Cost Analysis in USAID’s Center for Education

• In Event: Making Cents: How tools and methods are helping the sector conduct cost analysis

Proposal

In 2018, USAID’s Center for Education launched the Cost Reporting Guidance for USAID-Funded Education Activities and in 2020, the Cost Analysis Guidance for USAID-Funded Education Activities as a part of a cost measurement initiative. These documents were both updated in 2021. In the Center for Education’s history, these documents were the first of their kind to provide a framework and pragmatic structure for capturing and analyzing the billions of dollars invested by USAID in education development projects. The goal of the cost measurement initiative is to improve sustainability and value-for-money, and assist USAID in planning and managing its education investments.

The Cost Analysis Guidance establishes the process and procedures for how analysts examine USAID cost data in the education sector and sets standards for reporting on findings. It includes specific, step-by-step guidance along with tools and worksheets for analysts to use. The objective of providing these pragmatic tools is to provide analysts with the critical resources they need to conduct the analysis and to contribute to the wider learning that is occurring due to USAID’s innovative cost measurement initiative. To ensure comparability and transparency of the results, all new USAID-funded cost analyses in education are required to adhere to this guidance.

This presentation will describe the key components of the USAID Center for Education cost analysis methods and highlight the unique aspects of these methods when compared to others. In particular, it will discuss activity-based costing, the use of standard cost categories, including and excluding costs in analysis based on perspective, disaggregation of USAID-specific operations and management costs, and inclusion of data on government and nongovernmental contributions. It will also share how these methods are standardized across partners and analyses to ensure comparability.

It will also cover analysis methods that USAID does not use, such as purchasing power parity and discounting costs and benefits, and how the prioritization of balancing burden and precision influences some data collection and analysis guidelines.

Author

• Emma Venetis, EnCompass LLC