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.