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Date: 2019-12-13 Page is: DBtxt001.php list0300-Cost-effectiveness-efficiency-1

Definitions for TrueValueMetrics
Cost Effectiveness/Efficiency

Cost effectiveness is a metric that relates the cost of doing something with the value of the results achieved. Cost effectiveness is a measure that relates how much impact or value was achieved with the use of resources ... it is a measure of productivity.

Example: Malaria

The global strategy for malaria is to reduce the burden of the disease ... value is derived from reduction in the burden of malaria. Let us take the following two situations:

  1. 1. Bednets are used, cost $10 per net ... and say $100,000 was spent on nets ... and the burden of malaria goes down down 5%.
  2. 2. IRS is used and $100,000 is spent on IRS ... and the burden of malaria goes down 20%
At first glance it appears IRS would have a cost effectiveness 4 times better than bednets. But bednets last 3 years and IRS must be done annually ... so the comparative cost effectiveness is closer.

The comparison model can be very powerful ... but the data need to be specific, precise and timely. At the present time with very limited data about malaria interventions it appears that most of the available funds are wasted.

Cost efficiency. Cost efficiency is a measure that relates how much an activity did cost with how much much it should have cost? How much something should cost is determined by reference to experience, technical factors and prices.

Calculating cost. It is possible to calculate how much something should cost if the elements of the activity are understood. If experience in other situations is known, this may inform how much something should cost in another situation. What something should cost may be expressed as a standard cost.



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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.
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