CEBE TIG Week: Moving Beyond Traditional Cost-Analytical Methodologies in Program Evaluation and Decision-Making: Embracing Costing Techniques from Other Disciplines by Nadini Persaud

Date: Saturday, February 22, 2025

Hi, I am Nadini Persaud, Incoming Chair of the Costs, Effectiveness, Benefits, and Economics TIG, founded in 2004 by Professor Brian Yates. I am a Senior Lecturer in Evaluation at the Sagicor Cave Hill School of Business and Management at the University of the West Indies, Cave Hill Campus, Barbados and teach in the M.Sc. Project Management and Evaluation program. I am also a CPA, so I am passionate about cost-inclusive evaluation and using cost analytical techniques to better understand program costs.

Hot Tips

• Presently, the evaluation discipline still has relatively limited literature that discusses cost analytical methodologies, and discussion tends to focus on economic appraisal methods. Note, however, that in the economic and accounting disciplines, entire books are dedicated to discussing these methodologies. The perusal of this literature can therefore considerably complement the limited insight available from evaluation specific literature.
• You can also continue your professional development and learning about cost analytical techniques by viewing one or more of the dozens of free YouTube videos on the topic. YouTube videos do a remarkable job of educating and cementing learning and are relatively short and informative.
• Financial accounting techniques will permit analyses to determine the financial health of your program. Having good insight into the financial health of your program is good for medium and long-term strategic planning and for preparing funding proposals.
• Cost and management accounting techniques are instructive for helping you to understand your costs and benefits data and helping you to understand your cost behavior and cost drivers. These methodologies originate in the profitability sector and may appear distasteful to many social program administrators since social programs have quite different objectives to profitability organizations. However, you be pleasantly surprised by the usefulness of these methodologies. Keep an open mind and explore and embrace alternative cost analytical methodologies. You are likely to get addicted when you see what can be done with these methodologies. 

Rad Resources

There are hundreds of textbooks dedicated to cost and management accounting and financial accounting concepts. If you select a book with multiple editions, you will likely be able to download a full free PDF of an earlier version. Don’t worry about the edition. The content is usually almost identical.

Cool Tricks

• Did you know that per unit fixed costs become smaller when your program’s total fixed costs are optimized within the relevant range?
• Did you know that unit variable costs are directly proportional to output?
• Understanding cost behavior is important for strategic planning and forecasting.
• The word profit can be replaced with revenue earned or income generated. Today, programs need to at least break even to justify continuation. Making cost savings or earning income is beneficial. If you have extra cash, you can either deliver higher quality service or alternatively serve more clients. So, profit in and by itself is not a bad thing. Explore how this can be leveraged to do more societal good. 

Lessons Learned

• You will be surprised at how intriguing and insightful cost and management accounting is and wonder why you never used these techniques before. Get rid of the word profitability if this will make you feel more comfortable and explore an exciting world of numbers that can transform decision-making.
• Figuring out your break-even point, that is, the point at which you are neither making a gain or loss is powerful information for strategic planning and program expansion.
• Conducting sensitivity analyses in an Excel spreadsheet can be very insightful. See how changes in variable and fixed costs, service charges and so on can impact your break-even point and help to you better allocate available resources. 

The American Evaluation Association is hosting CEBE TIG Week with our colleagues in the Costs, Effectiveness, Benefits, and Economics Topical Interest Group. The contributions all this week to AEA365 come from our CEBE TIG members. Do you have questions, concerns, kudos, or content to extend this AEA365 contribution? Please add them in the comments section for this post on the AEA365 webpage so that we may enrich our community of practice. Would you like to submit an AEA365 Tip? Please send a note of interest to AEA365@eval.org. AEA365 is sponsored by the American Evaluation Association and provides a Tip-a-Day by and for evaluators. The views and opinions expressed on the AEA365 blog are solely those of the original authors and other contributors. These views and opinions do not necessarily represent those of the American Evaluation Association, and/or any/all contributors to this site.