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Cost-Benefit Analysis --
Just the Basics!
Publisher: Resource Management Systems, Inc.
ISBN: 0-9707733-3-1
244 Pages; Metal Bound
TABLE OF CONTENTS
COST-BENEFIT ANALYSIS - A PLAIN-ENGLISH INTRODUCTION
1. What Is A Cost-Benefit Analysis?
2. What Do I Have To Do?
3. How Can I Do It?
4. How Do I Get Started?
5. How To Use This Book
FREQUENTLY ASKED QUESTIONS
ILLUSTRATIVE EXAMPLES
STEP 1. MAKE CHANGE EXPECTATIONS EXPLICIT
STEP PREVIEW: What Business Performance Changes Are Expected?
OVERVIEW
PROCEDURE
Activity 1. Describe The Big Problem To
Solve
Activity 2. Identify Key Performance Changes
Activity 3. Measure Current & Expected
Performance
Activity 4. Write The Overarching Change
Objective
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 2. ESTABLISH EVALUATION CRITERIA
STEP PREVIEW: How Will You Judge Proposed Solutions?
OVERVIEW PROCEDURE
Activity 1. List And Define Relevant
Criteria
Activity 2. Prioritize The Criteria
Activity 3. Secure Key Stakeholder Agreement
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 3. CONCENTRATE ON THE "VIABLE FEW"
STEP PREVIEW: Which Alternative Solutions Should You Analyze?
OVERVIEW PROCEDURE
Activity 1. Identify Potential Solutions
Activity 2. Grade (Pass/Fail) Alternatives
Activity 3. Identify "Viable" And
"Not Viable" Alternatives
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 4. MEASURE WHAT YOU GET (BENEFITS)
STEP PREVIEW: How Much Benefit Does Each Solution Deliver?
OVERVIEW PROCEDURE
Activity 1. Develop A "Benefit
Scorecard"
Activity 2. Determine Non-Financial Benefits
Activity 3. Determine Financial Benefits
Activity 4. Record Results For Each
Alternative
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 5. MEASURE WHAT YOU GIVE (COSTS)
STEP PREVIEW: How Much Will Each Alternative Cost?
OVERVIEW PROCEDURE
Activity 1. Develop A "Cost
Scorecard" (Cost Matrix)
Activity 2. Determine Project Costs
Activity 3. Determine Recurring Costs
Activity 4. Record Estimates In The Detail
Worksheet (Scorecard)
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 6. IDENTIFY THE RISKS
STEP PREVIEW: No Surprises! How Much Risk Is Involved?
OVERVIEW PROCEDURE
Activity 1. Locate The Risk Analysis
Activity 2. Identify Potential Risks
Activity 3. Pinpoint Significant Risks
Activity 4. Record The Results
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 7. CALCULATE THE FINANCIAL METRICS ("ROI")
STEP PREVIEW: What Is The Financial ROI?
OVERVIEW PROCEDURE
Activity 1. Determine Required Metrics
& Discount Rate
Activity 2. Calculate The Annual "Cash
Flow"
Activity 3. Use Your ROI Calculator To
Generate Metrics
Activity 4. Record The Results
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS
STEP 8. COMPARE - JUDGE - COMMUNICATE
STEP PREVIEW: All Factors Considered, Which Choice Is "Best"?
OVERVIEW PROCEDURE
Activity 1. Consolidate Facts For
Comparison
Activity 2. Compare Benefits, Costs, Risks,
ROI
Activity 3. Pinpoint The Best Choice
Activity 4. Communicate And Document
ILLUSTRATIVE EXAMPLES
FREQUENTLY ASKED QUESTIONS.