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CBA - Cost Benefit Analysis

 


Economic and Financial Analysis: New requirement from 1.1.2022 for project phases of 6 million or more

Revised How-to Note EFA and backstopping available (see SDC Field Handbook chapter 5.1 and 5.2)

On 2 March 2020, the Directorate decided that Economic and Financial Analyses (EFA) will be compulsory for project phases over 6 million as of 1 January 2022. It mandated the QA section to implement this decision (see minutes).

To provide you with better guidance on EFA, the Quality Assurance section has revised the current How-to Note. The revised version consists of two parts: part 1 gives a brief overview on why, when and how to apply EFA, while part 2 details the practical steps on how to apply EFA, supported by examples. The How-to Note offers different methods in order to better adapt the analysis to the realities of different contexts and projects.

Furthermore, the QA section has concluded frame contracts with three backstoppers to support you in conducting EFA (cf. part 2 of the How-to Note for more details).

The responsibility for conducting EFA lies with the line management and project management. Approval will be done within the PCM, e.g. by the OpComs.

The How-to Note is available in the SDC Field Handbook, area 5.1 and 5.2, working aids. The French translation of the How-to Note will follow by the end of the year.

For more information go to quality assurance shareweb or to the PADLET prepared by the quality assurance team (links on the right).
Normative Documents
SDC [1.1 MB]
The SDC Directorate decided in spring 2020 to implement Economic and Financial Analysis (‘EFA’) for all project phases with a budget above 6 million CHF, making it mandatory at the ex-ante stage. Project proposal phases below 6 million CHF are encouraged to present a solid argumentation of the value for money invested. This decision applies to all projects funded by the SDC – including project contributions - with the exception of core contributions to multilateral institutions and to Swiss NGOs, which follow the Guidance for Core Contribution Management (CCM). 
This guide is comprised of two parts to instruct SDC Staff on the implementation of EFA. Part I provides a basic understanding of Economic and Financial Analysis (‘EFA’) for all SDC staff. Part II provides practical guidance for SDC staff who mandate an EFA.
SDC [966 kB]
This is an interactive, step-by-step operational manual on the planning and implementation of Economic and Financial Analysis (EFA), including interfaces to Project Cycle Management (PCM) and project monitoring. This is the second part of the EFA guide providing practical guidance while part one provides a basic understanding of EFA for all SDC staff
Working Aids
SDC [8.6 MB]
This presentation was used for the webinar on March 3rd 2022 on EFA for IED NPOs in the Western Balkans. The main focus of the presentation and webinar were the economic and financial analyses in SDC.
SDC [118 kB]

Cost-Benefit Analysis (CBA) is a widely used approach for assessing whether the benefits of a particular action are greater than its costs over a given period of time. This also applies to VSD: In the application and assessment of a new project idea as well as in monitoring and project evaluations we would like to know if the expected benefits (for example: higher incomes for graduates) are greater than the costs of the project.

Therefore, a working aid and this rather simple Excel workbook have been developed. Their aim is to support SDC program officers, project implementers, consultants and other stakeholders in assessing costs and benefits of VSD interventions, be it in the planning stage of a project (ex ante), for monitoring purposes (ex inter) or as part of a mid-term or end of phase evaluation (ex post). 

Both documents are currently available as beta-versions that need further testing and discussion. We (Andrea Inglin of the e+i focal point and Roman Troxler of the VSD backstopping team) would be happy to get your feedback with regards to its user-friendliness and applicability in your contexts.

>> have a look at the Working Aid
SDC [3 MB]

Here's what you need to know about linking results and resources
and dealing with uncertainties in project planning and management: 

The Cost Benefit Analyses (CBA) & The DCED Standard for Results Measurement 

What do they have in common? What are the differences? How do programs benefit from both tools?
SDC [1.4 MB]

This How-to-Note provides an overview and explains the basic concepts of financial and economic analysis focusing on two frequently used methodologies: Cost-Benefit Analysis (CBA) and the Cost-Effectiveness Analysis (CEA). 

As part of result-based-management CBA and CEA are important means to improve the effectiveness of SDC’s interventions through the improved linking of results and resources. They should thus be increasingly integrated into planning and reporting tools whilst maintaining the pragmatic approach emphasised in this How-to-Note. 

This document explains why financial and economic analyses of projects are useful and important in development cooperation. Staff and partners at the SDC head office and cooperation offices (programme managers, decision-makers, financial staff and in particular project implementers) need to acquire a basic understanding of financial and economic analysis in order to be able to decide without an excessive amount of effort in which cases what kind of analysis makes sense and how to carry it out.
Case Studies
GIZ

The first part of this data driven advocacy tool provides key figures about the cost and benefits resulting from the provision of in-company training places from Switzerland and Germany. The second part of the showcases a cost-benefit analysis with data from leading Pakistani companies. >> pdf

Key Documents

Stefan C. Wolter and Eva Joho [1.7 MB]

The authors have used evidence from Germany, Switzerland and Austria to simulate the costs and benefits of an apprenticeship policy applied in an English context. In summary, this study analyses the question of whether an average English firm could expect a net benefit when training apprentices in a similar manner to Swiss firms but does not evaluate either current English apprenticeships or current policy measures... [more]
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General Topics
Result Measurement
Migration
Governance
Gender
CBA
Fragility
Future of Work
Decent Work
LNOB
Digitalization
Systemic Approach

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