Cost-Benefit Analysis Template

What is Cost-Benefit Analysis Template?

A cost-benefit analysis (CBA) template is a structured framework used to evaluate the potential benefits and costs of a project, policy, or investment decision. It helps organizations make informed decisions by systematically weighing the advantages against the disadvantages. Here's a general outline of a cost-benefit analysis template:

I. Project/Proposal Overview

  • Briefly describe the project or proposal being evaluated.
  • Identify the key stakeholders and their interests.

II. Benefits

  • Quantify the expected benefits, including:
    • + Financial benefits (e.g., increased revenue, cost savings)
    • + Non-financial benefits (e.g., improved efficiency, enhanced customer satisfaction)
    • + Intangible benefits (e.g., environmental impact, social responsibility)

III. Costs

  • Identify and quantify the costs associated with the project or proposal, including:
    • + Initial investment costs
    • + Ongoing operational costs
    • + Maintenance and replacement costs
    • + Opportunity costs

IV. Analysis

  • Calculate the net benefits by subtracting the total costs from the total benefits.
  • Determine the payback period (the time it takes for the project to generate enough cash to recover its initial investment).
  • Evaluate the internal rate of return (IRR) or net present value (NPV) to determine the project's profitability.

V. Sensitivity Analysis

  • Test the robustness of the analysis by varying key assumptions and parameters.
  • Identify areas where uncertainty is high and consider scenarios that might affect the outcome.

VI. Conclusion

  • Summarize the findings, including the net benefits, payback period, IRR/NPV, and any recommendations for further action.
  • Highlight any limitations or uncertainties in the analysis.

Here's a more detailed template with columns:

Category* * | Description* * Cost/Benefit (in $)* * | | — | — | — | | Benefits* * Financial benefits 100,000
Non-financial benefits -25,000
Intangible benefits -10,000
Initial Investment Costs* * | Equipment purchase | 50,000 | | | Training and setup | 20,000 | | Ongoing Operational Costs* * Maintenance and repairs 5,000
Staffing and overheads 30,000
Maintenance and Replacement Costs* * | Replacement cycle | 10,000 | | | Ongoing maintenance | 3,000 | | Opportunity Costs* * Foregone revenue -15,000
Total Benefits* * | | 145,000 | | Total Costs* * 128,000
Net Benefits* * | | 17,000 | | Payback Period* * (in months) 6

This template provides a basic structure for conducting a cost-benefit analysis. You can customize it to fit your specific needs and add more columns or sections as necessary.

, , , , ,