Conducting Cost-Effectiveness Analysis

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Cost-effectiveness analyses (CEAs) help partners decide how they might allocate limited budget resources. A CEA is a ratio of costs to impacts, and can provide partners with insight into which programs might offer the greatest value for money if they are choosing between programs that aim to achieve the same goal or outcome. While the foundation of a CEA is accurate and detailed cost data, collecting and collating data across multiple sources can make building this foundation challenging. IPA has developed an automated cost collection tool to facilitate the real-time collection of cost data and is also sharing the library of CEAs that we’ve conducted so far.

IPA’s Automated Cost Collection Tool

In our experience, it is much easier and more accurate to collect cost information during the implementation of a program instead of trying to piece together the data after the evaluation is completed. To easily calculate CEAs in real-time, we have developed an automated cost collection tool to input costs for the duration of a project on a monthly basis. In this tool, we use a slightly adapted version of the  “ingredients method of costing” outlined by Levins and McEwan (2001) and Dhaliwal et al. (2013) to collect program costs, in which we gather detailed information on the cost and quantity of all the ingredients required to implement the program. Detailed costs allow us to identify cost drivers and how these costs may change when the program is replicated or scaled up. Each month, the user can input line item costs, the corresponding date and description for these costs, and choose the cost ingredient category and assigned treatment arm from drop-down menus. This tool automatically calculates the CEA based on the inputted costs and impact measures, using the methodology outlined by Dhaliwal et al. (2013).

IPA’s CEA Library

In addition to our cost collection tool, we are also linking our growing library of CEAs that we’ve conducted so far so you can see how we’ve implemented some of these suggestions in practice. IPA is still working to refine our approach to on-the-ground cost collection to enable more accurate analysis. If you have any suggestions, feel free to reach out to