The cost-utility model forms part of the Total Cost of Ownership Model. It calculates a number of cost-utility parameters along an outcomes chain. The intention of the cost-utility model is twofold:
- To illustrate the value which is created at various points along the chain, and the investment that has been made to deliver the value (retrospective view, aimed at justification of spend); and
- To provide a means of comparing alternative strategies, by evaluating the cost of a specific strategy to deliver a specific type of value (prospective view, aimed at improved planning and design)
The model highlights parameters of economy, efficiency, and effectiveness. The parameters are selected to reflect aspects that may be of interest to decision makers:
How good is the implementing team with respect to the procurement of resources?
Improved procurement strategies would reduce the cost per item procured. For example, a procurement strategy that considers local service providers may (or may not) result in reduced cost of connectivity per school.
- How good is the implementing team with respect to putting goods and resources together in order to deliver outputs
- Improved efficiency would reduce the cost per item delivered. For example, different technical support models would result in different costs for delivering the utility of tablets that are available and functioning. Cumulative costs of delivering the output are considered throughout.
How well is the implementation doing in terms of reaching (some of) its targets?
Improved effectiveness would mean that money is spent better to reach outcomes. For example, different choices of technology and content, or different community engagement strategies, would affect the total cost of reaching learners with technology.
Examples of the parameters that are calculated in each category are:
Table 1 Cost-utility parameters
The focus of the model is on capturing aspects that are likely to inform decision-making. Economy parameters are aimed at informing better procurement decisions. Efficiency parameters provide a means of comparing different strategies of delivering outputs, and effectiveness parameters provide a means of reflecting on the overall cost of delivering a desired outcome. As such, the cost of different strategies along the outcomes chain can be compared.