Economic constraints remain one of the major limitations on the quality ofhealth care. Improvement of quality will require optimising facilities withinavailable resources. Our objective was to determine costs of surgery and toidentify areas where cost reduction is possible. PATIENTS AND METHODS:253 patients undergoing routine major and intermediate surgery during a periodof 3 months were selected at random. All consumables used and procedurescarried out were documented. A unit cost was assigned to each of these. Costingincluded: investigations, drugs, operations, personnel costs and medical suppliescost. RESULTS: The mean direct cost was LE 1638. The largest contributoryfactors towards total direct cost were, operative costs and personnel costs.CONCLUSION: Cost reduction in patients undergoing surgery should focus ondecreasing hospital stay.