What to Include in a Cost Benefit Analysis Template
Cost benefit analysis refers to a process business used to analyze decision. Here, you will need to sum the benefits of an action or situation & then substract the costs related to taking that action. In this article, we will discuss how to write a cost benefit analysis template.
How to Write a Cost Benefit Analysis Template
As its name, this analysis contains 2 parts. The first is analysis for cost and the second is analysis for benefit. It should start with compiling a comprehensive list of costs & benefits related to the decision or project. So, what are included in the cost-benefit analysis template?
Starts from the costs include some elements. The first is direct cost. Direct cost is direct labor that is involvd in manufacturing, manufacturing expenses, raw materials, and inventory. You have to include this kind of cost in the analysis as clear as possible.
The second type of costs intangible cost. There are many examples of intangible cost. For examples are such as the customer impact of buying a new business construction, project or strategy of a manufacturing plant, delivery delay of product, employee impacts.
The next type of cost is opportunity cost. You may not be familiar with this kind of cost. For your information, opportunity cost refers to buying a plant vs building one or alternative investment. If you find this type of cost, you have to include it in your own cost benefit analysis paper template.
There is one more type called cost of potential risk. There are many examples of this cost. One of the examples is regulatory risks. Besides that, compensation also belongs to the examples. Then, it also relates to environmental impact. That is all the typs of cost you will need to analyze.
After analyzing the costs, now you can continue with the analysis of benefits. There are some inclusions that you have to provide. You can start with revenue & sales. Revenue & sales increase from the new product or increased production. You have to include this on the analysis template.
Besides revene & sales, you also need to include intangible benefits. There are many examples of intangible benefits. One of them is improved employe morale & safety. Besides that, customer’s satisfaction due to the enhanced products offers or faster delivery.
One more, the analysis of benefit should include competitive advantages or market share that are gained as a result of decisions. You should use a monetary measurement to each items on the list. The result of aggregrate costs & benefits are compared to determine if they outweigh the costs.
There are key takeaways to understand. This analysis involves measurable financial matrics like cost saved or revenue earned as a result from decisions to pursue a business project. Besides, it may also include inteangible costs & benefits or effects from decisions like customer satisfaction.
After understanding all the guidelines above, now it is time for you to make a cost benefit analysis template by your own. Hopefully this guideline will be a useful reference for you in writing this kind of analysis.
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