THE ONLY MAN WHO BEHAVES SENSIBLY IS MY TAILOR; HE TAKES MY MEASUREMENTS ANEW EVERY TIME HE SEES ME, WHILE ALL THE REST GO ON WITH THEIR OLD MEASUREMENTS AND EXPECT ME TO FIT THEM.
Assessing costs and benefits
This section gives you an in depth guide and examples on how to fill in each section of the tool.
You do not need to measure every cost and benefit in monetary terms. In some cases measuring benefit or costs in non-money terms is more effective.
You will need to decide which measures are relevant to your context, making any assumptions clear and do not overstate your case.
Costs should be measured in monetary terms where possible. It is always worth starting with the elements that cost most. Once the high-cost items are identified you may be able to omit less significant costs, especially if they are difficult to measure.
Costs can either be inputs (Staff time and resources that make the process happen) or outputs/outcomes (negative results of the engagement).
Staff time (internal & external)
Staff time usually makes up the largest cost for engagement projects, although it is rarely fully quantified. It is not just the staff directly involved in delivering the project that need to be accounted for it also includes those who play a supporting role, including administrative and communications staff. It is usually easier to capture the full costs of contract workers and consultants as these will be invoiced for so have an audit trail.
Staff diaries are a useful way to capture the proportion of people’s time spent on engagement activities. A rough percentage of staff time spent can be enough.
Event costs (for example venue, refreshments, PA)
Most engagement uses events of some kind, either online or in person. After staff costs, this is often the most significant cost item. Whether this is one event or 200 you need a good understanding of the costs real/actual. Internal venues have hidden costs but you can use the external rental cost as a proxy value. If the venue is a website where the engagement takes place using an online platform the costs could include domain name registration, hosting fees, and building the site. Moderation costs should be listed under staff costs.
Communications costs (Postage, outreach, website, PR etc.)
Communicating the engagement opportunity and feeding back to participants are vital to successful engagement. In some engagement processes, for example surveys, communications and staff might be the only costs.
Communications costs include the publicity for the engagement process, whether this is provided by an external Public Relations company or internal resources. The internal costs to your organisation include mailing out invitations, adverts for workshops, designing and printing posters, or setting up a website.
Participant costs (travel and incentives)
The costs to the participants can be less straightforward to measure. This is partly because it is unclear if the time people spend as active citizens should be considered a cost or a benefit to society. How you approach the measurement of participant costs depends on the business case perspective. If it looks at the costs and benefits for society as a whole there is a strong case for including participants’ costs. If the focus is on the costs and benefits to your organisation or the public sector generally you may not need to cost participant time.
Disentangle which of the costs to participants are specific to engagement and which they would have incurred anyway. Avoid double counting; if you have already included cash incentives paid to participants then don’t cost their time as this would double count their time.
As a rule, don’t put an hourly value on participant time unless you are accounting for citizens’ time savings for as one of your engagement benefits.
You will also want to look at travel costs for staff and participants. These costs vary depending on the type and location of engagement.
Other cost issues
You could encounter what economists call ‘Leakage’; when benefits seep out beyond the intended target area or group, especially if you are targeting a particular vulnerable group and many of the benefits accrue to other groups.
Engagement has an opportunity cost, an alternative use that the money used for engagement could have been put to. This needs to be balanced elsewhere.
This section shows how to give a money value to different benefits. Think through your aims so that you can decide which benefits to measure. You are unlikely to need to measure all the potential benefits listed here so choose the relevant ones. For example, if a health engagement project impacts on crime you probably won’t need to measure both sets of benefits.
The Department for Communities and Local Government has identified five reasons for empowerment work. 1 The table below lists them, alongside examples of how to give the benefits monetary and a non-monetary value.
- 1Durose et al. (2009). ‘Empowering Communities to influence local decision making. Evidence-based lessons for policy makers and practitioners’ (The Department for Communities and Local Government). http://www.communities.gov.uk/publications/localgovernment/localdecisionlessons
Reasons for undertaking empowerment work
|Increase trust in public institutions
|Reduced spend on complaints
|Staff work diaries / time sheets, complaints listings
|Reported trust levels, NI4 scores, about people feeling able to influence decisions
|Improve quality of services
|Better service outcomes (health, crime etc), less time spent on administration and duplicated work, less complaints
|Staff work diaries / time sheets, neighbourhood level service statistics, health and crime statistics
|Service user satisfaction
|Take and justify difficult decisions
|Reduced conflict and reduced spend on legal challenges
|Legal costs, staff work diaries / time sheets, complaints listings
|Number of negative articles in press, survey results
|Promote good community relations
|Reduced vandalism and crime in local area
|Build resilient community networks
|Access to new funding and volunteering time
|Database of funding accessed before and after engagement. Time sheets for volunteers
Engagement can unlock resources that you would not have had access to otherwise, such as volunteer time, access to new funding or resources. Volunteer time can be costed by the hour using a suitable rate, for example the Department for Transport’s current rate for assessing the value of time, the minimum wage or the salary for an equivalent professional.
New resources can be allocated an approximate value using replacement costs:
|Increased volunteer time
|The cost of providing the service or activity using paid staff
|New intelligence and information
|The cost of gathering the same information using a market research company
|New and improved relationships
|The cost of building the same links through a PR and communications exercise
|Increased public awareness of policies and services
|The cost of achieving a similar level of awareness through campaigns or PR
|Citizen / consumer led campaign or marketing
|The cost of developing a similar campaign through a professional campaign company
Improvements to uptake or use of services
Engagement can also lead to an increase in positive service outcomes, for example positive health impacts, reduced crime levels and improvements in other service areas. These can be difficult to calculate accurately but it is often possible to find indicative figures for the business case.
In health a common measure of success is the ‘Quality Adjusted Life Year’ which not only measures reduced mortality but also health related quality of life over time. These measures can be complex so it is advisable to make use of benefits calculations from previous studies in order to value health benefits. Another option is to ask people’s willingness to pay 1 for a specific health improvement or risk reduction.
It can often be difficult to translate the outcomes of engagement into direct health benefits as a multitude of factors impact on an individual’s health and so it can be hard to show that any improvements are due to the engagement and not other factors.
The National Institute for Health and Clinical Excellence research about engagement in the health sector found that the easiest cases are where engagement is for projects around immediate or short-term harm reduction. Suitable comparators are vital for health projects. Long time frames can complicate valuation, for example in the case of smoking cessation you’d need to show that engagement leads to people stopping smoking in the long term as well as the short term to provide strong evidence of added value.
In cases where health improvement is measured in natural units that can be counted easily, such as the number of health visits or hours of hospital waiting time, it may be possible to do a cost effectiveness analysis of different options without having to monetise the benefits. So if you were running an engagement project around smoking cessation you could measure the benefit to society by the number of people who stopped smoking when using engagement and when not. In this case you do not need to measure the benefits in pounds and pence as you have a natural measurement unit.
The Department for Environment, Food and Rural Affairs has developed an Environmental Landscape Features model for valuing agricultural and environmental land uses which can be used for rural engagement. 2 For engagement processes which involve parks and other areas with recreational value you could use Forestry Commission estimates of the value of a person visiting a protected forest. 3
The Department for Communities and Local Government report 4 on the impact of New Deal for Communities on crime levels provides a useful tool for calculating the benefits of engagement in crime and policing.
The report calculated potential savings by using recorded crime data from regional police forces in England and estimates of costs per crime provided by the Home Office. The CLG report estimated the cost of crime per year across NDC areas as £2.4bn, with violent crime making up 86.4% of the costs. If your business case covers similar issues it would be valid to focus on working out only the high cost crimes.
If you include comparator data make sure that you consider the difference in size of the comparator areas and your area. If they are very different you could use per capita crime rates for the comparison.
The CLG report showed a significant reduction in burglary and thefts across NDCs; with the value of potentially prevented crime at £124.9m per year and a possible 44,422 crimes prevented over the course of the programme.
To reflect the level of under-reporting, crimes were weighted according to Home office figures. 4 For example the weighting for burglary is much higher than for murder as under-reporting is more common for burglary.
- 1see page 16-17
- 2Warburton, D (2007). Evidence Counts: Understanding the value of public engagement (Sciencewise ERC).
- 3 Garrod et al. (2000). Non-Market Benefits of Forestry. (Centre for Research in Environmental Appraisal and Management). http://www.forestry.gov.uk/pdf/fullnmb.pdf/$FILE/fullnmb.pdf
- 4 a b McLennan et al (2010) Crimes occurring and prevented in New Deal for Communities areas: An approach to estimating the economic costs and benefits. (Department for Communities and Local Government)
Crime figures Home Office
Improvements to quality of services
Engagement can have an impact on the quality of services themselves, which can be seen in measureable improvements such as lower running costs, less time spent on administration, more efficient targeting of resources and increased consumer satisfaction.
You can use staff or user diaries, or customer journey mapping to assess these efficiencies. Time savings can then be costed at wage levels for staff and at volunteering values for citizens. In these cases measuring the time spent on activities before and after the engagement is important.
To work out the cost of employee time use the gross wage plus non-wage labour costs (which includes National Insurance, pensions etc).
To work out non-employee time, use either the Department for Transport figure of around £5.85 per hour (2009 prices) or the minimum wage (See Appendix 5 for further information on determining time costs).
A recent study looked at the value provided by Local Information Systems (LIS) 1 by capturing information about time savings. The project asked people who used LIS to assess how much more time it would take to find the information through other means. The average number of minutes saved was then multiplied by the number of users. A percentage of time was costed at £5.85 (for those users who accessed the service as citizens) and another proportion was costed at £17.50 per hour (for those users who accessed the service in their paid employment, costed at the average wage of a Local Authority Data analyst). The research calculated that a LIS with operating costs of £63,000 per annum has a breakeven point between 442 and 300 repeat users per annum. The number of unique users for the LIS systems in the study ranged from 900 to 4,300 per year. The study concluded that the average LIS yields a net benefit of at least £100,000 per year. Similar calculations can be applied where engagement aims to reduce the time it takes for service users to access services.
Often engagement can improve service design. This is hard to measure in money terms but. You can capture data on a range of factors including:
- Perceived quality of service
- Levels of staff retention and satisfaction
- Lower costs of marketing
- Reduced activities due to participant feedback
- Reduced monitoring costs
- Lower communications costs
- Less time spent on complaints
- Less time spent on FOIs
- Lower cost of stress
- Less spend on legal fees
- Less spent on putting things right
Engagement may have a positive impact on user satisfaction levels, lead to improved relationships and reduce dissatisfaction. These benefits can be tracked through satisfaction surveys and the value can be estimated by looking at how much you spend on complaints before and after engagement.
Engagement might also be about exploring efficiencies. Working in partnerships often brings efficiencies by reducing duplication. Or engagement may lead to reductions in the use of particular services. This can be measured by establishing a benchmark of existing spending and track changes over time. Where there is a clear case of duplication it might be possible to remove one of the duplicating items and count the entire cost per year as a saving. A recent consultation for Leicestershire County Council found that in depth engagement as opposed to traditional paper based surveys led to members of the public gaining a much more nuanced understanding of the trade offs between spending and taxes. Before the exercise citizens were on average willing to cut two items of expenditure. After deliberating on the issue they were willing to face cuts in ten areas on average. 2 Achieving these changed attitudes through traditional marketing would have been very expensive.
Risk and probability
In some cases engagement can help reduce the risk of policy failure, either because it improves the information you are basing decisions on and helps avoid costly mistakes, or because it increases support and reduces complaints, litigation and judicial review.
In some cases engagement will allow you to make decisions that you could not make otherwise. Since the benefits would not happen without engagement it is tempting to count the full value of the project in your business case. However, the same benefits could arise with a different kind of engagement, or no engagement at all. If you want to measure reduced risk as a benefit you need to have a number of comparators to assess the probability of failure with or without engagement, as shown in the example below.
Most non-monetary costs are unintended outcomes of engagement, associated with risks rather than inputs. Engagement brings with it risks and at the same time can help mitigate against some types of risk.
The National Audit Office (2009) identified four categories of risk that need to be monitored and managed, each of which has implications for engagement 3 :
- Financial risks
- Performance risks
- Reputational risks
- Opportunity risks
- 1Alfonso et al (2010) ‘Understanding the value and benefits of establishing a local information system’ (Department for Communities and Local Government).
- 2Leicestershire County Council (2010) Hard times, hard choices
- 3National Audit Office (2009) Practical guidance on implementing the principles of proportionate monitoring.
|Why is this a risk for engagement?
|How engagement might mitigate against this risk
|Engagement might lead to a delay in decision making which incurs extra costs. The budget for engagement may be exceeded.
Engagement may uncover unworkable policies or unintended consequences before a programme is implemented thus avoiding unnecessary expenditure.
Engagement may also lead to programmes which are closely tailored to local needs.
|Engagement may bring in new information which could challenge your original plans and objectives.
Engagement may uncover unexpected risks to the success of the programme at an early stage which can then be avoided.
Engagement may bring key stakeholders on board.
|Engagement may increase public expectations to unrealistic levels.
|Being seen to be listening to local views can enhance the organisations reputation.
|Engagement may breed a risk averse culture due to ill-informed public views.
|Engagement may highlight new opportunities that the public and providers were unaware of.
Other examples of unintended costs that you might need to track and possibly monetise include decreased staff satisfaction and increased stress levels.
Non-monetary benefits are very important but may get overlooked as they are not usually measured and are difficult to assign a monetary value to. For example, decisions and services may be cheaper and easier to implement because they are based on accurate information, and better information helps to avoid unforeseen conflict in the future. One of the benefits that participants value most is influence over decisions; a democratic benefit which is very hard to place a monetary value on.
Other common benefits that are difficult to place a monetary value on include:
- Learning and skills building amongst participants
- Increased awareness of government policies and services
- Changed personal behaviour (relating to health, climate change etc.)
- A more representative group of participants in decision making
- Increased social capital, social cohesion and inclusion
This highlights the point that many of the most important benefits of engagement are as much about quality as they are about pounds and pence and may not be immediately visible. In the long term engagement can lead to real cost savings and other financial benefits.Problem solving
How to deal with common problems when valuing engagement:
I can’t find information or information is confidential - If it is difficult to gather certain bits of information, you can assign proxy measures that do not measure the intended benefit or cost directly but that are close enough to be useful, or use evidence from similar exercises.
For example even if you cannot measure service improvements directly the frequency and severity of complaints calls may be a useful proxy. Also it may be possible to find a previous study of a similar area and apply their findings to your situation. A menu of proxies can be found in Appendix 5.
No market value- Where there is no clear market value you can still make the case for non-monetary benefits. See the section on assessing costs and benefits for more detail, p. 19.
Benefits lie far in future- If the benefits are anticipated to occur a long time in the future, then explain why you think that is the case and allocate an approximate value. Point to similar projects that have had beneficial results, and highlight the early indicators of that success.
It is also important to outline in the business case how you intend to track the benefits over time. Compile an action plan and include any key milestones. Seek out quick wins.
Easier to measure costs than benefits- It will often be more straightforward to measure the costs than the benefits. The key is to be honest about this, and to make any assumptions clear. In part this is because public bodies have well developed processes for defining and measuring input costs but not for impacts and outcomes. Established financial management procedures create this imbalance and your business case helps to counteract this tendency.
Hard to prove cause and effect- Draw upon evidence from other case studies and use comparators where possible. Don’t over claim. If the correlation between cause and effect lacks evidence then say so, but give reasons for why you think the engagement might have caused that result, whilst considering the other factors which might be responsible.