Cost-effectiveness analysis
The cost-effectiveness analysis (CEA) (English cost-effectiveness-analysis = Cost effectiveness analysis) is an instrument for the evaluation of economic viability of projects whose costs via market prices can be determined whose benefits but not in monetary terms can be measured (eg B. Human life) or the monetary measurement of which is controversial in society.
Use and delimitation
The cost-effectiveness analysis should be distinguished from the cost-benefit analysis (Engl. Cost-benefit-analysis ), mainly for the evaluation of projects of the public sector is used. While the KWA only evaluates the cost criteria in monetary terms, in the cost-benefit analysis the other criteria are also expressed in monetary terms. On the input / cost side, the procedure corresponds to the cost-benefit analysis with the approach of opportunity costs. In contrast to the CBA, the benefit (effect) is included in the analysis in non-monetary units. Rather, the benefit is presented in physical quantities that indicate the achievement of operationalizable subgoals. As in a utility analysis, the effects are assessed using a weighted point system. The KWA is particularly suitable for those assessment and decision-making situations in which costs play an important role and should therefore be shown separately.
Procedure
The KWA initially considers the cost criteria separately from the other criteria; weighting is also omitted here. However, as with the utility value analysis, the target returns of the other criteria are assessed and summarized for effectiveness. The effectiveness and cost figures are also not added up, but put in relation to each other. The result is a cost-effectiveness indicator that expresses the costs associated with a point on the effectiveness scale. The indicators enable a clear ranking of the problem solutions. The rule of thumb is that the alternative solution that has the lowest cost-effectiveness ratio should be preferred . The results can then be presented graphically. A high level of effectiveness at low costs falls into the positive range and vice versa.
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With the KWA, projects that e.g. B. the protection and preservation of human life or other objects of inalienable rights have to be judged and decided on a rational level. This method is therefore advantageous if society rejects monetary assessments of the environment or causes great methodological difficulties. The KWA serves here as a decision-making aid for political decision-makers by providing the basis for evaluating alternatives.
Action
The task of the KWA is to help choose a measure . To do this, goals and their units of measurement must first be formulated. The alternatives are means by which goals can be achieved. The costs are determined in the form of opportunity costs , since the choice of a special alternative means that certain resources are no longer available for other purposes. The KWA focuses on the model . The means of representation can range from mathematical equations to a verbal description of the situation. The role of the model is to predict both the cost of each alternative and the extent to which each alternative will help achieve the goals. With the help of a criterion, alternatives are classified in order to be able to make the most desirable choice. It provides the yardstick by which costs can be weighed against effectiveness. The KWA is carried out in eight steps :
1. Goal analysis : The goals to be achieved must be complete, consistent and operationalized. If the target analysis is not carried out carefully, this will result in incorrect results.
2. Recording of secondary conditions : The secondary conditions are measures without which the goals cannot be achieved.
3. Determination of alternatives : The alternative courses of action are drawn up here. They must be able to meet the objectives and be consistent with the constraints.
4. Cost analysis : Pagatorial costs ( consumption of goods and services valued at market prices for the implementation of a measure) and opportunity costs are to be assigned to each measure.
5. Effectiveness analysis: The output side must be relevant and measurable. There are two sub-steps:
- Development of suitable benchmarks for the individual goals
- Measurement of the various partial efficacies on an efficacy scale : cardinal scale (extent of effectiveness differences ), ordinal scale (presentation of comparative differences: higher-equal-lower) or nominal scale (only class divisions: yes-no)
6. Temporal homogenization : The costs and effects that occur differently over time are related to a common point in time by discounting in order to make them comparable.
7. Consideration of risk and uncertainty : Due to incomplete information, costs and effectiveness can show different results depending on the situation. It is therefore important to distinguish:
- Decision in the case of objective risk: statistical probabilities can be assigned (e.g. a three when rolling the dice)
- Decision in case of subjective risk: only an assignment of subjective probabilities is possible (e.g. flood events)
- Decision in the event of uncertainty: neither objective nor subjective probabilities can be assigned. A sensitivity analysis is often carried out in this case .
8. Submission of project recommendations : At the end of the KWA, a cost-effectiveness matrix is drawn up, which takes into account the discounted values that are tailored to the risk and uncertainty.
See also
literature
- Manfred Schulte-Zurhausen : Organization , Vahlen 2002 ISBN 3-8006-2825-2
- Böhringer, Christoph: General equilibrium models as an instrument of energy and environmental policy analysis , Lang 1996 ISBN 3-631-30399-8
- Schröder, Michael: The economic costs of environmental policy , Physica-Verlag 1991 ISBN 3-7908-0535-1
- Weißkirchen, Frank: An application-oriented cost model for the evaluation of armed forces structures in the context of cost-effectiveness studies , Lang 1993 ISBN 3-631-46370-7
- Quade, Edward Schaumberg: Analysis for public decisions , American Elsevier 1975 ISBN 0-444-00153-0
- Wilhelm, Jürgen: Ecological and economic evaluation of agri-environmental programs , Lang 1999 ISBN 3-631-35593-9