SEMINAR ON

COST ANALYSIS OF PROJECT P

PREPARED BY PRAVIN Y. PATIL

(T1616PCE004) FIRST YEAR M PHARM

(PHARMACEUTICS)

RESEARCH METHODOLOGY

PARUL INSTITUTE OF PHARMACY,LIMDA. 1

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COST ANALYSIS

OF PROJECT

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

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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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.5

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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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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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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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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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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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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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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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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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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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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RESOURCE ALLOCATION

Matching the list of tasks and required resources.

INTERFACE WITH SATELLITE SYSTEM

/ PROJECTSFollowing should also be considered while planning the tasks:Any project influenced by this project.This project influenced by other projects.

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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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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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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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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.

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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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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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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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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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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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COSTS ASSOCIATED WITH A CLINICAL TRIAL

Institutional fees. Institutional overheads. Personnel. Patient care costs. Patient Travel. Supplies/ Equipment. Miscellaneous expenses.

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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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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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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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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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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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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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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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QUADRANTS OF COST-EFFECTIVENESS

34Fig. Quadrants of cost-effectiveness.

ADVANTAGES

Stress reduction.

Pursuing other objectives.

Prioritization and efficiency.

Sense of accomplishment.

Awareness and planning.

Accountability.

Expectation.

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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.36

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. 37

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