Free Simple Cost Benefit Analysis Templates
Cost benefit analysis belongs to one of the ways that a business decision maker can avoid creating a poor strategic decision in an unforgiving economic climate. Learning to write simple cost benefit analysis templates is not difficult. Let’s see the following complete guidelines below.
How to Write a Simple Cost Benefit Analysis Template
The key to execute a simple cost benefit analysis form is rooted in quantifying foreseeable cost and the expected quantifiable positive cash flow in a period of time. It includes hard costs and soft costs. Hard costs are actual money spent whereas soft costs are indirect money spent in other areas.
Before you start making this analysis, you have to consider preparation. Here, you need to build a team for this analysis. You should assemble a business unit subject matter expert group to brainstorm potential cost & benefit of the changes under considerations.
After preparation, the first step is to calculate all-inclusive costs. The costs include direct and indirect costs. However, it is not limited to these. Direct costs relate to annual maintenance costs, subscription fees, consulting fees, licensing costs or any change in tax, and actual capital investment.
On the other hand, indirect costs may relate to transportation costs or any change in utilities rates, labor hours for implementations, leasing costs, initial & ongoing training, and other cross unit or downstream costs. The costs must be calculated at the current rates correctly.
The second step in making a simple cost benefit analysis is to calculate benefits. It is similar to cost calculation. For your information, this is critical to be all inclusive in the approach to the project benefits. A cost benefit analysis that comes with positive material return will provide a ROI period.
You have to know that there are so many possible benefits. One of the examples is increased input. Besides that, reduced inventory costs also belong to the example of benefit. Other examples are such as reduced fees or taxes, reduced supply chain costs and reduced labor costs.
After calculating costs and benefits, the last step in making this kind of analysis is to incorporate time to the equation. The key is to collect the discrete costs & benefit numbers and then place in a template. You may use a spreadsheet like Ms Excel. Then, determine the net result on cash flow.
From the explanation above, we can conclude that the best way to complete the cost benefit analysis is to use a simple template. Some models have cumulative costs & savings or increased revenue for the ROI period under considerations.
Others may include “buckets” or itemize the area which will experience significant costs or benefits over time. The most complete incorporates a full 10-year model to accommodate the amortization or depreciation schedule of a capital investment, even though the horizon for ROI is shorter.
Whichever the model you want to choose, the key is to do the right preparation to make sure that the numbers feeding your analysis bears a strong resemblance to the actual cost. Now, it is time to make your own simple cost benefit analysis templates.
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