Module 2

Designing a Cost Analysis

In this module, we’ll walk you through a comprehensive list of considerations for designing a cost analysis, following a concrete example to illustrate each item; discuss how to think about which costs to include in your analysis; review a timeline of cost analysis activities; and start setting up a cost analysis in an Excel-based cost analysis template to get ready for the next step: data collection.

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In This Module…

  • What decisions must be made to plan a cost analysis?

    How to design a cost analysis.

    How to set up a cost analysis in an Excel-based cost analysis template.

  • Before you begin this module, answer a few multiple choice questions related to design of a cost analysis to prime you for topics the module will address.

  • Module 2: Video 1
    Introduction to Module 2

    Module 2: Video 2
    Designing a Cost Analysis Part 1: Descriptive Components

    Module 2: Video 3
    Designing a Cost Analysis Part 2: Study Design and Analytical Choices

    Module 2: Video 4
    Which Costs Should I Estimate?

    Module 2: Video 5
    Timeline for a Cost Analysis

    Module 2: Video 6
    Setting up Your Cost Analysis in a Template

  • Standards for the economic evaluation of educational and social programs.

    "Just give me a number!" Practical values for the social discount rate.

    Timing is everything: Collaborating with IES grantees to create a needed cost analysis timeline.

    A benefit-cost analysis of City Connects.

    (Links to the readings are available in the Recommend Readings section below.)

  • Timeline of activities for cost analysis

    CAPCAT templates including checklist and comparison chart

  • At the end of the module, we ask you to read about a hypothetical program, complete a checklist of study design considerations, and complete the setup tab in CAPCAT 1.2 Plus, one of CAP Project’s cost analysis templates.

 
 

The development and production of these materials was supported by the Institute of Education Sciences, U.S. Department of Education, through Grant R305U200002 to Teachers College, Columbia University. The opinions expressed are those of the authors and do not represent views of the Institute or the U.S. Department of Education.

 
 
 
 

Pause for Thought:
What are your learning goals for this module? Take a few minutes to write them down. Keep these goals in mind as you work through the lessons in this module.

Module 2: Video 1

Introduction to Module 2

03:33 minutes

This short video provides an overview of what you will learn in Module 2 and raises critical decisions you will need to make at this stage that will affect the budget needed to cover your own work.

 

Watch Video 1

Key Terms You Should Know from Video 1:
budget, business as usual, comparison group, template, design, logistics

Test What You Know

Answer a few multiple choice questions related to design of a cost analysis to prime you for topics Module 2 will address.

TAKE THE PRE-QUIZ
 
 

Pause for Thought:
What is your plan for learning success? What days and times will you set aside for your study? How will you hold yourself accountable for your learning? How will you reward yourself when you accomplish your learning goals?

Module 2: Video 2

Designing a Cost Analysis
Part 1: Descriptive Components

08:22 minutes

This video walks you through a checklist of design considerations for cost analysis, focusing on the descriptive components of the analysis: study motivation and context; and information about each program being analyzed. The checklist is based on one from the Standards for the Economic Evaluation of Educational and Social Programs (Cost Analysis Standards Project, 2021).

 

Watch Video 2

Key Terms You Should Know from Video 2:
societal perspective; start-up phase; ongoing phase; business as usual, standalone program, supplementary program, partially substituting program

 
 

Pause for Thought:
Are you currently planning a cost analysis? If so, are you clear about why the analysis is being done, who will care about the results, and how they might be used? If the answer is less than a solid “Yes!” go back to the drawing board and make sure everyone understands and agrees on these issues.

Module 2: Video 3

Designing a Cost Analysis
Part 2: Study Design and Analytical Choices

11:06 minutes

This video completes the review of the checklist for designing a cost analysis. It covers the study design items and analytical choices that need to be planned in preparation for data collection. We continue with the same concrete example as in the previous video to illustrate each point.

 

Watch Video 3

Key Terms You Should Know from Video 3:
time horizon; reference or base year for multiyear programs; scope of cost data collection; durable assets; amortization; sensitivity analysis; reference case analysis

 
 

Pause for Thought:
At this point, you should feel like you know what’s involved in designing a cost analysis. If you feel you need more details on any of the items covered so far in Module 2, take some time to review the CAP Project Standards and Guidelines or the Standards for the Economic Evaluation of Educational and Social Programs.

Module 2: Video 4

Which Costs Should I Estimate?

07:43 minutes

This video discusses how to determine which costs to include in a cost analysis using several hypothetical scenarios in which the program being studied may be totally new, may supplement current activities, or may partially or wholly replace them.

 

Watch Video 4

Key Terms You Should Know from Video 4:
counterfactual condition; supplementary programs; substitute or replacement programs

Module 2: Video 5

Timeline for a Cost Analysis

08:49 minutes

This video reviews the sequence of activities involved in planning, conducting, and reporting a cost analysis, highlighting key activities along the way.

 

Watch Video 5

Key Terms You Should Know from Video 5:
cost-effectiveness plane

Module 2: Video 6

Setting up Your Cost Analysis in a Template

11:55 minutes

This video provides a demo of the first few steps in setting up a cost analysis in one of CAP Project’s Cost Analysis Templates, CAPCAT 1.2 Plus. This will leave you ready to start data collection.

 

Watch Video 6

Key Terms You Should Know from Video 6:
geographical adjustments and indices; key parameters; default values; national average equivalent costs; centralized entities

Recommended Readings

 

Readings for this module include a comprehensive guide to producing high-quality economic evaluations, an article about how to choose a discount rate if you need one, a blog on cost analysis timelines, and an example of an economic evaluation which illustrates the challenge of gathering cost information on services provided to comparison students who are not participating in the treatment.

  • Comprehensive guidance for producing high-quality cost analyses, cost-effectiveness analyses, and cost-benefit analyses.

    Cost Analysis Standards Project. (2021). Standards for the economic evaluation of educational and social programs. American Institutes for Research.

    Access this reading

  • How to choose a discount rate to use in your economic evaluations.

    Moore, M. A., Boardman, A. E., Vining, A. R., Weimer, D. L., & Greenberg, D. H. (2004). “Just give me a number!” Practical values for the social discount rate. Journal of Policy Analysis and Management, 23(4), 789-812.

    Access this reading

  • Blog post on timelines for cost analysis.

    Pratt-Williams, J., Brodziak, I., Drummond, K., & Artzi, L. Timing is Everything: Collaborating with IES Grantees to Create a Needed Cost Analysis Timeline. Inside IES Research.

    Access this reading

  • An economic evaluation of Boston College’s City Connects program, which evaluated student needs and connects them to services provided by community partner organizations. Example of the difficulty of determining costs for students not receiving the intervention.

    Bowden, B., Belfield, C. R., Levin, H. M., Shand, R., Wang, A., & Morales, M. (2015). A benefit-cost analysis of City Connects.

    Access this reading

 
 
 

Apply Your Learning

At this point you should be able to design a cost analysis. Take the End of Module Self-Assessment to test your ability to apply your learning.

 

NOTE: To submit your end of module self-assessment, you will need to have a Google account and also know how to upload files to Google Drive. You can access video tutorials at the links below:

 
 

Additional Resources

Here are a some of the key items used in the Module 2 videos that you’ll need to support your learning and design of a cost analysis.

 
 

  • This timeline is described in Module 2 Video 5. It outlines all activities involved in executing cost and cost-effectiveness analysis concurrently with impact studies.

    Link to Timeline

  • This page provides access to CAPCAT 1.2 Plus, the cost analysis template we use in Video 6, as well as CAP Project’s other cost analysis templates and a comparison chart to help you choose which one to use. CAPCAT 1.2 Plus and 1.3 Advanced include the checklist used in Videos 2 and 3.

    Link to Templates Page

 
 
 

 Your Feedback Please

How helpful was it? Do you feel more confident about your ability to conduct a cost analysis? What can we improve? Please complete the Module 2 Feedback Questionnaire.

 

Up next…

Module 3: Collecting Cost Data

 

Overview

 

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MODULE 2

 

Module 3

 

Module 4

 

Module 5

 

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