Harmonizing Value for Money across Donors: BE2 Cost Measurement Guidance Note

• In Event: What does value for money mean when it comes to educating a child?

Proposal

NOTE: The Building Evidence in Education (BE2) is a donor working group led by a Steering Committee composed of the Department for International Development (DFID), United Nations International Children's Emergency Fund (UNICEF), United States Agency for International Development (USAID) and The World Bank Group. The Mission of BE2 is to harmonize research efforts across donors with the ultimate objective of improving availability and quality of data and evidence for decision making by national governments and funders.

With an increased emphasis on evidence-based programming, a need for better data on the impact as well as costs of donor-supported interventions in education is apparent. Governments and non-governmental donors of development assistance have been under increasing pressure from their stakeholders to demonstrate results of their investments. While the field made great strides in recent years with raising the number and the quality of impact evaluations, their results are incomplete without cost data for these interventions, to enable an assessment of value for money of the investments. We learn which interventions and approaches achieve the greatest value for money by comparing the cost-efficiency and cost-effectiveness across different programs. At present, it is difficult for funders or governments to use cost and effectiveness data to inform funding decisions because the cost evidence is not comparable, and frequently incomplete. Differences in donor and national reporting systems can act as an obstacle toward collecting comparable cost data. Where cost evidence is available, the data collection metrics and cost analysis methods are not standardized, which makes it difficult to compare data across different agencies and programs. Thus, national governments and international funders often miss critical opportunities to leverage information about costs of interventions in making policy decisions.

Differences in financial reporting requirements across donors also result in high transaction costs for governments and NGOs that benefit from donor support. National reporting systems struggle to comply with reporting requirements imposed by multiple donors, and international NGOs have to create parallel systems to satisfy the financial reporting requirements of different donors. Moreover, differences in metrics and measurement approaches make using data generated through different reporting streams difficult to compare and use for management decision-making, undermining the usefulness of this information for policy makers and program implementers alike.

In response to this need, BE2 produced a cost measurement guidance note that aims to guide the alignment of financial reporting requirements to the needs of cost analysis. The main objective of this guidance note is to establish a common foundation for how donors think about capturing and analyzing cost in donor-supported education programming. Furthermore, we hope that the ideas put forth in this note will be of benefit to national governments considering alternatives in resource allocation to improve efficiency and effectiveness of the education delivery in their respective countries.

This guidance note is designed to provide guidance to donors, their partners, and national governments on how to measure, analyze, and use data on costs of common components of education inputs. This guidance can thus be useful to those who are commissioned to produce research, independent researchers and academics, as well as implementation partners of multilateral donors. The guidance establishes the principles of systematic cost data collection across donor-funded education portfolio and outlines common elements underpinning such efforts, proposing the blueprint for cost reporting and analysis in the education sector.

Author

• Elena Walls, US Agency for International Development (USAID)