Final Business Proposal

DColeman-BUS-470-RS-CostBenefitAnalysis-SolutionEvaluation.xlsx

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Descriptors

Definitions:

Payback period - the period of time, expressed in months, that a project requires to recover the money invested in it (including the one-time savings which are often excluded by some calculators)

Benefit-cost ratio - an indicator that is often used to decide whether the benefits of a given project or solution outweigh the actual costs (the higher the ratio the better the investment)

Analysis horizon - the number of months the project is expected to be utilized before replacement or major upgrade

Implementation costs include capital costs (equipment, constructions, etc.), training, travel, outside professionals, lost of productivity during implementation & training, implementation costs such as installation, etc.

Ongoing costs include maintenance costs (monthly costs relating to the ongoing maintenance) and operational cost (internal labor, expendables, materials, supplies, etc.)

Hard savings - the direct benefits that affect the bottom line and can directly improve the financial performance of the organization (examples are: sales/price increase, cost reduction and productivity savings)

Soft savings - the indirect benefits which are difficult measure (they are mainly improved yield of a business process, the increased stakeholder satisfaction and the increased safety in the workplace)

One-time savings - examples are value of inventory reduction and sale of unneeded assets

Example

	Call Center
					$, hours, units	E.g.: $/unit	$	Year-1/partial year	Year-2	Year-3
				Cost/Benefit	Unit	Entry/Quantity	Final/Total	Description
	Project Title	C O S T S		Implementation costs (one time)			8,000
	CRM Rules for CCR Quality		1	Update rules in CRM			8,000	Cost to update rules
	Solution Title/Description		2
			3
	Sponsor		4
	CC Manager			Ongoing costs (monthly)			0
	Project Manager		1
	J Doe		2
	Timeframe for CBA (in months)		3
	12		4
	Estimated cost/savings year one (maximum 12)			>>>Total Costs (monthly)			667	3,333	11,333	19,333
	5	B E N E F I T S		Hard and soft savings (monthly)			1,200
	Average labor cost (hourly / daily)		1	Saving from reduced calls	Calls	5000	1,000
	$23.00		2	Saving from reduced QC	QC	500	200
	Assumptions/Comments		3
1			4
2				Savings (one time)			0
3			1
4			2
5			3
6			4
7				>>>Total benefits (monthly)			1,200	6,000	20,400	34,800
Benefit-cost ratio		1.80		667	Monthly payback	Net cash flow	Net gains	2,667	9,067	15,467
Monthly payback period		6.7		0	6.7	1,200	ROI		80.0%
	Explanation: I believe that training of management or supervisors is really needed when it comes to implementing changes at the organization. If training is not done, the organization will continue to fail and employee turnover will be high. Management currently do not know how to proper deal with employees and it is causing a lot of strife and distrust between employees and management. So much so that employees are just leaving instead of trying to discuss the issue because they know, changes will not happen any time soon. Management is currently stuck in their ways and need to be held accountable of their actions just as much as the people they are supposed to be leading. You can not properly lead if you do not know how to. The overall cost will be beneficial all around to everyone and not only enhance the relationship between management and employees, but will cause the employees to go the extra mile because they are happy with their job and environment and not discontent. This change will involve everyone because feedback is needed from managers and employees. Manager’s feedback is needed to ensure they are receiving the proper training and they are actually learning from it and feedback is needed from the employee preceptive to ensure the proper changes are made to solve the issues at hand. A monthly follow up is need to make sure this is successful. Also, team building exercises will need to be involved to build a trust relationship between management and employees.

Cost Benefit Analysis

					$, hours, units	E.g.: $/unit	$	Year-1/partial year	Year-2	Year-3
				Cost/Benefit	Unit	Entry/Quantity	Final/Total	Description
	Project Title	C O S T S		Implementation costs (one time)
	Training of Management		1	Train manager/supervisors			6,500	Cost to train manangement
	Solution Title/Description		2
			3
	Sponsor		4
	HR			Ongoing costs (monthly)			0
	Project Manager		1
	HR Manager		2
	Timeframe for CBA (in months)		3
	12		4
	Estimated cost/savings year one (maximum 12)			>>>Total Costs (monthly)			542	5,420	11,924	18,428
	10	B E N E F I T S		Hard and soft savings (monthly)			9,000
	Average labor cost (hourly / daily)		1	Savings from turnover		5000	5,500
	$25.00		2	Savings from training new employees		500	3,500
	Assumptions/Comments		3
1			4
2				Savings (one time)			0
3			1
4			2
5			3
6			4
7				>>>Total benefits (monthly)			9,000	90,000	198,000	306,000
Benefit-cost ratio		16.61		0	Monthly payback	Net cash flow	Net gains	84,580	186,076	287,572
Monthly payback period		0.7		0	0.0	9,000	ROI		1560.5%