07 April 2017

How much does that intervention cost?

Academics from London (UCL) and Australia (Australian National University) have developed a Cost Benefit Tool for the What Works Centre for Crime Reduction, as part of the work delivered by the Commissioned Partnership Programme.

Why have we developed a Cost Benefit Tool?

There is often only limited information on the costs and benefits of crime reduction interventions, which can hamper evidence-based decisions on what to do about crime problems.  To help practitioners make more accurate cost-benefit assessments of their interventions a new tool has been developed by the Commissioned Partnership Programme for the What Works Centre for Crime Reduction.  The Tool includes guidance and is based on an easy to use spreadsheet which is available in two parts.  It has been developed by Dr Matt Manning, Margarita Vorsina and Gabriel Wong from the University of Australia and Professors Shane Johnson and Nick Tilley (UCL). 

Has the Cost Benefit Tool been tested?

The Cost Benefit Tool was tested by practitioners at a workshop last September.  Participants came from a wide range of organisations including police officers and staff, representatives from the office of the PCC and charities delivering services directly to both victims of crime and to offenders as part of rehabilitation.  Discussions during the day revealed that participants identified individual ways of using the Cost Benefit Tool in a range of ways.  For example, a charity providing services for rape survivors, decided that they would use the Tool to cost their contribution to a wider multi-agency initiative; allowing them to identify their proportion of the cost, along with the benefits.

How can I find some guidance about conducting cost benefit analysis?

Alongside the development of the Cost-Benefit Tool the academic team have also produced Economic Analysis: A Brief Guide for Crime Prevention Practitioners.  This brief guide provides a summary of some of the issues faced by practitioners when conducting economic analysis, outlines the major forms of economic analysis that can be used, and provides some examples before going on to describe the Cost Benefit Tool.

Further information can be found in "The Green Book", the Treasury's guide to economic evaluation, or the easier to read "Supporting public service transformation: Cost benefit analysis guidance for local partnerships"

What is Part 1 of the Cost Benefit Tool and how can it be used?

Part 1 of the Cost Benefit Tool uses traditional costing techniques - such as those employed in the HM Treasury (2003) The Green Book – allowing input of all relevant cost and benefit data into the Tool to calculate total expenditure on one or more interventions/programmes (across all years of the intervention), and/or to compare the average annual expenditure before and after the introduction of the intervention. 

For example, users can input costs associated with a variety of factors such as:

  • personnel time
  • equipment purchases
  • materials used (e.g., fuel)
  • additional expenses (e.g. insurance or maintenance costs).  

Part 1 of the Cost Benefit Tool also helps by distinguishing costs as direct (e.g. salaries for project staff) or indirect (e.g. administration) and identifies intangible costs (e.g. reduction in productivity due to the extra demands of the new intervention). 

Users can also insert upper and lower cost estimates where only approximate or national costs are available or intangible cost estimates are used.  The Tool allows users to make a comparison of costs prior to the intervention being implemented (i.e. the status quo or costs in absence of the intervention) and after the intervention. 

On the benefits side it will estimate the size of savings made by avoiding or preventing crime.  Costs associated with crimes are based upon Crime against individuals and households.  Home Office Online Report 30/05 (2005), but other local data can be used.

Ultimately the Tool calculates the cost-effectiveness ratio, and the cost-benefit ratio.

What is Part 2 of the Cost Benefit Tool and how can it be used?

Part 2 uses a combination of traditional methods for calculating the costs of an intervention and other techniques that allow cost estimates to be made in the absence of reliable accounting data. In Part 2, the average annual costs of an earlier or similar intervention can be compared to those of a new intervention.  This part of the Tool allows the user to estimate how much it will cost to implement an intervention in a different context, such as a new location or more widely (upscaling from a pilot project to a whole treatment area).  This analysis asks the user to compare the differences between the two areas in a series of apparently simple questions, then uses a technique called Analytic Hierarchy Process (AHP) to estimate the new costs.

You can download Parts 1 and 2 of the Cost Benefit Tool by going to the Tool download page under the Research section of the What Works micro site.

For further information, please contact College What Works on whatworks@college.pnn.police.uk