Cost analysis of Project

1. SEMINAR ON
COST ANALYSIS OF PROJECTP
PREPARED BY
PRAVIN Y. PATIL
(T1616PCE004)
FIRST YEAR M PHARM
(PHARMACEUTICS)
RESEARCH METHODOLOGY
PARUL INSTITUTE OF PHARMACY,LIMDA.
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2. 2
COST
ANALYSIS
OF
PROJECT

3. TABLE OF CONTENT
 Objectives.
 What is cost?
 Types of cost.
 Project management.
 Cost analysis.
 Importance/need for cost analysis.
 Stages of cost analysis.
 Cost analysis of project.
 Cost of a project.
 Cost analysis method.
 Main types of cost analysis.
 Advantages.
 Conclusion.
 Reference. 3

4. OBJECTIVES
 To know the meaning of cost and study its type.
 To know the meaning of project management.
 To focus on cost analysis and to emphasize on
general cost analysis procedure.
 To study the analysis of cost incurred on
 Operation cost analysis.
 Clinical trial.
 Instrumentation.
 Raw material.
 To emphasize on advantages of
project cost management.
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5. WHAT IS COST ?
 In production, research, retail and accounting a cost is the
value of money that has been used up to produce something
and hence is not available for use anymore.
 “Cost” means the benefits given up in terms of money to
acquire goods or services.
 Cost represents the resources that have been or must be
sacrificed to attain a particular objective.
 Cost are often underestimated, resulting in cost overrun
during execution.
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6. TYPES OF COST
COST
Manufacturing
cost
Direct
materials
cost
Direct
labour
cost
Manufactu
-ring
overhead
cost
Non-manufacturing
cost
Selling and
distribution
cost
Administr
-ative cost
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7. OTHER TYPES OF COST
 Testing supplies and
reagent.
 Specimen collection and
supplies.
 Testing personnel salaries.
 Management salaries.
 Equipment repair and
maintenance.
 Allocated hospital
overhead.
Other cost types
Fixed cost Variable cost
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8. PROJECT MANAGEMENT
 It is the discipline of planning, organizing,
motivating and controlling resource to achieve
specific goals.
 The primary challenge of project management is to
achieve all of the project goals.
 The primary constraint are scope, time, quality and
budget.
 The secondary challenge is to optimize allocation of
necessary inputs and integrate them to meet pre-
defined objectives.
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9. COST ANALYSIS
 Cost analysis is an economic evaluation technique
that involves the systematic collection,
categorization, and analysis of different types of
cost.
 It is useful to know the cost per unit of the product
manufactured.
 If proper analysis of the cost spent on each and every
aspect is estimated and calculated and that helpful in
proper arrangement.
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10. IMPORTANCE / NEED FOR COST ANALYSIS
Deciding to accept / reject the project.
Providing statement for operating policy.
Provide data for fixing sales price.
Submitting project for funding agency.
Assessment of cost per unit.
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11. STAGES OF COST ANALYSIS
Identification stage: To distinguish which types of capital
expenditure projects are necessary to accomplish the
objectives.
Search stage: To explore alternative capital investments
that will achieve the objectives.
Information-acquisition stage: To consider the expected
costs and the expected benefits of alternative
capital investments.
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12. CONT……..
Selection stage: To choose projects for implementation.
Financing stage: To obtain project funding.
Implementation and control stage: To get projects
underway and monitor their performance.
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13. COST ANALYSIS OF A PROJECT
 A well-planned project is essential for the project
success.
 Important elements / issues to be considered for
managing a project:
 Size of the project.
 Required resources.
 Resources allocation.
 Interface with satellite systems or projects.
 Using managerial tools.
 Periodic team meetings.
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14. SIZE OF THE PROJECT
 Decided by the targets to be achieved.
 Composition of many tasks.
 All tasks involved & how to perform them should
be included in the plan.
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15. REQUIRED RESOURCES
 Determine the list of required resources by
analyzing the task list.
 Common resources:
 Raw material.
 Human resource.
 Time.
 Machinery/ instruments/computers.
 Money.
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16. RESOURCE ALLOCATION
 Matching the list of tasks and required resources.
INTERFACE WITH SATELLITE SYSTEM
/ PROJECTS
Following should also be considered while planning the
tasks:
Any project influenced by this project.
This project influenced by other projects.
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17. USING MANAGERIAL TOOLS
 Essential to implement all planned tasks.
 For better monitoring and control of actual status
with respect to planned work.
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18. PERIODIC TEAM MEETING
 For monitoring and control of the project
progress.
 Identifying and solving the problems raised for
the accomplishment of the project.
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19. COSTS OF A PROJECT
 Cost incurred on Raw Material.
 Cost incurred on Procedure.
 Cost incurred on Instrumentation.
 Cost incurred on Clinical Trials.
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20. COST INCURRED ON RAW MATERIAL
 List all required material inputs and alternatives.
 Describes/ Specify the data for the selection of materials.
 State the reasons for selection.
 Describe materials and inputs.
 Qualitative properties.
 Quantities required.
 Sources/ Suppliers.
 Availability.
 Unit cost.
 Timely delivery.
 Losses during shipment, storage, processing.
 Overheads. 20

21. COST INCURRED ON PROCEDURE
 Requirements for the products/ procedures – Temp,
Humidity, Air pressure, Aseptic area, AHU, etc.
 No. of steps involved / Alternatives.
 Apparatus required.
 Glasswares required (Beakers, Volumetric flasks,
RBF, Burettes, Pipettes etc.).
 Lab equipments (Blender, Compression machine,
dissolution apparatus, UV spectrophotometer, etc).
 Ancillary Equipments (e.g. Fume hood).
 Solvents required.
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22. CONT……..
 Biproducts formed and their disposal.
 Time required for each step.
 Human resources.
 Safety measures (Fire extinguisher, exhausts,
protective covering, masks).
 Electrical cost/hour.
 Depreciation of Equipment.
 Any outsourcing.
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23. COST INCURRED ON
INSTRUMENTATION
 Instruments cost.
 Cost of accessories.
 No. of samples to be analyzed.
 Duration of instruments used.
 Technically skilled persons involved.
 Maintenance cost.
 Depreciation.
 Outsourcing (if any).
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24. CLINICAL TRIAL COST ANALYSIS
 Purpose:
 To identify the research related costs of the
clinical trial.
 To identify the routine care charges associated
with the clinical trial.
 To provide a cost estimate of the trial.
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25. COST INCURRED ON CLINICAL
TRIALS
Preclinical/ Clinical
 Toxicological/ Pharmacological/ Pharmacokinetic study.
 Duration of study.
 Nature of study.
 Patient / Volunteer cost.
 Sites for study – hospitalization.
 Location/ Geographical Area of study.
 Protocol design cost.
Clinical Trials
 Lab test cost.
 Medical Practitioner/ Principal investigator’s cost.
 Cost of drugs and Chemicals.
 Regulatory and Ethical Agencies Fee.
 Outsourcing (CRO – Clinical Trial Cost + Profit).
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26. COSTS ASSOCIATED WITH A
CLINICAL TRIAL
 Institutional fees.
 Institutional overheads.
 Personnel.
 Patient care costs.
 Patient Travel.
 Supplies/ Equipment.
 Miscellaneous expenses.
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27. COST ANALYSIS DEVELOPMENT
 Begins once the trial submitted for IRB review.
 Cost analysts works with a research team to
identify all required labs and procedures within
the study.
 Required information includes expected number
of enrollment and estimated number of treatment
cycles.
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28. COST ANALYSIS METHODS
(FOR HEALTH SERVICES RESEARCH
AND PUBLIC HEALTH)
 Main types of cost analysis.
 Quadrants of cost-effectiveness.
 Key Attributes of cost analysis.
 Collecting cost data alongside clinical studies.
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29. MAIN TYPES OF COST ANALYSIS
 Cost-of-illness analysis:
 Cost-minimization analysis:
 Cost-effectiveness analysis (CEA):
 Cost-utility analysis (CUA):
 Cost-consequence analysis:
 Cost-benefit analysis (CBA):
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30. MAIN TYPES OF COST ANALYSIS
 Cost-of-illness analysis: A determination of the
economic impact of an illness or condition
(typically on a given population, region, or
country) e.g. smoking, arthritis or bedsores,
including associated treatment costs.
 Cost-minimization analysis: A determination of
the least costly among alternative interventions
that are assumed to produce equivalent outcomes.
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31. CONT.......
 Cost-effectiveness
analysis (CEA):
A comparison of
costs in monetary units
with outcomes in
quantitative non-
monetary units, e.g.,
reduced mortality or
morbidity.
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32. CONT.......
 Cost-utility analysis (CUA): A form of cost-
effectiveness analysis that compares costs in
monetary units with outcomes in terms of their
utility, usually to the patient, measured , eg. In
QALYs (Quality Adjusted Life Year).
 Cost-consequence analysis: A form of cost-
effectiveness analysis that presents costs and
outcomes in discrete categories, without
aggregating or weighting them.
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33. CONT.......
 Cost-benefit analysis (CBA): Compares costs and
benefits, both of which are quantified in common
monetary units.
 Cost–benefit analysis (CBA) is a systematic process
for calculating and comparing benefits and costs of a
project, decision or government policy.
 Purposes:
 To determine if it is a sound investment
(justification/feasibility).
 To provide a basis for comparing projects.
 It involves comparing the total expected cost of each
option against the total expected benefits, to see whether
the benefits outweigh the costs, and by how much.
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34. QUADRANTS OF COST-
EFFECTIVENESS
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Fig. Quadrants of cost-effectiveness.

35. ADVANTAGES
 Stress reduction.
 Pursuing other objectives.
 Prioritization and efficiency.
 Sense of accomplishment.
 Awareness and planning.
 Accountability.
 Expectation.
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36. CONCLUSION
 From this study we can conclude that the cost
analysis of project and project management is a very
essential tool in research and day to day laboratory
practices.
 Help in deciding the accept or reject of research
project.
 In systematic management of project.
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37. REFERENCES
 Kumar R., Research methodology , Pearson
publication, 2nd edition, 291-295.
 Chawla D., Sodhi N., Research methodology-
concept and cases, Vikas publication house PVT.
LTD.,1st edition,229-235.
 Nickel J., “Project evaluation using CBA”, Second
International Symposium On Engineering Systems,
2009,1-12.
 Heerkens G., Project management, McGraw-Hill
Publication,New York, 9-28.
 www.wikipedia.com/Cost analysis of project.
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