STEP 4: Define Program Costs (Input) and Cost Analysis Methods
In the specification of costs, all budgetary resources expended to implement the HP-DP program are documented. As defined in Chapter 5, a successfully implemented process evaluation will provide this information and data. Staff needs to prepare a cost inventory of all resources required to provide the program, define the units of measurement for each resource category, and assign a monetary value to each resource unit. This step requires documentation of the costs associated with program delivery: staff time/group or individual contact, number of contacts, and total amount of resources expended and cost per client. The following is a synopsis of the main cost/budget categories. Costs are segmented into two categories: direct and indirect.
Direct Costs
These are expenditures for staff training and staff time to deliver the intervention, and non-personnel costs, such as tests, and program materials.
Indirect Costs
These are expenditures for facilities rent, maintenance, security, and so on. Whether to use indirect costs is an individual program judgment and depends on the extent to which the organization requires these costs to be used.
Personnel Costs
The major cost associated with the delivery of most HP-DP programs is personnel time, typically 70%-90% of a budget. If mass media and/ or specific materials are used, the proportion of a budget for staff may be lower. A detailed description of the HP-DP program specifies how much individual staff time is expended to provide the different assessment and intervention components. As noted in Chapter 5, a program-provider flow analysis (PFA) of what is being delivered on a typical day to 10-30 clients (varies by census) at each site, and > 5 clients per provider for a typical workday, should provide this information.
A basic example of the costs of a program is as follows. In an employee wellness program, a graduate-trained exercise physiologist might use 20 hours to deliver twice a week a one-hour aerobics class for each group of 10 employees over a period of 10 weeks. The instructor may have to spend an additional 20 hours in preparation: 60 minutes/session. If you assume a $50,000 per year salary for this person, with a 20% fringe benefit rate (0.20 x $50,000 = $10,000), the total salary costs would be $60,000 per year. The rate for the staff would be about $30/hour ($60,000; 2,080 hours). Thus, the total staff costs to deliver this type of program to 10 employees would be about $1,200 ($30 x 40 hours): $120/employee. It is assumed that equipment cost is minimal, and not a direct cost.
Additional costs to the company could be considered, depending on whether the program was delivered on company time or employee time. It would be zero, if on employee time, or based on the average hourly wage of the 20 employees, if conducted on company time. If the average wage (salary + fringe) was $50/hr, the company direct cost for lost employee time would be $10,000: 10 X 20 X $50/hr. In this example, employees do not participate during company time.
Although probably small, costs for staff to communicate to employees about the program and/or to schedule the facilities would also be incurred and counted. Another dimension of a cost analysis may be participant copayment. If each employee had to pay $50 to enroll, the income would be $500, and total net cost of the program to the employer would be $700, or $70/employee.
