1. ACTIVITY-BASED COSTING (ABC)

2. OVERALL GOAL OF THE COSTING
To Develop a costing estimation of community-based services delivered by National Societies
The study should collect data available at administrative and financial records and provide relevant information on community based programmes that could allow decision makers, donors and programme planners and other stakeholders to respond to the following questions:
What are the key components of HIV and Aids interventions (Counselling and Testing, Treatment, Home based Care, referral and counter referral
What is the standard unit cost per beneficiary

3. Definition of the Concept of Activity-Based Costing (ABC)
The Activity Based Costing (ABC) is a methodology for allocating Resources to Activities and allocating Activities to Cost Objects

4. ABC Costing VS Traditional Method
Services and Products consume Activities, Activities consume Resources (human resources, equipment)
Activities are considered a the basic Cost Object
Expenses should be separate and matched to the level of Activity that consumes the Resources
Programme based costing
Traditional Method
Product and Services consume Resources
Not fit for programme costing but rather for facility based costing

5. Overview of the Costing Methodology
Services
Activities
Resources

6. Overview of the costing Methodology
The purpose of this model is to allocate costs.
This model is based on the principle that activities incure costs through the consumption of resources.
As end users demand products or services, activities must be performed.

7. Interest of ABC Costing
Track resources within a programme
Address the same programme contents with alternatively management strategy
Approach the same programme goals with alternatively sets of activities
Estimate the incremental cost of raising the programme coverage
Identify cost implications for alternative strategies of programme targeting
Evaluate the cost impact of technology change and substitutions in programme resource mix

8. Overview of the Step by Step Costing Methodology
Step 1. Costing Matrix or Catalogue
Step 2. Annual Volume of Services (Sum of Activities)
Activity/Service Definition
Activities Drivers (Outputs metrics or Volume)
Step 3. Fixed Costs Definition and Calculation (from the Ledger)
Step 4. Variable Cost per Service
Step 5. Unit Cost Calculation
Step .6 Reporting and Analysis

9. Step 1. Design the Costing Matrix or the Costing Catalogue
Service
Population
Output Units
Cost Categorie
Units
Select Service
Select Target Population
Select Output Unit
Select Cost Category
Select Unit
Outreach
PLHIV adults
Person contacted
Salaries and wages
Day/person
Testing
PLHIV under 15
Person tested
Test kits and lab reagents
Kit
Antiretroviral treatment
Serodiscordant couples
Year-person of adult ART
Medicines, ARV
One-month treatment
Condom distribution
Commercial Sex Workers
Year-person of Pediatric ART
Medicines,TB
One-case treatment
Referral
Men who have sex with men
TB treatments delivered
Transport
Monthly endowment
Home visit
People who injects drugs
IO treatments delivered
Office Renting
Dozen
Psychosocial Support
TB patients
Year-person of condom protection
Condoms
Set

10. Step 2. Annual Volume of Services (Sum of Activities) Activity/Service Definition
Briefly describe the key activities and health service provided performed by the programme or project.
Try to keep this list to the main activities that are somehow linked to customers.
Examples:
HIV Counselling and testing
ARV treatment
Psychosocial support
Condom distribution

11. Step 2. Annual Volume of Services (Sum of Activities) Activities Drivers (Outputs metrics or Volume)
Define the beneficiary population (pregnant women, PLHIV, OVC, sex workers, general population etc..)
Calculate the volume of each activity or service delivered to beneficiaries (Refer to programme report)
Examples:
# of people counselled and tested
# of condoms (male/female) distributed
# of people reached with HIV prevention messages

12. Step 3. Fixed Costs Definition and Calculation (from the General Ledger)
A fixed cost is a cost that does not vary in the short term, irrespective of changes in production or sales levels, or other measures of activity. A fixed cost is a basic operating expense of a business that cannot be avoided, such as a rent payment.
Example: The rent on a building will not change until the lease runs out or is re-negotiated, irrespective of the level of business activity within that building.
Examples of other fixed costs are insurance, salaries and property taxes.

13. Step 4. Variable Costs Definition and Calculation (from the General Ledger)
A variable cost is a cost that could vary, depending on the volume of activities, services or production.
Example: For a programme the following cost could be considered under variable costs
Transport for supervision
Medical and non medical supplies
Allowance
Training costs
Communication fees

14. Step 5. Unit Cost Calculation
FIXED Cost + Variable Cost / Outputs Metrics * This cost is automatically generated in the table * # of beneficiaries, # of item distributed, etc.

15. 1. IDENTIFY ANNUAL VOLUME OF SERVICES (Sum of Activities) PROVIDED

16. 2. FIX COSTS DEFINITION AND CALCULATION (Use financial Report or General Ledger records)

17. 3. VARIABLE COSTS DEFINITION AND CALCULATION PER SERVICES (Use financial Report or General Ledger records)

18. 3. VARIABLE COSTS DEFINITION AND CALCULATION PER SERVICES (2) (Use financial Report or General Ledger records)

19. 3. VARIABLE COSTS DEFINITION AND CALCULATION PER SERVICES (3) (Use financial Report or General Ledger records)

20. 4. UNIT COST CALCULATION PER PERSON SERVED

21. Summary points from 7 countries
- fixed costs (64-71%)
- care of orphans and vulnerable children has - unit cost of US $ and is constituted % of variable costs.
Counseling and testing costs on average US $ per person
Average unit costs:
- US $ among the IDU, • US $ for MSM • US $ for sex workers