review · Decision Making · 60–180 min · 1-10 people · low energy

Cost-Utility Analysis (CUA)

Cost-Utility Analysis (CUA) is a method for evaluating and comparing programs with non-monetary goals by measuring individual preferences and calculating the cost to achieve a unit of utility. It helps in making informed decisions when monetizing outcomes is not feasible or when considering stakeholder values is crucial.

When to use Cost-Utility Analysis (CUA)

Use CUA when you need to compare programs with similar goals but different outcomes, especially when those outcomes are difficult to quantify in monetary terms. It's particularly useful when stakeholder preferences and values need to be incorporated into the decision-making process.

What it solves

Difficulty in comparing programs with diverse outcomes; lack of consideration for individual preferences in decision-making.

How to run Cost-Utility Analysis (CUA), step by step

  1. Determine the attributes of utility/value that are relevant to the program's goals. (30 minutes)
  2. Assess the utility of each attribute using methods like proportional scoring or direct methods. (60 minutes)
  3. Assess the importance weights of each attribute to overall utility, using direct or variable probability methods. (30 minutes)
  4. Gather comprehensive cost data for each program alternative, including all resources used. (Ongoing)
  5. Combine costs and utility to calculate the cost-utility ratio for each alternative. (30 minutes)
  6. Conduct a sensitivity analysis to account for uncertainty in the parameters. (30 minutes)

Materials needed

  • Spreadsheet software
  • Whiteboard or virtual whiteboard
  • Survey tools (optional)
  • Cost data for each program

Facilitator tips

  • Clearly define the scope and boundaries of the analysis to avoid scope creep.
  • Ensure that stakeholders understand the methods used to assess utility and importance weights.

Common pitfalls

  • Subjectivity in assessing utility and importance weights can lead to biased results. Use multiple methods and involve a diverse group of stakeholders.
  • Incomplete cost data can distort the cost-utility ratios. Ensure all relevant costs are included.

Variations

  • Use different methods for assessing utility and importance weights.
  • Conduct a more detailed sensitivity analysis to explore the impact of different assumptions.

Running it online or hybrid

Use shared documents and virtual whiteboards to collect and analyze data. Ensure clear communication channels for individual preference assessments.

What it produces

A cost-utility ratio for each program, indicating the cost per unit of utility gained, along with a sensitivity analysis report.

Origin

Adapted from BetterEvaluation — source

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