EC 410 Drugs, medicines ECD 411 Office supplies ECS 412 Health supplies ECH 413 Other commodities ECO 414 Travel  ET 420 Local travel ETL 421 International ETI 422 Per diem ETP 423 Capital expenditures ECAP 430 Buildings ECAPB 431 Vehicles ECAPV 432 Medical equipment ECAPM 433 Audio-visual ECAPAV 434 Office equipment ECAPOF 435 Other direct costs EO 440 450 460 Advertising EOA 441 Bank charges EOBANK 442 Books, subscriptions, dues EOBOOK 443 Conferences  EOCON 444 Data processing  EODATA 445 Depreciation  EODEP 446 Equipment rental EOEQ 447 Freight EOFR 448 Insurance EOINS 449 Interest - mortgage EOINTM 450 Interest - other EOINTO 451 Laundry & cleaning EOLAUN 452 Legal & accounting EOLEG 453 Moving & storage EOMOV 454 Parking EOPARK 455 Participant training EOTR 456 Photocopying EOPH 457 Postage, courier EOPOST 458 Printing EOPRN 459 Recruiting & relocation EOREC 460 Rent EORENT 461 Repairs & maintenance EOREP 462 Security EOSEC 463 Stipends EOSTIP 464 Taxes EOTAX 465 Telephone, fax EOTEL 466 Utilities EOUTIL 467 Vehicle fuel, maintenance EOV 468 Videotaping EOVID 469 Subcontracts (Name: ) ESUB 500 Indirect Costs EI 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 Wages & salaries EIPW 611 Fringe benefits EIPF 612 Consultants EIPC 613 Temporary labour EIPT 614 Commodities EIC 620 Office supplies EICO 621 Other commodities EICC 622 Travel EIT 630 Local travel EITL 631 International EITI 632 Per diem EITP 633 Capital expenditures  EICAP 640 Buildings EICAPB 641 Vehicles EICAPV 642 Office equipment EICAPO 643 Other indirect costs EIO 650 660 670 Advertising EIOAD 651 Bank charges EIOBANK 652 Books, subscriptions,dues EIOBOOK 653 Conferences EIOCON 654 Data processing EIODATA 655 Depreciation EIODEP 656 Equipment rental EIOEQ 657 Freight EIOFR 658 Insurance EIOINS 659 Interest - mortgage EIOINTM 660 Interest - other EIOINTO 661 Laundry & cleaning EIOLAUN 662 Legal & accounting EIOLEG 663 Moving & storage EIOMOV 664 Parking EIOPARK 665 Participant training EIOTR 666 Photocopying EIOPH 667 Postage, courier EIOPOST 668 Printing EIOPRN 669 Recruiting & relocation  EIOREC 670 Rent EIORENT 671 Repairs & maintenance EIOREP 672 Security EIOSEC 673 Stipends EIOSTIP 674 Taxes EIOTAX 675 Telephone, fax EIOTEL 676 Utilities EIOUTIL 677 Vehicle fuel, maintenance EIOV 678 Videotaping EIOVID 679 Appendix D: Dummy tables WORKSHEET FOR SPECIFYING TABLES AND GRAPHS NEEDED (see Appendix D for examples of these tables) 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 ___3. Distribution of costs & revenues by general ledger line item , 3A, 3B ___4. GLI revenues & expenditures compared with budgets , 4A, 4A1 LEVEL 2 TABLES: ANALYSIS BY PHC LOCATION OR FACILITY, , ___5. Total revenues & costs by location/facility 1B2, 1B1,2 ___6. Total revenues & expenditures compared with budgets, 2B2, 2B1,2 ___7. Distribution of revenues & costs by general ledger item, 3B2, 3B1,2 ___8. GLI revenues & expenditures compared with budgets , 4A2,3, 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, 6A1 ___11. Total service/activity revenues & expend. compared with budgets, 2B3, 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 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_L1B, 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. Dummy tables for Level 1A - Single period Dummy tables for Level 1B - Multiple period Table 1b Total project revenues & expenditures Year 1 Year 2 Year 3 Year 4 Year 5 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% Table 2B Project revenues & expenditures Actual vs. budget Year 1 Year 2 Year 3 Year 4 Year5 Revenues Expend. Revenues Expend. Revenues Expend. Revenues Expend. Revenues Expend. Actual 9,055 8,524 10,361 9,956 11,784 10,159 12,604 11,405 13,196 11,532 Budget 9,100 8,695 10,308 10,130 12,279 11,550 12,990 12,175 Differebce (45) (170) (414) (216) 29 325 (145) 206 (643) Percent -0.5% .2.0% -4.0% -1.8% 0.3% 2.6% - 1.3% 1.6% -5.6% Table 3B.1 Project revenues & expenditures : General ledger items REVENUES Year 1 Year 2 Year 3 Year 4 Year 5 Government 4.500 5.000 5.500 5.450 6.210 Donors 3.000 3.500 4.000 4.000 3.850 Fees 890 1.125 1.509 2.167 2.000 Contributions 540 500 450 540 569 Other 125 236 325 447 567 Total 9.055 10.361 11.784 12.604 13.196 EXPENDITURES Personnel 2.346 2.466 2.900 3.218 3.345 Fringe benefits 876 950 1.187 1.259 1.354 Consultants 456 567 678 987 1.200 Travel/per diem 654 798 890 889 786 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 678 990 678 888 678 Other costs 876 1.254 976 988 876 Indirect costs 345 543 345 456 345 Total 8.525 9.956 10.159 11.405 11.532 Table 3B.2 Project revenues & expenditures : General ledger items Year 1 Year 2 Year 3 Year 4 Year 5 REVENUES Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Government 4,500 49.7% 5,000 48.3% 5,500 46.7% 5,450 43.2% 6,210 47.1% Donors 3,000 33.1% 3,500 33.8% 4,000 33.9% 4,000 31.7% 3,850 29.2% Fees 890 9,8% 1.125 10.9% 1,509 12.8% 2,167 17.2% 2,000 15.2% Contributions 540 6.0% 500 4.8% 450 3.8% 540 4.3% 569 4.3% Other 125 1.4% 236 2.3% 325 2.8% 447 3.5% 567 4.3% Total 9,055 100.0% 10,361 100.0% 11,784 100.0% 12,604 100.0% 13,196 100.0% EXPENDITURES Personnel 2,346 27.5% 2,466 24.8% 2,900 28.5% 3,218 28.2% 3,345 29.0% 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 1,032 12.1% 987 9.9% 1,032 10.2% 1,100 9.6% 897 7.8% Utilities 221 2.6% 345 3.5% 221 2.2% 345 3.0% 387 3.4% Evaluation 709 8.3% 600 6.0% 709 7.0% 709 6.2% 899 7.8% Vehicles 678 8.0% 990 9.9% 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% Total 8,525 100.0% 9,956 100.0% 10,159 100.0% 11,405 100.0% 11,532 100.0% Dummy table for Level 3: Services & activities Table 5A PHC services & activity cost MGMT ACTIVITIES Amount Percent Training 1.254,00 27,8% Suprvsn 899,00 20,0% Community org 1.432,00 31,8% MIS 554,00 12,3% Evaluation 366,00 8,1% Total 4.505,00 100,0% PHC SERVICES ANC/TT 2.345,60 21,3% Family plan 876,00 7,9% Growth mon/nutrit. 456,00 4,1% ORT/CDC 654,00 5,9% Child immun. 1.254,00 11,4% Water supply 2.278,00 20,7% Sanitation 221,00 2,0% Health ed. 709,00 6,4% Drug supply 336,00 3,0% Curative 1.548,00 14,0% Total 11.022,60 100,0% Table 6A Unit cost of PHC services & Activities MGMT ACTIVITIES Actual Units Cost/unit Training 1.254,00 126,0 9,95 Suprvsn 899,00 45,0 19,98 Com org 1.432,00 16,0 89,50 MIS 554,00 14,0 39,57 Eval 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 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 5,83 Water 2.278,00 6,0 379,67 Sanitatn 221,00 5,0 44,20 Hlth 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 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: MUDULE 8: Cost analysis worksheet (for Lotus 1-2-3) Press Ctrl + to go to the worksheet (to the right) This is simplified worksheet for entering income and expense data. It contains no macros and is very easy to use. Simply enter the data, check number (or cash, deposit, etc.), a description of the transaction, the account code, and the amount. Date Check Description Code Amount Subtotal 02/07/90 #373 Office expenses KCS $185.38 After all the data are entered, you can sort them by code and date. Simply press/, 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) 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 subtotal down to insert in the dummy tables (Appendix D) You can also resort the data back to the original order, if youwant. Simply change the sort order:/ Data 1stKey (change this to DATE), Ascending, 2ndKey (change this to CODE), Asending, Go. NOTE: The "Date" columm in the worksheet must be lomatted for dates. It is only fomatted to cell 157. Use the ?, Range, Format, Date command to format more cells. 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: K = Kajulu C = Clinical services O = Outreach, +, P = Personnel S = Supplies I = Income, D = Donor grants S = Service fees T = Travel D = Other direct costs Date, Check, Description, Code, Amount, Subtotal 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 postage, 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, 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, 27.01, 01/17/91, #323, MCI Mail Dec, KCD, 87.75, 01/19/91, #325, Mail and postage, KCD, 49.40, 01/19/91, #326, Computer purchase, KOD, 2,543.29, 01/20/91, #327, Telephone and fax, KOD, 90.01 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 I = Income D = Donor grants S = Service fees T = Travel D = Other direct costs Date, Check, Description, Code, Amount, Subtotal 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 , 43,000.00 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, 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, 427.50 05/06/90, #381, Staff salaries, KCP, 2,990.63, 02/18/91, #345, Mail and postage, KCP, 2,456.00, 5,446.63 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 , 795.33 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, 3,061.67 03/29/90, #376, Staff salaries, KOP, 2,520.34, 02/18/91, #344, Staff salaries, KOP, 2,300.00, 4,820.34 05/23/90, #391, Field worker travel, KOT, 25.00, 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_L1B, 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. 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; and 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. PAGE DOWN TO ENTER INPUT DATA A B C GL Items Actual Budget REVENUES, Government, 4,500.00, 4,500.00 Donors, 3,000.00, 3,000.00 Fees, 890.00, 1,250.00 Contributions, 540.0, 250.0 Other, 125.00, 100.0 Total, 9,055.00, 9,100.0 EXPENDITURES, , , , Personnel, 2,345.60, 2,245.0 Fringe benefits, 876.00, 800.00 Consultants, 456.00, 500.00 Travel, 654.00, 450.00 Supplies, 332.00, 280.00 Equipment, 1,032.00, 900.00 Utilities, 221.00, 220.00 Evaluation, 709.00, 1,000.00 Vehicles, 678.00, 800.00 Other costs, 876.00, 1000.00 Indirect costs 345.00, 500.00 Total 8,524.60, 8,695.00 Table 1A: Total project revenues & expenditures Revenues 9,055.00 Expenditures 8,524.60 Difference 530.40 Precent 5.9 To view the graph press: /, Graph, Name, Use, 1A 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 Table 3A: Project revenues & expenditure, general ledger items REVENUES,Amount, Percent Government, 4,500.00, 49.7 Donors, 3,000.00, 33.1 Fees, 890.00, 9.8 Contributions, 540.0, 6.0 Other, 125.00, 1.4 Total, 9,055.00, 100.0 EXPENDITURES, , , , Personnel, 2,345.60, 27.5 Fringe benefits, 876.00, 10.3 Consultants, 456.00, 5.3 Travel, 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 Total 8,524.60, 100.0 To view graphs: /, Graph, Name, Use, (and then the following names) For distribution of revenues : REV_SOURCE For distribution of expenditures : EXP_CATEGORY Table 4A: Total project revenues & expenditures Actual vs. budget: 19__  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 1B cost analysis procedures <197> multiple periods FILE: LEVEL_1B.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. Otherwise, press F10 or follow the instructions to display them. Enter data on the following table. A, B, C, D, E, F, G, H, I, J, K, L 16, Gen ledger items, Year 1, , Year 2, , Year 3, , Year 4, , Year 5, 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 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 33, Vehicles, 678.00, 800.00, 990.00, 700.00, 678.00, 800.00, 888.00, 800.00, 678.00, 900.00 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, 1,000.00 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 Table 1B: Total project revenues & expenditures Year 1 Year 2 Year 3 Year 4 Year 5 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% To view the graph press: /, Graph, Name, Use, 1B Table 2B: Project revenues & expenditures Actual vs. budget REVENUES Year 1 Year 2 Year 3 Year 4 Year 5 Actual 9.055,00 10.361,00 11.784,00 12.604,00 13.196,00 Budget 9.100,00 10.775,00 12.000,00 12.279,00 12.990,00 Difference -45,00 -414,00 -216,00 325,00 206,00 Percent -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 10.308,00 10.130,00 11.550,00 12.175,00 Difference -170,40 -352,00 29,00 -145,00 -643,00 Percent -2,0% -3,5% 0,3% -1,3% -5,6% To view graph: /, Graph, Name, Use, 2B.1 Table 3B.1 Table 3B.1: Project revenues & expenditures General ledger items  REVENUES Year 1 Year 2 Year 3 Year 4 Year 5 Government 4.500 5.000 5.500 5.450 6.210 Donors 3.000 3.500 4.000 4.000 3.850 Fees 890 1.125 1.509 2.167 2.000 Contributions 540 500 450 540 569 Other 125 236 325 447 567 Total 9.055 10.361 11.784 12.604 13.196 EXPENDITURES Personnel 2.346 2.466 2.900 3.218 3.345 Fringe benefits 876 950 1.187 1.259 1.354 Consultants 456 567 678 987 1.200 Travel/per diem 654 798 890 889 786 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 678 990 678 888 678 Other costs 876 1.254 976 988 876 Indirect costs 345 543 345 456 345 Total 8.525 9.956 10.159 11.405 11.532 To view graph: /, Graph, Name, Use, 3B.1 (Revenues) or 3B.2 (Expenditures) Table 3B.2: Project revenues & expenditures General ledger items Year 1 Year 2 Year 3 Year 4 Year 5 REVENUES Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Government 4,500 49.7% 5,000 48.3% 5,500 46.7% 5,450 43.2% 6,210 47.1% Donors 3,000 33.1% 3,500 33.8% 4,000 33.9% 4,000 31.7% 3,850 29.2% Fees 890 9,8% 1.125 10.9% 1,509 12.8% 2,167 17.2% 2,000 15.2% Contributions 540 6.0% 500 4.8% 450 3.8% 540 4.3% 569 4.3% Other 125 1.4% 236 2.3% 325 2.8% 447 3.5% 567 4.3% Total 9,055 100.0% 10,361 100.0% 11,784 100.0% 12,604 100.0% 13,196 100.0% EXPENDITURES Personnel 2,346 27.5% 2,466 24.8% 2,900 28.5% 3,218 28.2% 3,345 29.0% 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 1,032 12.1% 987 9.9% 1,032 10.2% 1,100 9.6% 897 7.8% Utilities 221 2.6% 345 3.5% 221 2.2% 345 3.0% 387 3.4% Evaluation 709 8.3% 600 6.0% 709 7.0% 709 6.2% 899 7.8% Vehicles 678 8.0% 990 9.9% 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% Total 8,525 100.0% 9,956 100.0% 10,159 100.0% 11,405 100.0% 11,532 100.0% Level 3 Cost analysis procedures: Services/activities FILE: LEVEL_3.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 MGMT ACTIVITIES Actual Units Training 1.254,00 126,0 Suprvsn 899,00 45,0 Com org 1.432,00 16,0 MIS 554,00 14,0 Eval 366,00 2,0 Total 4.505,00 203,0 PHC SERVICES 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 1.254,00 215,0 Water 2.278,00 6,0 Sanitatn 221,00 5,0 Hlth ed 709,00 588,0 Drug supply 336,00 25,0 Curative 1.548,00 876,0 Income gen 345,00 15,0 Total 11.022,60 2.310,0 Table 5A: PHC service & activity cost 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% MIS 554,00 12,3% 3,6% Eval 366,00 8,1% 2,4% Total 4.505,00 100,0% 29,0% PHC SERVICES 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% ORT/CDC 654,00 5,9% 4,2% 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 336,00 3,0% 2,2% Curative 1.548,00 14,0% 10,0% Income gen 345,00 3,1% 2,2% Total 11.022,60 100,0% 71,0% GRAND TOTAL 15.527,60 100,0% To view graphs: /, Graph, Name, Use, (and then the following names) For distribution of management costs: MGMT For distribution of PHC service costs: PHC Table 6A: Unit costs of PHC services & activities MGMT ACTIVITIES Actual Units Cost/unit Training 1.254,00 126,0 9,95 Suprvsn 899,00 45,0 19,98 Com org 1.432,00 16,0 89,50 MIS 554,00 14,0 39,57 Eval 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 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 5,83 Water 2.278,00 6,0 379,67 Sanitatn 221,00 5,0 44,20 Hlth 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 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 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.). Cost analysis in primary health care: 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 monograph series: Methods paper 2. Bethesda: Center for Human Services, 1985. WHO, Estimating costs for cost-effectiveness analysis: Guidelines for managers of diarrheal diseases control programmes. CDD/SER/88.3 Geneva: World Health Organization. 1988. Acronyms and abbreviations AIDS Acquired immune deficiency syndrome AKCHP Aga Khan Community Health Programme AKF Aga Khan Foundation AKHN Aga Khan Health Network AKHS Aga Khan Health Services AKU Aga Khan University ANC Antenatal care ARI Acute respiratory infections CBR Crude birth rate CDR Crude death rate CHW Community health worker CIDA Canadian International Development Agency CMR Child mortality rate EPI Expanded programme for immunization FP Family planning GM Growth monitoring IEC Information, education, communication IMR Infant mortality rate KAP Knowledge, attitudes, practice (behaviour) MIS Management information system MMR Maternal mortality rate MOH Ministry of health NGO Non-governmental organisation ORS Oral rehydration salts ORT Oral rehydration therapy PHC Primary health care PHC MAP Primary Health Care Management Advancement Programme PNC Postnatal care PRICOR Primary Health Care Operations Research Project SSS Salt-sugar solution for diarrhoea STD Sexually transmitted diseases TB Tuberculosis TBA Traditional birth attendant TT Tetanus toxoid UNICEF United Nations Children's Fund URC University Research Corporation USAID United States Agency for International Development WHO World Health Organization 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 community 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 programme size, such as those of a building, permanent staff, and medical equipment. Indirect cost(s): Costs that are not directly attributable to a programme, project, product or activity, but which are incurred in support of those direct activities. Overhead, fringe benefits, general and administrative expenses are typical indirect cost categories. Monetary cost(s): Financial expenditures incurred in purchasing a product or service. 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 mothers/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 PHC programme, including outputs, effects and impacts. Outputs: Products and services provided by a PHC programme. 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. 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.Neeraj Kak Dr. Paul Richardson Ms. Lori DiPrete Brown Dr. David Nicholas Ms. Pam Homan Dr. Wayne Stinson Dr. Lynne Miller Franco Ms. Maria Francisco Ms. Mary Millar