Comprehensive program evaluation work almost always involves obtaining information about the costs of the programs being evaluated. Such information is needed to assess overall cost effectiveness, to examine the efficiency with which programs operate, and to examine whether programs can be improved by various changes in specific aspects of program operations.
Obtaining adequate cost information for these purposes, however, can often pose problems. For reasons discussed later, available accounting data are often not detailed enough to provide all the information needed by the program evaluator, and program officials often cannot directly describe costs in ways that are useful for analysis work.
To address these concerns, this article outlines a general approach to estimating program costs, which we believe has wide applicability in program evaluation work.
Why Accounting and Budget Data Are Usually Not Adequate
Most public sector and nonprofit private sector organizations of any size have budget information about their operations. In addition, they usually have accounting systems that track program costs as the costs are incurred during the budget year. An obvious question to ask is, "Why not use these data for program evaluation?"
Utilizing budget and accounting data is cheap and readily implemented, and it sometimes yields sufficient data for evaluation purposes. Often, however, the available accounting and budget data are inadequate for one or more of the following reasons:
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