Measuring Cost-Effectiveness
At its most basic, cost-effectiveness is about measuring an organisation's relative efficiency in producing its outcomes.
For MAF, the development of robust cost-effectiveness measures requires knowledge of both the total costs (fiscal, economic and other) of its outputs and the nature and incidence of the outcomes (i.e. the impacts) generated as a result of these outputs. It also requires knowledge of the costs of alternative outputs that could be expected to generate similar outcomes. This “alternative output analysis” is a complex task, and if there are limited alternative outputs available, cost effectiveness analysis will be very difficult. It may be that cost utility analysis - comparing the costs of achieving a common end point (i.e. using a common metric) - may be possible, but this is also a complex task.
As a result, MAF is adopting a phased approach to developing cost-effectiveness measures.
During 2006/07 we developed an Outcomes Performance Monitoring Framework which identified the outcomes MAF is pursuing and what data will indicate whether MAF has made progress in achieving them. Developing these outcome performance measures is the first step towards determining cost-effectiveness.
MAF plans to develop a monitoring and evaluation strategy during 2007/08 that, when implemented, will allow for an assessment of the effectiveness of MAF outputs in creating desired outcomes. Therefore, demonstrating the efficiency of existing interventions and the robustness of the intervention logic is the second step in developing an over-arching performance measurement framework (which includes cost-effectiveness measures). It enables cost estimates to be provided for each MAF outcome, as the cost of those outputs that create the outcome can be aggregated.
In essence MAF's intervention logic will be assessed by these outcome evaluations and from 2008/09 on alternative interventions, or changes in output mixes, which achieve the same desired outcomes can then be costed and compared.
Contact for Enquiries
Strategy and Performance Group
Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: +64 4 894 0100
Fax: +64 4 894 0738
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