---
title: "ANNEX IV HRP Costing Options – Pros and Cons"
slug: "annex-iv-hrp-costing-options-pros-and-cons"
updated: 2023-12-15T10:57:17Z
published: 2023-12-15T10:57:17Z
canonical: "handbook.fscluster.org/annex-iv-hrp-costing-options-pros-and-cons"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://handbook.fscluster.org/llms.txt
> Use this file to discover all available pages before exploring further.

# ANNEX IV HRP Costing Options – Pros and Cons

| **Options** | **Pros** | **Cons** |
| --- | --- | --- |
| **Project based costing** | - Provides overview of response capacity, and early identification of possible gaps and duplications. - Allows financial tracking of response (projects requirements vs funding received in FTS). - Visibility to partners (appealing agencies listed in HRP and FTS). - Match between partners’ financial asks and HRP costing. - Possibility to prioritize projects during an emergency. - Possibility to link directly to humanitarian pooled funds (facilitating submission process for partners). - Provides higher transparency of process through the project Review Committee that would include various actors (including NNGOs). - Allows the FSC teams to better understand partners' capacity/strategies. | - Overall cluster/sector financial requirements reflect capacities of appealing agencies, which can be much lower than needs in some cases *(though this could be considered appropriate to avoid unrealistic plans)*. - Disconnect between targets and financial requirements if former is not defined based on submitted projects. - Partners have to submit one (or more) projects to be part of the HRP, and the process takes longer time because it includes projects' submission/revision/clearance. Some partners may not be willing to engage / be excluded if timing not convenient / they do not see benefit of it![3102395-200](https://cdn.document360.io/be292e4d-58a1-4b36-b738-174162fabafa/Images/Documentation/3102395-200.png)this can lead to an underestimated plan - Information (“transparency”) on cost breakdown could be less visible![3102395-200](https://cdn.document360.io/be292e4d-58a1-4b36-b738-174162fabafa/Images/Documentation/3102395-200.png)this can lead to a risk of budget overinflating or under estimation (impacting quality standards). The FSC needs to check information / ensure agency capacity. - Lengthy process to review all projects – vetting done with FSC committee when possible. |
| **Unit based costing** | - Financial requirement is directly linked to needs. - Allows partners to focus on strategic decisions of the planning process. - Once unit costs are calculated, easy to put in place, e.g. also for revisions / rapid onset emergencies - FSCXXXXXXXXXXXXXX partners do not have to submit project sheets, nor be involved in lengthy vetting process | - Lengthy process to get full endorsement from partners on set of activities and average costs which might require regular review and updating (as a result of fluctuating needs and/or prices). - Partners may not be willing to share their unit costs. - Support costs can vary considerably between geographic areas but also due to agency capacity. - Costing of complementary activities may be overlooked![3102395-200](https://cdn.document360.io/be292e4d-58a1-4b36-b738-174162fabafa/Images/Documentation/3102395-200.png)this can have an impact on programme quality. - High difference in costing among agencies (UN vs INGOs vs NNGOs)![3102395-200](https://cdn.document360.io/be292e4d-58a1-4b36-b738-174162fabafa/Images/Documentation/3102395-200.png)i.e. partners’ financial asks may not be fully reflected in HRP costing. - Certain level of funding may not translate into the expected levels of achievements if actual costs of operations differ from HRP costing. - Inability to conduct detailed financial tracking at project / partner level in FTS (as no projects are submitted on HPC). - Reduced partners’ visibility (no list of partners in HRP and FTS). - Less information for coordination team on planned interventions and potential gaps / duplications. - Less direct engagement of partners with clusters (more with donors). |
| **Mixed/Hybrid approach** | **Same as unit based:** - Financial requirement is directly linked to needs. - Allows partners to focus on strategic decisions of the planning process. - Once unit costs are calculated, easy to put in place, e.g. also for revisions / rapid onset emergencies. **Same as project based:** - Provides overview of response capacity, and early identification of possible gaps and duplications. - Visibility to partners. | **Same as unit based:** - Lengthy process to get full endorsement from partners on set of activities and average costs. - Difference in costing among agencies (UN vs INGOs vs NNGOs)![3102395-200](https://cdn.document360.io/be292e4d-58a1-4b36-b738-174162fabafa/Images/Documentation/3102395-200.png)i.e. partners’ financial asks may not be fully reflected in HRP costing. - Inability to conduct detailed financial tracking at project / partner level in FTS. |

Financial Tracking Service

Humanitarian Response Plan

National Non-Governmental Organisation

Food Security Cluster

International Non-Governmental Organisation

Humanitarian Programme Cycle