Price Analysis 1 Last Updated: August 08, 2018; First Released: January 01, 2014 Author: Kevin Boyle, President, DevTreks Version: DevTreks 2.1.4 A. Introduction This reference explains how to start to collect, measure, and analyze input and output price data (1*). DevTreks believes that all price data, from the price for a carton of milk in the grocery store to an avocado growing in an orchard, has a story to tell and lessons to teach. Those lessons can only be learned when data about prices is collected, measured, aggregated, analyzed, explained, and saved in online knowledge banks. Full, uniform, and accurate analyses of the prices of food, medical supplies, crop inputs, construction materials, tractors, livestock, flood control devices, and widgets, should be one or two links away for everyone. If a business owner, lender, doctor, patient, government official, or citizen, needs to make a decision involving prices, they should have ready access to the best data available. This reference introduces another DevTreks way to build these knowledge banks. Section Page Data URLs 2 NPV, LCA, M&E, and Resource Stock, Analysis 3 Input and Output Properties 4 Input and Output Analysis Properties 5 Totals Analysis 6 Statistical Analysis 14 Incremental Change Analysis 21 Progress Analysis 28 Performance Measures 38 Knowledge Banks and Summary and Conclusion 38 B. Data URLs The Construction Analysis 1, Health Care Analysis 1, Malnutrition Analysis 1, Ag Production Analysis 1, and Work Breakdown Structures, tutorials demonstrate how basic price data can be structured to support the analyses shown in this reference. The Analyzers demonstrated in this reference can be found in the references in their respective tutorials. The following URLs contain representative Input and Output Analyses (i.e. allowing for a software development firm’s testing purposes). Inputs URIs https://www.devtreks.org/buildtreks/preview/commercial/input/NPS 2011, Concrete Waste Factor 10 Percent/2147397457/none/ https://www.devtreks.org/buildtreks/preview/commercial/input/NPS 2011, Concrete Waste Factor 10 Percent/2147397457/none https://www.devtreks.org/greentreks/preview/carbon/input/2014 Fertilizer, Orange, Conventional/2147397531/none The M&E 1 analyses in the following dataset have been deprecated. Only the M&E 2 analyses are currently supported. https://www.devtreks.org/hometreks/preview/farmworkers/input/2013 Food Package/2147397521/none Outputs URIs https://www.devtreks.org/buildtreks/preview/commercial/output/2011 NPS Visitor Hiker WTP/2141223450/none/ https://www.devtreks.org/greentreks/preview/carbon/output/Disaster Risk Management, Example 6/2141223485/none http://localhost:5000/buildtreks/preview/commercial/output/2011 NPS Non-Visitor Trailhead WTP/2141223453/none http://localhost:5000/buildtreks/preview/commercial/outputgroup/Life Cycle Examples/1936433768/none C. Work Breakdown Structure (WBS) The construction data analyzed in this reference uses the UNIFORMAT WBS. Some output data was able to use that WBS as well. The remaining data was classified using fictitious WBSs. All of the data used in these analyses were aggregated using these WBS Labels. D. Net Present Value (NPV), Life Cycle (LCA), Resource Stock, and Monitoring and Evaluation (M&E) Analysis DevTreks’ NPV, LCA, Resource Stock, and M&E Analyzers can be used to carry out the analyses documented in this reference. Further information about each type of Analyzer can be found in the General Analyzer Tutorials on the site’s home page. Unlike Operation, Component, Outcome, or Budget elements, NPV calculators are not run prior to completing an Input or Output price analysis. Inputs have an Amount property that is usually set to 1 so that unit costs can be used in subsequent cost calculations. The Total Operating, Allocated Overhead, and Capital, Cost properties displayed in analyses result from multiplying their respective OC, AOH, or CAP, price by this amount. As a result, the numbers generated by NPV Input Analysis should usually be interpreted as non-discounted prices, rather than discounted costs. The exception is when the Input’s Amount and Price properties have been calculated using a discounting calculator, such as a Machinery or Irrigation Calculator. The numbers generated by LCA Input Analysis derive from Life Cycle calculators and should be interpreted as life cycle costs, rather than input prices. Base Outputs also have an Amount property, but it is often used to measure a “unit yield” from a production process, such as bushels of corn per acre (2*). The numbers generated by NPV Output Analysis should usually be interpreted as non-discounted prices when the Amount property is not a “unit yield” and non-discounted benefits when the Amount property is a “unit yield”. The numbers generated by LCA Output Analysis derive from Life Cycle calculators should be interpreted as life cycle benefits, rather than output prices. The numbers generated by M&E Input and Output Analysis may contain prices, quantities, costs, and benefits. Standard indicators contain a Q1 Property that is often a quantity, and Q2 Property that is often a price, and a Total property that is often a cost or benefit. Each base element in an analysis can contain up to 15 indicators. A Resource Stock Input or Output Total Analysis sums all of the Indicator “Qxs” in the analysis (i.e. Q1, Q2, Q3, Q4, Q5, QT, QTM, QTU, QTL, Score, ScoreD1, ScoreD2, ScoreM, ScoreL, and ScoreU). The remaining Statistics, Change By, and Progress Stock Analyzers only aggregate the QTM, ScoreM, ScoreL, and ScoreU properties. Each Input and Output element in an analysis can contain up to 15 indicators which, when analyzed, are displayed using up to 10 aggregate indicators. E. Input and Output Properties (3*) Base Element Input Properties: InputPrice1Amount: operating cost amount InputPrice1: operating cost price InputUnit1: operating cost unit InputUnit2: allocated overhead cost unit InputPrice2: allocated overhead cost unit InputUnit3: capital cost unit InputPrice3: capital cost price InputDate: date the input is expended Base Element Output Properties: OutputCompositionAmount: a multiplier for changing output revenues OutputCompositionUnit: unit of measurement for the composition amount OutputAmount1: quantity of the output OutputPrice1: price of the output OutputUnit1: unit of measurement for the output OutputDate: date the output’s revenue is received F. Price Analysis Properties Separate NPV, LCA, Resource Stock, and M&E analyzers are available for the base elements found in Inputs and Outputs (4*). The Calculator and Analyzer 1 reference documents how all Analyzers work. The Analysis Type property of Analyzers is used to specify the type of analysis to run. Analysis Result Properties: The results of running analyses are displayed using the properties that are explained in the following references: NPV Analysis Properties Refer to the Net Present Value Calculation and Benefit Cost Analysis References LCA Analysis Properties Refer to the Life Cycle Calculation and Analysis References M&E Analysis Properties Refer to the Monitoring and Evaluation Calculation and Analysis References Resource Stock Analysis Properties Refer to the Resource Stock Calculation and Analysis References G. Total 1 Analysis A Totals Analysis sums base elements for every base element in an analysis. All analyzers use the results of this analysis for each aggregated base element before carrying out additional calculations. The following URLs and images demonstrate typical examples of this analysis. These images were generated using Version 2.0.0 with the Azure site. LCA Input Totals NPV Input Totals LCA Output Totals NPV Output Totals M&E 2 Totals M&E 2 Starting Calculations The M&E tutorial points out that descendent elements are not aggregated into ancestors. The Input did not aggregate its children Input Series in the following Totals Analysis. Resource Stock Totals H. Statistical 1 Analysis A Statistics Analysis uses the Totals calculations to measure basic statistical properties of aggregated base elements. Total, Median, Mean, Variance, and Standard Deviation statistics are generated for all of the base elements that use the standard aggregators. The following images demonstrate typical examples of this analysis: LCA Input Stats NPV Input Stats LCA Output Stats NPV Output Stats M&E 2 Stats Resource Stock Stats I. Change 1 Analyses The Change 1 Analyses use the Totals calculations to measure incremental changes in aggregated base elements. The NIST 135 reference demonstrates how to use these types of measurements to make decisions based on benefits and costs. A Change by Year Analysis measures incremental changes between aggregated base elements that have different Years. A Change by Id Analysis measures incremental changes between base elements that have different Ids. A Change by AlternativeType Analysis measures incremental changes between aggregated base elements that have different AlternativeTypes. Changes are analyzed in ascending order (Id = 1,2,3; Year = 2000, 2001, 2002; AlternativeType = A, B, C). The first member of the sequence will be used as a “Base” element to make comparisons. The sibling sequence member immediately before the current sequence member will be used as an “x-1” element to make comparisons. Gaps in the sequence, such as a missing Year, will be ignored. Further documentation about these analyses can be found in the Change Analysis 1 reference. NPV Input and Output Analyzers include a selection list for setting the Alternative Type property that is used in the Change by Alternative Analysis. These analyzers can be copied into their descendants and then that property can be set appropriately in each descendant (6*). LCA Input and Output Analyzers don’t include this selection list because the property is set using LCA calculators. The following images demonstrate typical examples of these analyses: LCA Input Change by Alternative NPV Input Change by Year LCA Output Change by Alternative NPV Output Change by Alternative M&E 2 Change by Year Resource Stock Change By Alt J. Progress 1 Analysis A Progress 1 Analysis uses the Totals calculations to measure actual versus planned progress for aggregated base elements. The U.S. GAO (2009) emphasizes using Earned Value Management (EVM) best practices to ensure cost of work completed aligns with the value of work performed. A key requirement of EVM is to measure budget variances and scheduling variances. Budget variances measure the costs (and benefits) of work planned versus actual work completed. Scheduling variances measure the amount, quality, and timeliness of work planned versus actual work completed. EVM uses both variances to measure changes in the value of work planned versus actual work completed. A Progress 1 Analysis measures all of these variances. DevTreks’ best practices extend EVM to include Outputs (work progress), Outcomes (technical performance), Benefits (earned value), and M&E and Stock indicators (performance effectiveness). Further documentation about these analyses can be found in the Earned Value Management Analysis 1 reference. NPV Input and Output Analyzers include a selection list for setting the Target Type property that is used in this analysis. These analyzers can be copied into their descendants and then that property can be set appropriately in each descendant (5*). LCA Input and Output Analyzers don’t include this selection list because the property is set using LCA calculators. The following images demonstrate typical examples of this analysis: LCA Input Progress NPV Input Progress LCA Output Progress First glance at the following analysis suggests Alt 3 and 4 have wrong calculations. Second glance examined the Labels. Even simple analyses require close attention to detail –it really does require a scientific perspective. NPV Output Progress All glances at the following analysis finds errors. Why is 2008, rather than 2007, the benchmark? Again, the errant Labels for 2010 and 2011 result in a bad analysis. Many tutorials emphasize not following the test datasets used by a software development firm. Follow the standards developed by professional, scientific, networks (8*). M&E 2 Progress Resource Stock Progress K. Performance Measures The reference, Performance Analysis 1, documents how Performance Measures, such as Net Savings, can be used to support decisions related to prices. The Social Performance Analysis tutorials document how more advanced techniques, that use custom algorithms and TEXT datasets, can be used to carry out more sophisticated input and output analysis, such as Impact Evaluation. L. Knowledge Bank Standards All price data should be entered into online knowledge banks (i.e. production servers as contrasted to development servers) that can be used to analyze prices (7*). That structured evidence must be passed down to future generations. These knowledge banks aggregate and analyze all of the data in a network. Future references will discuss how these knowledge banks will evolve (i.e. semantic data, forecasts) to support future decision making needs. The flexibility offered by DevTreks in documenting prices means that networks need to develop “rules” explaining the “standards” that should be followed by clubs in their network. The “standards” make it possible to build knowledge banks. Summary and Conclusions Clubs using DevTreks can start to carry out the basic analysis of prices. Clubs can solicit help understanding prices better and share structured evidence explaining prices. Networks can build knowledge banks that explain prices and pass that knowledge down to future generations. The result may be farmers that get higher returns, patients that get treated less expensively, farmworkers who get paid fairly, conservationists who conserve natural resources more efficiently, governments that contract less wastefully, and people who improve their lives and livelihoods. Footnotes 1. Analysts have developed a large number of techniques for analyzing prices. This reference introduces basic price analysis. Some of the more sophisticated techniques, involving custom algorithms, the storage of input and output data in TEXT datasets, and the use of mathematical and statistical libraries, are included in the Performance, Social Performance, and Technology Assessment, tutorials. 2. Output aggregations include Output Name, Unit, Amount, Price, Annual Total, Annual Incentive Adjusted Costs, and Composition Amount. These aggregations are specifically included in order to support Cost Effectiveness and Productivity Analyses. They only have meaningful aggregations when the Outputs being aggregated are the same (i.e. corn or hay). Input aggregations include Input Annual Operating Costs, Annual Allocated Overhead Costs, Annual Capital Costs, Annual Total Costs, and Annual Incentive Adjusted Costs. Inputs do not include Names, Prices, Units, or Amounts because most Inputs within an Operation or Component are uniquely different and can’t be aggregated in any meaningful way. The LCA Analyzers have SubCosts and SubBenefits which allow for the aggregation of unique Input/Output Prices and Amounts. Those analyzers should be used to support Productivity Measures that rely on Input measurements such as Labor Amount per Unit Output, or Labor Cost per Dollar Revenue. 3. Inputs and Outputs that are children of Operations, Components, or Outcomes, have additional properties (such as Input.Times or Output.IncentiveAmount). 4. We assume that most Input and Output analyses are concerned about series data. Most of the testing with these analyzers took place using an Input or Output element that had multiple children series data. 5. The aggregated LCA element uses descriptive properties, such as name and description, from the first LCA element being aggregated. This can be a little misleading if the base LCA elements are described uniquely. For example, if the LCA element, Labor, is broken down into specific types of labor but aggregated using the same Label, the aggregated name reflects only the first type of labor. In addition, some of the aggregated numbers can be meaningless. For example, when two LCA elements, such as Materials, are entered into separate base Components that use the same LCA element Label and base element Label, their aggregated Costs will be meaningful but their aggregated Amounts will be meaningless if the Materials are not the same. Use unique LCA element Labels to distinguish LCA elements that must have meaningful aggregated Amounts. This can be particularly important when Performance Measurements need to be measured using outputs (i.e. cost per unit output) or inputs (i.e. output per unit labor). 6. The standard Relations properties found in Analyzers can be used to copy a parent analyzer into its children. Refer to the Calculators and Analyzers reference. If the parent analyzer that has been copied into the children is later changed (i.e. from a Change by Year to a Change by Alt), make sure to update all the children to the new analyzer. 7. What about daily, weekly, or monthly prices? The current price structure found in DevTreks is designed primarily for collecting annual prices –those are the prices most likely to be used in budgets. If you need more temporal prices, store the data in TEXT files, as discussed in the Resource Stock and M&E tututorials. 8. Unfortunately, in the author’s experience, conventional institutions only take the required action when governments throw money at them. And the governments only throw the money when certain people in government circles decide to run around putting out special interest-defined fires. Discussion of institutional reforms, including consequential digital activism, can be found in several tutorials, such as the Social Performance Analysis tutorials. References References for NPV, LCA, M&E, and Resource Stock analysis can be found in their respective tutorials. References Note We try to use references that are open access or that do not charge fees. Improvements, Errors, and New Features Please notify DevTreks (devtrekkers@gmail.com) if you find errors in these references. Also please let us know about suggested improvements or recommended new features. Video tutorials explaining this reference can be found at: https://www.devtreks.org/commontreks/preview/commons/resourcepack/Price Analysis 1/508/none/ DevTreks –social budgeting that improves lives and livelihoods 1