Example on flexible budget, based on activity levels - based on an example in the Program Budget
Manual
Malaria Prevention Sub-Program
A public health office is responsible for 10,000 people in District “A” and has set a target to increase
the number of people receiving publications, education and advice on malaria prevention. This year
the health office has advised 4,000 people about malaria prevention (40% of the population). The
target is to advise 50% of the population next year (year 1), 60% in the second year and 70% in the
third year.
The population is expected to grow by 3% per year for each of the next three years.
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Required:
1. Estimate the population in District “A” over the next three years (Years 1,2 and 3).
2. Calculate the targeted number of people in district A to receive advice on malaria prevention in
Years 1,2 and 3.
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The table below shows the current situation.
Number of people the clinic has advised on malaria prevention
Service Activities Population Number of Total population
(involved) activities (times) receiving advice on
malaria prevention
Discussion in communities 50 45 2,250
Discussion in schools 45 25 1,125
Direct talks with individuals 1 625 625
Total 4,000
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Required:
3. Using the targeted number of people calculated in 2 above, and assuming equal growth in all
types of service activities, calculate the targeted number of discussions in communities,
discussions in schools, and direct talks with individuals, in each of the next 3 years (Years 1, 2
and 3).
4. Then calculate the total number of people receiving advice through each of these activities and
check that the totals agree with the totals targeted in 2 above.
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1
There are three types of expenditure associated with the malaria prevention advice sub-program:
a) Administrative Cost: Expenditure incurred by the public health office to organise the malaria
prevention program.
b) Service Cost: Expenditure on the three types of service activity: (i) discussion with
communities, (ii) discussion with schools and (iii) direct talks with individuals.
c) Investment Cost: Expenditure on other materials in the capital costs classification to serve
the malaria prevention program.
In the next three years, the administrative cost will be incurred every year and will not increase in
real terms. The investment cost will only be incurred in Year 1.
Details of the costs of each activity (at today’s prices)are given below:
Activity / Expense type Quantity Unit cost Total Grand total
Administration
Paper 100 2.00 200.0
Pens 100 0.04 4.0
Water 280.0
Electric 1200.0
Phone 1200.0 2884.0
Service Activities:
Discussion with Community
Gas 5 3.20 16.0
Record cards 100 1.00 100.0
First aid kit 1 10.00 10.0 126.0
Discussion in Schools
Gas 2 3.20 6.4
Record cards 90 1.00 90.0
First aid kit 1 10.00 10.0 106.4
Discussion with Individuals
Gas 2 3.20 6.4
Record cards 5 1.00 5.0
Drugs 50 3.00 150.0 161.4
Investment
Capital cost 1 3000.00 3000.0 3000.0
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Required:
5. Calculate the cost of the malaria prevention subprogram (in real terms – i.e. at today’s costs)
over the next three years.
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2
The rate of inflation is estimated to be 4% per year for the next three years.
i.e. Year 1 costs are 4% higher than today’s costs, etc.
Required:
6. Calculate the cost of the malaria prevention subprogram in money terms over the next three
years.
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7. What is the cost per person visited in real terms (today’s costs) for each of the three service
activities? What is the average service cost per person visited?
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The cash available in year 1 (in real terms) will be only 130,000.
Required:
8. Show how the target for people advised can be achieved by:
- Reducing the number of direct talks with individuals to 700; and
- Increasing the number of discussions in communities to 61.
3