Reflections on Unit Costing Work

Focusing on a cost-benefit analysis of two services within

a Sure Start programme(Chris Brain)

Aims of this session To outline what was done for this cost-

benefit analysis of the two services To look at issues involved, and decisions

made This will be a quick run through! NOTE: this analysis was started in 2002,

without reference to NESS guidelines NOTE: permission from the Programme

has been obtained

Aims of the Analysis The Sure Start Unit were talking about

the importance of cost-benefit analysis This programme wanted to find out

how they were doing They wanted to ‘practice’ They wanted something manageable Started in 2002

Methods Finance Manager worked out all

the necessary costs Practitioners noted numbers of

children and adults, as well as their own hours

Case studies were carried out using observations and interviews

What is cost benefit analysis? Analysis of costs, analysis of

benefits Accountability Mainstreaming Monitoring for Sure Start Unit Internal purposes - learning from

evaluation

What are costs? Outlay costs are payments out Imputables are what would cost

something but are donated free of charge

Some costs are mixed in with other budgets

So costs are outlay; a proportion of other budgets; imputable costs

What are benefits? Number of children attending Number of adults attending Improved language ability Quality measures like happier family Quality measures like happier child Future measures such as what

intervention would cost at a later stage if needed

Choice of settings – 1) Language Scheme Language team input Discrete, half-hour sessions with

clear purpose One-to-one provision, with parent

present 4 settings (3 primary school, 1

shop) and home visits

Choice of settings – 2) Drop in Drop-in facility Supports some adult provision

such as ESOL, Keep Fit, Asian Women’s Group

2.5 to 4 hourly sessions A central facility and will be central

in new Children and Family Centre

Some definitions of terms (1) ‘Outlay’ costs are those paid out ‘Imputables’ refer to what is donated by

other agencies E.g. building rent – given free by schools

but ‘costed’ at £28 per session in the analysis

E.g. volunteers – give time free but ‘costed’ at £4.20 per hour in the analysis

Some definitions of terms (2) ‘True’ costs are what the service would

cost without the Partnership (imputable costs added)

‘Actual’ costs take outlay costs into account but allow donated services to be free

‘Future’ costs are what the service will cost (e.g. Language scheme will have more volunteers)

Data gathered Four months chosen – Oct 02, Jan 03,

Apr 03, July 03 – as representative Numbers of children and adults

recorded Number of minutes provided recorded Costs calculated (including imputables

of every sort)

Language Scheme ‘true’ costs Cost per month plus imputables: £2,189.08 Time scheduled per mth in hrs:

30.42 Actual Children per mth: 34 Adults per month: 34 Cost per hour: £71.96

Child per hour: 1.12 Cost per hour per child per hr: £64.25

Language Scheme ‘actual’ costs Cost per month (no imputables): £1,636.75 Time scheduled per mth in hrs:

30.42 hrs Actual Children per mth: 34 Adults per month: 34 Cost per hour: £53.80

Child per hour: 1.12 Cost per hour per child per hr: £48.08

Language Scheme – some conclusions Clinic rates v Partnership rates

(£82.70 v £64.25) ‘True’ v ‘actual’ rates (64.25 v £48.04) If take up rate higher (currently

55.7%) If adults are said to benefit too A question of averages (all 13 home

visits, 16 out of 22 at shop)

Data gathered – Drop in Staff costs £18,906 Premises £6,492 Communication £195 Equipment £1,419 Sundries £781 TOTAL (annual) £27,793 Of staff costs £4,107 are imputable

costs

Drop in - costs Cost per month (no imputables):

£2,316.08 Time per month in hours: 53.62 hrs Children per month: 114 Cost per hour: £43.19

Child per hour: 2.13 Cost per hour per child per hr: £20.28

Drop in – some conclusions Staff hours v child hours (138.12 v

53.62 means 2.58 staff for each hour)

Number of children per session (8 for 4 hours is costed at 2 per hour)

Adults benefit too but not counted Partnership holistic approach (picking

up on issues, working with families = benefits)

Case study evidence Parents appreciate services Attendance at Language Scheme

more likely than at ‘clinic’ setting Language progress at Scheme clear Drop in encourages: (in child)

confidence, social skills, (in adult) sharing and support

Overall conclusions (1) Language Scheme costs more than Drop in

(around three times as much) Take up rates are low for both (but better

than national ‘clinic’ rates re: Scheme) Benefits can appear later so hard to judge Partnership holistic working is important Figures use ‘true’ costs not ‘actual’ costs

(mainstreaming?)

Overall conclusions (2) By giving a cost to everything,

there has been a lot of honesty so a ‘worse case’ scenario - not really accounting for Partnership working

Benefits of early intervention are very hard to quantify

Case study evidence is clear – services are appreciated

References (1) Karoly, L. A., Greenwood, P. W.,

Everingham, S. S., Hoube, J., Kilburn, M. R., Rydell, P., Sanders, M., & Cheisa, James. 1998 “Investing In Our Children: What We Know And Don’t Know About The Costs And Benefits Of Early Childhood Interventions” RAND

References (2) Meadowes, P., 2001 “Guidance for Sure

Start Local Evaluators On The Estimation of Cost Effectiveness” National Institute of Economic and Social Research

Moran, R., Myers, R., & Zymelman, M. 1997 “The uses of cost analysis in Early Child Care and Development (ECCD) programs” Inter-American Development Bank

References (3) Holtermann, S., 2001“Children’s

Centres: exploring the costs of delivery of a national scheme” Daycare Trust Facing the Future Policy Papers

Holtermann, S., 2002 “Children’s Centres: exploring the costs of delivery of a national scheme” supplementary note Jan 2002

References (additional) Universal childcare provision in the

UK – towards a cost-benefit analysis. Discussion paper by PricewaterhouseCoopers. August 2003.

www.pwc.com NOTE: this was a paper published

after we had done the analysis and report, so not used.

Contact details Chris Brain Centre for Research in Early

Childhood, St. Thomas Centre, Bell Barn Road, Attwood Green, Birmingham. B15 2AF

0121 464 0029 C.brain@crec2.org.uk