Cost Measurement

Tools and Methodology for Cost Effectiveness Analysis

by H. G. Massey, David Novick, R. E. Peterson


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A review of the techniques of cost measurement and their evolution, with emphasis on the economic aspects that are of particular significance for the present and future. The development of the Planning-Programming-Budgeting System and its role in public policy decisionmaking is described, and the current methodology and tools of cost measurement are illustrated. The paper examines the underlying assumptions of economic cost measurement and makes observations on the limitations of the methods and tools that appeared as the locus of application has moved from the industrial and entrepreneurial area into the field of public policy decisionmaking. In conclusion, some thoughts are presented on the future of cost measurement.

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