Cost Benefit Analysis and Cost Effectiveness Analysis

Cost Benefit Analysis and Cost Effectiveness Analysis

In the 5^th session of module V we learnt about two different analysis used in the evaluation of a program, both of them represent differences in function also we can say that:

In the evaluation of a program we need to know the differences between CBA and CEA, everyone can be used in the evaluation of a program in order to determine the cost of the benefits that represent into the project

Differences between Cost-benefit and cost-effectiveness analysis

Cost Benefit Analysis (CBA)

Both costs and benefits are evaluated in dollars or monetary results; its value is quantitative and can be measurable

Cost Effectiveness analysis (CEA)

The costs of alternative means of achieving some benefit are compared.

The benefit itself is not evaluated in money.

In the second method we can take into consideration that the most important to use this program analysis is the benefits of people like:  lives saved, people attended, security and safe. The results can achieved in no measurable means because the benefits can be measurable or can not be countable, the benefits are qualitative

Also we refers to an important tern to take into consideration we  talk about those analysis that is refers to  NPV net present value NPV is an indicator of how much value an investment or project adds to the firm. The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. 

                                        CBA

CBA is a quantitative analytical tool to aid decision-makers in the efficient allocation of resources.

CBA helps to determine its value answer the following questions:

Could the outcomes a benefit to the entire community?

Could be measurable the benefit of the program?

Should continue with the same program runed?

CEA

But in order to talk about the Cost effectiveness analysis we need to take into account that also requires taking a cost of a program costs, although the benefit in the end isn’t valuable in dollars. 

In cost-effectiveness analysis, benefits (or effects) are expressed on some quantitative scale other than dollars.

How to Wrirte a Plan to Program Evaluation

Planning an evaluation of a program or project

It is not easy to evaluate something if we don’t have clearer idea for the program or project and the purpose of the evaluation, it will be difficult to improve or find the mistake in the program or project. In this class we learn the steps to follow and make a plan of evaluation of a program or project, also teacher gave us the guide (it is like questionnaire with sequence, and we just follow the question and answer it) to make our plan of the evaluation.

My group chooses the National Tourism Plan 2014 in El Salvador to make a program evaluation. Of course we are not really going to evaluate it; we just make a plan and have an idea about what program evaluation is.

The first step is choose the program or project to evaluate, after choose it, evaluator should have an idea about the program or project, where is developed its, what objective it has. Then, the evaluator has to specify what the purpose to evaluate the program or project is.

Evaluator should decide what type of evaluation to conduct the evaluation. There are goals evaluation, process evaluation and the outcome evaluation, each type of evaluation aims different parts, according the purpose of the evaluation, thus the evaluator has to analyze which one is suitable to reach the evaluation’s objective.

After knowing the program or project, evaluator has to make a chronogram or time chart to organize time for the whole evaluation process, also planning the activities to collect information/data (using methods that can collect better the data). And not only using methods to collect data, evaluator has to visit different institution who can give more information and searching online for existing information.

When the evaluator has the data, he/she will use PC program to interpret or process to make arrangement, and then analyze it.

The steps what I typed below are the simple ways, I stronger recommend you to ask help to some expert or professor who know about the program evaluation, them will give you an expertise to make it.

Program evaluation is not only to see if it works or not, most important is to find the improving way and correct something that is not useful or suitable in the place of the program or project developing.

Defining Evaluation and Program Evaluation

Definig Evaluation

Many authors agree their concepts of evaluation, some words are key to these concept; some of them are "systematic”,"process","assessment";

with these keywords can give us an idea of what evaluation is  and to form a homogeneous concept  in which all authors participate with their ideas to conclude in an accepted concept and that contains the necessary elements  to zoom in on a which clear and simple concept.

We could define evaluation as below: Evaluation is a systematic assessment in which the elements work together in order to perform a function; to provide a useful feedback of a specific object. 

Evaluation involves assessing the strengths and weaknesses of programs, policies, personnel, products, and organizations to improve their effectiveness.

As I said before, evaluation is a process in which there are a variety of elements to contribute to the activity of the evaluation, today I want to show the main elements of a evaluation.

·        Measure.

·        Assess.

·        Making a decision.

As we can see, this is the right order in the process of a evaluation.

When we talk about measure, we refer to the activity of the recompilation of data (gathering), in which organizing, processing, analyzing, synthesizing and interpreting of data are the main components in the measure.

The assess, have as main components synthesizing, and the interpretation of the data collected.

And we talk about making a decision the drawing and conclusion are the last components in the evaluation process.

The main objectives in an evaluation are: A useful Feedback, and influence decision-making or policy formulation; according to the results of the evaluation.

The types of evaluation will be according to the object and the purpose of the evaluation such as: Formative evaluations in which the quality of the implementation, assessment of the organization and personnel and procedures are evaluated in context of improve the object to be evaluated.

The summative evaluation refers to give an overview to the outcomes, so summarize the results of a program to estimate the costs associated to the object.

There are a lot of companies or institution that make the same questions:

Why to evaluate?

The main purpose to evaluate is to provide a useful feedback to a variety of audiences including sponsors, donors, clients, group of administrators, personnel of staff.

And the other question is what can be evaluated?

There is a wide variety of elements that can be evaluated such as: Programs, projects, products, institutions, advertising campaign, a social or economical reform, and so on.

Program evaluation

A program evaluation can be defined as a carefully collecting information about a program or project or some aspects of a program, in order to make necessary decisions about the program been evaluated.

A program evaluation can be helpful  to know the impacts of the products or services that a company offer to the clients or customers to make the delivery mechanisms to be more effective and less costly, identify if that are you doing is that you think you are doing, to produce results to promote services to the community, and compare programs to know o decide which should be retained

A program evaluation has some myth in which people express their doubts about a program evaluation; some of them are:

• Evaluation an useless activity

A lot of people believe that evaluation is a useless activity, that generates cost and complicated data with useless outcomes.

• Success or failure of a program.

Many people believe that the evaluation provide in their results if a program work or failure and that with this evaluation the program never will have problems in their process.

• Evaluation is complex only expert.

By other hand people believe that evaluation is a complex process and this provoke that no all person will be able to use it or understand the complexity of their process.

The reason to evaluate can be describe it as below:

Verify process, understand, improve, produce useful data, measure effectiveness and help management to understand the program.

The selection of the right method to evaluate is useful when we want to evaluate a program or project.

Some of the main program evaluation methods are:

Goal-Based Evaluation is enfocated to evaluate predeterminated goals or objectives at the beginning of the program evaluation.

Process-Based Evaluation is oriented to understand how a program works and to know if produce the expected results.

Outcomes-Based Evaluation is enfocated to realize if the organization is doing the right  to reach the results.

There are a series of methods to collect information some of them are:

Questionnaires, surveys, checklists,

Interviews

Documentation

Observation

Focus groups

Case studies

Business Administration

Business Administration Process

When we hear the word Administration we always relate it with business, but in fact, not only business area use administration, in any area like medical, education, hotel/restaurant and others area use it to manage well and get more profit or offer good service.

Teacher has explained about the definition and the purpose of the administration. It is interesting to understand the administration and its function, because I consider everything is related with administration also I think it can apply at home or personal life, for example, I administrate my life, to be more organized and gain the goal what I set, try to avoid and figure out any barrier that can happen in the life. To apply the administration, we should know the definition and the function.

Here has the definition is clear and understandable about the administration.

In business administration consists of the performance or management of business operations and thus the making or implementing of major decisions. Administration can be defined as the universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives.

Henri Fayol defined "the 5 elements of administration" there are planning, organizing, directing, controlling and budgeting. And it is the process or step should be follow to administrate. Those steps cannot be ignored; there are their own functions to associate each other step. In the internet can search more information or similar steps like that.

In the class, teacher asked us to choose one institution or company and fill in the follow chart as the exercise to be an administrator.

By this exercise can notice how hard is the administration work, every step has to think a lot and analyze the detail because every decision or the action can affect the outcome to be a successful or not, administrator should takes those consideration before to make any decision. It is recommended to organize with team group because there a lot of work and need different personnel to help.

Good administrator is not only can organize or manage well, it requires some values like responsibility, tolerance, good listener, honest and show understanding for the employees but don’t exceed the rule or the political. Try to avoid being a hard and squared man. If not, employees will have pet peeves that drive them a crazy. It is not easy to be an administrator, even though the people think that is a proud to be it and overlook the responsibility has the work.

As I say before administration has the process and depending on what area the process will be similar and take different kind of consideration.