Cumulative budget impact

Signature

CBI_T = sum_(t=1)^T BI_t

• BI_t Change in expenditure during period t attributable to adoption (currency per budget period)
• T Final period included in the budget planning horizon (number of periods)

Function

Budget-change function

Implementations

• Excel

  Calculate cumulative budget impact

  Excel sums the periodic budget-impact range across the planning horizon.

  =SUM(PeriodicBudgetImpact)

Assumptions

• Complete period coverage

  Every reporting period from 1 through T is included exactly once.

• Consistent monetary basis across budget periods

  Periodic impacts use a consistent currency and nominal-or-real convention before they are added.

• Undiscounted planning cash flows

  Periodic budget impacts are normally reported as undiscounted cash flows unless the budget holder explicitly requires an additional present-value view.

Worked examples

• Three-year cumulative budget impact

  Annual budget impacts are £900,000, £1,200,000 and £1,500,000. The cumulative three-year budget impact is £3,600,000.

  CBI_3 = 900000 + 1200000 + 1500000 = 3600000

Common errors

• Discounting away the annual cash-flow view

  Replacing undiscounted period-specific expenditure with a single discounted total can obscure the amounts the budget holder expects to pay in each financial period.

Sources

• ISPOR report for cumulative budget impact

  Sullivan SD, Mauskopf JA, Augustovski F, et al. Budget impact analysis—principles of good practice. Value in Health. 2014;17(1):5–14.

  View source →

Canonical Identity