samiha cost control & analysis_ ashok layland.doc

8/9/2019 Samiha COST CONTROL & ANALYSIS_ Ashok layland.doc

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A

PROJECT REPORT

ON

“COST CONTROL & ANALYSIS ”

OF

ASHOK LEYLAND LTD.

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ABSTRACT

This project titled “cost control & analysis” at Asho Leyland Ltd is a st!dy at

cond!cted in this co"pany #or the p!rpose o# analy$in% cost control.

ost analysis "eans “The econo"ic e'al!ation( e##iciency assess"ent( cost)*ene#it

analysis and cost e##ecti'eness” are called as “cost control and analysis”. +t is "ainly depends

on ost allocation and deter"ination( ost e##ecti'e analysis Econo"ic *ene#its

The o*jecti'e o# this decision aid is to #acilitate the cost calc!lation #or the ranch

pic !p and,or a li'estoc trailer. The decision aid calc!lates the per "ile and ann!al costs o# a

pic !p or trailer( the cost o# "a in% a trip -ith li'estoc ( and also allo-s #or calc!lation o#

costs #or enterprises *y allocatin% the percent costs *et-een #ora%es( li'estoc ( and crops.

The pro%ra" is !se#!l #or enterprise *!d%etin%( esti"atin% transportation costs and e'al!atin%

p!rchasin% alternati'es. ro"ote the acco!nta*ility( to increase the pro#ita*ility o# the

co"pany(

to st!dy the per#or"ance o# the or%ani$ation.

+np!ts are /0 'aria*les that are !sed to descri*e the pic !p and trailer. These can

*e o*ser'ed in the attached decision aid e1a"ple. !rrent "ar et 'al!e can *e the p!rchased

'al!e on a ne- pic !p or trailer or the "ar et 'al!e 2net3 #or a !sed pic !p or trailer. Total

"iles !sed sho!ld e4!al re"ainin% "iles o# !se #or a ne- pic !p or trailer. 5e"ainin% "iles

o# !se -o!ld re#lect "iles le#t #or !se #or !sed pic !p or trailer. See the de#inition section #or

a description o# other inp!t ite"s.

+t can *e concl!ded that o!tp!ts are three sections o# o!tp!t #or the decision aid6

per "ile and ann!al costs( trip costs and allocated costs. The trip cost or allocated cost section

can *e i%nored i# they are not desired. The pic !p cost can *e calc!lated -itho!t the trailer7ho-e'er( to calc!late the co"*ined pic !p and trailer cost( the pic !p "!st *e incl!ded to

%enerate these costs.

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INDEX

S.No. TOPIC P.No.

CHAPTER - 1

INTRODUCTION:

COST ANALYSIS IN EVALUATION

TYPES OF COST ANALYSIS

ADVANTAGES & DISADVANTAGES

01-08

CHAPTER - 2

CONCEPTIONAL FRA E !OR"S

THEROTICAL STUDY

USING !ITH THE STATE

STRENGTHENING

BUDGET & ALLOCATION COST

EFFICIENCY & EFFECTIVENESS

COST BENEFIT ANALYSIS

0#-20

CHAPTER - $

APPLICATIONS AND HISTORY

COST OVERRUN

COST ANALYSIS & CONTROL

ETHODS

COST ANALYSIS RATIO

21-%

CHAPTER - % CO PANY PROFILE %'- %

CHAPTER -

DATA ANALYSIS AND INTERPRETATION

LOST PRODUCTION COST

OE RESPONCE TI E

ANNUAL OE COST

-'1

CHAPTER - ' FINDINGS( SUGGESTIONSANDCONCLUSIONS

'2-''

BIBLIOGRAPHY

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CHAPTER )+

INTRODUCTION

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8HAT +S OST ANALYS+S9

ost analysis 2also called econo"ic e'al!ation( cost allocation( e##iciency assess"ent(

cost)*ene#it analysis( or cost)e##ecti'eness analysis *y di##erent a!thors3 is c!rrently a

so"e-hat contro'ersial set o# "ethods in pro%ra" e'al!ation. One reason #or the contro'ersyis that these ter"s co'er a -ide ran%e o# "ethods( *!t are o#ten !sed interchan%ea*ly.

At the "ost *asic le'el( cost allocation is si"ply part o# %ood pro%ra" *!d%etin% and

acco!ntin% practices( -hich allo- "ana%ers to deter"ine the tr!e cost o# pro'idin% a %i'en

!nit o# ser'ice 2Kettner( :oroney( & :artin( /;;03. =eca!se these st!dies ha'e *een -idely cited

and credited -ith con'incin% le%islators to increase their s!pport #or early childhood

pro%ra"s( so"e practitioners ad'ocate "a in% "ore !se o# cost)*ene#it analysis in e'al!atin%

social pro%ra"s 2=arnett( /;>>( /;;?3. Others ha'e ca!tioned that %ood cost)*ene#it or cost)

e##ecti'eness st!dies are co"ple1( re4!ire 'ery sophisticated technical s ills and trainin% in

"ethodolo%y and in principles o# econo"ics( and sho!ld not *e !nderta en li%htly 28hite(

/;>>3. 8hate'er position yo! ta e in this contro'ersy( it is a %ood idea #or pro%ra"

e'al!ators to ha'e so"e !nderstandin% o# the concepts in'ol'ed( *eca!se the cost and e##ort

in'ol'ed in prod!cin% chan%e is a concern in "ost i"pact e'al!ations 25ossi & @ree"an(

/;;?3.

COST ANALYSIS IS OF THREE IN EVALUATION:

/. ost Allocation

. ost ) E##ecti'eness analysis


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?. ost ) =ene#it analysis

5epresent a contin!!" o# types o# cost analysis -hich can ha'e a place in

pro%ra" e'al!ation. They ran%e #ro" #airly si"ple pro%ra")le'el "ethods to hi%hly

technical and speciali$ed "ethods. Ho-e'er( all ha'e speciali$ed and technical aspects. +#

yo! are not already #a"iliar -ith these "ethods and the lan%!a%e !sed( yo! sho!ld plan to

-or -ith a cons!ltant or read so"e "ore in)depth te1ts 2see so"e s!%%ested re#erences

at the end o# this disc!ssion3 *e#ore decidin% to atte"pt the".

COST ALLOCATION:

ost allocation is a si"pler concept than either cost)*ene#it analysis or cost)

e##ecti'eness analysis. At the pro%ra" or a%ency le'el( it *asically "eans settin% !p

*!d%etin% and acco!ntin% syste"s in a -ay that allo-s pro%ra" "ana%ers to deter"ine a !nit

cost or cost per !nit o# ser'ice. This in#or"ation is pri"arily a "ana%e"ent tool. Ho-e'er( i#

the !nits "eas!red are also o!tco"es o# interest to e'al!ators( cost allocation pro'ides so"e

o# the *asic in#or"ation needed to cond!ct "ore a"*itio!s ost ontrol Analysiss!ch as

cost)*ene#it analysis or cost)e##ecti'eness analysis. @or e1a"ple( #or e'al!ation p!rposes( yo!

"i%ht -ant to no- the a'era%e cost per child o# pro'idin% an a#ter)school t!torin% pro%ra"(

incl!din% the costs o# sta## salaries( snac s( and other o'erhead costs.

=esides *!d%et in#or"ation( *ein% a*le to deter"ine !nit costs "eans that yo! need

to *e collectin% the ri%ht ind o# in#or"ation a*o!t clients and o!tco"es. +n "any a%encies(

the in#or"ation recorded in ser'ice records is *ased on reportin% re4!ire"ents( -hich are not

al-ays in a #or" that is !se#!l #or e'al!ation.

+# sta## in a prenatal clinic si"ply report the n!"*er o# clients ser'ed *y %ender( #or

e1a"ple( yo! "i%ht no- only that /BC #e"ales -ere ser'ed in :arch. @or an e'al!ation(

ho-e'er( yo! "i%ht -ant to *e a*le to *rea do-n that n!"*er in di##erent -ays. @or

e1a"ple( do yo!n% #irst)ti"e "others !s!ally re4!ire "ore 'isits than older -o"en9 Do

sin%le "others or -o"en -ith se'eral children "iss "ore appoint"ents9 +s transportation to

appoint"ents "ore o# a pro*le" #or -o"en -ho li'e in r!ral areas9 Are any client

characteristics co""only related to i"portant o!tco"es s!ch as *irth -ei%ht o# the *a*y9

Decidin% ho- to collect eno!%h client and ser'ice data to %i'e !se#!l in#or"ation( -itho!t

o'er*!rdenin% sta## -ith !nnecessary paper-or re4!ire"ents( re4!ires a lot o# plannin%.

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Lar%er a%encies o#ten hire e1perts to desi%n data syste"s( -hich are called :+S or

"ana%e"ent)and)in#or"ation)syste"s.

+# yo! are -or in% #or an e1istin% a%ency( yo!r a*ility to separate o!t !nit costs #or

ser'ices or o!tco"es "ay depend on the syste"s that are already in place #or *!d%etin%(

acco!ntin%( and collectin% ser'ice data. Ho-e'er( i# yo! are in a position to in#l!ence these

#!nctions( or need to s!pple"ent an e1istin% syste"( there are a n!"*er o# te1ts that disc!ss

the pros and cons o# di##erent -ays o# *!d%etin%( acco!ntin%( and desi%nin% :+S or

"ana%e"ent)and)in#or"ation)syste"s 2see Kettner( :oroney & :artin( /;;


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The *asic 4!estions as ed in a cost)*ene#it analysis are( Do the econo"ic *ene#its

o# pro'idin% this ser'ice o!t-ei%h the econo"ic costs and +s it -orth doin% at all 9 One

i"portant tool o# cost)*ene#it analysis is the *ene#it)to)costs ratio( -hich is the total "onetary

cost o# the *ene#its or o!tco"es di'ided *y the total "onetary costs o# o*tainin% the".

Another tool #or co"parison in cost)*ene#it analysis is the net rate o# ret!rn( -hich is

*asically total costs "in!s the total 'al!e o# *ene#its.

The idea *ehind cost)*ene#it analysis is si"ple6 i# all inp!ts and o!tco"es o# a

proposed alternati'e can *e red!ced to a co""on !nit o# i"pact 2na"ely dollars3( they can *e

a%%re%ated and co"pared. +# people -o!ld *e -illin% to pay dollars to ha'e so"ethin%( pres!"a*ly it is a *ene#it7 i# they -o!ld pay to a'oid it( it is a cost. +n practice( ho-e'er(

assi%nin% "onetary 'al!es to inp!ts and o!tco"es in social pro%ra"s is rarely so si"ple( and

it is not al-ays appropriate to do so 28ei"er & inin%( /;; 7 Tho"pson( /;> 7 Fec ha!ser(

/;CB3.

An e1a"ple -ill ill!strate so"e o# the di##erences *et-een ost)E##ecti'eness and

ost)=ene#it st!dies( -hat they can tell yo!( and so"e o# the iss!es that neither can

e##ecti'ely address6

S!ppose the drop)o!t rate in an inner)city hi%h school is B>( p. 0?


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rei"*!rse"ents3 "i%ht ha'e the !nplanned res!lt o# hi%her lon%)distance phone *ills(

*eca!se the -or ers still #eel a need to stay in close to!ch -ith their clients.

!HAT COST ANALYSIS CANNOT TELL YOU:

• 8hether or not the pro%ra" is ha'in% a si%ni#icant net e##ect on the desired o!tco"es.

nless yo! no- #or s!re that the pro%ra" is prod!cin% a *ene#it( it doesnJt "a e

sense to tal a*o!t the cost o# prod!cin% that *ene#it 25ossi & @ree"an( /;;?3. ost

analysis "ay *e considered an e1tension o# an i"pact or o!tco"e e'al!ation( *!t it

cannot ta e the place o# one.• 8hether the least e1pensi'e alternati'e is al-ays the *est alternati'e. O#ten political

or social 'al!es other than cost need to deter"ine pro%ra" and policy choices. 8hen

there are co"petin% 'al!es or %oals in'ol'ed( cost analysis is o#ten j!st one #actor to

*e considered( and -e need to ha'e so"e other -ay o# decidin% -hich #actors sho!ld

ta e priority.

ADVANTAGES OF USING COST ANALYSIS:

•

ro"otes #iscal acco!nta*ility in pro%ra"s. Too o#ten( pro%ra" "ana%ers canJt easilydeter"ine the cost o# pro'idin% partic!lar ser'ices or achie'in% certain o!tco"es(

*eca!se they arenJt syste"atically collectin% the necessary data( either a*o!t clients or

a*o!t costs. At the least( pro%ra"s sho!ld *e a*le to tell #!nders 2or potential #!nders3

that d!rin% a %i'en ti"e period( they pro'ided a certain le'el o# ser'ices to a speci#ic

n!"*er o# clients( and at -hat cost 2 aco*s( /;>>3.

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• Helps set priorities -hen reso!rces are li"ited. ro%ra" "ana%ers can !se cost

in#or"ation in desi%nin% pro%ra"s( and in *!d%etin% and allocatin% #!nds to %et the

"ost o!t o# their reso!rces.• an *e e1tre"ely po-er#!l and pers!asi'e to le%islators( policy "a ers( and other

#!nders. :ay help con'ince the" to in'est in partic!lar inds o# pro%ra"s. So"e

ar%!e that this ad'anta%e o# cost)*ene#it analysis "ay hold tr!e e'en -hen it is not possi*le to assi%n "onetary 'al!es to all pro%ra" costs and o!tco"es7 i# the e##ect is

stron% eno!%h( e'en a relati'ely inco"plete cost)*ene#it analysis "ay *e pers!asi'e

2=arnett( /;;?3.

DISADVANTAGES OF USING COST ANALYSIS:

• 5e4!ires a %reat deal o# technical s ill and no-led%e. A tr!e cost)*ene#it analysis

re4!ires a solid %ro!ndin% in econo"ic theory and techni4!es( -hich is *eyond the

trainin% o# "any e'al!ators. +t "ay *e necessary to hire a cons!ltant i# this type o#

analysis is desired.• ritics #eel that "any ost ontrol Analysisare o'erly si"plistic( and s!##er #ro"

serio!s concept!al and "ethodolo%ical inade4!acies. There is a dan%er that an o'erly)

si"plistic cost)*ene#it analysis "ay set !p an inter'ention to #ail( *y pro"otin%

e1pectations that are !nrealistically hi%h( and cannot really *e achie'ed. This "ay

res!lt in political *ac lash -hich act!ally h!rts #!t!re #!ndin% prospects instead o#

helpin%.

• There are no standard -ays to assi%n dollar 'al!es to so"e 4!alitati'e %oals(especially in social pro%ra"s. @or e1a"ple( ho- do -e 'al!e thin%s li e ti"e( h!"an

li'es sa'ed( or 4!ality o# li#e9

• :ar et costs 2-hat people act!ally pay #or so"ethin%3 donJt al-ays re#lect real

social costs. @or e1a"ple( so"eti"es one personJs cost is another personJs *ene#it.

Also( "ar et costs donJt necessarily re#lect -hat econo"ists call the opport!nity

costs o# choosin% to do one thin% instead o# another.

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• So"eti"es there are "!ltiple co"petin% %oals( so -e need to -ei%ht the" or

prioriti$e the" in so"e -ay. +# a pro%ra" leads to i"pro'e"ent in one area( *!t "ore

pro*le"s in another( is it still -orth doin%9

• So"eti"es costs and "onetary 'al!es are considered less i"portant than other( "ore

intan%i*le 'al!es or pro%ra" o!tco"es.• The *est) no-n cost)*ene#it st!dies ha'e loo ed at lon%)ter" o!tco"es( *!t "ost

pro%ra" e'al!ations donJt ha'e the ti"e or reso!rces to cond!ct lon%)ter" #ollo-)!p

st!dies.

CHAPTER-II

CONCEPTIONAL FRA E !OR"

THEORITICAL STUDY

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USING COST CONTROL ANALYSIS!ITH THE STATESTRENGTHENING EVALUATION GUIDE :

+# yo! are !sin% the @i'e)Tiered Approach to ro%ra" E'al!ation o!tlined in the State

Stren%thenin% E'al!ation M!ide( ost ontrol Analysiscan *e !sed at se'eral le'els6

T*+, 1 - P,o , / D+ * * *o

At this sta%e( yo! -ill pro*a*ly *e !sin% cost st!dies *ased on other peopleJs e1periencein si"ilar pro%ra"s( since yo! are !nli ely to ha'e cost data o# yo!r o-n yet. This "eans that

the esti"ates yo! !se -ill only *e appro1i"ations( and "ay not acc!rately re#lect -hat yo!r

pro%ra"Js e1perience -ill *e. Ho-e'er( e1)ante cost analyses( done in the plannin% sta%es

*e#ore i"ple"entin% a pro%ra"( can potentially pre'ent so"e 'ery costly "ista es. +# yo!

ha'e access to cost)e##ecti'eness st!dies o# pro%ra"s si"ilar to the one yo! are considerin%(

especially i# they allo- yo! to co"pare the relati'e costs and *ene#its o# se'eral di##erent

-ays o# deli'erin% a ser'ice( *e#ore yo! ha'e "ade s!*stantial in'est"ents o# ti"e or "oney(so"e pro%ra" desi%n decisions "ay *e easier. One co""on e1a"ple in co""!nity)*ased

pro%ra"s is sta##in% 2e%.( decidin% -hether to !se hi%hly)trained pro#essionals to deli'er

ser'ices( or to rely on less hi%hly)paid parapro#essionals or 'ol!nteers3. 8hile "any people

ass!"e that the parapro#essionals or 'ol!nteers are al-ays less e1pensi'e( cost)e##ecti'eness

st!dies in so"e cases ha'e #o!nd that the pro#essionals "ay *e less costly in the lon% r!n

*eca!se they can see "ore clients( re4!ire less s!per'ision ti"e( or are "ore e##ecti'e. O#

co!rse( costs also need to *e -ei%hed a%ainst other considerations( s!ch as the #act that

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pop!lation or pro*le" area( the policy i"plications "ay *e %reat. One o# the *est) no-n

e1a"ples is the erry reschool St!dy 2disc!ssed earlier3( -hich has *een credited -ith

pers!adin% la-"a ers to s!stain or si%ni#icantly increase their s!pport #or early inter'ention

pro%ra"s( incl!din% Head Start. +t is -idely *elie'ed that one reason that this st!dy -as so

in#l!ential -as the #act that it incl!ded a cost)*ene#it analysis. 8hile "onetary cost is not the

only *asis #or policy decisions( it is !s!ally a 'ery salient one #or 'oters and politicians.

HO! TO BUDGET & ALLOCATE COSTS FOR COST

EFFECTIVENESS STUDIES:

The type o# *!d%etin% and acco!ntin% syste" yo!r pro%ra" or a%ency !ses "ay

-ell deter"ine ho- "!ch !se#!l cost data is a'aila*le #or e'al!atin% yo!r pro%ra"( or

co"parin% it to others. Three "ajor types o# *!d%etin% #or"ats co""only !sed in social

ser'ice pro%ra"s -ill pro'ide di##erent types and a"o!nts o# in#or"ation 2Kettner( :oroney(

& :artin( /;;


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The ro%ra" =!d%et( -hich also starts -ith a line)ite" *!d%et( loo s at the sa"e

in#or"ation #ro" the point o# 'ie- o# o!tco"es( or the cost o# achie'in% a res!lt. @or

e1a"ple( i# the /


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her ti"e on the State Stren%thenin% project and B


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COST - EFFICIENCY & COST - EFFECTIVENESS STUDIES:

@ro" the point o# 'ie- o# pro%ra" e'al!ation( *oth the ro%ra" and @!nctional

=!d%etin% syste"s are "ore !se#!l than a Line)+te" =!d%et. nit cost in#or"ation allo-s #or

!se#!l co"parisons o# the costs o# deli'erin% ser'ices and %ettin% res!lts. 8ith this

in#or"ation( -e can loo at the !nit cost o# one adoption a%ency co"pared to another( to see

-hether one operates "ore e##iciently. 8e can also co"pare the !nit cost 2per child3 o# adopti'e place"ent to the !nit cost 2per child3 o# place"ent in #oster care or residential

treat"ent. This is *asically -hat happens in a cost)e##ecti'eness st!dy.

+n %eneral( a cost)e##ecti'eness st!dy is "ore appropriate than a cost)*ene#it analysis

-hen yo!r %oals or o!tco"es canJt easily *e 4!anti#ied or "oneti$ed( or -hen there are

"!ltiple co"petin% %oals. As -ith *!d%etin% and cost allocation( there are a 'ariety o#

approaches to cost)e##ecti'eness st!dies. The approach that is *est #or yo!r p!rposes -ill

depend on a n!"*er o# #actors. A %ood so!rce o# "ore detailed in#or"ation a*o!t decidin%

-hat approach is "ost appropriate( and cond!ctin% the 'ario!s types o# cost)e##ecti'eness

st!dies( is 8ei"er & inin% 2/;; 3.

HO! TO CONDUCT A COST - BENEFIT ANALYSIS:

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ost)*ene#it analysis is *y #ar the "ost co"ple1 and contro'ersial o# the three "ethods o#

costs analysis -e ha'e disc!ssed. +t sho!ld not *e atte"pted *y those -ho lac technical

e1pertise in this area. Ho-e'er( #or so"e p!rposes( it is also one o# the "ost po-er#!l

"ethods. @or those -ho decide to !nderta e a cost)*ene#it analysis in spite o# the di##ic!lties(

=arnett 2/;;?3 o!tlines a nine step process. ario!s standard te1ts are reco""ended #or "ore

in)depth in#or"ation 2see *elo-3.

• S += 1: De#ine the Scope or erspecti'e o# the Analysis ) The #irst step is to descri*e the

alternati'e2s3 to *e e'al!ated( and deter"ine -hose perspecti'e -ill %!ide the e'al!ation. A

narro- cost analysis "i%ht loo only at the "onetary costs and *ene#its to the indi'id!al

participant or tar%et o# ser'ices( or to a partic!lar #!nder or a%ency. A *roader perspecti'e

"i%ht atte"pt to loo at a -ide ran%e o# costs and conse4!ences 2intended and !nintended(

direct and indirect3 #or society as a -hole. A pro%ra" that is not cost)e##ecti'e #ro" the

perspecti'e o# a partic!lar a%ency -ithin its li"ited "ission and *!d%et "ay -ell *e cost)

e##ecti'e #ro" the perspecti'e o# society( *eca!se it sa'es e1penses or pre'ents pro*le"s in

other areas. 5ossi and @ree"an 2/;;?3 note that *eca!se di##erent sta eholders "ay ha'e

di##erent 'al!es and priorities( "i1in% di##erent 'ie-points is li ely to res!lt in con#!sed

speci#ications and o'erlappin% or do!*le co!ntin%. 8hether -e li e it or not( the

perspecti'e chosen #or cost e'al!ation "ay ha'e political i"plications. There#ore( -hile

there are li"itations to any one perspecti'e( it is i"portant #or the e'al!ator to clearly state

his or her position.

• S += 2: ond!ct ost Analysis ) The ne1t step is to identi#y and esti"ate the "onetary

'al!e o# all reso!rces !sed in the inter'ention( not j!st the *!d%etary costs. So"e costs(

s!ch as salaries o# direct ser'ice sta##( rental o# o##ice space( or pro%ra" s!pplies( are

o*'io!s and si"ple to deter"ine.• +ndirect costs o# s!per'ision and ad"inistration need to *e incl!ded as -ell. Other

reso!rces and costs "ay %o -ell *eyond the ite"s that are !s!ally incl!ded in an a%ency

*!d%et. So"eti"es o'erhead 2li e o##ice space or s!per'ision3 is pro'ided as an in) ind

ser'ice *y an e1istin% a%ency( *!t since there are pro*a*ly so"e additional de"ands "ade

on the ti"e o# the a%ency sta##( this sho!ld *e #i%!red into the real cost o# the inter'ention

2-hat -o!ld yo! ha'e to pay i# the ti"e or space had not *een donated39. 8hat a*o!t the

'al!e o# the ti"e o# pro%ra" 'ol!nteers 2-hat -o!ld yo! ha'e to pay the" i# they -erenJt'ol!nteerin% their ser'ices39 =arnett ar%!es that parent ti"e is a #re4!ently i%nored cost

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#actor in inter'ention pro%ra"s #or children7 i# a hi%h le'el o# parent in'ol'e"ent is

re4!ired 2#or e1a"ple( teachin% the child( cond!ctin% physical therapy e1ercises( or

attendin% "any "eetin%s and appoint"ents3( it "ay represent a cost sa'in%s to the a%ency(

*!t a cost to the parent *eca!se there "ay *e less ti"e a'aila*le #or paid -or ( ho!se-or (

spendin% ti"e -ith other children in the #a"ily( or j!st the c!ddlin% and n!rt!rin% aspects

o# *ein% a parent.

• S += $: Esti"ate ro%ra" E##ects ) This is -here "ore traditional i"pact or o!tco"e

e'al!ation "ethods co"e in. As noted earlier( i# -e donJt no- that there is a si%ni#icant

*ene#icial e##ect o# o!r pro%ra"( there is little point in as in% ho- "!ch it costs to %et the

e##ect( or -hether it is "ore cost)e##ecti'e than another ind o# pro%ra". :any te1ts on

e'al!ation can assist yo! in desi%nin% a 'alid e'al!ation 25ossi & @ree"an( /;;?7 State

Stren%thenin% E'al!ation M!ide( /;;C3. O#ten it is not possi*le to !se a tr!e e1peri"ental

desi%n in e'al!atin% co""!nity)*ased pro%ra"s( *!t there are a n!"*er o# 4!asi)

e1peri"ental desi%ns a'aila*le 2 oo & a"p*ell( /;C;3. Also( donJt #or%et that it is o#ten

possi*le to !se e1istin% data to esti"ate pro%ra" e##ects( as -ell. +# yo! are loo in% at an

on%oin% pro%ra"( or one that is *ased on a national "odel 2s!ch as the arents As Teachers

pro%ra"3( chec to see i# #or"al e'al!ations ha'e already *een done else-here. Yo! "ay

also *e a*le to %et !se#!l in#or"ation #ro" the pro%ra"Js ser'ice statistics( or #ro" local(

state( or #ederal cens!s data insert lin here to sin% E1istin% Data 5L .

• S += %: Esti"ate the :onetary al!e o# O!tco"es ) This is one o# the "ost di##ic!lt and

contro'ersial aspects o# cond!ctin% a cost)*ene#it analysis( and it "ay re4!ire the help o#

cons!ltants. So"e cost)sa'in%s are easier to esti"ate than others. @or e1a"ple( -e "ay

ha'e data that the a'era%e cost o# placin% a child in residential treat"ent is


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'al!e o# *ene#its o'er a period o# ti"e. @or e1a"ple( i# -e -ant to loo at the projected

li#e)ti"e earnin%s o# a teena%er -ho stays in school d!e to a drop)o!t pre'ention pro%ra"

co"pared to one -ho does not( -e need to "a e projections a*o!t -a%es. +# -e -ant to

loo at -hether the %o'ern"ent -ill e'ent!ally reco'er its in'est"ent in the drop)o!t

pro%ra" thro!%h the ta1es he or she -ill pay on the increased inco"e( -e need to "a e

projections a*o!t #!t!re ta1 rates as -ell. These projections all re4!ire ass!"ptions. nlessyo! or so"eone on the pro%ra" sta## has e1pertise in this area( it is stron%ly ad'ised that

yo! see o!t a s illed cons!ltant to help -ith this step.• S += ': A%%re%ate and Apply a Decision 5!le ) +# yo! are loo in% at the costs and *ene#its

on se'eral o!tco"es 2-hich is o#ten the case3( ho- -ill yo! decide -hich has priority9 +# a

pro%ra" #or pre%nant teena%ers res!lts in healthier *a*ies 2and lo-er hospital costs3( *!t

not in #e-er repeat pre%nancies( -hich o!tco"e is "ore i"portant9

• S += ): Descri*e Distri*!tional onse4!ences ) This is related to choosin% yo!r perspecti'e

o# analysis. +t in'ol'es speci#yin% -ho %ains and -ho loses !nder di##erent conditions

2*eca!se in so"e cases( one partyJs *ene#it is another partyJs loss3. This "ay *e a hi%hly

contro'ersial and political step in the process.• S += 8: ond!ct Sensiti'ity Analysis ) This step in'ol'es identi#yin% the ass!"ptions

*ehind yo!r cost esti"ates( and considerin% ho- critical they are to yo!r calc!lations. +# one o# yo!r ass!"ptions t!rns o!t not to *e acc!rate( or i# conditions chan%e d!rin% the

ti"e o# yo!r st!dy 2#or e1a"ple( the "ini"!" -a%e %oes !p( a##ectin% salary costs3( -ill

that chan%e yo!r -hole concl!sion( or is the e##ect stron% eno!%h that there is so"e

lee-ay9• S += #: Disc!ss the Q!alitati'e 5esid!al ) Since there are al"ost al-ays so"e thin%s that

canJt *e 4!anti#ied or %i'en "onetary 'al!es( it is i"portant that yo!r report incl!de so"e

disc!ssion o# these iss!es. A #ran description o# so"e o# these 4!alitati'e iss!es in yo!r report can help ro!nd o!t yo!r concl!sions( and red!ce the chances o# yo!r st!dy *ein%

!sed inappropriately.

Co9 - B+ + * A 679*9

ost)*ene#it analysis is a ter" that re#ers *oth to6

21


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prod!ct( and only decide to prod!ce it i# he e1pects the re'en!es to e'ent!ally reco!p the

costs. ost)*ene#it analysis atte"pts to p!t all rele'ant costs and *ene#its on a co""on

te"poral #ootin%. A disco!nt rate is chosen( -hich is then !sed to co"p!te all rele'ant #!t!re

costs and *ene#its in present)'al!e ter"s. :ost co""only( the disco!nt rate !sed #or present)

'al!e calc!lations is an interest rate ta en #ro" #inancial "ar ets 25.H. @ran


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• ost ontrol Analysis can pro'ide esti"ates o# -hat a pro%ra"Js costs and *ene#its

are li ely to *e( *e#ore it is i"ple"ented. E1)ante or *e#ore the #act ost ontrol

Analysis "ay ha'e to *e *ased on 'ery ro!%h esti"ates o# costs and e1pected

*ene#its. Ho-e'er( i# a pro%ra" is li ely to *e 'ery e1pensi'e to i"ple"ent( 'ery

di##ic!lt to !n)do once it is in place( or 'ery di##ic!lt to e'al!ate( e'en a ro!%h

esti"ate o# e##iciency "ay *e 4!ite 'al!a*le in the plannin% sta%es 25ossi & @ree"an(/;;?3.

• ost ontrol Analysis "ay i"pro'e !nderstandin% o# pro%ra" operation( and tell

-hat le'els o# inter'ention are "ost cost)e##ecti'e. A care#!l cost analysis -ithin a

pro%ra" "i%ht tell yo!( #or e1a"ple( that it doesnJt so "!ch "atter -hether yo! ha'e

a hal#)day pro%ra" or a #!ll)day preschool pro%ra" #or children( *!t that the teacher)

to)child ratio does "atter 2that is( children *ene#it "ore #ro" lo- ratios than they do

#ro" lon%er days3. This in#or"ation "i%ht in#l!ence decisions a*o!t ho- "anyteachers yo! need to hire( or ho- "any classroo"s yo! need( or ho- "any children

yo! can ser'e e##ecti'ely.• ost ontrol Analysis"ay re'eal !ne1pected costs. A speech therapy pro%ra" "i%ht

!ne1pectedly #ind that it costs "ore to !se parapro#essionals to -or -ith children

than pro#essionals( *eca!se the parapro#essionals need "ore trainin% and s!per'ision(

or -or -ith #e-er children at a ti"e 28hite( /;>>3. Or( c!ttin% the n!"*er o# ho"e

'isits allo-ed *y case-or ers ser'in% a lar%e r!ral area 2in order to sa'e on "ilea%e

rei"*!rse"ents3 "i%ht ha'e the !nplanned res!lt o# hi%her lon%)distance phone *ills(

*eca!se the -or ers still #eel a need to stay in close to!ch -ith their clients.

S O E 6

ost analysis can *e !sed at se'eral le'els . At the "ost *asic le'el( cost allocation issi"ply part o# %ood pro%ra" *!d%etin% and acco!ntin% practices ( -hich allo- "ana%ers

to deter"ine the tr!e cost o# pro'idin% a %i'en !nit o# ser'ice. it deals -ith cost

allocation ( cost e##ecti'eness and cost *ene#it.

@i'e Tiers 6

T*+, 1 > P,o , / + * * *o

2%


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T*+, 2 > A33o4 5*6* 7

T*+, $ > U +,9 * & ,+ * *

T*+, > % P,o / o , 9 o5;+3 * P,o , / */= 3

COST ANALYSIS ETHODOLOGY :

PRI ARY DATA COLLECTION :-

• All the data collection process has *een carried o!t thro!%h the constit!tions -ith

the sta## "e"*ers concerned in the depart"ent o# #inance in the or%ani$ation.

• Direct interactions -ith the "ana%er( The acco!ntants and the related sta## concern

helped "e in %atherin% o# the re4!ired data.

• Too the help o# the "ana%e"ent #ro" the other depart"ents and the %!idance

#ro" the internal %!ide.

SECONDATY DATA COLLECTION :-

2


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ertain ass!"ptions ha'e *een "ade in re%ard to the #!t!re projects o# the

co"pany.

The data ha'e *een prepared in the cons!ltation -ith the 'ario!s personals o# the

or%ani$ation indirectly.

The chan%es in capital d!e to e1pected *etter "ana%e"ent ha'e *een ta en in the

acco!nt -hile calc!latin% the related capital str!ct!res.

The res!lts o# the capital str!ct!res #orecasts ha'e *een analy$ed to %i'e s!%%estions

#or i"pro'e"ent o# the per#or"ance o# the Or%ani$ation.

PERIOD OF STUDY :

The st!dy has *een cond!cted ta in% into an acco!nt the past #i'e years data i.e. #ro"


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CHAPTER-III

APPLICATION & HISTORY

2)


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e1tent that s!*stantial %!idance no- e1ists on ho- transport projects sho!ld *e appraised in

"any co!ntries aro!nd the -orld.

+n the K( the Ne- Approach to Appraisal 2NATA3 -as introd!ced *y the then

Depart"ent #or Transport( En'iron"ent and the 5e%ions . This *ro!%ht to%ether cost)*ene#it

res!lts -ith those #ro" detailed en'iron"ental i"pact assess"ents and presented the" in a

*alanced -ay. NATA -as #irst applied to national road sche"es in the /;;> 5oads 5e'ie-(

*!t s!*se4!ently rolled o!t to all "odes o# transport. +t is no- a cornerstone o# transport

appraisal in the K and is "aintained and de'eloped *y the Depart"ent #or Transport. /<

The E Js JDe'elopin% Har"onised E!ropean Approaches #or Transport ostin% and

roject Assess"entJ 2HEAT O3 project( part o# its Si1th @ra"e-or ro%ra""e ( has

re'ie-ed transport appraisal %!idance across E "e"*er states and #o!nd that si%ni#icant

di##erences e1ist *et-een co!ntries. HEAT OJs ai" is to de'elop %!idelines to har"onise

transport appraisal practice across the E . // /

Transport anada has also pro"oted the !se o# =A #or "ajor transport in'est"ents

since the iss!ance o# its M!ide*oo in /;;0.

:ore recent %!idance has *een pro'ided *y the S Dept. o# Transportation and

se'eral state transportation depart"ents( -ith disc!ssion o# a'aila*le so#t-are tools #or

application o# =A in transportation( incl!din% HE5S( = A.Net( Stat=en ost( al= ( and

T5ED+S . A'aila*le %!ides are pro'ided *y the @ederal Hi%h-ay Ad"inistration 0 B ( @ederal

A'iation Ad"inistration I ( :innesota Depart"ent o# Transportation C and ali#ornia

Depart"ent o# Transportation 2 altrans 3

D!rin% the early /;I< s( =A -as also e1tended to assess"ent o# the relati'e

*ene#its and costs o# health care and ed!cation in -or s *y =!rton 8eis*rod. ; /< . Later( the

S Dept. o# Health and H!"an Ser'ices iss!ed its =A M!ide*oo // .

Accuracy problems

The acc!racy o# the o!tco"e o# a cost)*ene#it analysis is dependent on ho- acc!rately

costs and *ene#its ha'e *een esti"ated . A peer)re'ie-ed st!dy /? o# the acc!racy o# cost

2#

http://en.wikipedia.org/wiki/New_Approach_to_Appraisalhttp://en.wikipedia.org/wiki/Department_for_Transport,_Environment_and_the_Regionshttp://en.wikipedia.org/wiki/Environmental_impact_assessmenthttp://www.webtag.org.uk/topics/costbenefitanalysis.htmhttp://en.wikipedia.org/wiki/EUhttp://en.wikipedia.org/wiki/Sixth_Framework_Programmehttp://heatco.ier.uni-stuttgart.de/http://heatco.ier.uni-stuttgart.de/http://ec.europa.eu/regional_policy/sources/docgener/guides/cost/pdf/3_full_en.pdfhttp://ec.europa.eu/regional_policy/sources/docgener/guides/cost/pdf/3_full_en.pdfhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-1http://en.wikipedia.org/wiki/TREDIShttp://en.wikipedia.org/wiki/Federal_Highway_Administrationhttp://en.wikipedia.org/wiki/Federal_Highway_Administrationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-3http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-4http://en.wikipedia.org/wiki/Federal_Aviation_Administrationhttp://en.wikipedia.org/wiki/Federal_Aviation_Administrationhttp://en.wikipedia.org/wiki/Federal_Aviation_Administrationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-5http://en.wikipedia.org/wiki/Minnesota_Department_of_Transportationhttp://en.wikipedia.org/wiki/Minnesota_Department_of_Transportationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-6http://en.wikipedia.org/wiki/California_Department_of_Transportationhttp://en.wikipedia.org/wiki/California_Department_of_Transportationhttp://en.wikipedia.org/wiki/Caltranshttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-8http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-9http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-10http://en.wikipedia.org/wiki/Accuracyhttp://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Estimatedhttp://en.wikipedia.org/wiki/Peer-reviewedhttp://flyvbjerg.plan.aau.dk/JAPAASPUBLISHED.pdfhttp://en.wikipedia.org/wiki/New_Approach_to_Appraisalhttp://en.wikipedia.org/wiki/Department_for_Transport,_Environment_and_the_Regionshttp://en.wikipedia.org/wiki/Environmental_impact_assessmenthttp://www.webtag.org.uk/topics/costbenefitanalysis.htmhttp://en.wikipedia.org/wiki/EUhttp://en.wikipedia.org/wiki/Sixth_Framework_Programmehttp://heatco.ier.uni-stuttgart.de/http://ec.europa.eu/regional_policy/sources/docgener/guides/cost/pdf/3_full_en.pdfhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-1http://en.wikipedia.org/wiki/TREDIShttp://en.wikipedia.org/wiki/Federal_Highway_Administrationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-3http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-4http://en.wikipedia.org/wiki/Federal_Aviation_Administrationhttp://en.wikipedia.org/wiki/Federal_Aviation_Administrationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-5http://en.wikipedia.org/wiki/Minnesota_Department_of_Transportationhttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-6http://en.wikipedia.org/wiki/California_Department_of_Transportationhttp://en.wikipedia.org/wiki/California_Department_of_Transportationhttp://en.wikipedia.org/wiki/Caltranshttp://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-8http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-9http://en.wikipedia.org/wiki/Cost-benefit_analysis#cite_note-10http://en.wikipedia.org/wiki/Accuracyhttp://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Estimatedhttp://en.wikipedia.org/wiki/Peer-reviewedhttp://flyvbjerg.plan.aau.dk/JAPAASPUBLISHED.pdf


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+n the case o# the @ord into 2-here( d!e to desi%n #la-s( the into -as lia*le to

*!rst into #la"es in a rear)i"pact collision3( the @ord co"panyJs decision -as not to iss!e a

recall. @ordJs cost *ene#it analysis had esti"ated that6 *ased on the n!"*er o# cars in !se and

the pro*a*le accident rate( deaths d!e to the desi%n #la- -o!ld r!n a*o!t 0;.B "illion 2the

a"o!nt @ord -o!ld pay o!t o# co!rt to settle -ron%#!l death la-s!its3. This -as esti"ated to

*e less than the cost o# iss!in% a recall 2 /?C.B "illion3 /I . +n the e'ent( @ord o'erloo ed

2or considered insi%ni#icant3 the costs o# the ne%ati'e p!*licity so en%endered( -hich t!rned

o!t to *e 4!ite si%ni#icant 2since it led to the recall any-ay and to "eas!ra*le losses in sales3.

+n the #ield o# Health Econo"ics( so"e analysts #eel that cost)*ene#it analysis can

*e an inade4!ate "eas!re( as -illin%ness)to)pay "ethods o# deter"inin% the 'al!e o# h!"an

li#e can *e s!*ject to *ias accordin% to inco"e ine4!ity. They s!pport !se o# 'ariants s!ch as

cost)!tility analysis and 4!ality)adj!sted li#e year to analy$e the e##ects o# health policies.

Co9 o


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hannel t!nnel *et-een the K and @rance -as >< percent #or constr!ction costs and /0<

percent #or #inancin% costs.

Three types o# e1planation o# cost o'err!n e1ist6 technical ( psycholo%ical( and

political )econo"ic . Technical e1planations acco!nt #or cost o'err!n in ter"s o# i"per#ect

#orecastin% techni4!es( inade4!ate data( etc. sycholo%ical e1planations acco!nt #or o'err!n

in ter"s o# opti"is" *ias -ith #orecasters. @inally( political)econo"ic e1planations see

o'err!n as the res!lt o# strate%ic "isrepresentation o# scope and,or *!d%ets.

All o# the e1planations a*o'e can *e considered a #or" o# ris . A projectJs *!d%eted

costs sho!ld al-ays incl!de cost contin%ency #!nds to co'er ris s 2other than scope chan%es

i"posed on the project3. As has *een sho-n in cost en%ineerin%research / ( poor ris analysis

and contin%ency esti"atin% practices acco!nt #or "any project cost o'err!ns. N!"ero!s

st!dies ha'e #o!nd that the %reatest ca!se o# cost %ro-th -as poorly de#ined scope at the ti"e

that the *!d%et -as esta*lished. The cost %ro-th 2o'err!n o# *!d%et *e#ore cost contin%ency

is added3 can *e predicted *y ratin% the e1tent o# scope de#inition( e'en on co"ple1 projects

-ith ne- technolo%y.

ost o'err!n is typically calc!lated in one o# t-o -ays. Either as a percenta%e(

na"ely act!al cost "in!s *!d%eted cost( in percent o# *!d%eted cost. Or as a ratio ( 'i$. act!al

cost di'ided *y *!d%eted cost. @or e1a"ple( i# the *!d%et #or *!ildin% a ne- *rid%e -as /


33/60

COST ANALYSIS ETHODS

• :ain Types o# ost Analysis

• Q!adrants o# ost)E##ecti'eness

• Key Attri*!tes o# ost Analyses

• ollectin% ost Data Alon%side linical St!dies

St!dies o# costs and related econo"ic i"plications co"prise a "ajor %ro!p o#

"ethods !sed in HTA. These st!dies can in'ol'e attri*!tes o# either or *oth o# pri"ary data

collection and inte%rati'e "ethods. That is( cost data can *e collected as part o# 5 Ts and

other clinical st!dies( as -ell as ad"inistrati'e data*ases !sed in health care pay"ent. ost

data #ro" one or "ore s!ch so!rces o#ten are co"*ined -ith data #ro" pri"ary clinical

st!dies( epide"iolo%ical st!dies( and other so!rces to cond!ct cost)e##ecti'eness analyses andother cost st!dies that in'ol'e -ei%hin% health and econo"ic i"pacts o# health technolo%y.

+nterest in ost ontrol Analysishas acco"panied concerns a*o!t risin% health care

costs( press!res on health care policy"a ers to allocate reso!rces( and the need #or health

prod!ct "a ers and other technolo%y ad'ocates to de"onstrate the econo"ic *ene#its o# their

technolo%ies. This interest is re#lected in a considera*le increase in the n!"*er o# reports o#

ost ontrol Analysisin the literat!re and #!rther re#ine"ent o# "ethods.

* T7=+9 o Co9 A 679*9

There is a 'ariety o# approaches to cost analysis( the s!ita*ility o# any o# -hich

depends !pon the p!rpose o# an assess"ent and the a'aila*ility o# data and other reso!rces. +t

is rarely possi*le or necessary to identi#y and 4!anti#y all costs and all *ene#its 2or o!tco"es3(

and the !nits !sed to 4!anti#y these "ay di##er.

$$

http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading19http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading20http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading21http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading22http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading19http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading20http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading21http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Heading22


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* 7=+9 o 3o9 679*9 * 364 + ?+ o66o * .

• Co9 -o -*66 +99 679*9 : deter"ination o# the econo"ic i"pact o# an illness or

condition 2typically on a %i'en pop!lation( re%ion( or co!ntry3 e.%.( o# s"o in%(

arthritis or *edsores( incl!din% associated treat"ent costs

• Co9 -/* */*@ *o 679*9 : deter"ination o# the least costly a"on%

alternati'e inter'entions that are ass!"ed to prod!ce e4!i'alent o!tco"es

• Co9 -+ +3 *


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ost tility tile 2e.%.( QALYs3

ost =ene#it or )

ost ) :ini"i$ation Analysis( EA and A necessarily in'ol'e co"parisons o#

alternati'e inter'entions. A technolo%y cannot *e si"ply cost e##ecti'e( tho!%h it "ay *e cost

e##ecti'e co"pared to so"ethin% else. Altho!%h =A typically in'ol'es co"parisons o#

alternati'e technolo%ies( this is not necessary.

=eca!se it "eas!res costs and o!tco"es in "onetary 2not disease)speci#ic3 ter"s(

=A ena*les co"parison o# disparate technolo%ies( e.%.( coronary artery *ypass %ra#t s!r%ery

and screenin% #or *reast cancer. A dra-*ac o# =A is the di##ic!lty o# assi%nin% "onetary

'al!es to all pertinent o!tco"es( incl!din% chan%es in the len%th or 4!ality o# h!"an li#e.

EA a'oids this li"itation *y !sin% "ore direct or nat!ral !nits o# o!tco"es s!ch as li'es

sa'ed or stro es a'erted. As s!ch( EA can only co"pare technolo%ies -hose o!tco"es are

"eas!red in the sa"e !nits. +n A( esti"ates o# !tility are assi%ned to health o!tco"es(ena*lin% co"parisons o# disparate technolo%ies.

T-o *asic approaches #or cost)*ene#it analysis 2 =A3 are ratio approach and

the net *ene#it approach. The ratio approach indicates the a"o!nt o# *ene#its 2or o!tco"es3

that can *e reali$ed per !nit e1pendit!re on a technolo%y 's. a co"parator. +n the ratio

approach( a technolo%y is cost *ene#icial 's. a co"parator i# the ratio o# the chan%e in costs to

the chan%e in *ene#its is less than one. The net *ene#its approach indicates the a*sol!te

a"o!nt o# "oney sa'ed or lost d!e to a !se o# a technolo%y 's. a co"parator. +n the net

*ene#its #or"!lation( a technolo%y is cost)*ene#icial 's. a co"parator i# the net chan%e in

*ene#its e1ceeds the net chan%e in costs. The choice *et-een a net *ene#its approach or a

*ene#it,cost approach #or a =A can a##ect #indin%s. The approach selected "ay depend !pon

s!ch #actors as -hether costs "!st *e li"ited to a certain le'el( -hether the intent is to

"a1i"i$e the a*sol!te le'el o# *ene#its( -hether the intent is to "ini"i$e the cost,*ene#it

ratio re%ardless o# the a*sol!te le'el o# costs( etc. +ndeed( !nder certain circ!"stances these

t-o *asic approaches "ay yield di##erent pre#erences a"on% alternati'e technolo%ies.

$


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=o1 /; sho-s *asic #or"!las #or deter"inin% EA( A( and =A.

COST ANALYSIS RATIO

$'


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Q!adrants o# ost)E##ecti'eness

A *asic approach to portrayin% a cost)e##ecti'eness 2or cost)!tility3 co"parison o#

a ne- inter'ention to a standard o# care is to consider the cost and e##ecti'eness o# a ne-

inter'ention in the space o# #o!r #ields as sho-n in =o1 7

Dr!""ond /;;C 7Mold /;;I 3.

$)

http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Byford1998http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Drummond1997http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Gold1996http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Byford1998http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Drummond1997http://www.nlm.nih.gov/nichsr/hta101/ta101015.html#Gold1996


38/60

Co/= , o, . Any cost analysis o# one inter'ention 'ers!s another "!st *e speci#ic

a*o!t the co"parator. This "ay *e standard o# care 2c!rrent *est practice3( "ini"!" practice(

or no inter'ention. So"e analyses that declare the s!periority o# a ne- inter'ention "ay ha'e

!sed a co"parator that is no lon%er in practice or is considered s!*)standard care or that is

not appropriate #or the patient pop!lation o# interest.

P+,9=+3 *


39/60

deter"ination "ay re4!ire special analyses o# reso!rce cons!"ption. Ho-e'er( char%es 2as

-ell as act!al pay"ents3 tend to re#lect pro'ider cost shi#tin% and other #actors that decrease

the 'alidity o# !sin% char%es to represent the tr!e costs o# pro'idin% care.

$#


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I *,+3 Co9 96 Analyses sho!ld acco!nt #or indirect costs( so"eti"es no-n as

prod!cti'ity losses. These incl!de the costs o# lost -or d!e to a*senteeis" or early

retire"ent( i"paired prod!cti'ity at -or ( and lost or i"paired leis!re acti'ity. +ndirect costs

also incl!de the costs o# pre"at!re "ortality. +ntan%i*le costs o# pain( s!##erin%( and %rie# are

real( yet 'ery di##ic!lt to "eas!re and are o#ten o"itted #ro" cost analyses.

T*/+ Ho,*@o 6 +nterpretation o# ost ontrol Analysis"!st consider that the ti"e

hori$on 2or ti"e)#ra"e3 o# a st!dy is li ely to a##ect the #indin%s re%ardin% the relati'e

"a%nit!des o# costs and o!tco"es o# a health care inter'ention. osts and o!tco"es !s!ally

do not accr!e in steady strea"s o'er ti"e. o"parisons o# costs and o!tco"es a#ter one year

"ay yield "!ch di##erent #indin%s than co"parisons "ade a#ter B( /


41/60


42/60


43/60

as opposed to *rand na"e dr!%s in a "edical therapy( or !sin% a pla!si*le hi%her disco!nt

rate in an analysis chan%es the cost)e##ecti'eness o# one inter'ention co"pared to another.

Co66+3 * Co9 D 6o 9* + C6* *3 6 S 4 *+9

The 'alidity o# a cost)related st!dy depends !pon the so!rces o# the data #or costs

and o!tco"es. +ncreased attention is *ein% %i'en to collection o# cost data in "ore ri%oro!s(

prospecti'e st!dies( partic!larly 5 Ts. The closer inte%ration o# econo"ic and clinical

st!dies raises i"portant "ethodolo%ical iss!es. +n order to pro"ote "ore rational di##!sion o#

ne- technolo%ies( it -o!ld *e desira*le to %enerate relia*le cost and o!tco"es data d!rin%

the early part o# a technolo%yJs li#ecycle( s!ch as d!rin% 5 Ts re4!ired prior to "ar etin%

appro'al. An 5 T -o!ld *e e1pected to yield the "ost relia*le data concernin% e##icacy o# an inter'ention7 ho-e'er( the care %i'en in an 5 T and the costs o# pro'idin% it "ay *e

atypical co"pared to "ore %eneral settin%s. @or e1a"ple( 5 Ts "ay in'ol'e "ore e1tensi'e

and #re4!ent la*oratory tests and other patient "onitorin%( and "ay occ!r "ore o#ten in

acade"ic "edical centers -hose costs tend to *e hi%her than in co""!nity health care

instit!tions. Other aspects o# trial desi%n( sa"ple si$e( choice o# o!tco"e "eas!res(

identi#ication and ta*!lation o# costs( *!rden on in'esti%ators o# data collection and related

"atters a##ect the !se#!lness o# clinical trial data #or "eanin%#!l econo"ic st!dies 2 =ri%%s


44/60

D*93o4 R + C 6346 *o U9+ * D+ +,/* * P,+9+ V 64+

o F4 4,+ Co9 9 B+ + * 9

+n practice( there is -ide 'ariation in econo"ic st!dy "ethodolo%ies 2 Eli1ha!ser

/;;> 7 Ni1on


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North A"erica( E!rope( and A!stralia #o!nd a %eneral trend to-ard har"oni$ation in "ost

"ethodolo%ical aspects( altho!%h there -ere "ore di##erences in s!ch di"ensions as choice

o# econo"ic perspecti'e( reso!rces( and costs to *e incl!ded in analysis 2 Hjel"%ren


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These are all 4!estions that people ha'e to ans-er( and ans-ers that people ha'e to

de#end.

The 'ersion o# the cost *ene#it approach -e e1plain here is necessarily si"ple.

8here lar%e s!"s o# "oney are in'ol'ed 2#or e1a"ple( in #inancial "ar et transactions3(

project e'al!ation can *eco"e an e1tre"ely co"ple1 and sophisticated art. The #!nda"entals

o# this are e1plained in rinciples o# orporate @inance *y 5ichard =realey and Ste-art

:yers ) this is so"ethin% o# an a!thority on the s!*ject.

E /=6+: A sales director is decidin% -hether to i"ple"ent a ne- co"p!ter)*ased contact

"ana%e"ent and sales processin% syste". His depart"ent has only a #e- co"p!ters(

and his salespeople are not co"p!ter literate. He is a-are that co"p!teri$ed sales

#orces are a*le to contact "ore c!sto"ers and %i'e a hi%her 4!ality o# relia*ility and

ser'ice to those c!sto"ers. They are "ore a*le to "eet co""it"ents( and can -or

"ore e##iciently -ith #!l#il"ent and deli'ery sta## .

His #inancial cost,*ene#it analysis is sho-n *elo-6

Co9 9:

Ne- co"p!ter e4!ip"ent6

• /< net-or )ready s -ith s!pportin% so#t-are V (0B< each

• / ser'er V ?(B


47/60

• Lost ti"e6 0< "an days V


48/60

arena( #or"al = A is a so"eti"es contro'ersial techni4!e #or thoro!%hly and consistently

e'al!atin% the pros and cons associated -ith prospecti'e policy chan%es. Speci#ically( it is an

atte"pt to identi#y and e1press in dollar ter"s all o# the e##ects o# proposed %o'ern"ent

policies or projects. 8hile not intended to *e the only *asis #or decision "a in%( = A can *e

a 'al!a*le aid to policy"a ers.

Altho!%h concei'ed "ore than /B< years a%o *y the @rench en%ineer !les

D!p!it( = A sa- its #irst -idespread !se in the e'al!ation o# #ederal -ater projects in the

nited States in the late /;?


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Ho-( then( are *ene#its and costs esti"ated9 8hile it is %enerally ass!"ed that they

are "eas!red di##erently( *ene#its and costs are act!ally #lip sides o# the sa"e coin. =ene#its

are "eas!red *y the -illin%ness o# indi'id!als to pay #or the o!tp!ts o# the policy or project

in 4!estion. The proper calc!lation o# costs is the a"o!nt o# co"pensation re4!ired to e1actly

o##set ne%ati'e conse4!ences. 8illin%ness to pay or co"pensation re4!ired sho!ld each *e

the dollar a"o!nt that -o!ld lea'e e'ery indi'id!al j!st as -ell o## #ollo-in% thei"ple"entation o# the policy as *e#ore it.

S!ppose( #or e1a"ple( -e -ished to e'al!ate the *ene#its and costs o# a proposal

to control air poll!tion e"issions #ro" a lar%e #actory. On the positi'e side( poll!tion

a*ate"ent -ill "ean red!ced da"a%e to e1posed "aterials( di"inished health ris s to people

li'in% near*y( i"pro'ed 'isi*ility( and e'en ne- jo*s #or those -ho "an!#act!re poll!tioncontrol e4!ip"ent. On the ne%ati'e side( the re4!ired in'est"ents in poll!tion control "ay

ca!se the #ir" to raise the price o# its prod!cts( close do-n se'eral "ar%inal operations at its

plant and lay o## -or ers( and p!t o## other planned in'est"ents desi%ned to "oderni$e its

prod!ction #acilities.

Ho- do -e deter"ine the -illin%ness to pay #or the #a'ora*le e##ects9 @irst( it

is relati'ely easy to 'al!e the red!ced da"a%e to "aterials. +#( say( a-nin%s -ill no- last ten

years rather than #i'e years( it is strai%ht#or-ard to "!ltiply the n!"*er o# a-nin%s ti"es

their price to %et an idea o# sa'in%s to cons!"ersWso lon% as the price o# a-nin%s is not

a##ected *y the policy. +# red!ced poll!tion "eant "ore a%ric!lt!ral o!tp!t( it -o!ld *e

si"ilarly easy to 'al!e *eca!se crops ha'e -ell)de#ined "ar et prices. +n other -ords( -hen

*ene#its in'ol'e "ar eted o!tp!ts( 'al!in% the" is not di##ic!lt.

=!t -hat a*o!t red!ced health ris s or i"pro'ed 'isi*ility9 =eca!se these are not

thin%s that people *!y and sell directly( it is "!ch less clear ho- to esti"ate the -illin%nessto pay 2the 'al!e o# the *ene#its3. T-o "ajor techni4!es are a'aila*le. One( called the

contin%ent 'al!ation "ethod( in'ol'es as in% people directly( 'ia sophisticated

4!estionnaires( ho- "!ch they -o!ld pay #or red!ced health ris s or i"pro'ed 'isi*ility.

This approach "a es it possi*le to esti"ate the *ene#its o# pro%ra"sW#or e1a"ple( the

preser'ation o# a re"ote -ilderness areaW#or -hich other techni4!es %enerally are

inapplica*le. Ho-e'er( this approach has its li"itations. One is that it o#ten re4!ires

indi'id!als to place dollar 'al!es on thin%s they are !n!sed to 'ie-in% in econo"ic ter"s. As

%#


50/60

a res!lt( their responses "ay not *e as relia*le as -e -o!ld li e. Also( responses to s!r'eys

are hypothetical7 econo"ists pre#er 'al!es re'ealed in act!al "ar et transactions.

Another approach is to o*ser'e ho- "!ch people are -illin% to pay #or %oods that

ha'e an EN +5ON:ENTAL Q AL+TY co"ponent. @or e1a"ple( ho!ses in !npoll!ted

nei%h*orhoods sell #or "ore than those in poll!ted areas. sin% statistical techni4!es to hold

constant the other characteristics o# ho!ses and the nei%h*orhoods in -hich they are located(

it is possi*le to identi#y a “clean air pre"i!".” This pro'ides i"portant +N@O5:AT+ON on the

'al!e to indi'id!als o# air 4!ality i"pro'e"ents. A si"ilar approach #or esti"atin% ho- "!ch

people 'al!e poll!tion control and other p!*lic policies that red!ce health ris s is to esti"ate

ho- "!ch o# a -a%e pre"i!" they are paid to -or in jo*s that pose health ris s. Yet other

techni4!es in#er 'al!es #ro" s!ch thin%s as the ti"e and "oney people spend tra'elin% to and

#ro" desira*le recreation sites.

+t is %enerally ass!"ed that cost esti"ation in'ol'es a "ere totin% !p o# the

e1pendit!res that a##ected parties "!st "a e( as in o!r e1a"ple o# the #ir" controllin% air

poll!tion. As s!%%ested a*o'e( ho-e'er( "atters are "ore co"plicated than this. So"e #ir"s

not initially a##ected *y 5EM LAT+ON -ill inc!r hi%her costsWthose p!rchasin% the prod!ct o#

the re%!lated #ir"( #or e1a"ple. These “ripple” e##ects "!st *e ta en into acco!nt. Or i# the

poll!tin% #ir" closes do-n so"e operations rather than p!rchase poll!tion control de'ices( its

e1pendit!res -ill *e $ero *!t the social costs are still positi'e. +n s!ch cases the costs are *orne *y e"ployees( shareholders( and p!rchasers o# its o!tp!t. n#ort!nately( techni4!es #or

"a in% these "ore sophisticated cost esti"ates are still in their in#ancy7 #or this reason(

'irt!ally all = As still !se direct e1pendit!res as ro!%h "eas!res o# tr!e social costs.

Three additional iss!es in = A *ear "ention. @irst( %o'ern"ent policies or projects

typically prod!ce strea"s o# *ene#its and costs o'er ti"e rather than in one)shot incre"ents.

o""only( in #act( a s!*stantial portion o# the costs is inc!rred early in the li#e o# a project(

-hile *ene#its "ay e1tend #or "any years 2perhaps *e%innin% only a#ter so"e delay3. Yet(

*eca!se people pre#er a dollar today to one ten years #ro" no- 2see +NTE5EST 5ATES 3( = A

typically disco!nts #!t!re *ene#its and costs *ac to present 'al!es. Not only are there

technical disa%ree"ents a"on% econo"ists a*o!t the interest rate 2or rates3 at -hich these

#!t!re i"pacts sho!ld *e disco!nted( *!t disco!ntin% raises ethical pro*le"s as -ell. At a

disco!nt rate o# /< percent( #or instance( / "illion in *ene#its to people #i#ty years #ro" no-

has a 5ESENT AL E o# only >(B


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those pertainin% to the pre'ention o# %lo*al cli"ate chan%e or the disposal o# hi%h)le'el

radioacti'e -astes 2-hich -ill *e lethal #or h!ndreds o# tho!sands o# years3.

A second stic in% point in = A is the #act that the -illin%ness to pay #or the #a'ora*le

e##ects o# a project or policy depends on the D+ST5+= T+ON O@ +N O:E 6 a *illionaire -o!ld *e

a*leWand there#ore -illin%Wto pay "ore than a pa!per #or the sa"e i"pro'e"ent in

en'iron"ental 4!ality( e'en tho!%h *oth cared a*o!t it -ith e4!al intensity. So"e critics

disli e = A *eca!se it red!ces *ene#its to p!re dollar a"o!nts.

Third( s!ppose that the a#ore"entioned pro*le"s -ere to disappear( and that

*ene#its and costs co!ld *e easily e1pressed in dollar ter"s and con'erted to present 'al!es.

Accordin% to "odern = A( a project or policy -o!ld *e attracti'e i# the *ene#its it -o!ld

prod!ce e1ceed the costs. This is *eca!se( in theory( those %ainin% #ro" the project co!ld

co"pensate those "ade -orse o## and still *e *etter o## the"sel'es. +n o!r #actory e1a"ple(

#or instance( those enjoyin% the *ene#its o# cleaner air %ain "ore than the losses to cons!"ers

-ho "!st pay "ore #or the #actory s o!tp!t or to -or ers -hose jo*s are eli"inated. Th!s(

the -inners co!ld co"pensate the losers and still co"e o!t ahead. +n practice( o# co!rse( this

co"pensation is seldo" paid. There#ore( e'en the "ost e##icient projects create so"e losers.

This can !nder"ine s!pport #or = A in %eneral and o#ten "a es it politically di##ic!lt to

enact e##icient policiesWor( con'ersely( to *loc 'ery ine##icient projects( -hose costs e1ceed

*ene#its.

+n spite o# these stic in% points( = A see"s to *e playin% an increasin%ly i"portant

role in %o'ern"ent decision "a in%. One reason "ay *e that sh!nnin% a co"prehensi'e(

analytical approach to decision "a in% si"ply *eca!se it has #la-s ine'ita*ly p!shesdecisions *ac into the real" o# the ad hoc and p!rely political. 8hile = A does ha'e 'ery

real shortco"in%s( it appears pre#era*le to s"o e)#illed roo"s.

SEA5 HES 5ELATED TO6 OST ANALYS+S

ost Analysis

E1a"ple

ost Acco!ntin% Li#e ycle ost Analysis =ene#it ost Analysis

1

http://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+analysis+example&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=1http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+analysis+example&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=1http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+accounting&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=2http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=life+cycle+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=3http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=benefit+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=4http://www.econlib.org/library/Enc/DistributionofIncome.htmlhttp://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+analysis+example&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=1http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+analysis+example&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=1http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=cost+accounting&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=2http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=life+cycle+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=3http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=benefit+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=4


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Transaction ost

Analysis

:ar%inal ost Analysis rod!ct ost Analysis onstr!ction ost

Analysis

CHAPTER-IV

CO PANY PROFILE

2

http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=transaction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=5http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=transaction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=5http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=marginal+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=6http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=product+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=7http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=construction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=8http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=construction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=8http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=transaction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=5http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=transaction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=5http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=marginal+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=6http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=product+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=7http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=construction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=8http://www.google.co.in/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=HbU&q=construction+cost+analysis&revid=682901193&ei=kHijSbr4K4_VkAW_-oSyBQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=8


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CO PANY PROFILE

The ori%in o# Asho Leyland can *e traced to the !r%e #or sel#)reliance( #elt

*y independent +ndia. andit a-aharlal Nehr!( +ndiaJs #irst ri"e :inister pers!aded :r.

5a%h!nandan Saran( an ind!strialist( to enter a!to"oti'e "an!#act!re. +n /;0>( Asho

:otors -as set !p in -hat -as then :adras( #or the asse"*ly o# A!stin ars. The o"panyJs

destiny and na"e chan%ed soon -ith e4!ity participation *y =ritish Leyland and Asho Leyland co""enced "an!#act!re o# co""ercial 'ehicles in /;BB.

Since then Asho Leyland has *een a "ajor presence in +ndiaJs co""ercial 'ehicle ind!stry

-ith a tradition o# technolo%ical leadership( achie'ed thro!%h tie)!ps -ith internationaltechnolo%y leaders and thro!%h 'i%oro!s in)ho!se 5&D

Access to international technolo%y ena*led the o"pany to set a tradition to *e #irst

-ith technolo%y. =e it #!ll air *ra es( po-er steerin% or rear en%ine *!sses( Asho Leyland

pioneered all these concepts. 5espondin% to the operatin% conditions and practices in the

co!ntry( the o"pany "ade its 'ehicles stron%( o'er)en%ineerin% the" -ith e1tra "etallic

"!scles. Desi%nin% d!ra*le prod!cts that "a e econo"ic sense to the cons!"er( !sin%

appropriate technolo%y ( *eca"e the desi%n philosophy o# the o"pany( -hich in t!rn has"o!lded cons!"er attit!des and the *rand personality.

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Asho Leyland has*!ilt a rep!tation #or relia*ility and r!%%edness. The B( seater to > seater do!*le)dec er *!ses( #ro" C.B tone to 0; tone in

ha!la%e 'ehicles( #ro" n!"ero!s special application 'ehicles to diesel en%ines #or ind!strial(

"arine and %enet applications( Asho Leyland o##ers a -ide ran%e o# prod!cts.

Co,=o, + =,o *6+

@or o'er #i'e decades( Asho Leyland( the #la%ship o# Hind!ja Mro!p in +ndia( has *een a "ajor presence in +ndiaJs o""ercial ehicle ind!stry.

%


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The o"panyJs prod!ct ran%e spans #ro" C.B T M 8 to 0;T MT8 in %oods

transport and #ro" /; seaters to >< seaters in passen%er transport( a host o# special application

'ehicles and diesel en%ines.

Ser'ed *y its o-n co"prehensi'e 5&D *ase( co"ple"ented *y colla*orations -ith

%lo*al technolo%y leaders( Asho Leyland has esta*lished a tradition o# technolo%ical

leadership and a stron% rep!tation #or prod!ct relia*ility. The history o# the o"pany has

*een p!nct!ated *y a n!"*er o# technolo%ical inno'ations( -hich ha'e since *eco"e

ind!stry nor"s. +t -as the #irst to introd!ce "!lti)a1led tr!c s( #!ll air *ra es and a host o#

inno'ations li e the rear)en%ine and artic!lated *!ses in +ndia. +n /;;C( the o"pany

la!nched the co!ntryJs #irst NM *!s and in


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samiha cost control & analysis_ ashok layland.doc

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