CARE Food Manual (CARE , 1998, 355 p.): Chapter 2 - Assessments Cost and Logistics: II. Assessing Costs

CARE Food Manual (CARE , 1998, 355 p.)

Chapter 2 - Assessments Cost and Logistics

		(introduction...)
		I. Logistics Assessment
		II. Assessing Costs

II. Assessing Costs

Food aid programs are costly, and it is critical that CARE and counterparts integrate rigorous cost analyses into all programming decisions in order to use resources effectively and efficiently, and country offices should pay careful attention to whether they will carry out activities directly, form partnerships or contract out services.

Costs will vary depending upon program size, method of distribution, feeding schedules, and the local infrastructure available for project operations. Funds will be required for supervision, warehouse storage and handling, monitoring, and overall management and administration. In addition, costs are associated with survey design and analysis, training, personnel, transportation, and beneficiary selection. All these costs are borne by the donor, CARE, the recipient government and project participants either through cash or in-kind support. See Attachments for an example of a worksheet that could be used for estimating costs.

Cost analyses should be conducted. Some examples include:

· Costs per ration (e.g., total costs and logistics, direct and indirect program costs as a percent of total ration costs)
· Costs per metric ton
· Costs per beneficiary
· Direct operational costs of CARE as a percent of total program cost
· Local cash and in-kind contributions as a percent of total program resources
· Cash and in-kind contributions by communities and/or beneficiaries as a percent of total program resources.

Food aid projects are expensive, require considerable manpower, and are cumbersome to manage. In developing a food aid project, country offices must be prepared to justify each cost element.

Project Resource Requirements

Program Elements	Required Inputs
Targeting	Systems to gather and analyze information collected on the target population Ration cards or registration procedures
Pre-Shipment	Staff to determine: · Total tonnage to be transported/delivered · Breakdown of tonnage by delivery location · Time frame required to complete each delivery · Expected duration of the program · Agreements with the host government, donor, counterparts, transportation companies, clearing and forwarding agents, storage facilities, and project participants
Documentation	Preprinted multiple copy issue (waybills) and adjustment vouchers Storehouse ledgers
Management Arrangements	Organizational structures and clear assignment of responsibilities Both formal and on-the-job training Initial and periodic systems analysis to insure: · Proper authorizations · Accountability · Checks on the recording of transactions · Regular stock reports · Limited access to assets · Separation of duties Staff rotation
Procurement (many of these costs are borne directly by the donor, but should be considered in the overall cost of food aid projects)	Office material and equipment Vehicles for monitoring and management Freight forwarder Systems in CARE country office, local donor office, CARE Atlanta, donor headquarters office to process calls forward and purchase food Processing and packaging, if required Pre-shipping storage and handling Ocean freight Overland transport to the border in landlocked countries
Port Charges	Landing charges other fees Charges for movement of cargo from storage area and loading on forwarding transport (includes labor) Demurrage charges for not clearing food out of port warehouses on a timely basis Survey charges for inspection of the cargo prior to discharge to fix responsibility for any damages en route.
Internal Transport, Storage and Handling	Adequate discharge, storage, and off-take facilities at port, including stevedores, supervision, transit sheds and port storage Ex-tackle, ex-shed, and discharge surveys Staff and scales to collect sample weights of the food Reconstitution costs, including extra bags, labor, stitching machines and scales Local clearing and forwarding agent fees Adequate means of inland transport to central warehouses Adequate central warehouse facilities, including space, fumigation and reconstitution Warehouse equipment, pallets, scales, locks Reliable communications network Vehicles or transport costs to distribution points Regular fuel supplies Anticipation of seasonal constraints and other problems, and backup plans and reserve capacity to minimize delays in distribution Insurance, such as bonding of warehouses and employees
Delivery Schedules/Distribution Plan	Scheduling of the distribution Contingency plans for ration deliveries Training and arrangements for distribution at the sites
On-Site Feeding	Local inputs, such as spices or other foods Cooking utensils Materials for complementary activities, such training guides, growth charts, health posters and vaccines
Monitoring and Evaluation Systems	Systematic monitoring and evaluation of: Process indicators: · Cleanliness of facilities · Stock balances at distribution sites · Validation of inventory records from port to end-use sites · Ration size · Distribution procedures and amount of food distributed · Review of beneficiary lists Impact indicators: · Progress of interventions in meeting final and intermediate program goals · Status and needs of the affected population · Effectiveness/impact of food assistance · Status of livelihood systems in a targeted area, including market prices, production, livestock and socioeconomic conditions Periodic audits and internal reviews