Cost Estimating and Analysis in Program Evaluation

This article appeared in the GAO Review, Vol. 16, Issue 3, Summer 1981. Evaluations have been designed to compare the effectiveness of programs but have seldom included thorough cost comparisons. The implicit assumption often seems to be that the most effective programs are also the most cost-effective. Human service programs have not had good cost models to borrow from because many of these projects have no counterparts in industry. Attention has been focused on the revenue required to meet program needs with very little concern for the total cost of a particular service. The importance of cost information and cost comparisons is beginning to be realized in social program evaluation. There appears to be a need for more focused research to find solutions to complex problems of cost estimation and to develop improved cost models for this purpose. More consistent accounting for government expenditures would provide an improved database for support of such research. More specific treatment of program costing problems may be needed in evaluation guidelines and standards published by government agencies and professional societies.