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Step 1
The first step in developing a business case alternatives analysis is to recognize that a program manager and funding manager's decision to fund your project may be a direct correlation to whether or not the project will
perform above and beyond expectations and correlating your analysis to such metrics can ensure the favorable regard of such a study- that is to say, the first step is recognizing that the criteria established to assess your project's viability has to speak to the manager via the measures you establish- assess your program's values in terms of what
it is going to be valued against. The metrics typically used are return on investment or payback period as well as secondly, the cost overrun risk potential in dollar figures. -
Step 2
The second step in writing a cost and benefit analysis is to select the projects being compared and describing how such projects were suggested or recognized as alternatives. To do so one typically needs to recognize that a project is funded in terms of its importance or value to a team or larger program and often department, overarching department. Ultimately identifying the objectives and priorities can help one determine if the scope of alternatives or entirety of alternatives have been been considered. The place to start is the baseline. A baseline alternative, one which demonstrates that current appropriations and outputs are at the best level demonstrates that project and team or department wide ability to do a required function if not new one is done with the same team and allocation of resources to how the required function was done last year- ultimately this is known as the stay the same or do nothing differently alternative. The second alternative is the built it from scratch alternative, this plan is rather an attempt to do a new function entirely differently than in the past or as though it were being done by a new or seperate company. After selecting these two parameters essentially one has narrowed the cost scope. The third and consequent alternatives map directly to the predicted new appropriation of funding to produce an output or outcome that is superior to the past while tweaking parts of the current processes and through added efficiencies provided in new acquisitions in terms of equipment or expertise from training or otherwise. Various configurations may exist and as such business process analyses need to be considered.
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Step 3
The third step is to attach benefits to the costs. Costs may range but the final analysis depends on the ratio of benefits to cost such that the greatest improvement or highest yield demonstrates the greatest benefit for that alternative when selected. Benefits are tangible and intangible. Reduced staff time required to perform the task is typical. The ability of one department to function better may affect the organization's ability overall to do better work and produce outcomes more effectively which means that assessing the project in terms of value to other components within the company or entity is important. Such intangibles can relate to dollars or out comes and services rendered such that an initial analysis will yield benefits within a department that are greater than the others but less than a different one with a higher overarching interdependency.
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Step 4
THe other important assessment is the risk requirement. If IT developments are expected to create better ways of doing something the value of a new addition may be mitigated by future better products within a ten year time frame and repeated acquisitions may in the long run prove costly; alternatively, the operations and maintenance, training and trouble shooting requirements may be costly as well as the ability to train staff on new systems and processes which effectively may cost more in terms of time spent on training than with a baselie.
