From bdc885c973e819f71480fd8831227da47af970b3 Mon Sep 17 00:00:00 2001 From: Jet Hughes Date: Sun, 12 Jun 2022 14:07:30 +1200 Subject: [PATCH] vault backup: 2022-06-12 14:07:30 --- content/notes/25-cost-benefit-analysis.md | 47 ++++++++++++++++++++++- 1 file changed, 46 insertions(+), 1 deletion(-) diff --git a/content/notes/25-cost-benefit-analysis.md b/content/notes/25-cost-benefit-analysis.md index 5cdd00f7c..af9430ac5 100644 --- a/content/notes/25-cost-benefit-analysis.md +++ b/content/notes/25-cost-benefit-analysis.md @@ -40,8 +40,53 @@ tags: - familiarity and expertise (low familiarity -> higher risk) - size (larger -> higher risk) - compatitibilty (with existing systems; less -> higher risk) - - e.g., IBM police 90's fil + - e.g., IBM police 90's failure - will it be worth it (economic) + - costs and benefits + - quantify costs and benefits + - asses economic value + - payback period + - NPV + - ROI + - convers both "should" and "can" form financial perspective + - can we afford it + - will it provde financial benefit + - are funds available - includes considerations of risk and uncertainty - may revisit due to uncertainty +# costs and benefits +## identify +costs +- development + - salaries, pm costs, testing and qual control +- operational + - maintenance, licensing, servers, training, + +benefits +- tangible + - reduced customer service costs, more efficiet (saves staff costs), legal compliance +- intangilble + - security + - market share + - improved perception of company "cool", happier staff + +# quantify +dollar values. usually estimates/guesse + +e.g., +- dev team salaries (assumes accurate estimate of required effort) +- increased sales (how to predict) +- improved customer satisfaction: how to assign dollar value +- smarter student management system with better prerequisite, modelling: how to estimate benefit +- these are tangible benefits, intangible benefits are harder + +# assess economic value +- payback period - how long until accumulated benefits equal the cost +- NPV: sum of costs and benefits , but future years discouted + - ![example](https://i.imgur.com/W6lhzKb.png) +- ROI: what is the discounted benefit relative to the costs +- + + +