Module 8 Facilitator's Guide_Cost Analysis

8/7/2019 Module 8 Facilitator's Guide_Cost Analysis

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THE PHC MAP SERIES OF MODULES. GUIDESAND REFERENCE MATERIALSEach module includes:o a User's guide. a Facilitator's guide. computer programsModule 1 Assessing information needsModule 2 Assessing community health needs and coverageModule 3 Planning and assessing health worker activitiesModule 4 Surveillance of morbidity and mortalityModule 5 Monitoring and evaluating programmesModule 6 Assessing the quality of serviceModule 7 Assessing the quality of managementModule 8 Cost analysisModule 9 Sustainability analysisManager's guides and referenceso Better management 100 tipsr Problem-solving. Computerso The computerised PRICOR thesaurusProduction Managers: Ronald Wilson, Aga Khan Foundation, Geneva, andThongchai Sapanuchart, Somboon Vacharotai Foundation,BangkokDesign & Layout: Helene Sackstein, FranceDesktop Publishing: Marilyn J. Murphy, suracha suntarasut, somboon Vacha-rotai Foundation, Bangkok, Thailand and Atthapon Thnoi,

Dept. of Medical Sciences, ThailandFirst Printing: In 1993 by Thai Wattana Panich, Bangkok, Thailandsecond Printing: ln 1997 by Veteran organization Printing co,Ltd, ThailandPublished by the Aga Khan Foundation USA, Suite 700,1901 L Street N.W., rilhshingtonDC., USA Additional copies are available at the Somboon \hcharotai Foundatior\ 101Boromratchonanee Road, Talingchar\ Bangkok l'0170, Thaland Fax. (621M*ffiz


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ISBN:1Library# -882839-r4-5of Congress Catalog Number: 92-75474


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Dedicated toDr. Duane L. Smith (7939-7992) ,Dr. Williqm E. Steeler (1948-7992)and all other health leaders, mano.gers and workerswho follow their example in the effort to bring qtality healthcare to all in need.


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The Primary Health Care Management AdvancementProgramme has been funded by the Aga Khan FoundationCanada, the Commission of the European Communities,the Aga Khan Foundation U.S.A., the Aga KhanFoundation's head office in Geneva, the Rockefeller Foun-dation, the Canadian International Development Agency,Alberta Aid, and the United States Agency for Interna-tional Development under two matching grants to AKFUSA. The first of these grants was, "Strengthening theManagement, Monitoring and Evaluation of PHC Pro-grams in Selected Countries of Asia and Africa" (cooper-ative agreement no. OTR-0158-A-00-8161-00, 1988-l99L); and the second was "Strengthening the Effective-ness, Management and Sustainability of PHC,/Mother andChild Survival Programs in Asia and Africa" (cooperativeagreement no. PCD-0158-A-00-1102-00, L99L-L994).The development of Modules 6 and7 was partially fundedthrough in-kind contributions from the Primary HealthCare Operations Research project (PRICOR) of the Centerfor Human Services under its cooperative agreement withusArD (DSPE-6920-A-00-1048-00).This support is gratefully acknowledged. The viewsand opinions expressed in the PHC MAP materials arethose of the authors and do not necessarily reflect thoseof the donors.AIIPHC MAP material(written and computer files)isin the public domain and may be freely copied anddistributed to others.


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ContentsFOREWORD . ........1SESSION L INTRODUCTION AND OVERVIEW ... ......7

Tiansparencies8-1: Workshop objectives .......158-2: Cost analysis is... ....168-3: Costanalysisinformation.. ......L78-4: Monitoring . ........188-5: Efficiency . .. ..198-6: Planning .....208-7: PHC programme costs by line item .....2L

SESSION 2: MAKE DECISTONS (STEPS 1, 2 AND 3) .. . . ... .. ..23liansparencies8-8: Session2:Ob1ectlves..... ........298-9: Steps in cost analysis ......30

8-10: Determining the scope .....31SESSION 3: CODE AND ALLOCATE COSTS(STEPS4ANDs) ....37'liansparencies

8-11: Session 3: Objectives .. . . . . .438-12: Advanced features.... .....448-13: Cost allocation .. ....458-14: Units of measure for allocating costs . . ..468-15: Retrospective allocation techniques .....47

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SESSION 4: ENTER, ANALYSE AND REPORT DATA(srEPs 6,7 AND 8) . . . .. . ..49'liansparency8-16: Session 4: Objectives . .....53


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ForewordWhat is the purpose of the Facilitatorb guide?The Facilitator's guide contains a suggested workshop design for use byindividuals who wili help PHC managers and staff learn how to use thePrimary Health care Management Advancement Programme (PHC MAP)series. Thereis a Facilitator's guide for.each module in the PHC MAP series.What information does it contain?

Each Facilitator's guide contains instructions for conducting a workshopon one of the modules in the PHC MAP series using the informationcontained in the User's guide.The instructions are irranged in one to two hour sessions. The numberof sessions depends on the amount of information and,/or the number ofsteps contained in the User's guide. The first page of each session lists,nriion objectives, major topic headings, time required, and materials andequipmeni. The following pages describe the instructional activities inoutline form.The outline is divided into two columns. The right-hand columnindicates what the facilitator says or does to conduct the session' Theleft-hand column lists the handouts, overhead transparencies, or othermaterials needed to support the activity. Copies of these materials, suitablefor duplication, appeaiit tn" end of the session in which they are first used'Some transparencies are used in more than one session'How are the workshoPs organised?The first session of each workshop contains activities designed tointroduce the PHC MAP series and explain its importance to PHCprogrammes, present an overview of the workshop, explain the purpose ofih"--odul",'review specific terms or concepts used in the module, and

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acquaint the participants with the organisation and content of the User'sguide.The final session of each workshop contains activities designed to reviewkey points of the user's guide, if appropriate, help participants prepare anaction plan, and brings the workshop to a formalconclusion. The jessionsin between present the steps required to accomplish the purpose of themodule and provide an opportunity for participants to apply those stepsto their own programmes.Each workshop is designed to be given on consecutive days, unintei-rupted except for breaks, meals, and rest, if the workshop is lbnger thanone day. It is recognised, however, that situations vary and the pHc MApmodules will be used singly or in combination by individuals and or-ganisations in the field and on university campuses. Therefore, it isexpected that the workshops described in the Facilitator's guides will beadapted to fit a range of circumstances. Indeed, those who iacilitate pHCMAP workshops are encouraged to make adaptations to meet the needsof participants andlor specific PHC.programmes.

Who can be a facilitator?Ideally, the person who serves as facilitator has training and experiencein the fields of public health, management, planning, and evaluation, as well

as sampling and survey design. It is recommendedthat this person also beskilful in working with small groups.The facilitator should be someone from outside the pHC programme,perhaps from another agency or a university. As a person wiih no direciinterest in the programme, the facilitator can be neutral in disagreementsthat may arise and help the-group members resolve an issue Jblectively.Having an.outside person as facilitator also allows the programme directo-r,who usually has a leadership role, to contribute his oi hei knowledge andexperience as a full participant in the work of the group.It is also recommended that a facilitator have i fuli set of pHC MApUser's guides and Facilitator's guides. It is sometimes necessary, in thecourse of completing one module, to reler to information in anothei module.Who should participate in the workshop?__ _lh" primary audience for the PHc MAp series is the team that managesPHC programmes or other population-based health programmes in eitherthe public or private sector. An example of apHC maiagement team inthe public sector is the core staff of I district ranging fiom 100,000 to300,000 in size of population served.

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3An example oI a PHC management team in the private sector is thecore staff of an NGO that provides PHC services to a specific populationin a given geographic area. The average size oI the service population mayrange from 40,000 to 60,000, but may be as small as 10,000 or more than

100,000. In either case, the management team should have:. the knowledge and skills needed to complete the steps in the module. the time and resources required to collect and analyse the required data. the authority to plan and implement improvements in managementsystems and procedures based on this analysis.If feasible, teams from several districts or from several PHC programmeswithin a given NGO, may work simultaneously with one facilitator to

complete a module. It is recommended that one facilitator work with nomore than four teams or 20 people at one time.What does the facilitator do?Understands the needs of participants. If the facilitator is workingwith one PHC programme, the most efficient way to gather informationabout participants and the programme in which they work is to meet withthe PHC director to determine:. the nature of the PHC programme (services provided, size and descriptionof area served, number and type of facilities, number and qualificationsof staff, community involvement, computer capability, strengths, majorproblems, etc.). if information needs have been clearly identified. previous staff training in management information systems or relatedtopics. resources available for training (time, space, equipment). possibility for subsequent technical assistance to workshop participants.

Understands the content of Module 1. Read the User's guide andFacilitator's guide for Module L and consider options for workshop delivery.. The purpose of Module 1 is to help participants select priority informationneeds and to review some basic concepts underlying managementinformation systems. Depending on participant background, the amountof time available, and the need to establish priorities among managementinformation needs, Module 1 can be presented in its entirety, limited toLevel I Quick start, limited to the PHC MAP systems framework, or in

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summary form as contained in the first session of the Facilitator's guidesfor Modules 2 through 9.. If information needs have not been clearly identified and participantshave no background in systems, then Module 1 should be presented infull. The selection of the next module willdepend upon priorities set bythe participants as they complete the steps in Module 1.. If information needs have been clearly identified and participants haveno background in systems, then that portion of Module L can be addedto the first session of the selected module.. If information needs have been clearly identified and participants have abackground in systems, then the overview of PHC MAP in the selectedmodule will be sufficient.Understands the content of the selected module. Read the User'sguide and Facilitator's guide for the selected module and consider optionsfor workshop delivery.. Depending upon the length of the module and the availability of staff fortraining, the workshop sessions may be presented as described in theFacilitator's guide, or workshop sessions may be delivered at intervals (forexample, every morning for a certain number of days, one session perweek, or one day per week for three or four weeks).. If follow-on technical assistance is available, the content of the modulecould be presented in the workshop and the application of the procedureto the PHC programme could be conducted on the job.. Participants could plan steps in the workshop, complete them on the job,and bring the results to the next workshop session. This approach isparticqlarly applicable to Module 2 which requires development of aquestionnaire, selection of a survey sample, training of data collectors,and data collection. These steps cannot actually be carried out within thetime limits of the workshop as contained in the Module 2 Facilitator'sguide.. Other options are possible depending upon the circumstances of eachsituation.Determines what programme information, if any, is needed for

completion of the module. For example, census data and lists of householdsare required to complete some of the steps in Module 3.



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Determines the most appropriate people to attend the workshop. Forexample, Module 7 is best completed by those responsible for planning,training, supervision, logistics, and other management services.Discusses the delivery options and participants with the PHC managerand make decisions regarding the most appropriate option and participantselectiofi. Also determines if the needed information is available and if itis not, the alternatives for obtaining the information.Notifies participants of the date, time, and purpose of theworkshop and confirms attendance. Initialnotice of the meeting may comefrom the PHC manager, with follow-up by the facilitator.Prepares the agenda, using as a modelthe sample in Session 1of theFacilitator's guide for the selected module.Inspects the room where the workshop willbe held and answers thesequestions:. Is the room large enough to seat all the participants?. Can chairs and tables be arranged in a variety of ways: all participantsaround one table; participants in groups of three or four at smaller tables?

. Is the lighting adequate?. Can temperature and humidity be controlled?. Is there an electrical outlet for an overhead projector?. Is a microphone necessary for everyone to hear and to be heard?. Are toilets conveniently located?. Is the site convenient to parking, restaurants and public transportation?. Are supporting facilities available and convenient: duplication, wordprocessing, computers?Prepares notes to conduct the workshop using the session outlines inthe Facilitator's guide for the selected module, and makes the necessaryadaptations. Refer to the appropriate User's guide for content.Duplicates the worksheets and other handouts as indicated inthe Facilitator's guide and obtains the necessary equipment.Conducts the workshop as planned.Provides follow-on assistance, if appropriate.



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Session L Introduction and overviewObiectives: Participants will be able to:. Define cost analysis.. Name three ways managers can use costanalysis.. Explain one strength and one limitation of costanalysis.Session outlinq I. Introduction (30 minutes)II. Overview of workshop (10 minutes)III. Module 8 User's guide (15 minutes)IV. Cost analysis (20 minutes)V. Limits and strengths of cost analysis (15minutes)Materials: Module 8 User's guideHandout 8-1: Agenda

Tiansparency 8-1: Workshop objectiveTiansparency 8-2: Cost analysis is...Tiansparency 8-3: Cost analysis informationTiansparency 8-4 MonitoringTiansparency 8-5: EfficiencyTiansparency 8-6: PlanningTiansparency 8-7: PHC programme costs byline itemEquipment Flip chart, stand, markers, masking tape, over-head projector and screenModule 8: FGr session 1


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I. Introduction (3O minutes)

Name tagsor place cardsFlip chart

See the Module 1 User'sguide for this information

Note: Omit Section I if you have presented Md-ule7, or some other modulqimmediately priortothe presentation ol Module 8.A. OPENING REMARKS. Introduce self and other staff, as necessary.. Explain your role in the workshop.. If you do not know the participants, ask eachone to state his or her name, position title, andjob location.Note: If the group is larger than 6 or 8, you mayu.rish to haue them u)ear name tags or place cardswith their names at places where they are sitting.. Ask each participant to complete this sen-

tence:'As a result of attending this workshop,I expect .. ." and write their responses on theflip chart.. When all responses have been recorded, saythat you will return to this list after giving anoverview of the workshop.B. OVERVIEW OF PHC MAP. Explaln why information is important forPHC programmes.o Summarise PHC MAf; including:Purpose of PHC MAPTitle and purpose of each module and othermaterials.. Make the following points about PHC MAP:Has been field-tested and revised to ensureusefulness to PHC programme staff.Modules can be used in any sequence.

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Checklists and other materials can beadapted to fit a particular situation.The procedures outlined in the modules canbe adopted as routine monitoring activities ina PHC programme.. Explain why MAP is being introduced in thisPHC programme.

Note: The remarks here should be tailored to thespecific programme and should prouide the an-su.rers fo these questions:Why are we doingthis workshop?What do ute expect to achieue?It may be appropriate for the PHC manager tomake these remarks.

II. Overview of workshop (1O minutes)Tiansparency &1:Workshop objectiveHandout &l Agenda

. Review the workshop objective.. Distribute and review the workshop agenda,describing the activities that willtake place toaccomplish the workshop objectives.o Review the expectations contributed by par-ticipants at the beginning of the session.Indicate which ones willbe met and which

ones will not and why.Suggest, if possible, alternatives for meet-ing the expectations that will not be niet inthis workshop.. Ask for questions or comments.lll. Module 8 user's guide (15 minutes)

Module 8 User's guide o Distribute a User's guide to each participant.

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. Refer participants to the llable of contentsand point out the major sections of the User'sguide.Explain that the Introduction will be dis-cussed in detail in just a moment.Explain the three levels of detail in costanalysis:

Level 1: BasicLevel2: SelectiveLev'el3: DetailedExplain that the workshop will focus on Level2 and the 8 steps listed under proce-dures.Briefly highlight the contents of Ap2endicesA-F and say that they will be refered to atappropiate points in the workshop.

IV. Cost analysis (20 minutes)Transparency 8-2:Cost analysis is ...

Transparency 8-3: .Cost analysis information a

Transparency 8-4:MonitoringTiansparency 8-5:EfficiencyTransparency 8-6:Planning

Define cost analysis as the examination ofexpenditures to determine how resources havebeen spent, including analysis of revenuesources and amounts.Explain the kinds of information cost analysisprovides.Discuss the ways cost analysis information canhelp a manager.

MonitoringEfficiencyPlanning

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Session l: lntroduction and overview

Tiansparency 8-7:PHC programme costsby line item

. Present examples of the types of informationcost analysis can provide.Refer participants to Table 1 and Figure 1on page 5 in the User's guide for two ways todisplay total project costs and expenditures.Refer participants to Table 2 and Figure 2for a comparison of actual and budgetamounts for expenditures and revenues.Ask participants which line item costs theleast according to the table (supplies at 5332.)Refer participants to Figure 3 on page 7in the User's guide and ask participantswhich type of display they prefer (the tableshown on the transparency or the graph inFigure 3).Explain that the Module 8 User's guideprovides computer programs to producegraphs such as this for the cost data fromtheir PHC programme.Refer participants to Tirble 4 and Figure 4on page 8 in the User's guide for a comparisonof line item costs for two subprojects.Refer participants to Tlrble 5 and Figure 5Aon page 9 in the User's guide for a display ofcosts by PHC service and activity.Refer participants to Figure 58 on page 10for displays of unit costs.Refer participants to Table 6 and Figure 6on page 11 for displays showing trends in costsusing data from recent years.Ask participants which year shows the

greatest change according to the numbers inTable 6 (1988 shows a large increase overL9871.Ask participants which line items con-tribute to the increase (personnel, travel, andequipment).



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Explain that Figure 6 displays not onlytrends over time for total costs but also acomparison of trends between total costs andpersonnel costs. Similar comparisons can bemade of trends in costs of line items.Refer participants to'lbble 7 on pagel2inthe User's guide which shows a trend analysisfor revenue.Ask participants which year showed thegreatest increase in revenue (1990).Ask participants which sources ac-counted for greatest portion of that increase(federal, service fees, and contributions).Point out the graph in Figure 7 whichshows an alternate way to display the samedata.Refer participants to Table 8 and Figure 8on page 13 of the User's guide for another typeof trend analysis. This type compares expen-ditures and revenue over time and displaysclearly the point at which the project breakseven (expenditures and revenues are equal).. Ask for questions and comments on types ofcost analysis information and display choices.

V. Limits and strengths of cost analysis (15 minutes)A. LIMITSDiscuss the difficulty of estimating timecosts.Discuss the difficulty of allocating costs.B. STRENGTHSState that even approximate data con-tribute to better decision-making.



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Point out that as the tables and graphsdemonstrate, simple analysis can yield usefulinformation to help managers plan and moni-tor programme activities.Remind participants of the value of finan-cial information especially at times when re-sources are shrinking, demand for services isrising, and programmes are being pressured byboards and donors to become self-sustaining.

. Ask participants for questions or commentson the strengths and limits of cost analysisbased on their experience.



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SAMPLE AGENDAMODULE 8*Session 1(1 hr, 3C inins)

Session 2(1 hr, 30 mins)

Session 3(2 hrs, 15 mins)

Session 4(1 hr, 35 mins)

IntroCuction andoverviewMaking decisions(Steps 1, 2 and 3)Code and allocatecosts(Steps 4 and 5)Enter, analyse, andreport data(Steps 6,7 and 8)

'For an actual precerrhtion, substitute the appropriate clock hours in the first column.

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WORKSHOP OBJECTIVECarry out a cost analysis using theinstructions and worksheets containedin Module 8 User's guide

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COST ANALYSIS IS...the examination of expenditures todetermine how resources have beenspent, including an analysis of revenuesources and amounts

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COST ANALYSISINFORMATION1. Amounts spent and received2. Comparison of actual and budgetamounts3. Costs by line item4. Costs by facility or location5. Costs by PHC service or activitY6. Average costs7. Cost trends over time



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MONITORINGPurposS:o Ensure that costs are under control

o Identify problems before they becomeseriousTVpe of analysis:

o Compare actual costs (and revenue) toplanned budget



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EFFICIENCYPurpose:o Identify areas where savings can be

made or revenues increasedType of analysis:o Comparison by site or facility



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PLANNINGPurpoSs:

o Estimate budget needed to supportprogramme in the future: at the samelevel, at an expand ed Ievel, at a reducedlevelo Estimate budget to replicate theprogramme at another siteTypes of analysis:o Projection of future costso Average costs



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PHC PROGRAMMECOSTS BY LINE ITEMLine Item Cost Percentofnotal Cost

Personnel 2345.00 49.97.,Tiavel 345.00 7.37"Equipment 456.00 9.77"Supplies 332.00 7.I7"Other direct costs 876.00 t8.67"Indirect costs 345.00 7.37"Total costs 4,699.OO 100.0%



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Session 2: Make decisions (Steps 1,2and 3)Objectives: Participants will be able to:. Specify objectives for a cost analysis.. Decide what to cost.. Select appropriate tables and graphs.Session outline I. Introduction (10 minutes)II. Specify cost analysis objectives (30 minutes)III. Decide what to cost (25 minutes)IV. Select tables and graphs (20 minutes)V. Summary (5 minutes)Materials: Module 8 User's guideTiansparency 8-8: Session 2: ObjectivesTiansparency 8-9: Steps in cost analysis

Tiansparency 8-10: Determining the scopeHandout 8-2: Worksheet for specifyingobjectivesHandout 8-3: Worksheet for decidingwhat to costHandout 8-4: Worksheet for selectingtypes of cost analysisHandout 8-5: Worksheet for selectingtables and graphs neededEquipment Flip chart, stand, markers, masking tape, over-head projector and screen

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I. Introduction (1O minutes)'liansparency &&Session 2 Objecti',res'liansparency &9:Steps in cost analysis

o Review session objectives.o Review the eight steps in cost analysis.Explain that the first three steps are themanager's responsibility and the decisionsmade in these steps establish the scope of thedata collection system.Explain that the remaining five steps arecarried out by the finance staff.Explain that although responsibility isdivided among the eight steps, it is importantfor the manager to understand the capabilitiesof the finance staff and it is important for thefinance staff to understand what the managerwants to know. By consulting with each otherthroughout the entire process, better decisionswill be made and better data collected moreefficiently.. SaV that this session covers the first threesteps.

II. Specify cost analysis obJectives (Step 1) (3O minutes)Handout 8-2: Worksheet o Distribute the worksheet and direct partic-for specifying objectives ipants'attention to the three major headings.The user/audience refers to the people whowill see the results of the cost analysis and usethe information to make decisions that affectthe programme.The purpose refers to how the informationwill be used. Each user may have more thanone purpose and several users may share acommon purpose. A manager may be wise toconsult with potential users at this stage to besure the purposes of all users are considered.



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Note: Shonr transprencies 8-4, 8'5, and 8-6 fromSession 7, if necessary, to reuiew monitoring et'fi'ciency, and planning.

The scope refierc to how broad the costanalysis will be.. Review the considerations that influencedecisions on scope.. Write an example of a cost analysis objectiveon the flip chart, for example A one monthprospective analysis of cost and expenditureswill be carried out for all health and manage-ment services in the area served by the PHCprogramme to enable the manager to preparean operating budget for the coming fiscal year.

Notet This may be prepared ahead of ttme.. Ask participants to prepare another sampleobjective which includes the user, the purpose,and the appropriate elements listed underscope.. Direct participants to complete the work-sheet for their programme and then write anobjective for each user.

o Participants work on worksheet and objec-tives for 15 minutes.Note: Depending on the size and composition oJthe group, arrange participants in groups of 4'6.AII participants in a group should be from thesameprogramme.. Lead participants in a review of their work.Ask a person from each group to describetheir choices regarding scope and to explain

the rationale for those choices.Invite questions and comments from otherparticipants.



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Session 2: Make decisions (Steps 1,2 and 3)Ask a second person from each group to

read one objective.Invite questions and comments from otherparticipants.III. Decide what to cost (Step 2', (25 minutes)

Handout 8-3: Worksheet o Distribute the worksheet and review thefor deciding what to cost three levels of detail.Level I is the simplest as most PHC pro-grammes keep track of costs by line item asin the examples on page 22inthe User's guide.If a programme has more than one projector site, the manager may want a separateanalysis for each. This is called Level2. Anexample of Level 2 is shown on page 23.Level3 cost analysis can provide informa-

tion for each of the health services and man-agement services a PHC programme provides.Possibilities are shown on page 24.r Direct participants to complete the work-sheet by listing all the general ledger itemsthey currently account for in L'evel 1, all pro-gramme projects in sites in Level 2 and allhealth and management services in Level 3.. Inform participants that this is a preliminarylist and they will have an opportunity to re-consider what they want to cost after complet-ing Step 5.



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Session 2: Make decisions (Steps 1,2 and 3)IV. Select tables and graphs (Step 3) (2O minutes)' Handout 8-4: Worksheetfor selecting types of costanalysis

Handout 8-5: Worksheetfor specifying tables andgraphs needed

. Distribute the worksheet and explain thatthis is similar to the list that appears on page28 of. the User's guide except the items on thislist are sequenced according to the level ofdetail of the data that is collected.A manager who selects Level I can obtainfour types of analysis with the cost data hecollects.A manager who selects Level2 can obtainfive types of analysis.A manager who selects Level 3 can obtainall seven types.. Direct participants to check all seven typesfor now. After completing Step 5 and review-ing the level of detail for collecting cost data,this list may change.. Distribute the worksheet and explain thatthis is a checklist of the tables that can beprepared for the various levels of detail of costdata.The six basic tables are designated by anumber and letter (1A,28, etc.)The six basic tables can be modified bychanging labels and headings to serve a num-ber of purposes.The modifications are designated by numberand explained in the notes at the bottom ofthe worksheet.. Refer participants to Thble 18 in Appendix Dto illustrate how tables can be modified.

Table 18 as it appears in Appendix D dis-playrs Level 1 data: total revenues and expen-ditures over five years.



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The same table can be used to display Level2 data by changing the heading to "'lbtalrevenues and costs by location" and changingthe column labels to the names of the loca-tions.Refer participants to page 29 in the User'sguide for another example of how a basic tablecan be adapted by changing the title andlabels.

If a programme has the capability to use thecomputer programs for data entry and analy-sis that accompany this module, then the datacan be displayed in graphs as well as tables.. Invite questions and comments.. Direct participants to study the graphs inAppendix D and check the tables they willneed consistent with the level of detail of datacollection and the objectives of the cost analy-sis.

V. Summary (5 minutes). Point out that participanis have completedthe first three steps in the cost analysis proce-dure: specify objectives, decide what to cost,

and select tables.. Explain that the remaining steps that beginwith Step 4 in the next session are carried outby the finance staff based on decisions madein Steps 1-3.



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SESSION 2zOBJECTIVESSpecify cost analysis objectivesDecide what to costSelect tables and graphs



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DETERMINING THE SCOPECountry, region, city, rural si te?Multiple sites?Total programme, proj ect, servicecomponent?Past or future? 6 months, 1 year,3years?

o Analyse existing data (retrospective)?Analyse future data (prospective)?Costs? Revenue? Both?



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WORKSHEET FOR SPECIFYINGOBJECTIVES

User/Audience_ Manager

Board of directors_ Central directorateDonors

Purpose_ Monitoring_ Efficiency_ Planning

Other:

Scope_ Cteographic area_ Progra mme/ project/activity_ Trme/duration_ Prospective or retrospective_ Expenditures and/or revenue

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WORKSHEET FOR DECIDING WHATTO COSTLevel l:PHC programme (total costs)Level L General ledger items

Level 2z Proiects, subprojects,locations, sites, etc-

Level 3: PHC service components or management comlrcnents



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WORKSHEET FOR SELECTINGTYPE(S) OF COST ANALYSTS1. Total amount of resources spent andreceived (L1)2. Revenue and expenditures comparedwith budget (L1)3. Distribution of revenue and costs byline item (L1)4. Tiends in revenue and costs over time(L1)5. Distribution of costs by location orfacility (L2)

Distribution of revenue and costs byPHC service or activity (L3)Average costs (unit costs) (L3)

6.

7.



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WORKSHEET FOR SPECIFYINGTABLES AND GRAPHS NEEDED

Level 1 Tables : Analysis by general ledger item-

1. The total amount of resources spent and revenues received2. Total revenues & expenditures compared with budgets3. Distribution of costs & revenues by general ledger line item4. GLI revenues & expenditures compared with budgets

Level 2 Tables : Analysis by PHC location or facility5. Total revenues & costs by location/facility

-6. Total revenues & expenditures compared with budgets

-T.Distributionof costs & revenues by general ledger line item

-8. GLI revenues & expenditures compared with budgets

Level 3 Tables : Analysis by PHG service or actavity9. The distribution of costs by PHC service/activity

10. Average costs (unit costs) of each service/aclivity11. Total service/activity revenues & expend. compared with

budgets

-12.Distribution of service/activity revenues & costs by GLI

13. GLI rev. & expend. of each service/activity compared withbudgets

14. Distribution of revenues & costs by location & service

TablesSingleperiod

1A2A3A4A

3834A4383'5

Multipleperiods(Trends)

1B283B4A1

781'2287'2381'24A1'3

3826A12Bl'3381'3144A-''381'3

TB2283824A

5A6A283

NOTES:1. Prepare sqparate table for each time period.2. Change headings and labels (e.9., from'Year 1" to'Central HC" or'ANC').3. Prepare separate tabte tor 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



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Session 3: Code and allocate costs(Steps 4 and 5)Objectives: Participants will be able to:. Set up a coding system for the items to be

costed.. Determine if indirect costs, depreciation, non-monetary costs and foreign exchange are tobe included in the analyses.. Allocate costs directly or indirectly.. Allocate indirect costs proportiortately accord-ing to appropriate unit of measure (e.9., time,space, and distance).. Explain three techniques for allocating costsretrospectively.

Session outline I. Introduction (5 minutes)II. Coding system (30 minutes)III. Advance features (40 minutes)IV. Cost allocation (15 minutes)V. Allocation techniques (15 minutes)VI. Review of decisions (30 minutes)Materials: Tiansparency 8-11: Session 3: ObjectivesTiansparen cy 8-12: Advanced featuresTiansparency 8-13: Cost allocation'liansparency 8-14: Units of measure for allo-cating costs



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Equipment Overhead projector, screenTiansparency 8-15: Retrospective allocationtechniquesHandout 8-6: Coding worksheet

Module 8: FGr session 3


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Session 3: Code and allocate costs (Steps 4 and 5)I. Introduction (5 minutes)

Tiansparency 8-11:Session 3: Obiectives. Review session objectives.. Give an overview of session activities.

II. Coding system (30 minutes)

Handout 8-6:Coding worksheet

. Review general principles for setting up acoding system.Use or adapt an existing system, if possible.Make it easy to remember.Letters are easier to remember than num-bers.Use a logical sequence, such as location,service, general ledger item.Always use codes in the same sequence as aletter;it may mean different things dependingupon the order in which it is placed.. Refer participants to page 30 in the User'sguide for an example of an actual codingsystem.. Invite questions and comments.. Distribute the worksheet and direct partic-ipants working in previously establishedgroups, to list relevant items for each levelandestablish a code for each item.Note: Depending upon time auailable, all groupsmay not t'inish the coding process. The obiectiueis to prouide opportunity for sufficient practice sothat they can complete it on their own outside theunrkshop.

. Invite questions or comments from all par-ticipant groups.



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lll. Advanced features (4O minutes)

'liansparency &12:Adrnnced feafures

. Explain that cost analysis can be made moreaccurate if certain costs and concepts areunderstood. Explain that participants may wish to con-sider these features if they are a factor in theirprogrammes and if they are planning aLevel2 or Lqtel3 analysis.Note Using the information and examplescon-tained in Appendix A, prepare a prerentation onthese concepts appropriate to the needs of thepiogramme and the background of the partici-Wnts.

lV. Cost allocation (15 minutes)Tiansnarencv &13:Cost illocati'on o fntroduce key terms.To allocate costs means to assign them toone or more cost categories.Direct allocation is the term used when costsare assigned to a single category e.9., the costof raccines is assigned to immunization.Indirect allocation is the term used whencosts must be assigned to two or more cate-gories. Examples of these costs are staff timeand vchicles.Indirect allocation may be done equally(evenly divided among categories) or propor-tionately according to an appropriate unit ofmeasure (distance travelled in the case of avehicle).. Refer participants to page 35 in the User'sguide for examples of direct allocation for allthree levels.



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Tiansparency 8-14:Units of measure forallocating costs

. Explain that equal indirect allocation is notrecommended because it is not very accurate.For example, personnel costs might be dividedequally among three health centres, but thismethod, though easy, would not account forthe differences among the health centres'. Explain the units of measure for allocatingcosts proportionally.. Refer participants to page 36 in the User'sguide for examples of proportional allocationfor each item.. Explain that proportional allocation requiresvery good records and, though time consum-ing, will give very good estimates of cost.. Invite questions or comments on cost alloca-tion.

V. Allocation techniques (15 minutes)

Tiansparency 8-15:Retrospective allocation

. Explain that if participants are planning todo an analysis of costs compiled and coded inthe future (prospective) then they can set uptheir system now and the needed data forproportional allocation will be readily availa-ble. If cost analysis is going to be a routinepart of their management, then this approachis recommended.. If the cost analyses are done based on dataalready collected (retrospective), then otherallocation techniques must be considered.. Explain the three techniques and the prosand cons of each.

. Explain the recommended approach:Recode major items that are easy to cate-gorise, e.9., contraceptives.Module 8: FG; session 3


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Get estimates from staff (expert judgement)on time spent on planned activities and use ofspace.Take a prospective sample of remainingitems, especially ones that account for a largeportion of costs.. Invite questions and comments on allocationtechniques.

Vl. Revlew of decisions (3O minutes)r Refer participants to the worksheets theycompleted in Session 2:Deciding what to cost (Handout 8-3)Selecting types of cost analysis (Handout8-4)Specifying tables and graphs (Handout 8-5)r Dlrect participants to work in the groups theyformed to prepare the worksheets in Session2 and review and modify those worksheets inlight of the information presented in Session

3.o After 15 minutes, ask one person from eachgroup to describe any changes that were made

and to explain the reason for the change.e Ask for final questions or comments on Ses-sion 3.



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SESSION 3: OBJECTIVESSet up coding systemDecide on inclusion of indi rect costs,depreciation, non-monetary costs, andforeign exchangeAllocate costs directly and indirectlyAllocate indirect costs proportionatelyExplain 3 techniques for retrospectiveallocation



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ADVANCED FEATURESIndirect costs' Capital costs (depreciation)Non-monetary costs (in-kind contribu-tions)Foreign exchange



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45

COST ALLOCATIONDirect allocationIndirect allocationo Equal allocationo Proportional allocation



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UNITS OF MEASUREFORALLOCATINGcosrsItemPersonnelSupplies

Facilities

EquipmentVehicles

Unit of measureTime workedWeight usedVolume usedUnits usedSpace usedTime usedTime usedDistance travelledTime used



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RETROSPECTIVEALLOCATIONTECHNIQUESRecode all transactionsUse expert judgement

Sample selected costsoo



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CODINGWORKSHEETLevel L PHC programme (total costs)Level L General ledger items

Code description Code description

Level 2: Proiects, subprojects, locations, sites, etc.Code description Code description

Level & PHC service comlx)nents or management componentsCode description Code description



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Session 4z Enter, analyse, and reportdata (Steps 6,7 and 8)Obiectives:

Session outline:

Materials;Equipment

Participants will be able to:. Enter data and compute costs.. Analyse and interpret revenue and cost data.. Report cost analysis findings.I. Introduction (5 minutes)IL Enter data (20 minutes)III. Analyse and interpret data (20 minutes)IV. Report findings (1.5 minutes)V. Next steps (25 minutes)VI. Conclusion (10 minutes)

Tiansparency 8-16: Session 4: ObjectivesFlip chart, stand, markers, masking tape, over-head projector and screen



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I. lntroduction (5 minutes)liansparency &16Session 4: Objectives o Review session objectives.. Give an overview of session activities.

Il. Enter data (20 minutes). Remind participants that in a prospective

cost analysis, coding and data entry will bedone as costs are incurred according to thesystem established.. Explain that for a retrospective cost analysisthere are three ways that data can be takenfrom past records and recoded.Reclassify total costs.Reclassify monthly or quarterly costs.Reclassify individual transactions.. Explain how to reclassify monthly or quar-terly costs using the example on page 32.. Explaln how to reclassify individual transac-tions.By computer.Manually.. Invite questions or comments on data entry.

III. Analyse and interpret data (2O minutes)Explaln that the manual production of tablesis easily accomplished by taking the totalsfrom Step 6 and entering them in the appro-priate tables.Refer participants to page 45 and discussthe questions that should be asked to helpinterpret the data displayed on the tables.



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Session 4: Enter, analyse, and report data (Steps 6,7 and 8). Invite questions and comments on analysisand interpretation.

IV. Report findings (15 minutes). Refer participants to page 46 and discussthe guidelines for reporting findings, orally andin writing.Note: It' possible, circulate a written report that isa good example of what the participants shoulddo.. Remind participants that the cost analysisobjectives specified in Session 2 are a goodplace to begin when preparing the report.. Also note that it may be necessary to preparemore than one report if user objectives aremarkedly different.o Invite questions and comments on reportingfindings.

V. Next steps (25 minutes). Direct participants to work in small groups

as assigned in Session 2.. Ask participants to:List the steps necessary to implement a costanalysis in their PHC programme, building onthe decisions made in the workshop.Arrange the steps in sequence.

Set a tentative completion date for each stepand indicate the name of the responsible per-son.



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VI. Conclusion (lO minutes)'liansparency &lWorkshop obizctives o Revlew the workshop objectives.. Revlew the list of participant arpectationsrecorded on a flip chart in Session 1 and askparticipants to indicate the extent to whichthey were mel' . Thank participants for their attention and

harrd work.

Module & FG; session 4


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SESSION 4: OBJECTIVESEnter data and compute costsAnalyse and interpret dataReport cost analysis findingsAnalyse and interpret data



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PHC MAP MANAGEMENT COMMITTEEDr. Ronald Wilson . Aga Khan Foundation, Switzerland (Co-Chair)Dr. Jack Bryant . Aga Khan University, Pakistan (Co-Chair)Dr. William Steeler r Secretariat of His Highness the Aga Khan, France (Co-Chair)Dr. Jack Reynolds r Center for Human Services, USA (PHC MAP Director)Dr. David Nicholas . Center for Human Services, USADr. Duane Smith . Aga Khan Foundation, SwitzerlandDr. Pierre Claquin . Aga Khan Foundation, SwitzerlandMr. Aziz Currimbhoy . Aga Khan Health Service, PakistanMr. Kabir Mitha . Aga Khan Health Service, IndiaDr. Nizar Verjee . Aga Khan Health Service, KenyaMs. Khatidja Husein . Aga Khan University, PakistanDr. Sadia Chowdhury . Aga Khan Community Health Programme, BangladeshDr. Mizan Siddiqi . Aga Khan Community Health Programme, BangladeshDr. Krasae Chanawon-tse . ASEAN Institute for Health Development, ThailandDr. Yawarat Porapakkham . ASEAN Institute for Health Development, ThailandDr. Jumroon Mikhanorn . Somboon Vacharotai Foundation, ThailandDr. Nirmala Murthy r Foundation for Research in Health Systems, IndiaPHC MAP TECHNICAL ADVISORY COMMITTEEDr. Nirmala Murthy . Foundation for Research in Health Systems, India (Chair)Dr. Krasae Chanawongse . ASEAN Institute for Health Development, ThailandDr. AlHenn . African Medical and Research Foundation (AMREF), formerly ofthe Harvard Institute for International DevelopmentDr. Siraj-ul Haque Mahmud r Ministry of Planning, PakistanDr. Peter Tugwell . Faculty of Medicine, University of Ottawa, CanadaDr. Dan Kaseje . Christian Medical Commission, Switzerland, formerly of theUniversitv of Nairobi. KenvaKEY PHC MAP STAFF AT THE CENTER FOR HUMAN SERVICESDr. Jack Reynolds (PHC MAP Director) Dr. Neeraj KakDr. Paul RichardsonDr. David NicholasDr. Wayne StinsonMs. Maria Francisccr

Ms. Lori DiPrete BrownMs. Pam HomarrDr. Lynne Miller-FrancoMs. Mary Millar


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Documents

Module 8 Facilitator's Guide_Cost Analysis